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, SEPTEMBER 25, 2003 9:00 A.M. JAMES F. PETERS, CSR, RPR CERTIFIED SHORTHAND REPORTER LICENSE NUMBER 10063 TIFFANY C. KRAFT, CSR, RPR CERTIFIED SHORTHAND REPORTER LICENSE NUMBER 12277 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 ii APPEARANCES BOARD MEMBERS Dr. Alan Lloyd, Chairperson Mr. Joseph Calhoun Ms. Dorene D'Adamo Supervisor Mark DeSaulnier Professor Hugh Friedman Dr. William Friedman Supervisor Barbara Patrick Mrs. Barbara Riordan BOARD MEMBERS EXCUSED Dr. William Burke Mr. Matthew McKinnon Supervisor Ron Roberts 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. Kathleen Tschogl, Ombudsman Ms. Kathleen Walsh, General Counsel PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 iii APPEARANCES CONTINUED STAFF Mr. Gerhard Achtelik, Air Pollution Specialist, MSCD Ms. Analisa Bevan, Manager, ZEV Implementation Section Ms. Crystal Reul Chen, Air Resources Engineer, Retrofit Implementation Section, MSCD Mr. Bob Cross, Chief, MSCD Ms. Cynthia Garcia, Population Studies Section, Research Division Ms. Annette Hebert, Chief, Heavy-Duty Diesel In-Use Strategies Branch, MSCD Mr. Jack Kitowski, Chief, On-Road Controls Branch Mr. Bob Loscutoff, Chief, Monitoring and Laboratory Division Ms. Alexa Malik, Board Secretary Mr. George Poppic, Staff Counsel Mr. David Salardino, Mobile Source Control Division Ms. Nancy Steele, Manager, Retrofit Implementation Section, MSCD Mr. Jim Watson, Monitoring and Laboratory Division ALSO PRESENT Mr. Tom Addison, Bay Area Air Quality Management Districts Ms. Yvette Agredano, California Chapters of SWANA Mr. David Achiro, Tahoe Truckee Sierra Disposal Co., Inc. Mr. Don Anair, Union of Concerned Scientists Mr. Jeff Arnold, Association of Rotation Molders PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 iv APPEARANCES CONTINUED ALSO PRESENT Mr. Kelly Astor, CA Refuse Removal Council Ms. Diane Bailey, NRDC Mr. Rick Bell, Dupont Ms. Emily Brown, Inform Mr. Doug Button, South San Francisco Scavenger Co., Inc. Mr. Todd Campbell, City of Burbank & Coalition for Clean Air Mr. Frank Caponi, L.A. County of Sanitation Mr. Richard Caglia II, Industrial Waste and Salvage Mr. Bill Dobert, Specialty Solid Waste, CRRC Mr. Sean Edgar, California Refuse Removal Council Ms. Shiela Edwards, Marine Sanitary Service Mr. Mark Figone, East Bay Sanitary Company, Inc. Mr. Jack Fiori, California Waste Recovery Systems Mr. Tom Fulks, Green Car Institute Ms. Sheryl Granzella, Richmond Sanitary Service Mr. Bill Guerry, Outdoor Power Equipment Institute Mr. Chuck Helget, Allied Waste Industries Mr. David Huerta, City of Fremont Ms. Bonnie Holmes-Gen, American Lung Association Ms. Yvonne Hunter, League of California Cities Mr. Robert Kittell, Electricab Energy Dr. Joseph Kubsh, Manufacturer's Emission Control Association PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 v APPEARANCES CONTINUED ALSO PRESENT Mr. Mark Leary, California Integrated Waste Mr. Jed Mandel, Engine Manufacturers Association Mr. Alan Marchant, Turlock Scavenger Company Mr. Ruben Martinez, Diesel Air Fleet Service Mr. John McNamara, California Refuse Removal Council Mr. Jim Medich, City of West Sacramento Mr. Sam Mendoza, City of San Diego Mr. Daniel Meyers, City of Los Angeles Mr. Harry Miller, Tracy Delta Solid Waste Management Co. Mr. David Modisette, Public Policy Advocates Mr. Michael Mohajer, L.A. County Solid Waste Management Committee Ms. Patricia Monahan, Union of Concerned Scientists Mr. Kevin Mullins, Mill Valley Refuse Service Mr. Graham Noyes, World Energy Mr. Louie Pellegrini, Peninsula Sanitary Service Ms. Kathryn Phillips, Center for Energy Efficiency & Renewable Technologies Ms. Mary Pitto, Regional Council of Rural Counties Mr. Ronald Proto, CCRC Member Consulting Group Mr. David Raney, Honda Mr. Andy Rose Mr. Greg Sanders, Varner Brothers, Inc. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 vi APPEARANCES CONTINUED ALSO PRESENT Mr. Harry Schrauth, City of Oakland Mr. Dennis Shuler, Gilton Solid Waste Management Mr. Wendel Smith, Global Fuel Mr. Scott Smithline, Californians Against Waste Mr. Kent Stoddard, Waste Management Mr. Timothy Vail, General Motors Mr. Tim Ward, CA Independent Oil Marketing Association Mr. Paul Wuebben, South Coast AQMD Ms. Stephanie Williams, CA Trucking Association Mr. David Wilson, City of Los Angeles Ms. Karen Wilson, Sacramento Metropolitan Air Quality Management District PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 vii INDEX PAGE Pledge of Allegiance 1 Roll Call 1 Item 03-7-1 Chairman Lloyd 16 Executive Officer Witherspoon 17 Staff Presentation 17 Q&A 21 Item 03-7-2 Chairperson Lloyd 22 Executive Officer Witherspoon 23 Staff Presentation 25 Ombudsman Tschogl 42 Q&A 44 Mr. Mark Leary 54 Ms. Yvonne Hunter 58 Mr. Daniel Meyers 60 Ms. Mary Pitto 61 Mr. Harry Schrauth 62 Mr. Michael Mohajer 62 Ms. Yvette Agredano 65 Mr. Sam Mendoza 68 Mr. Frank Caponi 75 Mr. Jed Mandel 77 Ms. Emily Brown 89 Mr. David Huerta 92 Mr. Graham Noyes 93 Ms. Stephanie Williams 100 Mr. Tim Ward 116 Mr. Kelly Astor 118 Mr. Bill Dobert 132 Mr. Greg Sanders 135 Mr. Jack Fiori 138 Mr. Andy Rose 141 Mr. Mark Figone 143 Mr. Dennis Shuler 147 Ms. Sheila Edwards 149 Mr. Kevin Mullins 151 Mr. Louie Pellegrini 154 Ms. Sheryl Granzella 157 Mr. Ronald Proto 158 Mr. Doug Button 159 Mr. David Archiro 161 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 viii INDEX CONTINUED PAGE Item 03-7-2 continued Mr. Henry Miller 162 Mr. Alan Marchant 165 Mr. John McNamara 166 Mr. Richard Caglia 171 Mr. Sean Edgar 172 Mr. Chuck Helget 176 Mr. Kent Stoddard 179 Mr. David Wilson 184 Mr. Paul Wuebben 187 Mr. Ruben Martinez 188 Dr. Joseph Kubsh 191 Mr. Scott Smithline 193 Ms. Karen Wilson 195 Mr. Todd Campbell 197 Ms. Bonnie Holmes-Gen 203 Mr. Todd Addison 206 Ms. Patricia Monahan 208 Ms. Diane Bailey 212 Mr. Wendel Smith 214 Q&A 215 Motion 230 Vote 234 Item 03-7-3 235 Chairperson Lloyd 235 Executive Officer Witherspoon 237 Staff Presentation 239 Q&A 266 Ombudsman Tschogl 284 Mr. David Raney 287 Mr. Bill Guerry 297 Mr. Joseph Kubsh 310 Mr. Don Anair 314 Mr. Rick Bell 316 Mr. Jeff Arnold 321 Mr. Jeff Medich 326 Mr. Dave Modisette 328 Mr. Jed Mandel 337 Discussion 354 Motion 355 Vote 359 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 ix INDEX CONTINUED PAGE Item 03-7-4 360 Chairperson Lloyd 360 Executive Officer Witherspoon 361 Staff Presentation 362 Q&A 371 Mr. Timothy Vail 378 Mr. Tom Fulks 384 Mr. Robert Kittell 395 Ms. Kathryn Phillips 399 Discussion 405 Adjournment 410 Reporters' Certificates 412 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 1 1 PROCEEDINGS 2 CHAIRPERSON LLOYD: Good morning. The September 3 25th, 2003, public meeting of the Air Resources Board will 4 now please come to order. 5 Dr. Friedman, will you please lead us in the 6 pledge of allegiance. 7 (Thereupon the Pledge of Allegiance was 8 Recited in Unison.) 9 CHAIRPERSON LLOYD: Thank you. 10 Will the Clerk of the Board please call the roll? 11 BOARD CLERK MALIK: Dr. Burke? 12 Mr. Calhoun? 13 BOARD MEMBER CALHOUN: Here. 14 BOARD CLERK MALIK: Ms. D'Adamo? 15 BOARD MEMBER D'ADAMO: Here. 16 BOARD CLERK MALIK: Supervisor DeSaulnier? 17 Professor Friedman? 18 BOARD MEMBER WILLIAM FRIEDMAN: Here. 19 BOARD CLERK MALIK: Dr. Friedman? 20 BOARD MEMBER HUGH FRIEDMAN: Here. 21 BOARD CLERK MALIK: Mr. McKinnon? 22 Supervisor Patrick? 23 SUPERVISOR PATRICK: Here. 24 BOARD CLERK MALIK: Ms. Riordan? 25 BOARD MEMBER RIORDAN: Here. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 2 1 BOARD CLERK MALIK: Supervisor Roberts? 2 Chairman Lloyd? 3 CHAIRPERSON LLOYD: Here. 4 Thank you very much. 5 Before we start this morning, I'd just like to 6 highlight a couple of my activities in the last week, and 7 one of those is Mike Scheible and myself had a chance to 8 go down to the port of Los Angeles last week to see 9 firsthand some of the issues being faced by the port and 10 also understand what can be done in terms of mitigating 11 air quality and emission issues there. So again, we had a 12 great hosting of the visit, and I think it was very, very 13 educational. Everybody has the opportunity to do that -- 14 it was really impressive. And to see it's the third 15 largest port in the world behind Singapore and Hong Kong, 16 although that's traded sometime with the Port of Long 17 Beach. 18 A few interesting pieces, looking at the truck 19 traffic coming in there as well as now the increasing 20 train and rail traffic, so I think there's nothing like 21 going in firsthand and seeing what's going on. 22 Another week a delegation of us had gone down 23 including Ms. D'Adamo to visit three dairies down in 24 Modesto area, and again, that was very educational to see 25 what was going on and to understand the complexity. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 3 1 I'd just like to indicate the first slide 2 indicates the opportunity that Mike and I had to go out in 3 the early morning and to actually go up on one of these 4 rope ladders and we climbed up on the container ship. You 5 can see the containers right at the top. It's about 200 6 feet going up there. So we had to make sure when you got 7 on board, if it was rising and falling, make sure you got 8 out on the up. 9 BOARD MEMBER RIORDAN: Mr. Chairman, is that -- 10 CHAIRMAN LLOYD: That's me going up. Mike -- we 11 have another picture of Mike also. Mike was there. We 12 had a great time. 13 That's the real story. We were disappointed that 14 we didn't have to travel further. But the person who did 15 the photography, his wife is a professional photographer 16 so he said he could embellish that for us. But it was 17 very -- it's like the fishtail. But on the serious side, 18 it was very educational. A lot can be done. But also you 19 look at this when you have 70,000 hour power diesel 20 engines coming in. You can understand the magnitude and 21 also understand what can and cannot be done when we talk 22 about electrification and whatnot. It's easier for new 23 engines than older engines. But also the port -- I was 24 impressed by the staff and the management there of trying 25 to do things and I think again we learned a lot. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 4 1 Next, in the last few days some of you might have 2 seen the Michelin Bibendum, the challenge they've had in 3 bringing vehicles all over the world to California and 4 they've invited 2- to 300 journalists. Started off in 5 Sacramento and then moved onto the raceway in Sonoma 6 yesterday. Again, I had the pleasure of participating 7 both days. And again, I think it gave great pleasure to 8 see the variety of vehicles out on the raceway. All the 9 way from high performance and the super clean. We had the 10 new Prius there. All of the engine manufacturers had 11 wonderful models, examples including some of the boutique 12 cars. And coming away from that also you can see the 13 dedication of Michelin to the whole issue of the 14 environment and air quality issues. 15 One graphic which came out of there, reminded me 16 when we look at tires and the importance of tires, no 17 matter what we're driving, we still are driving on those 18 tires. One in at least five gallons of gasoline we use -- 19 for every five tanks, one tank of that is really wasted on 20 rolling resistance. If you look at trucks, that's two out 21 of every five. That's a dramatic indication of what can 22 be done. More focus is coming on that issue. You might 23 have seen the announcement by the Governor together with 24 the Governors of Washington and Oregon encouraging -- one 25 of the items encouraging state freight and others to use PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 5 1 the most fuel-efficient tires as possible. That's 2 something I think we can all do. And you can see that 3 really translated back in terms of new useful things that 4 the public can do. 5 The other part I would also say on behalf of my 6 colleagues, I was really proud to see the number of clean 7 vehicles and the presentation on the super clean vehicles 8 the PZEV, joint work of Honda and U.C. Riverside and also 9 with clean gas from Chevron and Texaco. In fact, these 10 cars are so clean, you can see the progress being made, 11 not only are these vehicles clean at the start but also 12 maintaining that cleanliness. 13 And then you also had the Toyota Prius, and they 14 had a very nice example here so that they showed that 15 driving the Pruis 150,000 miles produces fewer emissions 16 than painting a 500 square foot room. In fact, one of the 17 vehicles qualified for the ATP ZEVS. I think the PZEVS 18 and ATP ZEVs are going to have a dramatic impact on 19 improving air quality. This goes all the way to -- for 20 example, if you want to go from Paris to Peking 21 approximately 7,000 miles, it's less emissions than a can 22 of insect repellant. Now it's just a dramatic example of 23 what can be done. We're going to try to get some more 24 copies of this. But I think the general public can relate 25 to these, but we're also getting the benefits in PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 6 1 California. 2 We did get presented on behalf of Michelin -- 3 because ARB and staff played a significant role in helping 4 Michelin with this event, so we got what they call a 5 Michelin Bibendum trophy. And as you can see here -- I'll 6 pass it to my colleagues. It's heavy. But it's really 7 nice. But again, I would like to particularly single out 8 Jim Fischer, Dr. Shannon Baxter of our staff and others, 9 but those are the ones that have worked diligently on 10 this, Jerry and his staff yesterday. So it was very, very 11 good. 12 Now after that, a tour of some of the technology 13 and exciting things to be done. 14 I have both the pleasure and the sad event. And 15 as most of us know, at this time our Chief Counsel, 16 Kathleen Walsh is going to be migrating west. And it's 17 going to be, I think, a great loss for us, but also a 18 great opportunity for Kathleen. Now firsthand, of course, 19 you will be knowledgeable about the travel issue, being 20 safe, indicating why they need I&M in the Bay Area. So we 21 really have a friend. And she is going to be, as you 22 know, joining the Bay Area Air Pollution Control District. 23 I'd like to read a resolution -- also recognize 24 her husband, Paul Benson, who's sitting in the front. 25 Paul, if you can just stand and we'll recognize you. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 7 1 Thank you. 2 The Resolution we prepared here, Resolution 3 0-3-28. Whereas, Kathleen C. Walsh has loyally served the 4 California Air Resources Board as General Counsel for 5 seven years, having joined the ARB as legal counsel in 6 1982 after beginning state service with the Office of 7 Administrative Law; 8 Whereas, for the past 20 years, Ms. Walsh has 9 been a master at juggling numerous complex legal matters 10 with aplomb, patience, thoroughness, and a fresh breeze of 11 humor; 12 Whereas, armed with her experience as lead 13 counsel for the Monterey County Office of Legal Aid, her 14 superior organizational skills, and her ornate sense of 15 balance and fairness at the Office of Administrative Law, 16 Kathleen single-handedly created the Office of 17 Administrative Appeals for ARB's heavy-duty vehicle 18 inspection program by working literally around the clock 19 during summer and fall of 1991, becoming the ARB's first 20 Administrative Law Judge and holding her first hearing in 21 early 1992; 22 Whereas, during her two years as Administrative 23 Law Judge for the heavy-duty vehicles inspection program, 24 through her unprecedented dedication, Ms. Walsh endured, 25 considered, and decided 1157 appeals out of the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 8 1 approximately 8500 citations issued, a marathon race 2 through 50 hearings a month; 3 Whereas, as Senior Staff Counsel, Kathleen 4 assisted the Executive Office and the Board on numerous 5 critical projects of vehicular emission control, such as 6 the adoption of tough new standards for heavy-duty 7 vehicles, passenger cars, and motorcycles and cutting-edge 8 provisions for zero-emission vehicle; 9 Whereas, Kathleen's stamina and ability to remain 10 calm under pressure were again demonstrated in the 11 development of the 1994 State Implementation Plan for 12 ozone, which has more than once saved important ARB 13 initiatives; 14 Whereas, with her characteristic compassion and 15 generosity, Kathleen has always found time to discuss the 16 quirky practice of law with law students and aspiring 17 young lawyers, inspiring several to pursue the profession; 18 Whereas, Kathleen has also inspired her two sons 19 to pursue professional careers, with her son Matthew 20 becoming a mechanical engineer and her son Joshua becoming 21 a lawyer; 22 Whereas, during her long and fruitful career at 23 the ARB, Ms. Walsh has excelled at all aspects of complex 24 legal practice, drafting hundreds of legal opinions, 25 pursuing and wisely avoiding litigation, drafting key ARB PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 9 1 regulations, and negotiating difficult settlement 2 agreements on matters as diverse as the SIP, locomotives, 3 and ZEVs, creatively securing ARB's interests; 4 Whereas, Kathleen has sacrificed her scholarly 5 preference for secluded legal opinion drafting to 6 successfully manage a growing staff of attorneys, 7 enforcers, and regulations' coordinators; to provide 8 immediate and cogent legal advice to the Board and to 9 staff; and to be constantly available to assist in all 10 manner of urgent policy matters; 11 Whereas, Kathleen has elected to jump from the 12 frying pan into the fire by joining the legal staff of the 13 Bay Area Air Quality Management District as Assistant 14 Counsel. 15 Now, therefore be it resolved, that the Board 16 offers fervent gratitude for the significant contribution 17 Ms. Walsh has made to the practice of air pollution and 18 administrative law in California and for her substantial 19 contribution to improving air quality for our citizens. 20 Be it further resolved, that the Board wishes 21 Kathleen the best during her tenure at the Bay Area 22 District and urges her not to suffer too much nostalgia 23 for the warmth of Davis and Sacramento during the foggy 24 cold San Francisco summers. 25 With that, Kathleen, I would really say, I think PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 10 1 we'll all miss you at a time, when up here, when we look 2 for advice, we look down and see your calm demeanor and 3 your always excellent opinion. I think we're really going 4 to miss that. But rest assured, as indicated in the 5 resolution, you've already been a tremendous contribution. 6 We look forward to working with you. I take you at your 7 word, your commitment, you're not going to come back and 8 testify before us. And with that, I wish you the very 9 best. 10 And I'd like -- if my colleagues would like to 11 add some words, please feel free to do so. 12 BOARD MEMBER D'ADAMO: Well, I'd like to add to 13 what the Chairman just said by just thanking you 14 personally. There have been numerous times, as you know, 15 throughout the years where I felt maybe a little bit of an 16 increased obligation as being the law member to make 17 certain on certain legal issues that I had a better 18 understanding of the issues, when, in fact, I didn't. And 19 I always knew that I could call on you, and you were 20 always prompt in your response. And most importantly, I 21 could rely on your expertise so that I could look better 22 and so this Board could make the right decisions. 23 So it's not often that we get to engage in 24 professional careers where we feel like we can make a 25 difference. Not only have you made a difference, but PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 11 1 you've always done so with the utmost professionalism. 2 And you and your family should be proud of your 3 achievement. We wish you well and look forward to seeing 4 you after you go to work for the Bay Area and breathing 5 all that nice clean, crisp air. Good luck. 6 CHAIRPERSON LLOYD: Moving from D.D. on down the 7 line. 8 SUPERVISOR DeSAULNIER: Always hard to say 9 something nice about an attorney, present company 10 excepted, D.D. 11 CHAIRPERSON LLOYD: Jed, take notice. 12 SUPERVISOR DeSAULNIER: I just -- first of all, 13 this is good news/bad news for me, of course. When 14 Kathleen called and told me that she would be coming to 15 the Bay Area, at the time I was talking to the soon-to-be 16 former regional administrator for Region 9 congratulating 17 him for coming to the Bay Area. We're delighted to have 18 you. But on the other hand, I will miss you up here and 19 your level of professionalism. And for someone who's a 20 non-attorney but likes to practice attorney as a local 21 politician, the way you've reminded me professionally 22 there are things like the Constitution that I have to be 23 reminded of some control over what I do, I appreciate your 24 professionalism and the way you've dealt with me 25 personally and look forward to dealing with issues like PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 12 1 transport into the valley as you represent the Bay Area. 2 BOARD MEMBER WILLIAM FRIEDMAN: Kathleen, I just 3 want you to know I learned a great deal from you, and it's 4 been a privilege to have worked with you. And I wish you 5 the very best and I thank you. 6 BOARD MEMBER HUGH FRIEDMAN: Kathleen, I came 7 prepared to make about an hour's worth of remarks, but 8 there's very little left to say after that resolution, 9 which is comprehensive and covers almost every facet of 10 your service long before I came to the Board, and your 11 contributions. 12 And I want to second what our law member said as 13 well. I'm glad that you're going to the Bay Area, which 14 is my home as well. And I'm glad that the fact that 15 DeSaulnier is on that Board back down there doesn't deter 16 you in any way. He has such an introspect for lawyers, as 17 you know. You'll do a great job down there. And I'm sure 18 he's delighted, as they all should be. 19 I just wanted to join in wishing you every good 20 wish, utmost satisfaction in this new passage. And you 21 and your husband, your family -- and you must be very 22 proud to have at least one out of two become a lawyer. So 23 they took a role model. So congratulations. 24 And at the appropriate time, I'd like to second 25 D.D.'s motion to pass the resolution, if I may. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 13 1 BOARD MEMBER RIORDAN: Kathleen, I want to thank 2 you for your thoughtful advice that you've given to us 3 over the years. It has been an extraordinary time. We've 4 accomplished a great deal, thanks to staff people like 5 yourself. And we're going to miss you, but we hope that 6 you can offer as much to the Bay Area as you've offered to 7 us. And we hope that you and Paul both enjoy your 8 retirement -- quote, retirement. And we welcome you back, 9 but again, not to testify, just to see you. And we 10 certainly understand the delight that you must have in 11 moving to the Bay Area. I can't think of a more beautiful 12 city to be in. And thank you for those long hours of time 13 that you spent trying to keep us on the straight and 14 narrow. 15 BOARD MEMBER CALHOUN: Kathleen, I've already had 16 a chance to talk with you, but I'm going to add a couple 17 things. You succeeded in getting Mike promoted to 18 Executive Officer, and you didn't stop there. You got him 19 promoted to Judge, so you're deserving of a nice relaxing 20 job with the Bay Area Air Quality Management District. 21 SUPERVISOR PATRICK: Kathleen, I, too, would like 22 to thank you very much. It's all been said, but we, as a 23 Board, have really appreciated your sage advise. We have 24 always felt comfortable that we were on a very sound legal 25 footing. Some of us do not have the benefit of being PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 14 1 attorneys, as a couple of our members do, and we really 2 appreciate your advice. And we're going to miss you very 3 much. But those of us in the San Joaquin Valley are 4 particularly appreciative of having another friend at the 5 Bay Area District. 6 SUPERVISOR DeSAULNIER: First assignment is 7 downwind lawsuits. 8 SUPERVISOR PATRICK: She made me stay out of 9 those. 10 CHAIRPERSON LLOYD: We had a proposal, seconded 11 to the resolution. All in favor say aye. 12 (Ayes) 13 CHAIRPERSON LLOYD: Thank you. 14 (Applause) 15 CHAIRPERSON LLOYD: I want to afford you an 16 opportunity if you'd like to say something, but don't feel 17 obliged to do so. 18 GENERAL COUNSEL WALSH: Well, I will keep it 19 brief. 20 CHAIRPERSON LLOYD: No. Take as much as you 21 want. I didn't mean it that way. 22 GENERAL COUNSEL WALSH: I know we have a lot to 23 do today. And I cannot possibly say everything that is in 24 my head and my heart today. This has been a wonderful 25 place. I grew up as a lawyer here. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 15 1 CHAIRPERSON LLOYD: Is your microphone on? 2 GENERAL COUNSEL WALSH: I think so. Yeah. 3 This has been a great Board. And it has 4 succeeded a few other great boards, some of you were on 5 them. It's changed over time. But it has kept getting 6 better over my time here. I have been amazed and proud as 7 I watched those of you who sit up there, looking at the 8 audience behind us who sit here, at your thoughtfulness 9 your care, your concern. You have an incredibly hard jobs 10 to do, and you do it well. I know that a lot of that is 11 helped by the wonderful staff here at ARB. And I'm proud 12 to be a part of that staff. 13 As I move on to the next stage in my life -- 14 which I'm very happy and pleased to be doing. It is a 15 long time dream. And believe it or not, the idea of going 16 back to the fog and the ocean breeze is just music to my 17 heart. I spent many, many a day as a young child along 18 the Carcinus Straights between the railroad tracks and the 19 bay. I was to stay off the railroad tracks and out of the 20 water, but we had an amazing amount of fun between those 21 two dangerous places. I'm so looking forward to the 22 change. 23 But I will never forget the folks I have met 24 here, and I wish you the very best of luck. I will still 25 be a Californian, still breathing the air. I look to you PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 16 1 for the fine, fine work this Board does to protect the air 2 for Californians. Thank you very much. 3 CHAIRPERSON LLOYD: Thank you very much indeed. 4 Catherine, can you just for the Board just give 5 us a brief update about how we're going to go about -- not 6 replacing Kathleen, but replacing the position? 7 EXECUTIVE OFFICER WITHERSPOON: Our two most 8 senior counsels are alternating starting tomorrow as 9 acting general counsel. That's Bob Jenne and Tom 10 Jennings. And we have already done the interview process. 11 We do have superb candidates. And we hope to finish the 12 selection process, acquire a freeze exemption, and clear 13 the Governor's office review sometime by the middle of 14 October. 15 CHAIRPERSON LLOYD: Thank you very much. 16 With that, I'd like to move on to the first item, 17 Agenda Item 0-3-7-1. Again, I'd like to remind anyone in 18 the audience who wishes to testify on today's agenda item 19 to please sign up with the Clerk of the Board. Also, if 20 you have a written statement, please give 30 copies to the 21 Board. 22 The first agenda item is our monthly Board update 23 on recent finding on health effects of air pollution. 24 Staff will be presenting recent findings related to ozone 25 and asthma. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 17 1 So Ms. Witherspoon, if you'd like to begin staff 2 presentation. 3 EXECUTIVE OFFICER WITHERSPOON: Thank you, Dr. 4 Lloyd. 5 In April of this year, staff presented a study 6 about the responses of allergic asthmatics exposed to 7 ozone in controlled chamber experiments. Those results 8 show that asthmatic individuals challenged with an 9 allergen showed heightened effects when exposed to ozone. 10 Today staff will present results from a new study 11 that provides further biological evidence for the 12 synergistic effect of allergens and ozone. 13 Cynthia Garcia from the Population Research 14 Division will discuss the study results. 15 (Thereupon an overhead presentation was 16 presented as follows.) 17 MS. GARCIA: Thank you, Ms. Witherspoon. 18 Good morning, Chairman Lloyd, and members of the 19 Board. For today's health update, I will be discussing 20 two recent toxicological studies on allergen responses. 21 These studies will provide information on possible 22 mechanisms behind ozone's respiratory effect and help 23 explain the results in previous studies on the effects of 24 ozones on sensitive individuals with asthma. 25 --o0o-- PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 18 1 MS. GARCIA: The health effects of air pollution 2 on asthmatics have been a concern to the Board for some 3 time, due to the fact that asthma is one of the most 4 common chronic and disabling diseases among children and 5 adults. 6 Previously the children's health study found that 7 children that live in high-ozone communities have reduced 8 lung functions, and those who play several sports in those 9 high-ozone communities are more likely to develop asthma 10 than children who play no sports. In addition, 11 epidemiological studies have found increased medication 12 use and increased asthma symptoms were associated with 13 ozone exposure and asthmatics. 14 These studies provide a significant link between 15 ozone and asthma among sensitive individuals. However, 16 they do not provide us with a biological explanation for 17 why children and asthmatics may be more vulnerable to 18 ozone effects. The following studies attempted to. In 19 April of this year, we presented to the Board a control 20 chamber study. The results showed that asthmatic 21 individuals challenged with an allergen showed increased 22 asthmatic effects when exposed to ozone, demonstrating a 23 synergistic effect between ozone and allergen. The next 24 two recently-published studies that I will be introducing 25 to the Board today provide further biological evidence of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 19 1 the synergistic effect between allergens and ozone. 2 --o0o-- 3 MS. GARCIA: This study on guinea pigs was 4 designed to examine the effects of ozone on 5 hyperresponsiveness, which is an increased tendency of the 6 bronchial airways to constrict, and one of the hallmarks 7 of asthma in humans. This study used an animal model to 8 explain the effects of ozone exposure in non-allergic and 9 allergic animals. Using this model, the study sought to 10 determine whether long-term engine-emitted exposure to 11 ozone reduces or worsens airway hyperresponsiveness in 12 animals who are sensitive to allergens and irritants. 13 The results of this experiment demonstrate that 14 animals exposed to ozone alone did not develop airway 15 hyperresponsiveness. However, animals sensitive to 16 allergens showed increased airway hyperresponsiveness when 17 exposed to ozone and then challenged to the allergen or 18 irritant. Therefore, ozone exacerbates the constriction 19 of the bronchial airways synergistically with the 20 allergen. This increased tendency of the bronchial 21 airways persisted for up to four weeks after ozone 22 exposure ceased. 23 --o0o-- 24 MS. GARCIA: The second study examined the 25 responsiveness of a mechanism of bronchial muscle PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 20 1 contraction after exposing the isolated bronchial tissue 2 to ozone. The experimental results indicate that exposure 3 to ozone potentiates the contraction response in human 4 bronchial when challenged to a specific allergen. This 5 synergistic effect of allergen and ozone depends on both 6 the concentration and duration of exposure to the 7 pollutant. This graph shows the effect of ozone on 8 bronchial responsiveness to an irritant challenge. The 9 higher the concentration and the relation of exposure, the 10 higher the contraction due to the irritant challenge. At 11 very high doses, there is a toxic effect with the downward 12 trend. These two toxicological findings combined help 13 provide the possible biological explanation for why and 14 how sensitive individuals are the most susceptible to the 15 effects of ozone. 16 --o0o-- 17 MS. GARCIA: We have seen from these two 18 toxicological studies that ozone and allergen appears to 19 have a synergistic effect in the lungs. The effects 20 depend on the duration of concentration of ozone exposure. 21 These results contribute to our knowledge of how ozone 22 works to worsen the medical symptoms related to asthma. 23 These studies indicate that some asthmatics may be 24 particularly vulnerable to the harmful effects of ozone. 25 In addition, this will help provide general information to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 21 1 the Board during ozone standard review process. 2 Finally, further study on long-term ozone 3 exposure and its effect on vulnerable asthmatic 4 populations is underway. The Fresno Asthmatic Children 5 Environment Study, FACES, funded by ARB, is assigned to 6 help clarify the role of ozone and allergens such as 7 pollens, molds, and other toxics in its exacerbation of 8 asthma. 9 --o0o-- 10 MS. GARCIA: Thank you for your attention today. 11 I will be happy to answer any questions. 12 CHAIRPERSON LLOYD: Thank you very much indeed. 13 BOARD MEMBER WILLIAM FRIEDMAN: Both of these 14 studies are in the category of descriptive biological 15 basic research, and they're helpful. They are stepping 16 stones to what we really need to find out, which is the 17 true basic cellular and molecular mechanism that instigate 18 asthma. After all these years, we still don't have a 19 clue. We have a lot of clinical research. And in fact, 20 as we all know, we're funding very important clinical 21 research in Fresno in the FACES study. But until we 22 really nail down precisely what triggers asthma, we're not 23 going to be able to get rid of the problem. And these 24 are, you know, reasonable studies, but they're just real 25 stepping stones to get where we need to go. There's a lot PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 22 1 more work that needs to be done. 2 CHAIRPERSON LLOYD: Thank you very much. Thanks 3 very much. Thank you, staff. 4 We'll move ahead to Agenda Item 03-2-7, the 5 proposed diesel particulate control measure for solid 6 waste collection vehicles. 7 Diesel particulate matter was identified by this 8 Board as a toxic air contaminant in 1998. The health 9 impacts of diesel include lung cancer, increased hospital 10 admissions, and premature mortality. Diesel PM also 11 worsens allergies, asthma, and other respiratory and 12 cardiovascular diseases. The average statewide potential 13 cancer risk associated with diesel PM emissions is 540 14 potential cases per million. In the South Coast air basin 15 with the emissions even higher, the cancer risk from 16 diesel air is estimated to be 1,000 cases per million 17 people. 18 In 2000, this Board adopted a comprehensive risk 19 reduction plan for controlling diesel PM. At that time, 20 we set a goal of reducing diesel PM in California by 21 75 percent by 2010 and 85 percent by 2020. To meet these 22 goals, the plan identified three primary strategies: More 23 stringent standards for new diesel engines, a lower sulfur 24 limit of 15 PMM for diesel fuels, and controls on existing 25 diesel vehicles and equipment. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 23 1 ARB staff and Board have been actively working on 2 several plans to achieve these goals. The Board has 3 adopted new engine standards heavy-duty diesel vehicles, a 4 fleet rule for transit buses, an incentive program and 5 protocol for older, high emitting school buses, a 6 verification procedure for diesel PM retrofit 7 technologies, and a lower sulfur diesel fuel rule that we 8 just finished this past month. 9 Staff has worked on a host of diesel retrofit 10 rules for various vehicles and engine categories, with 11 many of those rules in the workshop process right now. 12 Staff is also verifying diesel retrofit technology as 13 rapidly as they can, with several devices now approved and 14 more in the pipeline for review. 15 We are encouraged by efforts by the industry to 16 address the reduction in PM on new engines and working 17 aggressively to reduce those in existing engines. And 18 today we are, in fact, looking at a measure to reduce PM 19 emissions from solid waste collection vehicles. 20 Ms. Witherspoon, will you please introduce this 21 item and begin staff's presentation. 22 EXECUTIVE OFFICER WITHERSPOON: Yes. Thank you, 23 Chairman Lloyd and members of the Board. 24 Our ultimate goal, as expressed in the diesel 25 risk reduction plan, is to clean up virtually every diesel PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 24 1 engine in California. This is a huge undertaking, and 2 we're still in the learning process as to the best 3 approach for each engine family and each individual 4 vehicle fleet. 5 In addition, because diesel control technologies 6 are still in the process of being born, we've had to 7 adjust our regulatory strategies as we've gone along to 8 reflect the actual performance and availability of various 9 control devices and other emission control options. We 10 once thought it would be as simple as putting a diesel 11 filter on almost everything. We now see it's going to 12 require a skillful combination of retrofit controls, 13 engine upgrades, accelerated retirement, vehicle 14 replacement, and the use of cleaner diesel fuel 15 formulations for alternative fuels. That's the direction 16 that staff is now taking. 17 With the proposed solid waste collection vehicle 18 rule, staff is proposing to require best available control 19 technology phased in by model year groups over a 20 seven-year period. As designed in this rule, BACT for 21 diesel PM includes ARB-verified emission control 22 strategies, such as particulate filters, oxidation 23 catalysts, alternative diesel formulations like lubrizol 24 and other technologies that may be verified in the future. 25 The definition of BACT in this rule also includes the use PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 25 1 of alternative fuels and replacement with newer clean 2 diesel engines which will be available beginning in 2007. 3 We chose to do solid waste collection vehicles 4 early in the diesel risk reduction process because of 5 their presence in residential communities. These vehicles 6 are in everyone's neighborhood once or twice a week 7 resulting in direct near-vehicle exposures. I should tell 8 that you the waste collection industry was not thrilled 9 about being the first on our list, but notwithstanding 10 those concerns, has generally responded in a thoughtful 11 and responsible way to this initiative. Staff has had 12 many discussions with industry representatives and has 13 reworked portions of the rule in response to their 14 suggestions and practical concerns. 15 The California Integrated Waste Management Board 16 was also a key player in development of this rule and in 17 making sure we have fully coordinated California's waste 18 management and air quality objectives. The Executive 19 Director of the Integrated Waste Management Board, Mark 20 Leary, is here to testify this morning, once we get to 21 that part of the proceeding. 22 The staff presentation this morning will be given 23 by Ms. Crystal Reul Chen of the Mobile Source Control 24 Division. 25 (Thereupon an overhead presentation was PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 26 1 presented as follows.) 2 AIR RESOURCES ENGINEER CHEN: Thank you, 3 Ms. Witherspoon. 4 Chairman Lloyd, and members of the Board, it is 5 my pleasure to present the staff's proposal for 6 controlling diesel particulate matter from on-road 7 heavy-duty residential and solid waste collection 8 vehicles. 9 --o0o-- 10 AIR RESOURCES ENGINEER CHEN: Today's 11 presentation includes a brief history on the need for this 12 regulation leading directly to a summary of the proposed 13 regulation and supported by a discussion of technical 14 feasibility and cost effectiveness. I will conclude the 15 presentation with the remaining issues and staff's 16 recommendation. 17 --o0o-- 18 AIR RESOURCES ENGINEER CHEN: The Board 19 identified diesel particulate matter, or PM, as a toxic 20 air contaminant in 1998. Its health impacts include 21 increased risk of lung cancer, aggravation of chronic 22 respiratory symptoms such as asthma and eye, nose, and 23 lung air irritation. Also, PM in the air is tied to 24 increased hospitalization and mortality in those with 25 existing heart and lung diseases. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 27 1 --o0o-- 2 AIR RESOURCES ENGINEER CHEN: In California, 3 studies have estimated that diesel PM emissions are 4 responsible for 70 percent of the total potential cancer 5 risk from all toxic air contaminants. No level of 6 exposure in diesel PM is considered to be safe. 7 --o0o-- 8 AIR RESOURCES ENGINEER CHEN: In 2000, this Board 9 adopted a plan to significantly reduce diesel PM emissions 10 and the associated potential cancer risk from all sources. 11 The proposed control measure we have brought before you 12 today focuses on reducing diesel PM emissions from 13 existing engines, specifically solid waste collection 14 vehicles. This is the second rule to focus on reducing 15 in-use emission. The first one was a fleet rule for 16 transit agencies. 17 --o0o-- 18 AIR RESOURCES ENGINEER CHEN: The benefits of 19 this rule, if adopted, are substantial. Staff estimates 20 that 80 premature deaths will have been prevented by 2020 21 at a cost of $900,000 per death prevented. This cost can 22 be compared to U.S. EPA's value of 4.2 to $5.9 million per 23 premature death. In addition, cancer risk from exposure 24 to diesel PM from collection vehicles is expected to 25 decrease. Over 2 million pounds of PM and 30,000 tons of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 28 1 oxides of nitrogen, or NOx, and hydrocarbon, or HC, will 2 not have been emitted to the air. And we estimate the 3 cost per household that receives trash collection service 4 at an average statewide to be less than $1 per year. This 5 is a cost effective method to reduce diesel PM and save 6 lives. 7 --o0o-- 8 AIR RESOURCES ENGINEER CHEN: Now I will give you 9 an overview of the proposed regulation by describing the 10 regulations' four general discussions: Scope and 11 applicability, specific requirement for municipalities, 12 general requirements for solid waste collection vehicle 13 owners, and enforcement. 14 In my presentation, I will be including staff's 15 proposed 15-day changes to the original staff proposal. A 16 summary of the proposed changes have been provided to you 17 and is available outside the room. 18 --o0o-- 19 AIR RESOURCES ENGINEER CHEN: As proposed, it 20 affects both municipalities and private owners of solid 21 waste vehicles. Municipalities may own and operate their 22 own fleets or contract for trash collection services with 23 private haulers. The vehicles covered by this rule are 24 those with 2006 and older model year engines and vehicles 25 weighing more than 14,000 pounds gross vehicle weight and PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 29 1 used to collect residential and commercial solid waste. 2 --o0o-- 3 AIR RESOURCES ENGINEER CHEN: In order to comply 4 with this rule, the vehicle owner must choose the best 5 available control technology for each of the vehicles in 6 its fleet following the phased-in implementation schedule. 7 The owner is required to keep records to demonstrate 8 compliance and make those records available on request to 9 ARB. 10 --o0o-- 11 AIR RESOURCES ENGINEER CHEN: We have provided 12 owners with several options for complying with the best 13 available control technology requirements. The owner may: 14 Repower using either a diesel engine or power system that 15 meets the .01 grams per brake horsepower hour particulate 16 matter standard or one that meets the .1 gram per brake 17 horsepower hour with the addition of a retrofit device; 18 replace the diesel engine with an alternative fuel for 19 pilot ignition engines; or retrofit with a product that is 20 verified with the highest diesel PM emission reduction 21 available, such as a particulate filter or oxidation 22 catalyst. 23 --o0o-- 24 AIR RESOURCES ENGINEER CHEN: If an owner 25 installs a retrofit system, it must be ARB verified. From PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 30 1 the verified systems available, the owner must apply the 2 technology that reduces diesel PM by the greatest amount 3 or highest verified level that the manufacturer agrees is 4 feasible for the vehicle. Also the use of the system must 5 not void the original engine warranty if one is still in 6 effect. And finally, the system must be commercially 7 available. 8 --o0o-- 9 AIR RESOURCES ENGINEER CHEN: Several retrofit 10 strategies are verified and available for collection 11 vehicles. Four Level 3 systems, which achieve an 85 12 percent reduction in diesel PM, are verified for 1994 to 13 2002 model year heavy-duty engines. Three of these are 14 passive diesel particulate filters and one reduces both 15 NOx and PM. No Level 2 strategies are verified yet. 16 Three systems are verified for 1991 to 2002 model years 17 that achieve Level 1 or at least a 25 percent diesel PM 18 reduction. These systems include a diesel oxidation 19 catalyst. 20 --o0o-- 21 AIR RESOURCES ENGINEER CHEN: The implementation 22 schedule has been designed with the goals of phasing in 23 implementation by technical feasibility and cost. We have 24 tried to balance the availability of technologies such as 25 the .01 gram per brake horsepower hour PM engine which PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 31 1 will be available in 2007 with providing time for owners 2 to spread out the cost of compliance. Note that the group 3 with model years 1988 to 2002 engines is split into two 4 groups, 1988 to 1993 model year engines and 1994 to 2002 5 model year engines, to ensure that the older vehicles are 6 implemented on the same schedule as the newer engines. 7 --o0o-- 8 AIR RESOURCES ENGINEER CHEN: Let me now walk you 9 through the options currently available for each model 10 year group. For 1960 to 1987 model year engines, the 11 options currently are to repower to a newer diesel engine, 12 or replace with an alternative fuel or pilot ignition 13 engine, because no retrofit products are verified yet for 14 these engines. Should verified retrofitted devices become 15 available, our proposal is to restrict the use of Level 1 16 products, such as a diesel oxidation catalyst, only to 17 companies with fewer than 15 vehicles. 18 --o0o-- 19 AIR RESOURCES ENGINEER CHEN: Some engines in 20 1988 to 1993 model year engine group have an additional 21 option. Diesel oxidation catalyst systems are verified 22 for 1991 through 1993 engine model years. And staff 23 expects they may be verified for 1988 to 1990 engines in 24 the future. In addition to retrofitting with a diesel 25 oxidation catalyst system, 1988 to 1993 model year engines PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 32 1 may also be repowered or replaced. 2 For 1994 through 2002 model year engines even 3 more options exist, as diesel particulate filters and 4 oxidation catalysts systems are already verified for 5 engines of this group. Retrofits are expected to be 6 implemented more frequently than engine repowers and 7 replacement because of the lower cost of retrofit devices. 8 --o0o-- 9 AIR RESOURCES ENGINEER CHEN: Finally, for 2003 10 to 2006 model year engines, staff believes diesel 11 particulate filters will be verified in the future, 12 although none are currently verified. 13 --o0o-- 14 AIR RESOURCES ENGINEER CHEN: To provide owners 15 with additional flexibility, staff is proposing that some 16 extensions be available for owners. First for those 17 owners who bring 50 percent or more of their vehicles into 18 compliance early, an extension on the 100 percent 19 implementation date is available. 20 Second, if no verified retrofit product is 21 commercially available, an owner may apply for a 22 compliance extension after he's evaluated his fleet to 23 find all vehicles that can be implemented on schedule. 24 1987 and older model year engines would only be eligible 25 for a one-year extension. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 33 1 Finally, companies with fewer than four vehicles 2 are not required to phase in implementation but would 3 simply need to comply with the 100 percent implementation 4 date. 5 --o0o-- 6 AIR RESOURCES ENGINEER CHEN: Now I will discuss 7 the benefits and cost effectiveness of the proposed rule. 8 --o0o-- 9 AIR RESOURCES ENGINEER CHEN: First, I will 10 discuss the benefits from the standpoint of tons of 11 emissions produced. As you can see, this rule should 12 provide immediate and significant reductions in diesel PM 13 emissions. The chart shows three different implementation 14 scenarios. One based on currently-verified technologies 15 as of spring 2003, and two scenarios that hypothesize 16 possible future verification of technologies. 17 Diesel PM reductions from the collection vehicle 18 fleet in California as a result of this proposed 19 regulation will range from 49 to 67 percent in 2010 and 40 20 to 54 percent in 2020. Similarly, the rule will also 21 reduce NOx emissions primarily from expected engine 22 repowers and replacements. Staff used the same three 23 implementation scenarios as I discussed previously. NOx 24 reductions from the collection vehicle fleet in California 25 as a result of this proposed regulation should range from PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 34 1 15 to 31 percent in 2010 and from 4 to 13 percent in 2020. 2 --o0o-- 3 AIR RESOURCES ENGINEER CHEN: As a result of 4 reducing diesel PM emissions by 2020, staff estimates 80 5 premature deaths would be prevented. As you know, 6 particulate matter in the air is correlated with increased 7 hospital emissions and mortality. The cost of premature 8 death prevented would be $900,000. Comparing this 9 estimate cost to U.S. EPA's value of between 4.2 and 5.9 10 million for avoided deaths, this proposed regulation is a 11 very cost effective mechanism to prevent premature deaths. 12 --o0o-- 13 AIR RESOURCES ENGINEER CHEN: Similarly, the 14 cancer risk from diesel PMs would be reduced by up to 27 15 cases per million in heavily affected areas near roadway 16 to landfills and up to four cases per million in an 17 average neighborhood. 18 --o0o-- 19 AIR RESOURCES ENGINEER CHEN: Staff determined 20 this rule will cost 63 million over seven years, 21 increasing to a total of $154 million over 17 years. The 22 original cost reported in the June 6 staff report over a 23 seven-year implementation phase-in period was $73 million. 24 The new cost analysis corrected some errors in the 25 original analysis and extended the time period to reflect PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 35 1 full implementation. The estimated cost effectiveness of 2 the proposed regulation on a cost-per-emissions reduced 3 basis is $32 per pound of diesel PM reduced and a $1.79 4 per pound of NOx plus hydrocarbon reduced. 5 --o0o-- 6 AIR RESOURCES ENGINEER CHEN: Finally, because 7 the cost of trash collection is usually charged to the 8 households receiving service, staff calculated a cost of 9 compliance per household. With about 12.5 million 10 households in California, the average statewide cost of 11 compliance per household over the entire lifetime of the 12 proposed regulation would be about $12, or an average cost 13 per household of approximately 70 cents per year. In 14 other words, the average increase in the sanitation fee 15 charged to each household statewide should average less 16 than $1 per year. 17 --o0o-- 18 AIR RESOURCES ENGINEER CHEN: Now I will turn to 19 the results of the staff's analysis of the technological 20 feasibility of this regulation. 21 --o0o-- 22 AIR RESOURCES ENGINEER CHEN: We collected 23 exhaust temperature profiles through data logging 60 24 collection vehicle engines and determined that about 12 25 percent of California's total collection vehicles could be PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 36 1 retrofitted with passive diesel particulate filters. 2 Although the average fleet wide is only 12 percent, as you 3 can see, particulate filters are most compatible with 4 front end and side loaders. In addition, particulate 5 filters work well on newer engines, such as the 1994 6 through 2002 model years. 7 --o0o-- 8 AIR RESOURCES ENGINEER CHEN: Staff analyzed the 9 results of fleet in-use experiences both in the 10 United States and Europe. The two fleets with the most 11 experience are the city of Los Angeles and New York City. 12 Los Angeles first participated in BP ARCO's demonstration 13 of their low sulfur diesel fuel and particulate filter. 14 Since that pilot demonstration which started in 2000, 15 about 360 filters have been installed on L.A. collection 16 vehicles. No problems have been associated with them, and 17 L.A. plans to install about 600 more on remaining vehicles 18 in their sanitation fleet, including other truck types. 19 New York City has approximately 30 diesel 20 particulate filters installed on their sanitation trucks 21 and plans to install about 100 more on other collection 22 vehicles in their fleet. 23 --o0o-- 24 AIR RESOURCES ENGINEER CHEN: ARB also 25 commissioned a study of diesel particulate filter usage PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 37 1 and experiences in Sweden. Driven by a mandate to control 2 particulate matter emissions in specific urban areas, 3 there were as of January 2003, 22 retrofitted collection 4 vehicles and 24 vehicles with diesel particulate filters 5 installed as original equipment. No filter-related 6 problems have been reported by the vehicle owners, and the 7 program is considered to be a success. 8 --o0o-- 9 AIR RESOURCES ENGINEER CHEN: That completes the 10 presentation of the proposed regulation and its technical 11 feasibility. Now I will describe issues raised by 12 stakeholders. 13 --o0o-- 14 AIR RESOURCES ENGINEER CHEN: Waste haulers are 15 concerned about cost recovery, primarily by those 16 companies that collect trash under a contract with the 17 municipality. The industry proposed as a solution that 18 the municipality with the contract be responsible for 19 compliance. Staff initially proposed joint responsibility 20 with municipality, but has withdrawn that proposal as 21 discussed on the next slide. 22 In order to find out more about contracts, staff 23 worked with the Integrated Waste Management Board on a 24 survey. Surveys were e-mailed to our municipality 25 contracts, plus all of the recycling coordinators. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 38 1 Surveys were returned from 74 cities, 12 counties, and 4 2 military bases representing about one-third of the 3 population of California and the most populated major 4 cities and counties. 5 Staff asked if contracts included a provision 6 allowing for an increase in rates, including when there 7 was a change in law. Of those with contracts, 87 percent 8 of the contracts allowed for rate increases for changes in 9 the law, such as this proposed regulation, or other 10 non-specified increases in the cost of doing business. 11 The time to negotiate a rate change reported in surveys 12 ranged from two weeks to three years, with most reporting 13 less than a year for a rate renegotiation. Of the other 14 contracts, most will be renegotiated at some time during 15 the implementation of this rule, allowing for a rate 16 increase. 17 Staff is proposing two additions requested by the 18 industry, adding language that states the Board's intent 19 to encourage rate renegotiations and biannual progress 20 reports on implementation to foster dialogue. 21 --o0o-- 22 AIR RESOURCES ENGINEER CHEN: As mentioned 23 earlier, staff is proposing changes based on issues raised 24 by the municipalities. Municipalities argued to staff 25 that the joint responsibility provision would be overly PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 39 1 burdensome and costly as they lacked resources to enforce 2 compliance and have no control over vehicle purchasing and 3 maintenance decision. As a result of these discussions, 4 staff proposes removing most of the requirements currently 5 listed in Section 2021.1 with only some reporting 6 requirements remaining. In addition, staff recommends 7 that joint responsibility for compliance be eliminated. 8 --o0o-- 9 AIR RESOURCES ENGINEER CHEN: Finally, 10 environmental organizations have argued that this rule 11 would be more stringent. They have proposed several 12 changes to make the rule more stringent; limiting 13 exemptions to one-year, splitting large groups with model 14 year 1988 to 2002 engines, and closing loopholes they 15 perceive to be in the rule. In addition, they have asked 16 staff to accelerate compliance of the oldest vehicles by 17 two years. 18 Staff compared the cost effectiveness of this 19 alternative with that of the proposed regulation and found 20 it to be about the same as staff's proposal. By beginning 21 implementation two years earlier for 1960 to 1987 model 22 year engines, an additional 18 percent diesel emission 23 reduction would be achieved for an associated cost 24 increase of about 14 percent. Staff feels that bringing 25 the 1960 to 1987 engine model year group into compliance PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 40 1 earlier would impact small business more immediately 2 because more small businesses own the older vehicles. 3 --o0o-- 4 AIR RESOURCES ENGINEER CHEN: Therefore, staff is 5 proposing to limit exemptions to one year for only the 6 oldest vehicles, to split the 1988 to 2002 group, and to 7 tighten up the implementation phase-in. Staff is adding 8 language to clarify the active fleet calculation to ensure 9 that 100 percent of the vehicles are implemented on time 10 and that vehicles cannot be double counted in two 11 implementation groups, and that an owner must evaluate all 12 of his fleet before he can apply for an exemption for any 13 engine. Staff is not, however, proposing to accelerate 14 implementation of the oldest vehicles. 15 --o0o-- 16 AIR RESOURCES ENGINEER CHEN: The engine 17 manufacturers have submitted comments questioning ARB's 18 authority to adopt this regulation on two fronts. First, 19 they assert we are regulating new engines and should 20 therefore obtain a waiver from the U.S. EPA. Second they 21 assert that if we claim we are, in fact, regulating 22 non-new-engines, that we lack the authority to do so. Our 23 legal office will address these issues during the witness 24 testimony. 25 --o0o-- PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 41 1 AIR RESOURCES ENGINEER CHEN: Now I will conclude 2 by summarizing the benefits of the rule and staff's 3 recommendations. 4 --o0o-- 5 AIR RESOURCES ENGINEER CHEN: To recap, the 6 proposed regulation would result in significant cost 7 effective benefits. An estimated 80 premature deaths will 8 be prevented by 2020 at a cost effective $900,000 per 9 death prevented. Cancer risk from exposure to diesel PM 10 from collection vehicles would be significantly reduced. 11 This proposal would result in between a 49 and 67 percent 12 reduction in diesel PM by 2010 and a 40 and 54 percent 13 reduction by 2020. And the cost to Californians is 14 estimated to be less than $1 per household. Staff 15 believes the benefits of the proposed regulation are 16 substantial. 17 --o0o-- 18 AIR RESOURCES ENGINEER CHEN: Given the benefits 19 the proposed regulation can bring to Californians, staff 20 recommends the Board adopt new Sections 2020, 2021, 21 2021.1, and 2021.2 and direct staff to prepare 15-day 22 changes as outlined in our presentation for public comment 23 and adoption. 24 Given that this is a new rule affecting people 25 who have not been directly impacted by our rules before, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 42 1 staff plans to develop implementation guidelines and 2 conduct outreach and education for those affected by the 3 rules. Staff believes the proposed regulation can 4 successfully be implemented over the coming seven years. 5 Thank you. 6 CHAIRPERSON LLOYD: Thank you very much. Madam 7 Ombudsman, would you please describe the public 8 participation process that occurred while this item was 9 being developed and share any concerns or other comments 10 that you may have for the Board at this time? 11 OMBUDSMAN TSCHOGL: Thank you, Chairman Lloyd and 12 members of this Board. 13 To develop the control measure proposal before 14 you, staff has worked with many stakeholders over the past 15 three years. They held four public workshops at various 16 locations in El Monte, Los Angeles, Oakland, and 17 Sacramento. The workshops were held in the afternoon and 18 evening to ensure as much participation as possible. The 19 attendees representing the solid waste collection 20 companies and their associations, California Trucking 21 Association, Engine Manufacturers Association, field 22 suppliers, technology providers, and environmentalists and 23 other interested parties. 24 In 2000, staff initiated a feasibility study that 25 ran for more than two years. For the study, more than 100 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 43 1 different companies voluntarily provided their engine and 2 their vehicle data for the inventory, and over 60 3 companies received free smoke capacity tests on their 4 vehicles. Another six companies allowed staff to collect 5 vehicle profile data for 60 vehicles, and thereby learned 6 which technology would serve the vehicles. Each of these 7 companies received updates to the development of the rule. 8 During 2002 and 2003, staff met approximately ten 9 times with the work group that included members of the 10 California Refuse Removal Council, plus representatives of 11 Waste Management and BPI. Staff had many phone and 12 e-mails contacts with various municipalities throughout 13 the state and held three separate meetings with them to 14 discuss the rules and implementation issues. 15 A joint effort was undertaken with the Integrated 16 Waste Management Board to provide information to those 17 possibly missed in the earlier contract. Staff also 18 discussed the proposed rule with environmental 19 organizations on numerous occasions. In addition, staff 20 attended several of the South Coast Air Quality Management 21 District's workshops and work group meetings on their 22 clean on-road residential and commercial refuse vehicles 23 rule. 24 Staff created a separate website in addition to 25 the diesel risk reduction website posting all documents PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 44 1 including presentations associated with this rule. As 2 revisions to the control measure were made, subscribers to 3 various list serves received notices of workshops and 4 changes to the website. On June 6th, 2003, staff hosted 5 the public notification and the staff report on the 6 website. In summary, staff has worked with many 7 stakeholders through workshops, meetings, conference 8 calls, focused work group meetings, one-on-one 9 communication to develop this solid waste vehicle proposed 10 rule. Thank you. 11 CHAIRPERSON LLOYD: Thank you very much. 12 Questions. Any question from the Board at this 13 time? 14 Mr. Calhoun. 15 BOARD MEMBER CALHOUN: Would the staff comment 16 again on the durability and effectiveness of these 17 systems? 18 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF 19 HEBERT: First of all, the systems have to go through a 20 very rigorous verification process where they have to 21 basically prove out durability to 50,000 miles and prove 22 that emissions are maintained at the same emissions level 23 as they were new. They have to do a minimum amount of 24 in-field testing, actually be on a vehicle or piece of 25 equipment to show that they function properly in the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 45 1 field. And then they also carry a five-year 150,000 mile 2 warranty. 3 BOARD MEMBER CALHOUN: Another question. It's my 4 understanding the municipalities are no longer responsible 5 for the control that's taken out. 6 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF 7 HEBERT: Yes, sir. 8 BOARD MEMBER CALHOUN: Now, what about those 9 vehicles that the municipalities only accept? 10 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF 11 HEBERT: They are considered the owner, and they must 12 comply with the program. 13 BOARD MEMBER CALHOUN: Who enforces this? 14 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF 15 HEBERT: It's going to be the Air Resource Board. We will 16 do it through our periodic smoke inspection program by 17 checking records, cross-checking vehicles that are 18 documented to have devices on or retired or have been 19 replaced. And then as we get a little bit further into 20 the program by the heavy-duty roadside inspection, then 21 the vehicles will be cross-checked with what they're 22 supposed to have on them, or if they're supposed to have 23 been retired and the vehicle should not be in the fleet 24 any longer. 25 CHAIRPERSON LLOYD: Professor Friedman. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 46 1 BOARD MEMBER HUGH FRIEDMAN: There is a -- in the 2 proposed rule there is a compliance extension automatic 3 for an owner of "three or fewer" of these vehicles. That 4 is, they don't have to phase-in regardless of the model 5 year, as I understand it. And is that right? 6 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF 7 HEBERT: It's for each group. If they have less than four 8 vehicles, they don't have to comply with the 100 percent 9 requirement for each group. 10 BOARD MEMBER HUGH FRIEDMAN: I'm not clear on 11 that. 12 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF 13 HEBERT: Well, if they only have four vehicles, chances 14 are they either have, you know, in the same -- 15 BOARD MEMBER HUGH FRIEDMAN: No. They have fewer 16 than four. If you have four, there's no extension, as I 17 understand it. It's fewer than four. 18 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF 19 HEBERT: Fewer than four. 20 BOARD MEMBER HUGH FRIEDMAN: I don't want to 21 quibble, but you plucked a number. 22 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF 23 HEBERT: Fewer than four. 24 BOARD MEMBER HUGH FRIEDMAN: And Annette, suppose 25 the mix -- does it matter what the mix of those four model PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 47 1 years are? Some could be very old some, some could be 2 new -- of the three or two. But regardless of their model 3 year, they don't -- they don't have to meet or comply 4 until 2010; is that correct? 5 RETROFIT IMPLEMENTATION SECTION MANAGER STEELE: 6 This is Nancy Steele. 7 CHAIRPERSON LLOYD: Can you put the mic on? Is 8 your mic on? 9 RETROFIT IMPLEMENTATION SECTION MANAGER STEELE: 10 Yes. This for the model years 1988 to 2002, they would 11 have to comply by 2007. For 1960 to 1987 vehicles they 12 would comply by 2010. So they have one, two, or three 13 vehicles, those would be their final compliance dates. 14 BOARD MEMBER HUGH FRIEDMAN: So when you say 15 compliance extension, what do you mean? 16 RETROFIT IMPLEMENTATION SECTION MANAGER STEELE: 17 Rather than having to comply -- 18 BOARD MEMBER HUGH FRIEDMAN: Early. 19 RETROFIT IMPLEMENTATION SECTION MANAGER STEELE: 20 It would be difficult to figure out what 10 percent of 21 three is. So we thought it would be easier -- plus since 22 these are very small businesses, we also thought it might 23 help them out. 24 BOARD MEMBER HUGH FRIEDMAN: Well, 10 percent of 25 four is .5. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 48 1 RETROFIT IMPLEMENTATION SECTION MANAGER STEELE: 2 Well, because most of the compliance dates are 25 percent, 3 50 percent, 100 percent, actually, that first year is the 4 only one. 5 BOARD MEMBER HUGH FRIEDMAN: So one out of four? 6 RETROFIT IMPLEMENTATION SECTION MANAGER STEELE: 7 Yes. 8 BOARD MEMBER HUGH FRIEDMAN: How is "owner" 9 defined? I couldn't find a definition anywhere in the -- 10 but I may have just missed it. 11 RETROFIT IMPLEMENTATION SECTION MANAGER STEELE: 12 We're using the same definition as used by the heavy-duty 13 vehicle group. That means the owner is the person that 14 owns the vehicle legally and also has control over the 15 vehicles. 16 BOARD MEMBER HUGH FRIEDMAN: Or directly or 17 indirectly to affiliates? 18 RETROFIT IMPLEMENTATION SECTION MANAGER STEELE: 19 Yes. 20 BOARD MEMBER HUGH FRIEDMAN: It's broad. You 21 couldn't take a fleet and set up six or eight or ten 22 different entities, each of which owned three? 23 RETROFIT IMPLEMENTATION SECTION MANAGER STEELE: 24 Yes. 25 BOARD MEMBER HUGH FRIEDMAN: Not that anybody PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 49 1 would do that. But that covers it. Okay. Thank you. 2 CHAIRPERSON LLOYD: Dr. Friedman. 3 BOARD MEMBER WILLIAM FRIEDMAN: I just want to 4 get a better handle on numbers. In the state, how many 5 such vehicles are we talking about, total? 6 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF 7 HEBERT: It's about a little over 11,000. Between 11- and 8 12,000 right now. 9 BOARD MEMBER WILLIAM FRIEDMAN: And then of that, 10 how many owned are by entities with four or less vehicles? 11 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF 12 HEBERT: Four or less vehicles -- 13 BOARD MEMBER WILLIAM FRIEDMAN: I'm sorry. Less 14 than four vehicles. 15 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF 16 HEBERT: It's probably less than 1 percent, I would guess. 17 BOARD MEMBER WILLIAM FRIEDMAN: So you're talking 18 about 1,000 or so -- of the total number of vehicles, it's 19 going to be 1,000. 20 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF 21 HEBERT: Less than 1,000. 22 BOARD MEMBER RIORDAN: Less than 1,000. 23 BOARD MEMBER WILLIAM FRIEDMAN: And in the model 24 years '60 to '87, with the 12,000, how many are in that 25 category? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 50 1 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF 2 HEBERT: Just '60 to '87, not counting how big their 3 fleets are? 4 BOARD MEMBER WILLIAM FRIEDMAN: Just for 1960 to 5 '87 engine model years, in that group, how many of those 6 vehicles exist? 7 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF 8 HEBERT: It's about a third of the population, so that 9 would be -- 10 BOARD MEMBER WILLIAM FRIEDMAN: About a third. 11 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF 12 HEBERT: About 3,000. 13 BOARD MEMBER WILLIAM FRIEDMAN: And then '88 to 14 '93? 15 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF 16 HEBERT: '88 to '93 would be about 15 percent. Let me 17 look that up. It's about 15 percent. 18 BOARD MEMBER WILLIAM FRIEDMAN: So about 15 19 percent or so -- 20 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF 21 HEBERT: Is 15, one-five. 22 BOARD MEMBER WILLIAM FRIEDMAN: About 50 percent 23 or more is '94 to the present? 24 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF 25 HEBERT: Yes, sir. A little bit more. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 51 1 BOARD MEMBER WILLIAM FRIEDMAN: Thank you. 2 CHAIRPERSON LLOYD: What about the -- in the 3 summer you don't talk about the NOx benefits. But you're 4 assuming we're going capture some NOx benefits as well. 5 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF 6 HEBERT: Yes, sir. About -- depending on how all the 7 verifications lay out, between 15 and 30 percent NOx 8 reduction. 9 CHAIRPERSON LLOYD: That also depends on what 10 retrofit device they're going to use. 11 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF 12 HEBERT: It also depends heavily on repowers and 13 replacements. That's where the bulk of the NOx reductions 14 come from. 15 CHAIRPERSON LLOYD: So when you look at the 16 number of vehicles -- in terms of the number of 17 properties, when you talk about these 12,000 vehicles, how 18 many properties are we talking about? And then if we 19 bring that down, how many properties have three or less 20 vehicles? 21 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF 22 HEBERT: There's about 700 companies -- so 14 percent of 23 the companies have three or less. 24 CHAIRPERSON LLOYD: 14 percent, one-four? 25 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 52 1 HEBERT: Of the companies, but they don't have -- 2 CHAIRPERSON LLOYD: But 14 percent of those 3 companies then. Okay. So that's -- 4 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF 5 HEBERT: Of the 70 companies. 6 CHAIRPERSON LLOYD: That's what we're talking 7 about. How are they -- are they distributed evenly 8 throughout the state? 9 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF 10 HEBERT: Yes, sir. 11 CHAIRPERSON LLOYD: Yes. Professor Friedman. 12 BOARD MEMBER HUGH FRIEDMAN: One more question. 13 What are the owners of the 13 percent of the fleet, the 14 current contract-covered fleets that don't have a reopener 15 because of law change -- because of a change such as this? 16 What are they to do to recover the cost? 17 EXECUTIVE OFFICER WITHERSPOON: Professor 18 Friedman, because the rule is phased-in over a seven-year 19 period, we believe virtually all the contracts will open 20 at some point during that window. So even if there's not 21 an explicit reopener clause, there's both an opportunity 22 to request reopening before the contract lapses, and then 23 once the contract lapses, to increase the rate to recoup 24 the cost of having complied both before that lapse date 25 and subsequently. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 53 1 CHAIRPERSON LLOYD: Can I ask a question of the 2 witnesses? We have over 30 witnesses here signed up. Of 3 those, how many -- and I won't -- of the 700 companies, we 4 obviously have 100 here or less. So on the witness 5 list -- could you put your hands up in the audience -- 6 represent companies that have three or less? 7 BOARD MEMBER D'ADAMO: They're out driving trucks 8 today. 9 Mr. Chairman, what I'm wondering is maybe the 10 definition of what is a small company is too small, and 11 more of what's out there may be some of the smaller 12 mid-size operators that operate more. 13 CHAIRPERSON LLOYD: So if I -- 14 BOARD MEMBER D'ADAMO: If I could have that 15 information. 16 CHAIRPERSON LLOYD: So if I rephrase that to 15 17 or less, how many would go up? 15 or less. 18 (Thereupon, there was a show of hands.) 19 CHAIRPERSON LLOYD: One, two. Okay. 20 (Thereupon, there was a show of hands.) 21 CHAIRPERSON LLOYD: 50 or less. That's helpful. 22 EXECUTIVE OFFICER WITHERSPOON: Dr. Lloyd, a 23 comment on the witness list. I believe we don't have the 24 complete one before you, because there was another batch 25 of names including all of the environmental PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 54 1 representatives. So I think the witness list is more than 2 40 individuals. 3 CHAIRPERSON LLOYD: More than 40? 4 EXECUTIVE OFFICER WITHERSPOON: More than 40. 5 Four-zero. 6 CHAIRPERSON LLOYD: Thank you. 7 EXECUTIVE OFFICER WITHERSPOON: It's 45. 8 CHAIRPERSON LLOYD: I definitely don't have that 9 one. Thanks. 10 EXECUTIVE OFFICER WITHERSPOON: It's coming. 11 CHAIRPERSON LLOYD: With that, I better -- unless 12 there are any more questions, we better promptly move 13 ahead to the witness list. And I would like to call up 14 the first of the three witnesses signed up, Mark Leary, 15 Integrated Waste Management Board, Yvonne Hunter, and 16 Daniel Meyers. 17 Welcome, Mark, and thanks for coming. And thank 18 Linda and the Board and you for working diligently with 19 staff and helping us throughout this issue. So really 20 shows great teamwork. Thanks for coming today. 21 MR. LEARY: Thank you, Dr. Lloyd, and thank you 22 members for this opportunity to testify before you. 23 I am Mark Leary, the Executive Director of the 24 California Integrated Waste Management Board. I'm here to 25 provide testimony on behalf of our Chair, Linda PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 55 1 Moulton-Patterson. Unfortunately, the Chair is unable to 2 testify here today due to some recent arthroscopic surgery 3 that has precluded her from traveling to Sacramento. I'm 4 here to present her remarks. 5 It's a pleasure to be here today and have this 6 opportunity to discuss the proposed diesel particulate 7 matter control measures for the on-duty heavy-duty diesel 8 fueled solid waste collection vehicles. Our number one 9 mission at the Integrated Waste Management Board is to 10 protect public health, safety, and the environment for all 11 Californians. It's because of this mission that we share 12 your concern for California's air quality. 13 Our staff has been working diligently with the 14 Air Resources Board since the inception of this rule 15 making. As such, we want to gratefully acknowledge and 16 appreciate the ongoing efforts of the Air Board and have 17 greatly enjoyed the opportunity to work with your staff. 18 As a representative of the California Integrated 19 Waste Management Board, we support the Air Board rules in 20 this area. We look forward to continuing our work 21 together to address these air quality issues through our 22 cross-media affiliations. 23 We understand there's a definite need to reduce 24 diesel fuel particulate matter. As the former Mayor of 25 Huntington Beach and one of Governor Davis' appointees PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 56 1 representing the public sector, the Chair is sensitive to 2 the concerns of local jurisdictions and counties. Our 3 job, therefore, moving forward is a delicate one. 4 We are all currently enduring financial 5 limitations that impede our daily actions. Yet, it's my 6 intention to show good faith in resolving these 7 situations. It is precisely because of these concerns and 8 the uncertainty of the upcoming legislation that we hope 9 to work together to address these limitations. The Waste 10 Board is fully aware of the importance of clean air and a 11 clean environment and respect the Air Board's role in 12 managing and protecting California's air quality, just as 13 we value our own role as environmental stewards when it 14 comes to waste diversion and landfill monitoring. 15 The principal component of our stewardship is 16 defined by Integrated Waste Management Act of 1999 which 17 required California's jurisdictions to reduce landfill 18 disposal by 50 percent by the year 2000. Through the 19 planning of waste diversion efforts of local 20 jurisdictions, California has reached 48 percent on a 21 statewide average. And as a result, California now has 22 adequate disposal capacity for the next 15 years. 23 In addition, the Waste Board's implementation of 24 the Act has created a new materials management economy 25 based on the conservation and creative reutilization of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 57 1 our resources. This strategy has eclipsed the 2 disposal-based waste management system of the past and has 3 set the stage for substantial economic growth. 4 Currently, California's newly developed diversion 5 and recycling businesses amount to a $10 billion industry 6 consisting of 5300 enterprises and employs 85,000 7 Californians. Waste diversion's almost twice the economic 8 impact on a per-ton basis as waste disposal. Given this 9 growth in employment and business development, the Board 10 is continuing to pursue higher levels of waste diversion 11 as we strive for zero waste, which will ultimately benefit 12 California's economy and protect California's resources. 13 However, these efforts have resulted in placing 14 more diesel-powered waste collection vehicles and trucks 15 on our California roadways and created an unintentional 16 increase of particulate emissions, hence our support for 17 your rule. 18 In conclusion, I'd like to reiterate we are 19 committed to joining the Air Resources Board as we set the 20 appropriate policies in motion to guide the development of 21 a sustainable California. By doing so, I'm certain that 22 we can continue to work together and ensure all 23 California's resources are protected now and for future 24 generations to come. 25 On behalf of our Chair, Linda Moulton-Patterson, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 58 1 thank you for this opportunity to testify. 2 CHAIRPERSON LLOYD: Thank you very much, Mark. 3 Thank you. 4 Yvonne Hunter, Daniel Meyers, Mary Pitto. 5 MS. HUNTER: Good morning, Board members. I'm 6 Yvonne Hunter with the League of California Cities, and I 7 thank you very much for this opportunity to testify. 8 As you probably have heard from us and numerous 9 local governments, we were in strenuous opposition to the 10 rule as it was originally put out. The League, California 11 State Association of Counties, the Rural -- I'm sorry -- 12 Regional Council of Rural Counties -- I always get that 13 confused -- and the Solid Waste Association of North 14 America sent a letter in July outlining our concerns. The 15 concerns that -- and staff adequately reflected them -- 16 dealt with what we viewed was the inappropriate 17 requirements on local government to serve as the 18 enforcement of compliance arm of the ARB, in part in areas 19 over which we had no control. And to sort of add insult 20 to injury, the rule, the way we interpret it, put us on 21 the hook for penalties if our haulers didn't comply. 22 I need to specify also that I'm speaking on 23 behalf of my colleague Karen King from CSAC. She was not 24 able to attend, but she and I have been in close 25 communication. She asked me to say all of my remarks, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 59 1 save one at the end, applies to CSAC as well. 2 One of the key issues that local government 3 raised and that we talked to the staff about extensively 4 is how solid waste is regulated in local governments and 5 the roles that cities and counties have and do not have. 6 And the key thing is a distinction between those haulers 7 who operate under a contract or a franchise -- usually 8 it's an exclusive contract or franchise -- where we have 9 rate-setting authority, as opposed to those haulers who 10 operate under a business license, a permit, perhaps under 11 a franchise that's not exclusive, where basically the 12 hauler operates with the permission of the local 13 government, and that is it. The hauler establishes its 14 own price structure. It negotiates with businesses. 15 I'd say 98 to 99 percent of residential solid 16 waste is either collected by the local government itself 17 or through an exclusive franchise or contract, but a lot 18 of the commercial is collected through what's called open 19 competition. And in many instances while the hauler may 20 get a business license permit, we don't distinguish it 21 between them. And we perhaps can't even differentiate 22 them with a permit from those who ask for a permit for a 23 beauty salon. So we needed to distinguish those issues in 24 the regs. 25 I need to compliment and thank the staff. Your PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 60 1 staff -- you have great staff. And over the last month 2 we've had extensive conversations, e-mails, meetings with 3 them. They were very gracious with their time, generous 4 with their time. And the changes that they are proposing 5 clearly address all of our concerns. We think it makes it 6 a much better rule, and we would encourage you to adopt 7 those changes. And if you do, the League and CSAC will 8 remove our opposition. And the League -- I'm authorized 9 to go ahead and say that the League will enthusiastically 10 support the rule. 11 I also need to emphasize that our opposition was 12 focused on those operators that work through contract or 13 franchising, in no way reflected any opposition from 14 municipal-run operations. So the League is very happy to 15 work with you in getting any information out to local 16 governments about this rule, and we thank you very much 17 for your cooperation. 18 CHAIRPERSON LLOYD: Thank you very much, indeed. 19 Daniel Meyers. 20 I'm going to ask if people can keep their 21 comments to about three minutes, if you would. As I'm 22 looking ahead, I'm just doing the arithmetic here looking 23 ahead to the number of witnesses and multiplying. It's 24 pretty high so -- 25 MR. MEYERS: I will keep it brief. Good morning, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 61 1 and thank you for the opportunity to present today. 2 Again, my name is Dan Meyers, representing the city of 3 Los Angeles. I just want to say the city does support the 4 Board's goal to improve air quality throughout the state. 5 And the city is committed to complying with all fleet air 6 standards. In fact, clarification, I turned in a card in 7 opposition. In fact, the city supports the rule in 8 general. We do oppose certain language of the rule, 9 specifically hearing Yvonne from the League of Cities, of 10 the role of municipalities. Cities strongly opposes 11 making the municipalities responsible for complying with 12 the Air Resource Board and strongly opposes making cities 13 liable for violations and fines. 14 CHAIRPERSON LLOYD: So with the modification 15 you're okay? 16 MR. MEYERS: Absolutely. 17 CHAIRPERSON LLOYD: Great. 18 MR. MEYERS: So with that -- I mean, that pretty 19 much summarizes it. 20 CHAIRPERSON LLOYD: That's all we need. That's 21 great. 22 MR. MEYERS: Thank you. See, that's brief. 23 CHAIRPERSON LLOYD: Thank you. 24 Mary Pitto, Harry Schrauth, Michael Mohajer. 25 MS. PITTO: Good morning. I'm Mary Pitto with PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 62 1 the Regional Council of Rural Counties, and I appreciate 2 this opportunity. I'm here to just let you know that with 3 the changes as staff has proposed, the Regional Council of 4 Rural Counties are withdrawing our opposition and support 5 the rule. But I especially -- we would like to note that 6 we would like to maintain the original phase-in schedule 7 for older vehicles as they're likely to be -- the three or 8 less vehicles because they're likely to be in our 9 jurisdictions. We represent 30 rural counties. Thank 10 you. 11 CHAIRPERSON LLOYD: Thank you very much indeed. 12 Does staff have a problem with that? 13 EXECUTIVE OFFICER WITHERSPOON: It will come up 14 during the environmental testimony later. 15 CHAIRPERSON LLOYD: Okay. 16 MR. SCHRAUTH: Chairman Lloyd and members of the 17 Board, I'm Harry Schrauth with the Recycling Solid Waste 18 Program, Supervisor for the city of Oakland. The city of 19 Oakland appreciates the assistance of your staff in 20 working with us on our previous objections to the role of 21 municipalities. And with the proposed changes that we 22 heard today, the city of Oakland would support the staff 23 recommendation. 24 CHAIRPERSON LLOYD: Thank you very much indeed. 25 Mike Mohajer, Yvette Agredano, and Sam Mendoza. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 63 1 MR. MOHAJER: Good morning, Chairman Lloyd, and 2 members of the Board. I'll do my best to be within the 3 three minutes. My name, for the record, is Mike Mohajer. 4 I'm with the Los Angeles Integrated Waste Management Task 5 Force. Our Task Force was formed pursuant to California 6 Integrated Waste Management Act and its members include 7 appointees of the California Board of Supervisors, League 8 of Cities, South Coast AQMD, City of Long Beach, as well 9 as the waste industry. 10 I would like on behalf of the L.A. County 11 Department of Public Works and the Task Force to express 12 our appreciation to you and your staff in being so 13 responsive to some of our comments that was expressed in 14 the two letters that was forwarded to you in August 21st 15 and September 11th, 2003. Not having seen the specific of 16 the proposed amendment that staff discussed here -- 17 however, I have been in the background involved, that's 18 why on the card I said I'm not opposing it. I'm not in 19 favor of it because I haven't seen the written language, 20 and hopefully after this period we'll get a chance. 21 But having said that, some of the rumors that I 22 have heard are that -- there are three areas that we do 23 have concern. The first one, we believe the information 24 that the ARB staff is looking for can be obtained from 25 local enforcement agencies that are approved by the Waste PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 64 1 Board pursuant to Section 40130 of the Public Resources 2 Code and 71332 of the Title 14 of the Code of Regulations. 3 In reference to Los Angeles County, you also note 4 the implementation that waste collection in a majority of 5 the cities as Yvonne mentioned for the commercial is open 6 market and in the unincorporated areas are also open 7 market. So it made it very difficult for municipality, 88 8 cities, and the county unincorporated area to enforce 9 those. So I was real pleased to hear that compliance has 10 been eliminated. But it is still -- in reference to the 11 Section 2021.2, I would say paragraph B that still remains 12 that it be submitted -- information submitted to us by the 13 haulers are wrong, then the municipalities are going to be 14 subject to penalty. 15 And lastly, I saw this revised language that as 16 far as the scope of applicability is concerned, I saw some 17 language that now Air Board is expecting that the cities 18 and the contractors negotiate a new rule. And our 19 position is that really the contracts between the 20 municipalities and the haulers are -- that is where it 21 stops. And the Air Board doesn't need to be involved, 22 even indicating as it's indicated in this scope of 23 applicability. 24 So hopefully we can work with you. But again, I 25 want to express thanks very much for everything your staff PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 65 1 has done, a substantial change from original draft. 2 CHAIRPERSON LLOYD: Thank you very much indeed. 3 Yvette Agredano, Sam Mendoza, Frank Caponi. 4 I notice here you've got oppose here. 5 MS. AGREDANO: Yes, that's correct. 6 CHAIRPERSON LLOYD: Although when we had the 7 representative of the League of Cities, SWANA was a piece 8 of that. Can you clarify why you're one of the members of 9 the signing of that opposing and when, in fact, we had 10 Yvonne Hunter testify she's changed her mind. 11 MS. AGREDANO: Well, it is correct. Yvette 12 Agredano representing the California Chapters of SWANA. 13 It is correct that we submitted a joint letter in 14 opposition of the rule back in July with the League of 15 Cities and CSAC and CRRC. However, although we do 16 appreciate staff working with us to address those 17 concerns, the California Chapters of SWANA still do have 18 some concerns with the proposed regulations. And you 19 should have before you a letter dated September 23rd 20 detailing our concerns, so I will just summarize them here 21 for you. 22 The first concern that we have -- it's more of an 23 alternative proposal. And that is that the information 24 that the ARB is seeking to gather on haulers, under Title 25 14 of the California Code of Regulations, that is already PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 66 1 designated to the local enforcement agencies. Under 2 Section 17332, LEAs are required to maintain a complete 3 listing of all persons holding approvals to provide solid 4 waste collection services within its jurisdiction. 5 Currently, the LEAs maintains that list, and it includes 6 most, if not all, of the information that the ARB is 7 seeking under these proposed regulations. 8 We feel that the regulations should be amended so 9 that the ARB works solely with the LEA, instead of with 10 local governments to gather the information. Since before 11 you had proposed regulations, local governments would only 12 have to provide information on those haulers for which 13 they regulate the rates. We're wondering where the ARB 14 would receive the information on the haulers for which 15 local governments do not regulate the rates. And it is my 16 impression that the ARB would collect that information 17 from the same reports as provided by the LEA. So we are 18 just wondering why the LEA cannot provide the information 19 on all haulers. We feel that failure to amend the 20 regulations in this manner will result in the duplication 21 of efforts and ineffective application of state and local 22 resources towards gathering this information twice. 23 Our second concern is that we are currently 24 opposed to the section under 2021.1 which states 25 noncompliance by a municipality would have them subject to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 67 1 penalties. We feel that this proposed rule would subject 2 local governments to penalties for failure to submit the 3 proper reports or for submitting a late report, which may 4 be a result of haulers not providing the proper 5 information to these municipalities. We feel that this 6 noncompliance language should be taken out of the proposed 7 regulations. And we would be willing to work with staff 8 further on these two issues. And I will be available for 9 questions if you do have any. 10 CHAIRPERSON LLOYD: Thank you. 11 Staff, any comments? 12 EXECUTIVE OFFICER WITHERSPOON: We looked at the 13 issue of adding local enforcement agencies -- that's what 14 LEA stands for -- to the regulations, and we were 15 concerned that as a group that they were unaware of these 16 late-breaking discussions and not had an opportunity to 17 represent themselves in the discussion. It could arguably 18 create a notice issue for us and a clout over the 19 regulation. We do believe that the whole subject of 20 reporting is something that we're going to work our way 21 through in the implementation process. And as the witness 22 alluded, we, of course, will draw on every resource 23 available to us to get the data we need. You will hear 24 later testimony from industry seeking a BACT report on how 25 it's going, and we'll use every source available. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 68 1 With respect to the penalty provision, it's only 2 a penalty if the local governments do not provide the 3 information that's required of them. And our intent is 4 that's principally when they're the owners of the 5 vehicles -- and we would not go after them, enforce 6 against them for something that the haulers did not do. 7 It's just there for completeness. I think it should stay 8 in the regulation, and we'll be judicious about the use of 9 it. There are times when local governments don't submit 10 anything at all, and we just need to send them a citation 11 to say, "You really do have to abide by this regulation. 12 You own these vehicles." 13 CHAIRPERSON LLOYD: Thank you. Thank you very 14 much. Sam Mendoza, Frank Caponi, Jed Mandel. 15 MR. MENDOZA: Good morning. My name is Sam 16 Mendoza with the city of San Diego. We own and manage a 17 fleet of 138 refuse haulers for the city. In 1999, we 18 embarked in a special dual fuel program with the money 19 from the ARB, Carl Moyer money, and the city of San Diego 20 was an expenditure of about $4.6 million in one of the 21 best available technologies at the time. 22 Since that date, we have banked 76.5 tons of NOx 23 by reducing -- using the dual fuel program. Additionally, 24 we have reduced the PM by 50 percent. We are asking for a 25 special consideration for the 77 trucks. We agree with PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 69 1 the PM proposal, and it is a good one. However, we have 2 only been in this program about two and a half years. Our 3 contractual obligation is for five years. And it seems 4 that it should not be outdated in a two-and-a-half year 5 cycle. All of the vehicles that we own other than that 6 are seven years, 70,000 miles, and they -- you know, they 7 stay that way. 8 The other concerns that we have, of course, we 9 paid 30,000 for each one -- each system on there. We 10 have -- in the Level 1 on the last one that we had, it 11 called for a reduction of 25 to 69 percent. We've 12 actually achieved 50 percent PM reduction, and that is 13 certified on your executive order which you should have a 14 copy of A 3260021 reduces it from .10 to .05 using the 15 dual fuel engine. We also showed that the engine does run 16 one tenth -- 1 to 10 ratio -- excuse me. A little bit 17 nervous. And we have supplied the documentation in front 18 of you to show that the delusion rate including the 1200 19 RPM diesel is 90.50. 20 The only request that we would have is that the 21 best available control technology for that engine be 22 modified slightly to allow a emergency fallback limp home 23 motor, rather than have it shut off on the highway and 24 stall in the middle of the road. What that does, of 25 course, it just allows us to get home. We can't operate PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 70 1 any longer than the specific time. It has to be repaired 2 before it sees the road again. 3 CHAIRPERSON LLOYD: Thank you. Questions? 4 Dr. Friedman. 5 BOARD MEMBER WILLIAM FRIEDMAN: So 62 percent of 6 your vehicles are spewing out diesel PM; right? I mean -- 7 MR. MENDOZA: Yes. 8 BOARD MEMBER WILLIAM FRIEDMAN: These are the 9 numbers. What would you like us to do about that? 10 MR. MENDOZA: The remaining fleet we are -- we do 11 agree with the program, and we will implement the PM 12 program as proposed. We don't have any problem. 13 The only consideration that we would like is for 14 going into this program early, you know, without any 15 mandate and cleaning up the air, which we've already 16 banked, you know, 76 tons of NOx, and we've reduced the PM 17 by 50 percent without having to do so. So all we're 18 asking for is for these 77 trucks that we still are in 19 contractual obligation is we would have some type of 20 consideration for the remaining three years, you know, or 21 four years that we have to pay these trucks off. 22 BOARD MEMBER RIORDAN: Excuse me, Mr. Chairman. 23 Has staff thought about this unique case? 24 EXECUTIVE OFFICER WITHERSPOON: It's a dilemma. 25 The vehicles that the witness is talking about are new PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 71 1 purchases, and new vehicles would have entered the fleet, 2 in any event, less clean than what was purchased, you 3 know, less NOx reduction. And so there were public moneys 4 applied. And the city of San Diego moved in this 5 direction with dual fuel and principally for the NOx 6 reductions. 7 The rule before you is a particulate control 8 rule, and we've tried to think through different ways of 9 giving them some flexibility, whether you excluded the 10 77 vehicles from your calculation as you went through the 11 percent that needed to be regulated or moved them to 12 different groups. But we're not completely convinced 13 that's overly burdensome since we're talking about 14 particulate effects, and the particulate is still there. 15 But if you want us to keep searching for the right 16 approach for this unique situation, we will continue 17 endeavoring to do so and try to come up with something in 18 the 15-day change period. 19 MR. MENDOZA: The reminder of the fleet will be 20 in compliance and also will all the future purchases. We 21 have no problem with the proposed regulation. It is a 22 good one. We agree with it. However, this one being not 23 even halfway through our cycle where we have to continue 24 to pay this for five years, we feel that we have started 25 early and we should receive some type of consideration for PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 72 1 it. 2 CHAIRPERSON LLOYD: I would like to take maybe 3 Ms. Witherspoon up on the suggestion that in this 4 particular case staff continue to work with the city and 5 see if we can come up with a mutually satisfactory 6 agreement and maybe report back to us on that. 7 BOARD MEMBER RIORDAN: I think that's only fair, 8 Mr. Chairman. 9 CHAIRPERSON LLOYD: Ms. D'Adamo. 10 BOARD MEMBER D'ADAMO: I just had a question on 11 one of the witness' last points. I'm not sure I 12 understood it, about the emergency situation with the 13 vehicle having to pull over. Could staff respond to that? 14 MR. MENDOZA: As it states is that it cannot 15 operate on diesel at any time. We are only asking for the 16 modification on these 77 trucks to allow us to limp home 17 or run on diesel, you know, when they stall, rather than 18 stalling in the middle of the road and having them towed 19 in. 20 EXECUTIVE OFFICER WITHERSPOON: The issue is that 21 we've defined BACT in the regulation to include 22 alternative fuel vehicles that are pure alternative fuels. 23 So this particular product does not meet our BACT 24 definition. You have two things you can do about that. 25 One is to change the BACT definition, which we would PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 73 1 oppose. And the other is to craft a different sort of 2 exemption, a different kind of flexibility that recognizes 3 the unique characteristics of these vehicles. They have a 4 limp home mode and in pure diesel operation are not 5 uniformly alternative fuel vehicles. 6 CHAIRPERSON LLOYD: Thank you. Professor 7 Friedman. 8 BOARD MEMBER HUGH FRIEDMAN: Is this a unique 9 situation? 10 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: There 11 have not been a real large number of these types of 12 engines sold, and the company that makes them happens to 13 be in San Diego. So I think that their market has been 14 more received in that area. 15 BOARD MEMBER HUGH FRIEDMAN: But it's not a broad 16 widespread problem? 17 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Not 18 real broad, no. I don't think that exact technology is 19 even being manufactured any more, if I'm correct. 20 There are different types now that have better 21 environmental qualities. But the issue with this is that 22 the vehicle actually runs on both fuels all the time. The 23 limp home mode thing is what happens if you run on natural 24 gas. It can get home on diesel. That's something we can 25 deal with. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 74 1 But if you look at the emission levels of the 2 engines, they're certified at about half of the standard 3 that a normal diesel would be. But that's the same 4 standard, by the way, that transit buses are certificated 5 to. And we're requiring transit buses to retrofit with 6 particulate filters as well. So these match the newer 7 transit bus performance, and we require that retrofit on 8 them. 9 So I think the issue from our standpoint would be 10 to try to take a look at the timing. And when you see 11 these 25, 50, 75, 100, maybe there's a way of shoving them 12 to the end and giving them more time to spread out the 13 money because they did do things to try to get the NOx 14 emissions down voluntarily early on. And maybe that's an 15 equitable way of dealing with the engines. We could do 16 that, with your direction in 15 days try to craft 17 something that would make -- 18 CHAIRPERSON LLOYD: Would that seem to be 19 promising? 20 MR. MENDOZA: Sure. That's great. Anything 21 would be promising. We really don't have anything at all. 22 So any consideration we would be -- would be given -- 23 especially in light of the state's budget, our department 24 got cut $1.7 million this year, so we're scrambling. 25 Anything you could do would be very helpful. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 75 1 CHAIRPERSON LLOYD: I think we could direct the 2 staff to work closely here and see about the issues Tom 3 was raising as well. Thank you very much. 4 MR. MENDOZA: Thank very much, Dr. Lloyd, Board. 5 CHAIRPERSON LLOYD: Frank Caponi, Jed Mandel, 6 Emily Brown. 7 MR. CAPONI: I'm Frank Caponi, and I'm 8 representing the L.A. County Sanitation Districts. We 9 support ARB's efforts in reducing diesel PM. In fact, we 10 are part of ARB as well as the South Coast AQMD in testing 11 PM removal technologies as well as alternative engines on 12 both off-road and on-road vehicles. 13 The card that Dr. Lloyd has in front of him 14 presents us in opposition to this rule. I'm willing to 15 remove that opposition conditionally pending some changes 16 to the rule. We support generally the -- we support the 17 staff's recommendations. I think Yvonne Hunter had put it 18 appropriately when she said that the municipalities cannot 19 be the enforcement arm of the ARB or any regulatory 20 agencies. That's really what we're here today to speak 21 to. 22 The San district does not operate any residential 23 or commercial collection vehicles. We are here, though, 24 to represent our -- or speak for our member cities as well 25 as our local governments. These governments and local PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 76 1 cities cannot be held to enforce the rules of the ARB or 2 any regulatory agency. 3 But also it's important that I think we have an 4 opportunity today to get this right because we're not only 5 speaking of this rule, but there will be other rules 6 coming up before you that will address retrofitting out 7 fleets and holding municipalities responsible. So with 8 that regard, we hope that you accept the staff's 9 recommendations. 10 Just some specifics about the staff 11 recommendations, on Section 2020, they propose to change 12 some definitions as necessary. We cannot support that 13 language. We do not support any definition that we don't 14 have in front of us and that we can't see the actual 15 language. So hopefully in the next 15 days we can see 16 that language and fully support the rule. 17 We support all of the revisions that remove any 18 of the compliance on the part of the municipalities. 19 You've heard some previous testimony about reports -- 20 reporting requirements that the municipalities will still 21 need to make. We hope you will listen to those comments. 22 We don't think there should be any reason for any 23 duplicative requirements of the municipality. If they're 24 collecting this information from other sources, then 25 that's where the collection should be. We shouldn't have PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 77 1 dual reports here. 2 And then finally, there's a Section D of 2021 3 which holds the municipalities similarly responsible for 4 incorrect information. The municipality really cannot be 5 held to bad information that's given to them by haulers or 6 any other sources. So in concert with removing some of 7 the other provisions, we also support the removal of 8 Section D. 9 And with that, as I said, we would remove our 10 opposition and fully support the rule. Thank you very 11 much. 12 CHAIRPERSON LLOYD: Thank you. 13 Comments from staff? 14 EXECUTIVE OFFICER WITHERSPOON: It's the same 15 comment as before. It's the completeness issue for 16 enforcement. It would be our intent to only go to a 17 penalty choice when a local government was not reporting 18 about its own vehicles accurately -- about its own 19 vehicles, but not to seek to reach through them to the 20 haulers. 21 CHAIRPERSON LLOYD: Thank you. 22 Jed Mandel, Emily Brown, David Huerta. 23 We were just confused here, Jed, looking at your 24 letter and looking at what box you checked. 25 MR. MANDEL: It's always prudent to be neutral PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 78 1 before this Board. 2 (Laughter) 3 CHAIRPERSON LLOYD: You think you'll get better 4 treatment if you put neutral rather than opposed? 5 MR. MANDEL: I think I know better than that. 6 But as you'll hear in a moment, one of the reasons we're 7 neutral is because we are strong proponents of the 8 retrofit programs. We have concerns about some of the 9 implementation issues of this particular proposal. 10 But for the record, my name is Jed Mandel. I'm 11 here today on behalf of the Engine Manufacturers 12 Association. EMA's members include principal 13 manufacturers of the diesel fuel and alternative fuel 14 engines used in the solid waste collection vehicles 15 covered by today's proposal. 16 As I said a moment ago, as I hope you are all 17 aware, EMA is a strong proponent of retrofit programs. We 18 are committed to working with ARB to develop a voluntary 19 incentivized retrofit program and other programs as a key 20 component of ARB's overall air quality improvement 21 strategy. 22 EMA supports retrofit programs that are 23 cost-effective, workable, and incentive-based, as opposed 24 to mandatory programs that enforce replacement, rebuild or 25 retrofit of engines before it makes economic or regulatory PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 79 1 sense to do so. 2 The proposed rule is a mandatory program, and 3 therefore I am opposed to it. EMA is opposed to it. But 4 we do think it could be modified and become an 5 incentivized program, which we would support. In 6 addition, as we detailed to you in separate written 7 comments that were submitted to the record before the 8 Board, the proposed rule is inconsistent with both federal 9 and state law. Even if the proposed rule were authorized, 10 it is seriously flawed because it fails to require the 11 availability and use of ultra low sulfur diesel fuel, a 12 subject that I've spoken to you about on many different 13 occasions. But with retrofit programs, I think you know 14 how strongly we support the use of clean diesel fuels. 15 At present, ultra low sulfur diesel fuel will not 16 be required on a statewide basis until September 2006. 17 The proposed rule, however, would be implemented sooner. 18 Without the availability of ultra low sulfur diesel, the 19 desired PM retrofit technologies cannot function. ARB has 20 recognized the linkage between the availability and use of 21 ultra low sulfur diesel as an enabler of PM retrofit 22 technology on many occasions and specifically in the urban 23 bus rule. In that rule, the staff worked to assure that 24 ultra low sulfur diesel would be available for transit 25 fleets and adopted a rule requiring the use of ultra low PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 80 1 sulfur diesel. You should do the same here. 2 Despite our concerns about the rule, engine 3 manufacturers want to work with ARB to implement cost 4 effective, voluntary programs and encourage fleet owners 5 to turn over and upgrade their motor vehicle fleets to 6 lower-emitting technologies as soon as practicable. EMA 7 fully recognizes the potential benefits created by 8 applying new technology to existing engines. Engine 9 manufactures who develop and are developing new 10 technologies, many of which have applications existing 11 designs. Voluntary incentivized retrofit programs can be 12 a cost effective and practical tool for heaving emission 13 reductions and should be a key component of ARB's overall 14 program. 15 It would be our recommendation that the Board 16 direct the staff to implement this and similar retrofit 17 programs that you'll be hearing in October. I believe 18 there's one in November. It's the United Airlines Full 19 Travel Act, I think, coming back here to see you 20 frequently. But we would encourage you to direct the 21 staff to work with all stakeholders on an effective and 22 voluntary incentivized program instead of a mandatory 23 program. I'd be pleased to answer any questions. 24 CHAIRPERSON LLOYD: Thank you. Any questions or 25 comments? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 81 1 You're saying you want to work voluntarily. We 2 trust you to work with us. This is the same industry that 3 we're going to come back in a few months and see how you 4 complied with the consent decree. 5 MR. MANDEL: There are members of the industry 6 who are subject to that consent decree. But the industry 7 as a whole, including those manufacturers, they are 8 absolutely committed and incentivized to retrofit-type 9 programs. And just to give you some sense, we are working 10 literally as we speak on developing a program that we can 11 roll out on a nation-wide basis, which obviously there 12 would be very significant benefits to California. We're 13 very serious about doing this. We're trying to figure out 14 a way for it to make the most economic sense. Obviously, 15 there's a question of who pays for it and how it gets paid 16 for. But as the cliche goes, we think the program has 17 legs. We're very concerned about the way in which it's 18 implemented on a mandatory basis and obviously concerned 19 about the statutory authority in California. 20 CHAIRPERSON LLOYD: Can we ask Ms. Walsh to 21 comment on that? 22 GENERAL COUNSEL WALSH: Yes. Mr. Mandel has 23 raised two issues, one having to do with federal law. 24 Under federal law states are generally preempted from 25 adopting standards for new motor vehicles and motor PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 82 1 vehicle engines. Of course, California enjoys the ability 2 to have a waiver of that preemption. In this case we're 3 not really travelling on that ground in any event. The 4 regulations for the most part affect used vehicles, 5 vehicles that are in use. And there is no federal 6 preemption that would effect this Board's ability to 7 regulate in that arena. 8 State law gives this Board ample authority to be 9 addressing this particular problem of diesel PM. In the 10 statutory provisions for addressing toxic air containments 11 such as particulate matter, there's specific authority to 12 adopt regulations that apply best available control 13 technology to motor vehicles and motor vehicle engines in 14 a written comment submitted on behalf of EMA. There's an 15 intimation there that authority is limited to new motor 16 vehicles. But that's based on some language taken from 17 the statute out of context. The statute itself is very 18 broadly drawn in terms of this Board's authority. And 19 there's no question that we have the authority to address 20 PM emissions -- toxic PM emissions from used motor 21 vehicles in a fashion that staff has proposed. 22 There is a statutory provision that is sited also 23 in the written comments from EMA related to the use of 24 certified devices on in-use vehicles. That statute, which 25 does provide a limitation that requires specific statutory PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 83 1 authorization to require those types of devices on used 2 vehicles, was adopted by the Legislature pre-1975 and a 3 very specific factual context that does not apply here. 4 We now are in a world where since that statute 5 was adopted, we have not only the Toxic Air Contaminant 6 Act, which is a 1983 vintage statute with clear direction 7 to this Board to attack the emissions of toxic air 8 contaminants from motor vehicles, new and used, also 9 provisions in state law in the same chapter that the 10 specific NOx device language cited in the EMA's letter 11 comes from which directs this Board to attack emissions 12 from used heavy-duty diesel vehicles with a specific 13 direction to adopt maximum controls for those vehicles, 14 and this would be used vehicles. That statute is a much 15 later adopted statute. And to the extent Section 43600 16 would require specific legislative authority, I think you 17 have it there in Section 43701 to do exactly what staff 18 has proposed here. 19 CHAIRPERSON LLOYD: Thank you. 20 Comments? 21 Dr. Friedman. 22 BOARD MEMBER WILLIAM FRIEDMAN: Can we get a 23 comment about the low sulfur issue? According to the 24 numbers that I asked for earlier, about 13 percent of the 25 vehicles are to be -- implementation is to occur prior to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 84 1 uniform low sulfur diesel being available. What is 2 staff's comment about that? 3 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF 4 HEBERT: Well, if you look at best available control 5 technology there was instances where the operators/owners 6 can choose solutions that do not require the use of ultra 7 low sulfur diesel fuel. There is technology in our 8 verification pipeline that are emitable to commercial 9 diesel fuel and ultra low sulfur diesel fuel. So we 10 decided not to force the fleet-wide use of ultra low 11 sulfur due to various issues about delivery, you know, 12 price increases or above the standard commercial diesel 13 fuel price. So we decided to leave it up to the owner in 14 selecting which technology you wanted to go with or which 15 option you wanted to go with, whether or not you would 16 switch over to ultra low ahead of the 2006 schedule. 17 EXECUTIVE OFFICER WITHERSPOON: The regulation 18 also carries within it the authority of the Executive 19 Officer to waive the device requirement if the fuel is not 20 available. And so we already know what the current 21 distribution of the diesel fuel is, and it would be sort 22 of an automatic process. If these fleets were located in 23 far flung rural areas, we couldn't even contemplate going 24 to the trap requirements until the fuel is there. And 25 either that would cause us to grant the one-year exemption PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 85 1 or to say just don't do Level 1 or talk about other 2 possibilities like the rebuilds and the retirement. 3 CHAIRPERSON LLOYD: Ms. D'Adamo. 4 BOARD MEMBER D'ADAMO: How is a fleet operator to 5 know what to do as far as timing? I imagine we're not 6 going to know and neither are they until they're butting 7 up against a deadline, specifically in a situation where 8 you expect it may become commercially -- the fuel may 9 become commercially available. 10 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: I think 11 one thing is that in the major urban areas the fuel is 12 virtually available now, and virtually anybody can get it. 13 So for the vast majority of these vehicles, we know fuel 14 is there. And these are secondary fuel vehicles. They 15 can use low sulfur, should they choose to go with trap 16 retrofit approach on some of the vehicles. And, of 17 course, that is only essentially two-and-a-half years away 18 before it would be the only fuel in the marketplace. 19 So what we're dealing with here is the need in 20 some limited instances to perhaps give these one-year 21 exemptions to let people that are having trouble getting 22 into rural areas, et cetera, delay until mid '06, in which 23 case the fuel is available. And that's no longer an 24 issue. 25 EXECUTIVE OFFICER WITHERSPOON: I asked staff to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 86 1 put the schedule back up so you can see the years in which 2 the control requirements hit for the different model year 3 realms. We're talking about that '88 through 2002 family 4 with four and five implementation dates and low 5 percentages where traps are certified, and traps are only 6 certified now for '94 and newer. 7 BOARD MEMBER WILLIAM FRIEDMAN: That's 13 percent 8 of the total, according to the numbers you gave me before, 9 are involved in that number. Because you told me there 10 were over 50 percent of all these vehicles in that '98 and 11 2002 category, and now you're talking about 35 percent or 12 55 percent. That's 1,000 vehicles. 13 EXECUTIVE OFFICER WITHERSPOON: What I'm getting 14 at is that where traps do not exist, either they are not 15 required at all and you move to another BACT 16 interpretation, such as rebuilding the engine or 17 repowering the engine -- I mean or replacing the vehicle, 18 if there's a hard requirement to comply or the trap is 19 available but the fuel is not, in which case the trap 20 installation requirement can be waived based on the 21 geographical location of the fleet until fuel is 22 available. 23 BOARD MEMBER WILLIAM FRIEDMAN: It sounds like 24 there's going to have to be -- 25 MR. MANDEL: It makes no sense. There is ultra PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 87 1 low sulfur diesel generally available all to states. It 2 makes sense to require its use, at least choosing to use 3 PM aftertreatment technologies, which are very cost 4 effective, reasonable approaches. That is required. 5 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: It is 6 essentially required because the way BACT works is if the 7 trap is available, a filter is available for one of your 8 engines. And that group you're talking about, Dr. 9 Friedman, that's the '94 and newer one. If it's 10 available, then you use the device. And you can only use 11 the device if the fuel's available. So what's going to 12 happen in most of the areas the fuel is available, the 13 decision that you have to use the device means you have to 14 switch to ultra low sulfur fuel. And it's only in those 15 instances where it's simply not available at a reasonable 16 price in that area, which is outside the major urban areas 17 there would be a need to say, "Well, gee, without the 18 fuel, you can't use the device." 19 The choice is at that point would be go to a 20 lower efficiency device or get a delay because the fuel is 21 not available. No device works on your equipment. And 22 that, of course, delay would only be good until '06 23 because that's when everybody has it available to them. 24 And if you look at the phase-in, you can see 25 there's flexibility to move the vehicles around. By '06 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 88 1 you're only doing 50 percent in that period. So if you're 2 having problems and you want to avoid the trap because you 3 can't get the fuel for a couple of years, you can focus on 4 some of the other vehicles that have retrofit or other 5 options available that don't require low sulfur fuel. 6 There's flexibility here to get around most of the 7 situations, and I think there will be relatively few. 8 MOBILE SOURCE CONTROL DIVISION CHIEF CROSS: I'll 9 remind you of the concern staff has is the pricing of the 10 fuel when you get into mandating. As you try to mandate 11 it, you get in situations where folks have copied markets, 12 and the waste haulers are concerned about that. 13 CHAIRPERSON LLOYD: Yes, Mr. Calhoun. 14 BOARD MEMBER CALHOUN: You mentioned the fact 15 that the industry is currently working on a program to 16 roll out nationwide. Is that a retrofit program? 17 MR. MANDEL: Yes. 18 BOARD MEMBER CALHOUN: When do you expect to have 19 it in place? 20 MR. MANDEL: I'm hesitant to over-promise because 21 we are really looking at developing it now and asking for 22 proposals from contractors and consultants to work with us 23 how to do it. So in fairness, I think we're still a bit 24 away from being able to share with you the details of it, 25 but we are -- it is on our agenda. We are working on it PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 89 1 as we speak. And I suspect being able -- before we can 2 come back to you and have some -- we still might be 3 six months to a year away. This is not an insignificant 4 program as you can imagine. 5 CHAIRPERSON LLOYD: This really is an incentive 6 to keep you on track in that process. 7 MR. MANDEL: You may want to look at it that way, 8 yes. If I could, Dr. Lloyd, just make one brief comment. 9 I know you're running short of time. I do want to take 10 some credit to make sure that we engage Kathleen today on 11 her last day of work. So you know, we're going to miss 12 her, and take one opportunity to express to her our best 13 wishes. We've enjoyed working with her and wish her very 14 well. 15 CHAIRPERSON LLOYD: That's very nice of you. 16 Again, I would like to also to thank the industry for its 17 continued progress, continued work with us on the very 18 important issue. So in fact, we are coming to these much 19 cleaner diesel engines with retrofits as well as. So we 20 appreciate that. 21 MR. MANDEL: Thank you. We'll continue to work 22 on that. 23 CHAIRPERSON LLOYD: Emily Brown, David Huerta, 24 Graham Noyes. 25 MS. BROWN: Good morning. First, I'd just like PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 90 1 to say the proposed measure set forth the vital vision of 2 replacing the high diesel vehicles in most California 3 communities with cleaner trucks. And for this, I think 4 the ARB should be commended. I say this in spite of 5 Inform's overall opposition to this bill as written. 6 My name is Emily Brown. I'm a research policy 7 associate at Inform. I'm here today to briefly summarize 8 the full written testimony of our Senior Research Fellow, 9 Jim Cannon, which was submitted electronically this week. 10 Inform is a national nonprofit environmental 11 research organization that analyzes alternative fuel 12 vehicles, advanced technologies, and the public policies 13 that can ensure the most rapid progress towards the area 14 of sustainable transportation. 15 Inform's most recent focus has been on the U.S. 16 refuse truck sector. Our 2003 report, "Breathing Garbage 17 Trucks, New Technologies For Cleaner Air," is the first 18 independent assessment of local environmental impacts of 19 this predominantly diesel vehicle sector and the 20 opportunities for change. Two of the major findings of 21 Inform's report are that refuse trucks, one of the oldest 22 and most polluting vehicle sectors in the U.S., should be 23 an extremely high priority target for pollution reduction, 24 and also that natural gas is the cleanest fully-commercial 25 vehicle technology for the sector. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 91 1 It should come as no surprise to anyone here that 2 California was the site of 92 percent of the nearly 700 3 U.S. natural gas refuse trucks identified by Inform in 4 late 2002. Twenty-three distinct natural gas programs 5 were operating in California at that time. And since the 6 publication of our report, seven new natural gas refuse 7 truck projects have emerged in the state. 8 The use of the natural gas in these refuse trucks 9 is already helping California achieve three critical 10 public policy objectives. First, of course, it is 11 reducing air pollution. This is not only PM, the focus of 12 this rule, but also nitrogen oxides and hydrocarbon. And 13 it's doing this with engines that are up to 98 percent 14 quieter than diesel trucks. Secondly, the use of natural 15 gas in refuse trucks is helping California achieves its 16 goal of reducing the state's dependence on foreign oil. 17 And finally, expanded use of natural gas is propelling 18 California along the road to a hydrogen cell future due to 19 the synergies between these fuels. 20 Regulatory agencies in California have played a 21 role in the progress to date by providing strong 22 regulations and incentives that have driven the 23 alternative fuel vehicle market. A pioneering role for 24 the refuse truck sector from the Air Resources Board could 25 provide vital support for the shift to clean alternative PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 92 1 fuel vehicles that is already underway. Unfortunately, by 2 focusing almost exclusively on diesel technology, the 3 current version of the program assumes a diesel fuel 4 future for the sector and misses a vital opportunity to 5 truly promote the best available technologies for PM 6 emission reductions reflected in an equally viable 7 alternative fuel -- 8 BOARD MEMBER HUGH FRIEDMAN: Ms. Brown, you're 9 allotted time has expired. Could you -- 10 MR. BROWN: The Air Resources Board can shape a 11 much more effective regulation by eliminating the third 12 path, best available control technology definition; by 13 eliminating the program exemptions for fleets pursuing the 14 diesel path; by shortening the program implementation 15 period and eliminating the automatic extension for the 16 oldest and dirtiest programs; and by strengthening the 17 benefits to operators choosing to switch to alternative 18 fuels. Thank you. 19 BOARD MEMBER HUGH FRIEDMAN: Any questions? 20 Comments? 21 Mr. Huerta, city of Fremont. 22 MR. HUERTA: Good morning. My name is David 23 Huerta. I'm with the Environmental Services Division of 24 the city of Fremont. We're pleased with the proposed 25 changes that staff has made that will pull the city out of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 93 1 the enforcement role that had been envisioned earlier. 2 It does leave one small concern that still we 3 have to deal with, which is we just recently negotiated a 4 contract with our waste hauler, and the contract contains 5 provisions for the use of an alternative fuel engineered 6 to reduce emissions. And this cost has already been 7 rolled into our contract. So with the overlay of 8 additional rules, it's going to make it rather complicated 9 to try to separate out exactly how much it costs. That 10 is, how much this is going to cost. This will also be 11 even more complicated since we're getting radically 12 different information as to cost estimates from our 13 hauler. I just would hope that this information is taken 14 into consideration. Thank you. 15 BOARD MEMBER HUGH FRIEDMAN: Any question or 16 comment? 17 Thank you. 18 Mr. Noyes, and then Stephanie Williams. 19 MR. NOYES: Good morning, members of the Board. 20 Graham Noyes from World Energy. We're the largest 21 supplier of biodiesel in the country. I had a brief 22 presentation to give -- that basically focuses on an 23 alternative measure, basically alternative performance 24 based option that we have throughout the process -- 25 particularly over the last six months or so been strongly PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 94 1 recommending as a way to build some additional 2 flexibility, some more cost effectiveness, while actually 3 realizing larger PM reductions than the rule would as 4 proposed now. 5 (Thereupon an overhead presentation was 6 presented as follows.) 7 MR. NOYES: I will be speaking using biodiesel as 8 an example, and biodiesel's verified federal reduction 9 numbers as an example. But this option would be equally 10 available using the pure NOx and aquazol, potentially a 11 Fisher-Tropsch if it went through the CARB program. 12 --o0o-- 13 MR. NOYES: I'm going to move through this 14 presentation very quickly because I appreciate your time 15 restraints on this. On this slide, the key factor is on 16 the CARB verification program for alternative diesel fuels 17 that were going through. They're still in the process. 18 That is not complete. So I'm using the federal 19 verification numbers that have been confirmed and 20 complete. 21 In terms of where biodiesel now is in the waste 22 collection industry. It's been used for years quite 23 successfully by a large number of fleets that are in 24 support for it because it's essentially a fuel retrofit 25 option. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 95 1 --o0o-- 2 MR. NOYES: In formulating this proposal, what we 3 tried to do was use the existing rule as a floor, 4 recognize all of CARB's goals in this, and not sacrificing 5 any of those goals. In particular, at least hit the PM 6 reductions that the proposed rule in its present form 7 would; not increase NOx or any other emissions; utilize 8 CARB procedures to determine what alternative fuels would 9 contribute to this; reduce the compliance at least to some 10 fleets; compliance cost to some fleets; and also provide 11 the collateral benefits that alternative diesel fuels can 12 provide in terms of reducing petroleum dependence and 13 global warming contribution. 14 --o0o-- 15 MR. NOYES: Our change was basically a 16 performance-based option that said given the inventory of 17 the particular fleet, if that fleet should choose to use 18 an alternative diesel fuel that's completed CARB's interim 19 procedure for certification of emission reductions for 20 alternative diesel fuels and that fleet can show that the 21 PM reductions that they would achieve using that 22 alternative fuel fleet-wide would equal or exceed the PM 23 reductions that the schedules would provide, they be 24 allowed that option. Essentially, if they can reduce PM 25 as much through another route that's CARB approved, they PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 96 1 should be entitled to do that. 2 --o0o-- 3 MR. NOYES: The details of this have been 4 submitted to CARB staff. We're not going to do a lot of 5 math up here. Just provide the chart and summaries. To 6 date, I have not heard that any of the technical analyses 7 was incorrect, and I have built in the assumptions into 8 this presentation so they are obvious and straightforward. 9 BOARD MEMBER WILLIAM FRIEDMAN: Your time has 10 elapsed so if you can complete the presentation. 11 MR. NOYES: Very good. I'll move through it even 12 quicker than I have been already. I do think this is a 13 very significant topic. 14 BOARD MEMBER WILLIAM FRIEDMAN: It is. And we do 15 have in writing your correspondence, two pages. 16 MR. NOYES: Very well. I'll move through very 17 quickly. 18 We used all of the CARB exemptions in terms of 19 vehicle inventory, in terms of emission standards, in 20 terms of what the PM reduction would be realized within 21 the CARB program. And the key thing to look at here is 22 the first three years. The most difficult years for 23 implementation where a B20 solution can reduce PM 24 significantly. 25 --o0o-- PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 97 1 MR. NOYES: This shows it in chart form over what 2 the current CARB plan would do. If you add up the 3 difference between the first three years of the B20 and 4 the first three years of the best available control 5 technology, you see for this fleet a 700 pound reduction 6 in PMs. If you carry that out over the entire inventory, 7 as specified in the CARB report, you're talking about 139 8 tons of PM reduction that this option could deliver. 9 --o0o-- 10 MR. NOYES: And this translates at the 14.11 ton 11 rate to reducing 10 premature deaths of the methodology 12 contained in the reports. 13 --o0o-- 14 MR. NOYES: It's a win for the industry, cost, 15 flexibility and proven technology that they can switch to 16 overnight. 17 --o0o-- 18 MR. NOYES: It's a win for CARB because CARB can 19 get after the older vehicles that are not available for 20 retrofits. So it will enhance the PM reduction. It will 21 achieve CARB's other goals, and it will show that CARB is 22 flexible to consider alternatives and has a respect for 23 cost concerns. 24 I appreciate the extra time. 25 BOARD MEMBER WILLIAM FRIEDMAN: Thank you, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 98 1 Mr. Noyes. Has that been presented to staff, Mr. Noyes? 2 EXECUTIVE OFFICER WITHERSPOON: Yes. We've been 3 aware of this issue for some time. 4 BOARD MEMBER WILLIAM FRIEDMAN: And you've taken 5 this into account? 6 EXECUTIVE OFFICER WITHERSPOON: We have taken it 7 into account. The regulation as proposed by staff does 8 allow biodiesel to qualify as Level 1 and Level 2 controls 9 as a 25 percent, 50 percent control respectively. And as 10 Mr. Noyes indicated, they're in the verification process 11 now of certifying exactly what the return is. 12 I think the difference between us is that he'd 13 have staff move to an overall fleet average approach 14 instead of the model year groupings in BACT approach we 15 have recommended instead. We have issues about 16 enforceability with changing the structure of the rule. 17 We have issues of the resources that would be demanded of 18 the staff to carry that out as we move from a fleet of 700 19 companies to ever larger numbers as we continue moving 20 through the diesel risk reduction plan. So generally 21 speaking, it's not manageable for us, but we have not 22 precluded the use of biodiesel as a compliance option 23 within the rule we have recommended to you. 24 BOARD MEMBER WILLIAM FRIEDMAN: Any comments or 25 questions from the Board? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 99 1 Thank you, sir. 2 MR. NOYES: If I can simply follow up on that 3 point. In terms of compliance, we currently certify fuel 4 purchases for U.S. military, utility companies, state 5 fleets. It's one of the easiest compliance techniques 6 available. Biodiesel, pure NOx, probably Fischer-Trophs 7 will not hit that 25 percent floor. That 25 percent floor 8 is an arbitrary floor, and it's inhibiting the ability of 9 CARB to reduce its PM reduction. 10 BOARD MEMBER WILLIAM FRIEDMAN: Do you want to 11 respond? 12 EXECUTIVE OFFICER WITHERSPOON: Yeah, if I might. 13 When I indicated that biodiesel could qualify, I was 14 referring to B100, which isn't used as much because it's 15 more costly. And B20 probably does not rise to the level 16 of our first incremental control, which is at least 25 17 percent reduction in emission. B20 would not hit that. 18 I think one of the other things that concerned 19 staff is that all the biodiesel products increase NOx 20 emissions. This is a particulate matter control measure, 21 but we don't think it's detrimental the way we structured 22 it to NOx. We're going to get concurrent NOx reductions 23 in the 15 percent to 30 percent range. But were we to 24 create a pathway for biodiesel itself, for PM only, we 25 would have a NOx benefit. That would be something you had PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 100 1 to consider and mitigate. 2 BOARD MEMBER WILLIAM FRIEDMAN: Thank you again. 3 MR. NOYES: We were extremely concerned about 4 that as well. 5 BOARD MEMBER WILLIAM FRIEDMAN: Sorry? 6 MR. NOYES: The verification measure -- the CARB 7 verification measure in place for any of alternative 8 diesel fuels, including biodiesel, would be NOx. And 9 there is no NOx risk. The fuel would not be certified if 10 it was raising NOx. Thank you. 11 BOARD MEMBER WILLIAM FRIEDMAN: Ms. Williams. 12 CHAIRPERSON LLOYD: And then Tim Ward and Kelly 13 Astor. 14 (Thereupon an overhead presentation was 15 presented as follows.) 16 MS. WILLIAMS: Good afternoon. 17 CHAIRPERSON LLOYD: Good morning. 18 MS. WILLIAMS: Is it morning still? I'm hungry. 19 CTA submitted on the CARB's diesel retrofit 20 reduction plan on August 25th, 2002 -- you remember, Alan, 21 we carefully supported the retrofit in noncompetitive 22 trucking fleets and for additional costs to be passed on 23 to the shipper or user. This is still our position. It's 24 approved by our Board. We support a voluntary and 25 subsidized program. We recommend any regulation be tied PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 101 1 to funding source and any particulate trap or device would 2 not exceed the 2006 PM standard. 3 --o0o-- 4 MS. WILLIAMS: On the current rule, we have 5 issues with the warranties still. They fall on the backs 6 of the users, the smallest economic unit. We have -- the 7 Board recommendations to address warranty -- the issues 8 have not been provided in this rule that -- and have not 9 relieved the trucking industry's liability when something 10 goes wrong. It was supposed to be handled in the first 11 rule. As you remember, we talked about the verification 12 procedures. We had a long discussion at the Board hearing 13 about the warranties. The CARB staff was supposed to come 14 back at that time and say what the cost effectiveness 15 based on the warranties -- Ms. D'Adamo asked them to come 16 back at 150, 300, and 450 in the rule making. It hasn't 17 been done. 18 We have very significant concerns about the 19 warranty issues and that they fall on the end user rather 20 than the manufacturer -- the engine manufacturers and the 21 trap manufacturer working on the liabilities in the time 22 failure. 23 The fuel supply issue is further boutiqued by 24 having a year period where vehicles that could use traps 25 and should be buying traps for the future because they are PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 102 1 qualified -- they're part of the 12 or 13 percent that 2 could use particulate traps, would be encouraged to use 3 some other technology rather than wait until 2006 when the 4 fuel is available. Put the trap on, and put the money 5 there in 2006 would be better for the environment and for 6 cost effectiveness of the companies. 7 And the last-minute attempt to exempt 8 municipalities from the responsibility, this is the 9 shipper, which pays the bill. This is like having Walmart 10 or Target come in and say, "We're not going to pay you 11 more to ship these goods just because CARB diesel costs 12 more, because the national average is 30 cents less, and 13 we're not going to pay you." So I think this is 14 incredibly bad for the waste industry. It's incredibly 15 bad for the trucking industry. 16 We find out about it at the last minute. No 17 notice. We find out the 15 days -- why? Why would you 18 exempt the people who pay the bills? This is the shipper. 19 They have to say, "We're going to pay more, and we're 20 going to pass it on to the customer." If they don't make 21 that decision, we have no control. 22 So the cost analysis is incomplete and 23 underestimated. The retrofit devices are $9500 for a 24 vehicle, $1500 to put on a device that detects when 25 there's pressure problems. And it costs money to take the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 103 1 vehicle out of the service. 2 Incremental fuel costs we talk about over and 3 over again. And the ability to cite the retrofit and 4 reengine in California state law is problematic. 5 I'm going to skip through some of these because I 6 know I only have three minutes. 7 --o0o-- 8 MS. WILLIAMS: Regulatory authority, the sections 9 provided do not say anything about retrofit. In fact, 10 they actually demonstrate that you don't have authority 11 for anything but new emissions, in-use standards, idling, 12 motor vehicle fuel specifications. There's no retrofit 13 authority provided in the sections that ARB has used. And 14 in fact, the section that we found that are above and 15 beyond what ARB used, 43600, these have to be the smoke 16 testing statutes they we're familiar with. This is right 17 in that section where we went to court in 1991. Section 18 43600 specifically prohibits insulation devices on used 19 motor vehicles, unless mandated by the statute. That's 20 because we don't want 100 different devices on vehicles. 21 And no offense to the speaker before me, but a 22 bunch of sales people at our office is telling, "This is 23 the mandated device. You have to buy this. The state 24 said you have to." How are we supposed to know which 25 device is mandated? We have no direction. There's no PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 104 1 regulations. This puts a serious and incredible burden on 2 the end user that should not be there. 3 Section 43701, which is part of this smoke 4 testing program, specifically requires that any 5 significant modification of the engine should be made 6 during maintenance or overhaul of the vehicle engine. 7 That's California statute. Not that you couldn't get a 8 bill passed, but you need to. 9 --o0o-- 10 MS. WILLIAMS: Just to let you know what the 11 field prices are today, we're about 36 cents more than San 12 Francisco, the Oregon corridor. We're about 18 cents 13 between Arizona and L.A. We're about 30 cents between San 14 Diego and Arizona. So we haven't resolved the issue on 15 fuel prices between California carriers and the boarder 16 states, New Mexico borders, and moving to be open quickly. 17 We really want to get this accomplished. We are really 18 are at a competitive disadvantage. 19 CHAIRPERSON LLOYD: Can you -- you've been about 20 five minutes. 21 --o0o-- 22 MS. WILLIAMS: Changes to the rules. This is my 23 last -- this is the municipalities' free ride, the shipper 24 getting a free ride. This is like the port saying, "We're 25 not going to pay you anymore to carry those containers. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 105 1 We want you to make $50 a load. We don't care if you 2 can't afford the fuel prices. We don't care if you don't 3 have health insurance. You take that load for $50 and we 4 don't care if your costs get bigger." 5 There's a difference between the port haulers and 6 any other segment of the industry. The shipper pays for 7 cost increases. They have to, or the system doesn't work. 8 We don't manufacture. We move it. They've been removed 9 from the definition of the contract. 10 They're removed from the compliance requirement. 11 They've been removed from the reporting requirement, from 12 the identification of funding sources. Why are they 13 removed from the identification of funding sources? If 14 they're saying no -- in Orange County they say "no new 15 taxes," and the waste hauler there says, "We have to do 16 this." And they say, "We're not going to give you any 17 more money," somebody needs to know. 18 Removed from the refusal to comply. Removed from 19 the notification of Executive Officer. The shipper has 20 been removed on a 15-day notice period. Nobody's been 21 notified. This has a significant impact on labor too 22 because there's only so much money in the company. That 23 either goes to drivers or environmental -- it doesn't go 24 to both places. 25 --o0o-- PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 106 1 MS. WILLIAMS: So here's the copy of the removals 2 that we found. 3 And our last point is the questionnaire that went 4 to municipalities is very biased. And the information 5 collected is very biased. This is the questionnaire. 6 These are the actual questions. What is the term of the 7 contract? How many years does the contract have left? 8 How many automatically renew unless cancelled? Does your 9 contract have a provision to allow for negotiation rate 10 increases during the contract term? Do they? How many? 11 How come we don't have this data? 12 How long would it take to negotiate a rate 13 increase once a new rule's adopted? Are there any other 14 conditions in your contract that allow for a rate 15 increase? Based on the review of your proposed rule, will 16 your agency require additional resources to comply with 17 this rule? 18 We know it's going to cost a lot of money to 19 retrofit. Of course, they're going need additional 20 resources. They're going to have to pass it on to the 21 consumer. Help us pass it on to the consumer. 22 And the last question, which is in bold because 23 it's very problematic, ARB has been asked by the refuse 24 industry to consider changes, changing the regulation to 25 place all of the responsibility -- rather than sharing the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 107 1 responsibility -- for compliance on the municipality 2 holding the contract -- the shipper -- with no 3 responsibility on the vehicles' owner. What would be your 4 response to this proposal? How do you think this could 5 affect your contract? Come on. Of course, nobody wants 6 to be regulated or pay. It's unfair. 7 --o0o-- 8 MS. WILLIAMS: We ask that the verification rule 9 making breakdown be moved back. It's in my comments. 10 You'll see on the warranty issue. The warranties were 11 supposed to be brought up in this rule making. In the 12 record there's nothing here on the warranty. Nothing 13 about pointing fingers between engine manufacturers and 14 trap manufacturers. And these warranties were in the 15 Board on February 13th, supposed to be part of the packet 16 and have not been. 17 And here's our proposal. That we would support 18 moving this forward -- and I think if you look behind you, 19 you can see that this -- it's minor changes to the 20 initial -- what was handed out, not in the 15-day rule. 21 But if you do not change the categories -- the translation 22 of Category 1 will be, move or sell these trucks, 1988 to 23 2002 because they cost too much to keep. Number 2 would 24 be 1960 to '87, buy these trucks, because these are what 25 you want in your fleet because this is the cheapest way to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 108 1 comply. And number 3, hold off purchases on 2004 and 2005 2 model years because you'll have to retrofit them. 3 This is not the message you want to send to the 4 market-based buyers of trucks. What you want to say is do 5 it in a way that's cost effective that gets the best 6 environmental benefit. This will get you there. Having 7 fuel early that costs too much is not going to get you 8 there. And having the oldest vehicles be the highest 9 market value is not going to get you there. 10 CHAIRPERSON LLOYD: Thank you. 11 Staff response quickly to the warranty issue. 12 Stephanie, when you talk about the difference 13 between out of state diesel prices and in state in this 14 particular case -- 15 MS. WILLIAMS: I just wanted to let you know what 16 the prices were yesterday. 17 CHAIRPERSON LLOYD: I know you remind us that -- 18 MS. WILLIAMS: I remind you that every time I'm 19 here. So next time you say it's 2 cents at the 20 Legislature and what it should be -- I've showed you over 21 and over again the differential. 22 EXECUTIVE OFFICER WITHERSPOON: The warranty 23 issue that we discussed at the time the Board adopted 24 verification procedures is whether staff had calculated 25 the costs accurately since truckers preferred to buy PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 109 1 extended warranties, and extended warranties would be more 2 expensive than the base cost assumed in the regulation. 3 There are currently no extended warranties 4 available for these trap devices. So we cannot report 5 back to you on what the cost is and how the calculation 6 changes. They're simply not available. 7 MOBILE SOURCE CONTROL DIVISION CHIEF CROSS: 8 There was also a substantial debate after hearing -- 9 CHAIRPERSON LLOYD: Can you speak up? I don't 10 know whether it's on. 11 MOBILE SOURCE CONTROL DIVISION CHIEF CROSS: 12 There was a lot of debate at the hearing about how long 13 the warranties are that are provided by the truck engine 14 manufacturers and how long the engines last and all of 15 that discussion where I think Stephanie was contrasting 16 the life of the trap to the life of the engine and all of 17 that. 18 I know my staff did go back and get all of that 19 information from the engine manufacturers and get back to 20 Stephanie in terms of sharing it with her for comment. 21 And I think that the basic thing we found was that the 22 engine manufacturer warranties weren't as long as she had 23 said at that hearing. I think what they were -- 24 MS. WILLIAMS: Is there a way -- rather than find 25 out at the Board meetings, is there a way -- since it was PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 110 1 supposed to be at the -- 2 MOBILE SOURCE CONTROL DIVISION CHIEF CROSS: The 3 point is to get the extended warranties she talked about, 4 you had to pay. And so we basically provided all the data 5 that we had. And as Kathleen said, we do look into the 6 availability of extended warranties and they're not 7 available yet. The trap manufacturers are very aware of 8 the issue and we're working with them. But we can't give 9 you an answer today. 10 CHAIRPERSON LLOYD: It might be good to get a 11 status report. 12 BOARD MEMBER D'ADAMO: I think this is an 13 important issue. It's far beyond the issue of cost 14 effectiveness. Because I know that we're going to hear 15 testimony later today about the possibility or suggestion 16 of acceleration of the rule until the state-of-the-art 17 trucks are available so we don't have to go through this 18 issue of traps. 19 I'm concerned about the impact that these 20 retrofit devices would have on the users, not just in 21 terms of cost, but certainty issues, convenience, having 22 to go -- you know, truck manufacturer and now retrofit 23 manufacturer and trying to get the two of them to talk to 24 each other -- 25 MOBILE SOURCE CONTROL DIVISION CHIEF CROSS: PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 111 1 That's kind of all done. I think the thing we have to 2 remember is, as staff said in their presentation, only 12 3 percent of the trucks are amenable to trap retrofit. So 4 out of all of those -- you know, and that basically 5 excludes the older ones. That's basically the 93 current 6 trucks are amenable, and it's just a few of those. And we 7 did our homework in terms of testing trucks to find out 8 which of those few were amenable to traps. 9 And so we're looking at a small sub-portion of 10 the fleet which has this concern. The traps that would go 11 on have gone through extensive testing through 12 verification process. And then they've also been 13 fleet-tested by the city of L.A. and there are 300 trucks 14 and in New York. So I think that as long as the rules for 15 properly applying the traps are followed, I don't think we 16 have a concern or a warranty concern. 17 The city of L.A. is fine. They're not having 18 troubles with them. I think when they're misapplied, 19 then, yeah, you do have problems. That's why the 20 verification requirements are so clear on what's 21 appropriate application and what isn't. But the bulk of 22 the regulation is things like retiring old vehicles, how 23 retrofits of some of them have no durability are applied, 24 and things like that. I think that what's happening is 25 the debate is focusing on traps when that's only 12 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 112 1 percent of the vehicles that we have to deal with. 2 BOARD MEMBER D'ADAMO: But that wouldn't be the 3 case -- I know we haven't had this testimony on this yet. 4 But if we provide for acceleration, would that be expand 5 that number? 6 MOBILE SOURCE CONTROL DIVISION CHIEF CROSS: No, 7 because it's the older vehicles. 8 EXECUTIVE OFFICER WITHERSPOON: It would 9 accelerate the pace at which old vehicles were scrapped, 10 but it wouldn't change the implementation or penetration 11 of traps. 12 BOARD MEMBER D'ADAMO: I must have misunderstood. 13 I thought that you'd have to utilize a trap along with an 14 engine or a vehicle that's -- a current vehicle in use, 15 wouldn't there be a combination, use both? 16 EXECUTIVE OFFICER WITHERSPOON: For every age 17 group, you have to use BACT, whatever BACT is. There 18 aren't any certified traps for the old engines. So it 19 just doesn't come up. 20 As they buy newer engines, then the engine that's 21 part of the model year grouping is required to have traps 22 when they're certified for those engine families. So then 23 they get on a new compliance schedule. 24 But as Mr. Cross indicated, we're not seeing any 25 failures. We arranged a site visit for waste industry PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 113 1 representatives down to L.A. sanitation district, and they 2 came away much reassured and impressed by what was going 3 on. They had issues on everything from maintenance, to 4 the reaction of the mechanics, to the warranty and other 5 things we've been talking about. I think that allayed 6 their concerns enormously about the segment of the fleet 7 that might end up with traps. 8 BOARD MEMBER CALHOUN: Are we talking about 9 possible damage to the trap itself or to the -- 10 MS. WILLIAMS: To the engine. The BACT pressure 11 ruins the engine. The liability falls on the end user 12 because once you modify the engine, you own it. There's 13 no engine manufacturer that will warranty it. And the 14 trap manufacturer is going to say, "No, you did 15 something." You've left us in a place where we have no -- 16 it's a lemon law, is the only way we'll be able to save 17 ourselves. 18 I would ask before you move forward, that you sit 19 down with some of my members -- their Board meeting is on 20 this issue, the warranty and the liability issue for us in 21 November. And I'd like to clarify when the Air Resources 22 Board and our Board -- before we move forward on whatever 23 it is we end up doing -- that, one, we're not liable for 24 new trucks when we put traps on; two, we're not liable if 25 the trap has a BACT pressure issue and has a catastrophic PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 114 1 failure. 2 And there's a misunderstanding here about how 3 poorly the vehicles did in the testing. The data that we 4 got shown from -- the Air Resources Board showed a number 5 of vehicles had failures. So they've just risen the 6 temperature level and said, "We're only going to do it to 7 these vehicles, and you can do this down here." We are 8 not engine manufacturers. We are truckers. My 9 maintenance guys have eighth- and ninth-grade educations, 10 and you're asking these people to decide what kind of 11 manufacturer equipment goes on vehicles. It's just 12 severely wrong. 13 EXECUTIVE OFFICER WITHERSPOON: We are not, in 14 fact, asking them to decide. We are issuing lists of 15 exactly what devices have been verified for exactly which 16 kind of engine and which model years. So it's simply a 17 look-up matter, that this device is certified by the Air 18 Resources Board is appropriate to their engine and is 19 available in the market to them. 20 MOBILE SOURCE CONTROL DIVISION CHIEF CROSS: The 21 failures were not on certified applications. In other 22 words, what we were doing was looking at the extremes to 23 find out where they do fail, which is something that one 24 would want to do in any program like this, find out where 25 they do fail so when you do set the limits, you set the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 115 1 right ones. So I think -- Stephanie wasn't at the L.A. 2 sanitation district. I was a skeptical too, to be honest 3 with you. It was a really, really impressive show. But 4 with respect to warranty, just really quickly, if the trap 5 hurts the engine, it's on the trap manufacturers. 6 MS. WILLIAMS: Could you put it in the rule? 7 MOBILE SOURCE CONTROL DIVISION CHIEF CROSS: It 8 is in the rule. 9 MS. WILLIAMS: It doesn't specify. 10 MOBILE SOURCE CONTROL DIVISION CHIEF CROSS: Take 11 a look at the latest verification amendments. It is. 12 MS. WILLIAMS: The 15-day rule? 13 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF 14 HEBERT: The verification procedure regulation itself 15 states there that if the retrofit device damages the 16 engine, the retrofit manufacturers are responsible for 17 repair. 18 MS. WILLIAMS: As a caveat, about certain 19 maintenance practices, which are not defined, it's an out 20 for the verification. 21 CHAIRPERSON LLOYD: Clearly we have to get that 22 resolved. What I would like to do is to follow up with 23 that issue. We need to expand upon, maybe report back to 24 the Board. But the other thing, we have the Diesel 25 Retrofit Advisory Committee coming up. I think it's PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 116 1 October 14th. 2 EXECUTIVE OFFICER WITHERSPOON: That's correct. 3 And the Board will be revisiting the verification 4 procedures as they relate to -- 5 CHAIRPERSON LLOYD: I think that's an 6 opportunity. And hopefully staff will invite some of the 7 members. Because clearly I think we need to be able to 8 close the gap -- the information gap and the trust gap 9 between the members and what we're doing with staff. So 10 we'll definitely work with you on participating -- 11 MS. WILLIAMS: I think the most important thing 12 we can do is get the statute language decided before 13 somebody moves in a direction that's not good for either 14 of us. 15 Thank you. 16 CHAIRPERSON LLOYD: Thank you. 17 Tim Ward, Kelly Aster, Bill Dobert. 18 I would say, by the way, to Board members, we do 19 have a meeting of that International Diesel Retrofit 20 Committee. It's meeting in Pasadena. I think it's 21 October 17th. 22 Maybe after this we'll take a five-minute break 23 to allow the court reporter to take a break. And 24 hopefully we're going to try to get through this item 25 before we take our lunch break. Thank you. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 117 1 MR. WARD: Good morning. I'm Tim Ward, Tom Ward, 2 Incorporated. I'm a fuel distributorship in -- 3 CHAIRPERSON LLOYD: Can you bring the microphone 4 closer to you? 5 MR. WARD: I have fuel distributor in Fireball. 6 I'm also representing California Independent Oil Marketers 7 today. Also I'm here to say I'm representing Terry 8 Perkins with Fireball Disposal. 9 Terry's business and I are very similar. We have 10 five trucks, all of them are '87 and older. The economics 11 of our businesses are basically the same. This is going 12 to be an expensive endeavor for us, putting these traps on 13 our trucks. We can't afford to buy new ones. 14 So we're asking for more time for the '87 and 15 more. We only have five trucks apiece. For example, I 16 made $18,000 two years ago, and 30,000 last year. But 17 because of workman's comp, increased insurance, they're 18 going to take 25,000 of my profit away from me this year. 19 So we're asking for more time. And I think more time also 20 gives us an opportunity to lessen the expense on the 21 device that they developed for NOx reduction. If you give 22 us smaller guys a little more time, we might have to only 23 put on one machine that will take care of the NOx problems 24 too. So that's what I'm asking. 25 CHAIRPERSON LLOYD: Thank you. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 118 1 Ms. Witherspoon. 2 EXECUTIVE OFFICER WITHERSPOON: I just want to 3 clarify, Mr. Ward is not affected by this regulation. 4 He's concerned about the precedent it sets for future 5 regulations and whether or not we would use the same 6 timetable for '87 and older vehicles -- is that correct? 7 MR. WARD: No. Actually, I'm -- we have our own 8 issue with ARB coming up in December. I'm representing 9 Fireball Disposal at that particular time. 10 CHAIRPERSON LLOYD: Thank you. 11 So as I mentioned, let's take a five-minute break 12 for the court reporter, and then we'll come back. And 13 then after that we will continue the item until we finish 14 it and then take a lunch break. 15 (Thereupon a recess was taken.) 16 CHAIRPERSON LLOYD: We're recommencing with Kelly 17 Astor, Bill Dobert, and Greg Sanders. 18 What I would ask, I know there's a lot of people 19 here all opposing in a row. If they've got similar 20 testimony as the person before, please try to conserve 21 some time so we can get through this item in a reasonable 22 time. I don't know where that starts. Thanks. 23 MR. ASTOR: Thank you, Mr. Chairman. Kelly Astor 24 on behalf of the California Refuse Removal Council. It's 25 been my privilege to serve the CRC for some 20 years as PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 119 1 general counsel. In addition to doing that, I'm a solid 2 waste franchise attorney. 3 I'm interested in particular in the cost issues 4 related to compliance with the rule. There was a graphic 5 presented during staff's presentation suggesting that some 6 87 percent of municipal contracts allow for rate increases 7 for changes in the law. That number is basically 8 consistent with my general understanding. But the 9 significance of that I think is sometimes overstated. 10 The fact that the contracts may allow for 11 compensation to be recovered is the starting point, not 12 the end point. I'm here to tell you as one who has 13 negotiated literally dozens of these such contracts, very 14 often you don't get all that you ask for. So the 15 compensation issue is one that has been paramount in at 16 least my mind throughout the couple of years we've had an 17 opportunity to work with your staff. 18 And of those ten workshops -- or four workshops 19 and ten meeting that staff alluded to I've been grateful 20 to be present at most of them. Staff has gone as far as 21 it's able in one sense, but the recent set of amendments 22 which essentially take the municipalities out of the rule 23 are troublesome to the industry that I represent. Again, 24 we're a regulated industry. In the main, these contracts, 25 particularly in the residential context, are exclusive PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 120 1 contracts. There is no competition. In exchange for 2 operating without competition, the cities have reserved 3 themselves, as naturally they should, with a right to set 4 our rates. 5 So we get what I call begging rights. We get the 6 right to go talk about what the costs of this rule are 7 going to be, but that isn't the end. That's why I'm 8 particularly pleased with staff's indication just in the 9 last day or so that they're willing to do two things to 10 improve the rule. While we still remain opposed to the 11 rule, these are important changes. One, it's vital to us 12 there's a look back or review undertaken by your Board 13 annually so you can find out, in fact, are the haulers 14 getting paid, or are cities giving only part of what they 15 need to ensure compliance. 16 In addition to that, it's important to us that 17 the intent language that we originally asked for be 18 restored to the rule. Now the intent language we're 19 asking for is not precisely the same of that which is set 20 forth in the September 25th staff proposed changes 21 handout. This talks about language expressing the intent 22 of the Board that collection -- contractors can negotiate 23 with their cities regarding the recovery of costs. That's 24 already in franchise agreements. 25 I'd like it to go a little stronger, similar in PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 121 1 form to the language that we represented several months 2 ago, which basically expresses the intent the staff told 3 us two years ago when these negotiations started. That 4 is, it's not this Board's intent these costs be borne by 5 the service provider, rather the recipient ultimately is 6 the one that should bear these costs. If that issue is 7 taken care of, the only other remaining issue that we have 8 in general terms with the rule are the technical issues. 9 I'm not the one really qualified to speak to 10 those, but I will tell you this. This industry is, after 11 all, an environmental industry. Our commitment to air 12 quality has been unwavering. From the outset of our 13 negotiations with your staff, we've made clear the fact we 14 embrace our obligation to help with containing the air 15 quality objectives of this rule. We've also said we 16 support the adoption of a rule. It's never been an issue 17 that we don't support the adoption rule. It's always been 18 about what form should that rule take. I think it's 19 important we be credited with that. 20 Again, others will talk about some of the 21 technical issues that arise that haven't been fully 22 satisfied. And it's largely for those reasons and to some 23 degree the compensation issues we remain opposed to the 24 rule. But I will say that the staff has gone to great 25 efforts to accommodate us. We're looking for further PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 122 1 accommodation. I'm open to any questions you may have. 2 CHAIRPERSON LLOYD: Thank you. 3 Ms. D'Adamo. 4 BOARD MEMBER D'ADAMO: I realize that staff -- 5 and appreciate that staff was trying to achieve some sort 6 of balance here in putting forth the most recent intent 7 language. I'm not sure if the language that you propose 8 would upset a balance on the other side regarding the 9 municipalities. 10 What I'd like to see is perhaps some language in 11 the regulation that commits our staff to work with the 12 waste haulers and the municipalities regarding this issue 13 and the incremental cost. 14 MR. ASTOR: I think that's helpful. The one 15 thing I would suggest, when we go to talk to the city 16 attorneys, city manager, and their whole contract 17 negotiating staff, it would be very helpful -- we hold 18 very few of the cards. We're not complaining. We're 19 delighted with the current system. But the fact of the 20 matter is most of the leverage is with the cities we work 21 for. 22 If we had something expressed by this Board -- 23 ideally in the language of the rule itself as opposed to 24 the resolution that said, "A funding source needs to be 25 identified, and it is not the intent of this Board that PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 123 1 these costs be borne by the service provider." That would 2 go a long way towards alleviating our concerns. Because 3 if it doesn't say that, if we don't get the increases, 4 there are competitive impacts to this rule which have 5 never been fully articulated or analyzed. 6 BOARD MEMBER D'ADAMO: What I'm looking for is 7 some future commitment by this Board not to get involved 8 in individual contracts, but to be working globally toward 9 this issue of incremental cost. 10 EXECUTIVE OFFICER WITHERSPOON: During the course 11 of development, we did express our commitment to helping 12 the waste companies explain the rule they were under to 13 local governments, the expectations of the state. And you 14 heard in the staff presentation, we're going to continue 15 to do outreach. You also heard Yvonne Hunter say she's 16 going to help us hit all the communication networks so 17 that is understood by all the parties. 18 You also indicated there's a delicate balance 19 here. There is. We offered to restore intent language 20 that we had previously. We ran that by all the local 21 governments that came and testified previously. They're 22 okay with our version of the language. I think they might 23 be troubled -- I certainly can't be sure that they would 24 be all right with the sort of amplified version that's 25 being recommended. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 124 1 And one thing that we want to take care to avoid 2 is we can't guarantee the outcome here. But certainly our 3 own analysis, our calculations of cost, telling you what 4 it is per household, that's how we expect it to play out. 5 And it won't be perfect in every instance, but we wouldn't 6 want you to say the rule's conditioned on full cost 7 recovery exactly the way the waste industry interprets it 8 for their company, their contract. It's more directional 9 from the Board, that's the general intent in the rule. 10 BOARD MEMBER D'ADAMO: I'm not looking for the 11 rule to be conditioned upon. I don't think the witness is 12 either. I'm just looking for a little bit more than what 13 we have. And also the municipalities that testified today 14 spoke to the issue of liability. They didn't necessarily 15 speak to this issue. I'm just wondering since the 16 liability issue as the main stated concern here, perhaps 17 we can go a little bit further. 18 EXECUTIVE OFFICER WITHERSPOON: They did talk to 19 us privately about the other issue, about the cost, how 20 the negotiations go, the kinds of information they wish to 21 have, and back and forth. It will be a negotiation. But 22 they are willing to step up. They understand why we're 23 doing the rule. They didn't tell us, "Forget about it. 24 There's no way the cities and counties will pass these 25 costs onto the consumers, their rate reverses." We PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 125 1 weren't getting that message from local government. And 2 we're beginning to keep working with them to see it 3 through. 4 BOARD MEMBER D'ADAMO: I'm just wondering if we 5 can go a little further on the intent language. 6 EXECUTIVE OFFICER WITHERSPOON: I'd be reluctant 7 to do that since the removal of the local governments' 8 opposition was contingent on all the things we talked 9 about, the specific language we showed them on intent of 10 putting that back. We would almost need to go track them 11 all down somewhere in the building. And a lot of them are 12 still here. 13 BOARD MEMBER D'ADAMO: At a minimum I think we 14 need to commit this Board and the staff -- I think we can 15 go with stronger language on what we can do, as you say, 16 with outreach and working with local governments. 17 EXECUTIVE OFFICER WITHERSPOON: That we can do. 18 And maybe during the lunch break -- 19 CHAIRPERSON LLOYD: Can you help us here identify 20 specifically where we can locate the language in the 21 material we have? 22 EXECUTIVE OFFICER WITHERSPOON: It's in the 23 15-day package. Can you see what staff is holding up? A 24 single page. It should be there. 25 CHAIRPERSON LLOYD: Okay. Single page. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 126 1 BOARD MEMBER HUGH FRIEDMAN: If it's only a 2 sentence or two on intent, could you read it, please. 3 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF 4 HEBERT: It's more of a summary of what we did. And we 5 added a statement to the scope and applicability section 6 of the rule that "an intent making it clear that the Board 7 expects that municipalities and solid waste collection 8 vehicle contractors will negotiate regarding recovery of 9 costs incurred to implement this regulation." 10 GENERAL COUNSEL WALSH: The Board Clerk has just 11 pointed out to me that actually that is attached to the -- 12 BOARD MEMBER HUGH FRIEDMAN: We can't hear you. 13 GENERAL COUNSEL WALSH: It's attached to the 14 yellow-faced package. That would be proposed Resolution 15 03-7-3. 16 BOARD MEMBER RIORDAN: It's at the back of the 17 packet. 18 MR. ASTOR: Members, to give you a contrast, 19 here's the language we would like to see. "It is the 20 Board's intent that municipalities demonstrate a funding 21 source to ensure compliance with Section 2023 and that 22 rate regulated fleet operators are fully compensated for 23 the actual and necessary retrofit fuel maintenance and 24 recordkeeping costs." It's still just an expression of 25 intent, but it goes beyond saying we should talk about it PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 127 1 because, again as I pointed out, our franchise agreements 2 already give us the right to talk about it, but there's no 3 expression of the direction we'd like to see the cities 4 go. 5 BOARD MEMBER RIORDAN: Mr. Chairman, I think it's 6 sometimes difficult to work this language out at the last 7 minute. I can see how one could interpret the suggestion 8 in a way that might create an imbalance, which I'm not 9 sure we want to create this imbalance. We want to keep 10 everything on a point where we're asking the cities to 11 accept an opportunity to look at this and to find some way 12 to compensate. But I have some trouble with your words 13 just clearly as you read them just to me in the last few 14 minutes, and I'm hoping maybe the cities can perhaps offer 15 some comments. 16 CHAIRPERSON LLOYD: I guess we're asking for 17 Ms. Hunter. I know Supervisor DeSaulnier also had a 18 request to speak. 19 SUPERVISOR DeSAULNIER: I know how meetings run 20 in Sacramento, especially having watched the one last 21 night, so I'm just sitting quietly to get my opportunity, 22 Chairman Schwarzenegger. 23 MS. HUNTER: Mr. Chairman, members, Yvonne Hunter 24 with the League of Cities. Again, thank you for the 25 opportunity to comment. Kelly Astor and I and the waste PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 128 1 industry, we've all gone around in circles on this issue, 2 and we're sympathetic to their concerns. It's the first 3 time I've actually heard in a long time the language that 4 Kelly read, and we simply couldn't go there. It would tip 5 the delicate balance that Catherine had talked about. 6 What would be very helpful to local governments 7 would be for the ARB staff -- and we've talked to the 8 staff about this -- to provide information to both 9 haulers, but more importantly to local governments on the 10 actual costs of some of these technologies. So that when 11 the haulers come to the local governments for discussions, 12 we have some reference point. We can say, "Yeah, you're 13 right. That is the cost," or, "No, I'm sorry. You know, 14 we don't know." 15 We look at them as our partners in providing 16 service. But I think that would be very, very helpful. 17 And we pledge to work with the industry and work with the 18 Air Board to make this work within the framework of 19 conditions and terms and franchises and contracts. 20 CHAIRPERSON LLOYD: Thank you. 21 BOARD MEMBER D'ADAMO: I'm comfortable with that. 22 I just think that the intent language needs to say that, 23 to include our role. 24 EXECUTIVE OFFICER WITHERSPOON: We'd be happy to 25 do that. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 129 1 CHAIRMAN LLOYD: Supervisor DeSaulnier. 2 SUPERVISOR DeSAULNIER: Perhaps it's all been 3 said, but I agree with D.D. Having been in local 4 government for well over a decade and having been involved 5 in my fair share of franchise agreements -- and I don't 6 know how many we have in our county, but it's multiples. 7 I don't see how we can fix this, I mean, the franchises 8 get audited, at least in my experience -- I don't know 9 about other people in local government -- as to what 10 they're spending. Their pass through should be a 11 reasonable pass through that we can tie to what the actual 12 costs are. I don't think -- that's not something that we 13 can not -- we're unable to do, I should say. So it may be 14 just a question of semantics but if we can work on -- 15 and I know you've worked on it forever. But between now 16 and the end of the hearing, I don't see how we couldn't 17 come to some conclusion that would be reasonable for 18 everyone so -- 19 CHAIRPERSON LLOYD: So what you're saying, some 20 cost recovery, but that's got to be the true cost? 21 SUPERVISOR DeSAULNIER: Right. Over the period 22 of time we're doing this, they -- and I know every 23 franchise isn't the same -- but those that do have audit 24 requirements should be able to go back and look at those, 25 the true costs, the actual cost. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 130 1 CHAIRPERSON LLOYD: Yeah. 2 SUPERVISOR DeSAULNIER: Thank you. 3 CHAIRPERSON LLOYD: Quit when you're ahead. 4 Thanks. No. If you need to come back later -- but I 5 think we have -- 6 MS. HUNTER: I just want to make sure we don't 7 tip the balance too far where we're no longer in support. 8 CHAIRPERSON LLOYD: I don't think so. 9 SUPERVISOR PATRICK: If I might make a comment. 10 I know we're ready to move on. I have to agree with this 11 woman from the League of Cities. 12 I think that we should have no role whatsoever in 13 the negotiations between the local governments and the 14 franchise folks. If you want to strengthen language or 15 something that said, you know, it's our intent that they 16 be compensated for this through the pass through that goes 17 to the taxpayer, I think that's okay, although I don't 18 have any objection to the language that we have in there 19 now. But I think we need to be very, very careful about 20 going too far in saying that it's simply the haulers who 21 are going to tell the local government how much this is 22 going to cost because that is certainly not acceptable. 23 And so, you know, I think that the language that was 24 presented by the Refuse Removal Council goes way beyond 25 what I would be willing to accept. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 131 1 CHAIRPERSON LLOYD: I thought what we were 2 looking at here was trying to use a technical resource -- 3 economic resource; is that right? 4 SUPERVISOR PATRICK: Absolutely. And to be able 5 to have information about what the true and actual costs 6 of this, I think is -- that's the role that we would play. 7 But certainly not getting any further into any 8 negotiations process in that. 9 EXECUTIVE OFFICER WITHERSPOON: As I understand 10 the Board's direction, it is to keep the intent language 11 the way the staff proposed it, but to add to it the 12 explicit role of the Air Resources Board staff in 13 communicating the local governments what we believe the 14 cost of compliance with the regulation to be; is that 15 correct? 16 CHAIRPERSON LLOYD: Two of my colleagues on the 17 right, is that okay? 18 EXECUTIVE OFFICER WITHERSPOON: I'll repeat. 19 SUPERVISOR DeSAULNIER: We were talking about -- 20 what was the word we used earlier? Recalcitrant local 21 government? 22 CHAIRPERSON LLOYD: But I think the key issue 23 here is that you raised some issues. And Barbara wants to 24 make sure we didn't go too far, and that is what I think 25 Ms. Witherspoon was saying, that we modify the language to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 132 1 indicate that the Air Resources Board will provide 2 information to the local municipalities so in fact there 3 would be evidence that the costs are really what they 4 cost. I think that sounds good. 5 SUPERVISOR DeSAULNIER: I think that's fine. But 6 at some point there are actual costs they will be able to 7 demonstrate physically in terms of bills and products they 8 buy that will be passed through. It's not rocket science. 9 EXECUTIVE OFFICER WITHERSPOON: What the 10 distinction is, is what is the cost attributable to the 11 regulation versus the cost tied to company choice or other 12 reasons like buying more new trucks than the reg would 13 compel them to do. That's where the dividing line is 14 going to be. 15 SUPERVISOR DeSAULNIER: I understand. 16 CHAIRPERSON LLOYD: Thank you. 17 We have Bill Dobert, Greg Sanders, Jack Fiori. 18 MR. DOBERT: Good afternoon. Just change over 19 here. I'm Bill Dobert. I'm the current Northern District 20 President of the Californian Refuse Removal Council. I'm 21 also the CFO of Speciality Solid Waste in Sunnyvale. For 22 a family business we're a jack-of-all-trades. I'm also -- 23 even though I've got all this white hair -- the youngster 24 in this industry. I've only been in this thing for about 25 12 years, having previously been a banker. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 133 1 The company, Specialty, I work for has been 2 around for 50 years. I guess what I'm here to talk about 3 is essentially what Kelly talked about, what you've been 4 discussing, and that's the compensation issue. When I got 5 into this business, franchise agreements were 20 pages, 30 6 pages, 40 pages. And over the years the cities have 7 decided to hire consultants to do the work for them and 8 make the decisions, and the franchise agreements are now 9 150 pages long. 10 I heard a number that 87 percent of the franchise 11 agreements have a provision in there allowing for -- and 12 somehow I guess it was synonymous with guaranteeing that 13 any regulatory change we would get compensated for. Well, 14 some of you have been involved at the counsel level. You 15 know the result. Some of the discussions are smooth. 16 Some of them aren't. It's not as easy to say there's 17 three words in a franchise agreement that says if you go 18 out and spend, what we don't know is what's going to be 19 the cost at this point. If it's going to be millions and 20 millions of dollars or if it's going to be something less. 21 We're going to be able to show invoices, which we will, to 22 substantiate what we have paid for, and they're going to 23 say, "We'll just build it into your payment next month." 24 CHAIRPERSON LLOYD: How large is your company, by 25 the way? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 134 1 MR. DOBERT: Our company is about 45 to 50 2 trucks. Pretty much representative of most of the folks 3 that raised their hand in the group back here. 4 The problem is it's just not that easy any more. 5 And so that's why it's critical to us that we guarantee -- 6 and once again, I've heard that from Yvonne there's no 7 indication from the cities that they don't want to say, 8 "If you spend the money, show us the invoices. As long as 9 it's within what the rules and regulations say you're 10 supposed to buy, that we will build it in and you will get 11 compensated." I don't think there's any indication that 12 anybody said they want to provide any company with 13 financial hardship because of this. 14 CHAIRPERSON LLOYD: So this is your major issue? 15 MR. DOBERT: This is our major issue. And the 16 only thing is we want you to know that in concept we 17 support clean air and providing whatever you want us to 18 do. We've done it with AB 939, and we will continue to do 19 that. 20 CHAIRPERSON LLOYD: Well, I think you've heard 21 the sentiment, and we're trying to work something out 22 here. So I hope you and the succeeding people who testify 23 bear that in mind, the fact we're trying to work that out, 24 and please try to limit your testimony. 25 MR. DOBERT: We appreciate that. And we hope it PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 135 1 will be part of the final outcome of the next 15 days. 2 CHAIRPERSON LLOYD: Again, you heard that staff 3 is going to come back to see how this rule is working out, 4 and so you're not signing on for a lifetime here. We're 5 very sympathetic and concerned about how this plays out, 6 and we want to work with you on that. 7 MR. DOBERT: Thank you. I appreciate that. 8 CHAIRPERSON LLOYD: We have Greg Sanders, Jack 9 Fiori, and Andy Rose. 10 BOARD MEMBER D'ADAMO: Mr. Chairman, as the next 11 witness is approaching, I was also wondering if we could 12 ask the waste haulers if they could provide us with 13 information as to their fleet size when they come up here. 14 MR. SANDERS: Certainly. 15 CHAIRPERSON LLOYD: That's good. 16 MR. SANDERS: Honorable Chairman, members of the 17 Board, my name is Greg Sanders. I work for Varner 18 Brothers in Bakersfield. We have a fleet of approximately 19 45 trucks that we put out on the road every day and are 20 involved in environmental quality and environmental issues 21 every day. And we've been doing that in this community 22 and Bakersfield and Kern County for the last 63 years. 23 We attempt to be very actively involved in 24 statewide issues. When it became apparent this was going 25 to be an issue that was going to affect us and that we PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 136 1 needed to work with CARB, we immediately came and became a 2 part of the negotiations and discussions with your staff 3 regarding this issue. We have been involved for the last 4 18 months. We have been involved as a company in regard 5 to testing equipment. We have tested diesel oxidation 6 catalysts. We have tested ultra low sulfur diesel long 7 before we were ever required because our contracts require 8 us every day to pick up refuse. We cannot not pick that 9 up. And if the technology does not work, we have to know 10 beforehand, before it threatens our contracts and what we 11 do. 12 I come before you today with a completely 13 different message than I intended 24 hours ago. And it's 14 a real world message. At 2:00 yesterday afternoon, I met 15 with an industry leader regarding our plans for the future 16 and essentially where we were going. He had been a part 17 of providing us, our company, with data logging and for 18 information that we would need that was critical to move 19 forward with our program. I was informed by one of the 20 top people in the industry that there are individuals -- 21 that there are engineers had misread our data. And that 22 the data was now going to require us to go to a diesel 23 particulate filter, which essentially is three times the 24 cost of where we had intended on going and had been 25 planning on going for the last year. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 137 1 There is not only the cost associated with this 2 dramatic change that at a time that is very tough for us 3 as an industry, but there's also the infrastructure 4 because if we have to go to DPFs -- and I understand 5 staff's concern about the potential year of giving us 6 leeway to have ultra low sulfur diesel on site. But 7 realize if I have to go to a diesel particulate filter, I 8 have to have an entirely new above-ground tank for that 9 fuel, and I have to go through a series of different hoops 10 to get that fuel. 11 And I told you earlier we had been involved in 12 the testing. Our latest invoice showed we're paying 14 13 cents a gallon additional -- 14 cents for ultra low sulfur 14 diesel fuel. If it's not mandated as a part of this, that 15 cost is going to continue to remain high. 16 CHAIRPERSON LLOYD: Can you -- three minutes have 17 gone. 18 MR. SANDERS: Okay. Very quickly, we've got a 19 crisis of confidence, and part of the problem simply rests 20 with the fact that we don't believe that there is a broad 21 enough technology base out there to support all of the 22 issues that need to be addressed. And there aren't enough 23 people in the industry or around this country to move this 24 rule forward as it's currently written. 25 And the cost -- and just to summarize, this was a PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 138 1 real issue. This was a huge issue for us. I had to make 2 a call yesterday to my owner to tell him that my estimates 3 for our program had gone from tens of thousands of dollars 4 to hundreds of thousands of dollars. That's a real world 5 happening. That's what happened to me yesterday. Not a 6 very pleasant day. So understand that these technology 7 issues are real, that for us they have to be addressed 8 before we can move forward. And we feel it's critical 9 that they be dealt with. 10 We have attempted to be proactive. We've 11 attempted to work with staff and do the things in advance. 12 We will continue to do that. 13 CHAIRPERSON LLOYD: Thank you very much. I think 14 we will have people testifying on these devices later on. 15 Thank you. 16 Jack Fiori, Andy Rose, Mark Figone. Again, 17 Ms. D'Adamo -- how many trucks do you have? 18 MR. FIORI: Sorry. We have 18 trucks. 19 CHAIRPERSON LLOYD: 18. 20 MR. FIORI: My name is Jack Fiori. I'm the Vice 21 President of California Waste Recovery Systems. Our 22 business office is located in Lodi, and we provide 23 residential and commercial solid waste and recycling 24 services to San Joaquin and Sacramento counties. We're a 25 privately owned business owned by the Vaccarezza family PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 139 1 for more than 75 years. We implemented the first three 2 carts back in San Joaquin and Lodi back in 1993 and first 3 two-cart residential collection systems in Sacramento 4 County, one in Galt and the other in what is now Elk 5 Grove. 6 As has been said, like most small garbage 7 companies, we've been recycling and diverting reusable 8 materials from the waste stream since our inception. Like 9 most small garbage companies, we're used to helping 10 communities do the right thing and be part of a solution 11 when it comes to the protection and preservation of the 12 environment. We support the air quality objectives of the 13 control measure as proposed. And we are not in 14 disagreement with the implementation time line if the 15 technology is proven, if it's on the shelf, and if it's 16 available to help us get there. 17 Beyond that, and using your own numbers, nearly 18 90 percent of the solid waste recycling collection in 19 California has been performed through the municipal 20 contracts we've been discussing. Many of these agreements 21 have fixed rates and do not include provisions to allow us 22 to recover for expenditures. Speaking personally, we have 23 two franchises with exclusive contracts. One is pretty 24 clean. One is nowhere close to clean language. I expect 25 some challenges. I expect some difficulties with that. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 140 1 And as business people, I think we both agree 2 that many times the word "negotiate" is a synonym for the 3 word "compromise." And to use the staff's numbers from 4 before, if I understood them correctly, in round numbers, 5 staff suggests that a dollar a year will be the cost per 6 household on this. And to carry that a step further, the 7 typical household pays about $200 a year for solid waste 8 service using the number 16, $17 per house, per month, and 9 rounding off. So a dollar of $200 is half a percent. 10 Well, those of us that have to go in and we've 11 got fixed rate changes or fixed rate adjustments based on 12 CPI, we're only going to get 2 1/2, 3 1/2, 4 percent. So 13 now we're going to dedicate a half a percent of the 3 14 percent, is a significant piece. And over the long haul, 15 it's going to cause a company like ours to fall back in 16 the race. Because if CPI is what we need to stay level, 17 we're no longer going to get it. 18 In closing, I urge you to reconsider the proposed 19 rule. I ask you to include adequate provisions to allow 20 for time extensions if the proven equipment is not 21 available to meet the emission standards. I'd ask you to 22 provide a mechanism so the haulers can recover their costs 23 by complying with standards in the case where municipal 24 franchises otherwise prevent it. 25 CHAIRPERSON LLOYD: Thank you very much. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 141 1 Clearly, we are concerned about the small facilities as 2 well. So thank you very much. 3 Now we have Andy Rose and Mark Figone and Dennis 4 Shuler. 5 MR. ROSE: My name is Andy Rose. I come from a 6 slightly different perspective than my colleagues in the 7 hauling industry. I'm an attorney and financial advisor, 8 and I finance these companies. So when costs increase -- 9 I'm actually speaking against interests. This is a good 10 thing for me. I actually urge you to raise the cost a lot 11 because I'll have to do more financing, and I'll make more 12 money. However, it doesn't really work if the haulers 13 can't afford to do it. Most of the haulers are going to 14 have to borrow money to do anything of any magnitude. I 15 want to basically reinforce -- let me finish that. I 16 represent about 65 haulers in California. Most of the 17 haulers -- a vast majority of any size of the group the 18 haulers that are speaking here. We're missing one, and we 19 intend to get him at some point. The rest are all 20 clients. 21 I want to ditto what Kelly said, but let me just 22 bring up a couple things. Supervisor DeSaulnier suggested 23 that some of the contracts do provide for cost of service 24 recovery. And that's very true. Unfortunately, they're 25 in a very big minority of contracts statewide. I also, as PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 142 1 Kelly does, serve as a financial advisor, but I also 2 negotiate these contracts. When you have one of those 3 types of contracts, you're absolutely right, it's a good 4 thing because you can negotiate the present price of 5 service you're going to get back. The vast majority do 6 not have that. 7 The '87 percent you guys sought, a lot of those 8 literally say you can come to the Council and ask. And 9 Kelly describes it properly as the begging rights. There 10 are Councils that say no. There are also agreements -- 11 and some of the consultants were referred to earlier -- 12 that actually don't want to put any extraordinary increase 13 provisions, period, in those contracts. In other words, 14 you may not come back. We don't care what happens to you. 15 Another trend is most of the contracts -- I would 16 say probably the majority go up by inflation. The latest 17 trend with the consultants is not to give you all the 18 inflation. They give you 50 percent of the inflation or 19 something like that. 20 So I want to make it very clear that while I 21 understand the intent -- and everyone is agreeing here 22 that the intent is wonderful. And everyone here says, 23 "Yes, we should do this. The cities should do this." 24 When you get down to the ground as a practical matter, I 25 would predict a great number of haulers are going to have PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 143 1 a very difficult time getting anything from their cities. 2 Finally, let me give you one specific example. 3 Workman's comp and fuel have gone up precipitously, as you 4 know, during the period of the last year. One of my 5 haulers who I think had 13 or 14 franchises went and asked 6 under the provisions that were in those contracts for 7 increases, based on those greatly increased cos,ts 400 or 8 500 percent for workman's comp. Two out of their 13 9 agreed to do that. 10 Finally, borrowing money, we have to go to banks. 11 There are two issues here. One is technology and one is 12 cost recovery. We've talked about cost recovery. You're 13 going to hear more about that. I don't know much about 14 the technology. All I can say is it's very important that 15 when we go to a bank to borrow money for something like 16 this that we can truly say to the bank, "Yes, this 17 technology works. And yes, we'd like to amortize these 18 trucks over seven to ten years, and they actually will 19 last that long, and our operation and maintenance costs 20 are reasonable." If we can not prove that, the hauler is 21 going to have a hard time borrowing the money, which means 22 they're going to have a hard time complying. 23 CHAIRPERSON LLOYD: Thank you very much. Thank 24 you. 25 Mark Figone, Dennis Shuler, and Sheila Edwards. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 144 1 MR. FIGONE: Good afternoon. My name is Mark 2 Figone, and I'm the General Manager of East Bay Sanitary, 3 and we have the exclusive contract for the city of El 4 Cerrito. We have currently only 11 diesel units, however, 5 we are in ongoing discussions with the city in an attempt 6 to acquire the recycling collection. So I would like to 7 speak optimistically and say we have 15 truck haulers, and 8 I would like to speak as such. 9 CHAIRPERSON LLOYD: Okay. 10 MR. FIGONE: We have just 15 employees. And in 11 consolidation in our industry over the past few years, 12 we've remained one of the few independent small haulers in 13 the county. My grandfather acquired the franchise in 14 1940. And since that time, we've been very successful in 15 maintaining relationships with successive council members, 16 staff, and with citizens of El Cerrito as well. 17 I came to work full time for the company in 1986. 18 I represent the third generation of our family managing 19 the business, and I'm proud of the business we've built, 20 and I hope to continue with it for many, many years to 21 come. 22 El Cerrito, as you know, is a vanguard on 23 environmental consciousness. They began the separation 24 and collection of recyclable materials back in the 1970s, 25 long before the advent of AB 939. As I just mentioned, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 145 1 they continued the collection, but we support them and 2 have throughout the years in terms of doing some of their 3 hauling of materials they collect. We also provide 4 billing services and help distribution of some of their 5 outreach and public education materials. 6 I mention this to emphasize the fact that both 7 East Bay Sanitary and the city of El Cerrito have a long 8 history of concern for the environment. We share the same 9 concerns as this Board and the state -- the citizens of 10 the state for clean air and other environmental friendly 11 business practices. 12 I'm here today to express my concerns, however, 13 that this proposed rule as written represents a 14 significant risk to the ongoing success of my family 15 business. El Cerrito is a very hilly community. We're 16 hard on our equipment. Just not to be redundant, but we 17 want to echo the representative from CTA's concerns about 18 the technology uncertainties. And we see a scenario where 19 as they unfold, it will create an excessive burden -- cost 20 burden for our business. 21 As has been mentioned also, we just completed a 22 two-year rate review process with our city. We have a 23 rate model on board. The rate model did not anticipate 24 the kinds of costs this new rule could potentially create. 25 And we have the option to renegotiate, but also as has PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 146 1 been mentioned, renegotiation is not a guarantee that we 2 will be able to recover these initial costs. 3 Rather than being terribly redundant, I'd just 4 like to close and say that, again, as currently written, 5 this rule places us at a competitive disadvantage, given 6 our size and given the fact that we have much larger, more 7 well funded public companies that surround us. They have 8 a much quicker ability to come in and respond to these 9 kinds of cost increases without having to go directly to 10 the rate payers. So without some or protection for 11 funding, it puts us at risk. Thank you. 12 CHAIRPERSON LLOYD: Thank you very much. 13 BOARD MEMBER RIORDAN: Mr. Chairman, I just have 14 one quick question. You just negotiated the contract. 15 How long is that contract now? What is the -- 16 MR. FIGONE: Our current contract is 12 more -- 17 12 more years. 18 BOARD MEMBER RIORDAN: And does it -- 19 MR. FIGONE: The rate model is negotiated 20 separately. The contract was already in place. 21 BOARD MEMBER RIORDAN: The contract is in place. 22 Then when do you renegotiate a rate increase? 23 MR. FIGONE: We would -- the rate model allows us 24 or the city to come at any time, given any significant 25 change in our cost of operations or under the city's PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 147 1 suspicion that things have changed. 2 BOARD MEMBER RIORDAN: Thank you. 3 CHAIRPERSON LLOYD: Thank you very much. 4 Dennis shuler, Sheila Edwards, Kevin Mullins. 5 MR. SHULER: Good afternoon. My notes originally 6 said good morning. I'm Dennis Shuler. I'm the 7 Environmental Affairs Manager for Gilton Solid Waste 8 Management. Our company currently operates about 50 9 trucks. This is a family-run organization. Currently, 10 the third generation in this family is running it. I've 11 personally been involved with the company for about eight 12 years. I've been in environmental work here for 29 years 13 in California. 14 The first thing we want to say from our company, 15 we are totally 100 percent in favor of what the Board is 16 doing in terms of establishing standards and helping with 17 emissions related to diesel engines. We have never 18 questioned that, and we are totally in support. 19 We live in the central valley where we have some 20 significant air emission problems. We know. We raise our 21 families there. We coach soccer teams. So this is to our 22 benefit. But as you've heard from other speakers here, we 23 as a refuse hauler in the valley do have problems with 24 this particular set of regulations. I'm not going to 25 speak on everything. I'm just going to speak on one PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 148 1 issue. 2 Our company currently serves under contract ten 3 different jurisdictions; three counties and seven cities. 4 We have contracts with each one of those jurisdictions, 5 and every one of those contracts is different. But each 6 one of them has three things in common. First, they get 7 to set the rates. And that means a great deal in terms of 8 what we're able to do in terms of operating our business. 9 Secondly, we're mandated in every one of the contracts 10 that we have to meet all federal, state, and local 11 regulation's statutes. So that's a condition upon every 12 contract we have. And lastly, all of these contracts have 13 language in them regarding us coming to them -- and the 14 key word, asking for a rate review or asking for a rate 15 adjustment. Under none of these contracts are we 16 guaranteed that we will receive rate increases. 17 The key word I heard in your staff's comments was 18 they did the survey and they came back and asked the 19 question did they allow for rate adjustments. That 20 doesn't mean they occur. Just to be brief, I stand in 21 front of city councils and boards all the time. We 22 present our members with the full analysis for these folks 23 every single year. That doesn't mean that our costs are 24 going to be compensated. Many, many times our costs show 25 we need a 4 percent increase, and staff will recommend to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 149 1 their elected official maybe 2, 2 1/2 percent. So we're 2 facing this all the time. 3 I'll finish up quickly. I just wanted to again 4 reemphasize we're totally in support of CARB's goal to 5 reduce emissions. We just question whether or not this 6 set of regulations at this time is going to accomplish 7 what you want. Thank you very much. 8 CHAIRPERSON LLOYD: Thank you. 9 Sheila Edwards, Kevin Mullins, Louie Pellegrini. 10 I would ask the people testifying -- I realize 11 this is very important to you, otherwise you wouldn't be 12 here. But please try to identify what we can do. Because 13 the individual case studies, while we can hear that, we 14 cannot really address all those in the individual context. 15 The broad context we could. It would really help us in 16 the long run. Thank you. 17 MS. EDWARDS: Thank you, Chairman. I will be 18 brief. My name is Sheila Edwards. I work for Marine 19 Sanitary Service and Recycling Marin County. Excuse me. 20 I've been waiting so long I forgot my voice. I represent 21 the Garbino family who could not be here today. It's a 22 family business, and they are running the business and 23 working hard at. But they send their regards and their 24 support for this clean air process. 25 CHAIRPERSON LLOYD: How many trucks do they have? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 150 1 MS. EDWARDS: We operate approximately 100 2 trucks, source separated collection, so many trucks run 3 the same routes. 4 I will be brief with my statement. Our concerns 5 are, again, the cost assurances. It's going to come out 6 one way or the other. Right now we have been very proud 7 to have reached a 70 percent diversion rate in our county. 8 We operate the first recycling center on the west coast. 9 Now, granted, that is in excess of what the state mandate 10 is, but it would be a shame to lose something in our 11 recycling diversion in order to pay for costs to reach the 12 air pollution requirements. 13 The second is the technology, where we don't know 14 where we stand with that. Some of the equipment and the 15 machinery is not available yet. We don't know what will 16 happen when we apply that machinery to our existing 17 trucks. And again, there are no assurances as to what 18 will occur if the trucks go down and the machines blow up. 19 I won't repeat any more of what has been said 20 before. I thank you for your time. We are dedicated to 21 providing quality sanitation and recycling services to our 22 communities, maintaining our recycling diversion rate, and 23 cleaning up the air. We support your work here, and we 24 look forward to working with you to craft a rule that is 25 achievable for our community and meets the air quality PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 151 1 objectives. 2 CHAIRPERSON LLOYD: Thank you very much. 3 Kevin Mullins, Louie Pellegrini, Sheryl 4 Granzella. 5 MR. MULLINS: Good afternoon, Mr. Chairman, Board 6 members. My name is Kevin Mullins. I'm from the Mill 7 Valley Refuse Service. I bring greetings the Bedio family 8 who could not be here today. They're busy servicing our 9 18,000 customers in the cities of Mill Valley, Corte 10 Madera, Tiburon, and Almonte. 11 My company has provided collection and recycling 12 services for these communities since 1906, almost 100 13 years. We operate about 40 trucks, and I'm here to 14 express the company's strong support for the clean air, 15 yet we are opposed to this proposal on a number of 16 grounds, which I'll briefly discuss now. 17 First and foremost, as a rule is written, this 18 could potentially bankrupt our company. This is a small 19 family-owned. This is their life savings at stake here. 20 I say this not only as a concerned citizen, but as an 21 accountant and an economist, and because I do their books. 22 Our company operates under contracts that do not 23 ensure increase on the rates being charged to offset the 24 tremendous financial burden this rule contemplates. For 25 example, last year with the massive increases of workers' PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 152 1 compensation, a lot of our elected officials that we 2 service said, "Tough luck." We got half the increase that 3 we asked for. 4 Going forward, I want you guys to understand that 5 is a family's life savings that we're risking here on a 6 technology that's not exactly proven. And some of the 7 stuff in the staff report discusses that the impact is 8 not -- will be insignificant, and there's no potential 9 cost impact. If we're not allowed to pass this on, this 10 is the people's homes. This is the people's lives. This 11 is college fund we're talking about here. This is a small 12 family. We're worth about $10 million, but if we are to 13 revamp our entire fleet, it would cost about $4 million. 14 So leverage that, that's 40 percent of our equity. That's 15 a risk that the owners cannot afford to take. 16 Second, as a small business, we see that our 17 company will be crippled with the debt load if forced to 18 absorb the cost without recovery from the customers. The 19 national waste companies may be able to shift their old 20 trucks to areas out of state and bring new trucks in from 21 elsewhere subsidized by profits from their massive 22 corporate infrastructure. 23 The Bedio family is a business that is formed to 24 stay in business, and we do not have this luxury of being 25 able to shift costs or subsidize our expenses with sources PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 153 1 from elsewhere. By weakening the company's strength, the 2 rule as written threatens to put them out of business. I 3 don't think this is what California wants. We are in the 4 business of environmental protection and fully support the 5 need for clean air. We have achieved a diversion rate 6 of -- I believe the current number is 74 percent. So we 7 take the environment very seriously. We cannot, however, 8 successfully implement or support the rule that does not 9 provide for mechanisms for us to recover our costs. 10 The most recent example that illustrates this or 11 points this out is the bankruptcy of the electric 12 utilities because if you control one side but not the 13 other, who gets stuck in the middle? It's the service 14 provider, which would be us. In short, we wind up 15 becoming debt laden and no longer economically viable. 16 This is a company that's been around -- survived the Great 17 Depression and is now in its third generation, just to be 18 put out by an environmental rule that can be done using a 19 multitude of different methodologies. 20 A solution, for example, is a model successfully 21 used under AB 939 to require the municipalities to comply 22 with public policies and objectives. The municipalities 23 who granted the authority to assess local fees for solid 24 waste management, not the private vehicle owner, are in 25 the position to ensure that the costs of compliance are PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 154 1 ultimately borne by the rate payer. This isn't clear. 2 We've achieved 74 percent where I think much of the state 3 and the country is around 30 or 40 percent. 4 I thank the Board for considering my remarks, and 5 I'm available for any questions that you have. 6 CHAIRPERSON LLOYD: Thank you. Louie Pellegrini, 7 Sheryl Granzella, Ronald Proto. 8 MR. PELLEGRINI: Good afternoon, Mr. Chairman and 9 Board members. My name is Louie Pellegrini. I'm the Vice 10 President of Peninsula Sanitary Service, a family company 11 on Stanford University. We run 15 trucks -- 12 CHAIRPERSON LLOYD: One-five? 13 MR. PELLEGRINI: One-five. We're also involved 14 with some other companies that we operate in San Mateo, 15 Santa Clara, and Alameda County. 16 On a daily basis, I'm responsible for 100 trucks 17 leaving the yard every morning. Believe me, that is not 18 an easy feat. My experience is third generation, 30 years 19 have been driving the trucks, repairing the trucks, 20 negotiating the contracts, negotiating the rates, 21 inspecting equipment, and it's not an easy -- our business 22 isn't simple anymore. 23 We have embraced alternative fuels. In the '70s, 24 our fleet were propane-fueled equipment. The technology 25 was there. The support wasn't there. It fumbled. In the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 155 1 early '90s we got involved with CNG conversion on our 2 service vehicles and our large collection vehicle. We had 3 to change the engine out. The technology is always 4 playing catchup. We are currently running 12 compressed 5 natural gas trucks in one of our franchise agreements. 6 It's working. My fear on the technology side and the age 7 and number of trucks that we have is that we're putting 8 the cart before the horse in that it's not proven. 9 In our franchise agreements in keeping our rates 10 down with the rate payers and the elected officials happy, 11 we have scheduled equipment replacements going out from 12 seven to ten years. Our franchises have life left of 11 13 to 20 years. This has all been scheduled to provide a 14 reasonable rate increase to recover costs and provide 15 efficient services to our customers. 16 We embraced AB 939. We met the rules of our 17 cities. We invested a lot of money. My concern with the 18 technology and the rule is there isn't any offramp if the 19 technology does not come to fruition like it's supposed to 20 here. My biggest fear is that I will not have the ability 21 to provide the service because equipment does not 22 function. 23 The trend in the new franchises is liquidated 24 damages, missed customers, inability to complete routes, 25 $150 a day fines if we can't complete the route. I feel PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 156 1 between a rock and a hard spot basically sitting here 2 today that we're depending on manufacturers for traps, 3 engines, and the cities not wanting to step forward to 4 partnership, with technologies being borne here, a lot of 5 phrases that kind of tie it all together, but it's on our 6 backs. And my confidence level to be able to go forward 7 and get the job done, I feel we're at risk. And -- 8 CHAIRPERSON LLOYD: I think you heard -- I think 9 your confidence issue is staff is going to work this 10 issue, monitor the issue. You heard the engine 11 manufacturers want to work here. We have some testimony 12 from some of the aftertreatment. And clearly we need to 13 work together. But we're not going to leave you in 14 isolation there. 15 MR. PELLEGRINI: I'll just finish up here. I'm 16 speaking from where the rubber meets the road. In the 17 last ten years, I rolled out five major fleet retooling 18 collection systems, interact with the chassis 19 manufacturers, the truck manufacturers, the engine 20 manufacturers. Murphy's law, it doesn't always go as it's 21 supposed to. A lot of promises, but we're going to set a 22 rule here that's going to effect us down the road. 23 CHAIRPERSON LLOYD: We have a checks and balances 24 here. We have staff reporting back. We obviously share 25 some of your concern that there will be enough faith to go PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 157 1 ahead. Thank you very much. 2 MR. PELLEGRINI: Thank you. 3 CHAIRPERSON LLOYD: Sheryl Granzella, Ronald 4 Proto, Doug Button. 5 MS. GRANZELLA: My name is Sheryl Granzella, and 6 today I represent the Richmond Sanitary Service, which is 7 the subsidiary of Republic Services. Much of what I was 8 going to say today has already been said. I don't want to 9 be redundant and go on and on. 10 CHAIRPERSON LLOYD: Supervisor DeSaulnier will 11 appreciate that. 12 SUPERVISOR DeSAULNIER: I'm in charge of 13 redundancy. 14 MS. GRANZELLA: Richmond Sanitary Service has 15 provided waste collection, recycling services to western 16 Contra Costa County for more than 80 years. My father 17 served as President of Richmond Sanitary Services for 45 18 years until the company sold to Republic Services in 2001. 19 And I, like many of these people in the room, grew up in 20 this business. 21 CHAIRPERSON LLOYD: Did you say how many trucks 22 you had? 23 MS. GRANZELLA: I'm getting there. 24 CHAIRPERSON LLOYD: Sorry. 25 MS. GRANZELLA: Today we operate 70 trucks at PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 158 1 Richmond Sanitary Service alone, but Republic Services has 2 well over hundreds of trucks in California. But Richmond 3 Sanitary Service has six exclusive franchises and six 4 municipalities. As you've already heard, all the terms in 5 these agreements are different. And every one of them are 6 different. And they don't all have the same thing. 7 We feel we perform an essential public service 8 for our customers. We're very concerned about the 9 environment. We strongly support the air quality that 10 CARB is seeking with its proposed rule. We really ask 11 that you help support all of us with our concern for our 12 capital and our operating cost that we in the industry 13 will need and we need to recover from our rate payers. So 14 I appreciate all that's been said today about how you're 15 going to change the language to work with us. Thank you 16 very much. 17 CHAIRPERSON LLOYD: Thank you very much indeed. 18 Ronald Proto, Doug Button, David Achiro. 19 Maybe if the speakers could line up in the front 20 so we can save a little bit of time. It all adds up here. 21 MR. PROTO: Good afternoon, Mr. Chairman, members 22 of the Board. I don't want to repeat what everybody has 23 already said, but I do want to punctuate it. What I've 24 heard is that you do want to work to help these folks 25 recover money. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 159 1 My name is Ron Proto. I'm an associate member of 2 CRRC. I'm a consultant, but I'm not a consultant that 3 generates 120-page contracts. I try to get them back down 4 to 20. But what separates me from most consultants is 5 that I've worked on their side as an operator for over 40 6 years, and I know what it is to negotiate a contract. The 7 language could be in there, but as Kelly Astor said and 8 Andy Rose said, it's only a starting point. 9 What I heard on the left was, "We need to put 10 language in there that allows them to recover." What I 11 heard on the right was, "Well, we should only be 12 advisories." What I heard in the center was, "Well, we 13 can't put too much in there because then we'll lose the 14 support of the cities." I ask you respectfully whatever 15 language you put in there to help the industry recoup its 16 dollars needs to be very clear and very specific. You've 17 made a regulation that's going to cost them a lot of 18 money. You should also put wording in there that allows 19 them to recoup it. Thank you very much. 20 CHAIRPERSON LLOYD: Thank you very much. 21 Doug Button, David Achiro, and Harry Miller. 22 MR. BUTTON: Good morning, Mr. Chairman, members 23 of the Board. I'm President of South San Francisco 24 Scavengers. We operate in the Bay Area approximately 42 25 vehicles. We've been in business since 1914, second/third PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 160 1 generation run business by nine family members -- nine 2 different families, I should say. 3 First off, I'd like to say I applaud your work. 4 And I, too, express and share your concerns with the 5 environment, and I believe our company does too. I look 6 forward to the day we can come here and say we have 7 reduced particulate matter, NOx emissions are down. But 8 what I'm concerned about is what I hear your staff saying 9 is that you're going to require us -- and I mean my 10 industry and my company -- to retrofit, repower, or 11 replace 11,000 vehicles in the next seven years depending 12 on what category you fall into. But it will be within the 13 next seven years. That's a monumental task. 14 You're asking us to do it with technology that, 15 again, I hear your staff telling me have neither been 16 developed, tested, or that will be warranted for the life 17 of the equipment that we have to put it on. I hear them 18 say that in L.A. we've tried it on 360 vehicles. And so 19 the warranty shouldn't be a concern. Excuse me. L.A. 20 last time I was there was flat. And I operate in a very 21 hilly area. Where are the tests for San Francisco? I 22 heard nothing on that. I saw nothing in the reports. I 23 don't know anything about -- I heard nothing about the 24 Sierras or the Nevadas range where we still have companies 25 that operate. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 161 1 And yet, they're going to be putting on these 2 technologies and requiring us at the end of the day when 3 all of you pass these rules that we go home, we go to our 4 councils and we're asking where we have begging rights to 5 get more money to get this cost replaced. We go to them 6 and say, "Yes, we want to do it." While at the same time 7 we're telling them labor is going up. Insurance is going 8 up. Workers' comp, all these things. It's not going to 9 be easy, especially when we can't tell them this is 10 something everybody else is doing. 11 You're making us do this before the rest of the 12 state. We're held out as poster children that we've got 13 dirty trucks, and that's not the case. We have been 14 environmentalists for 89 years, and I think every other 15 company here is too. I'd love to see this happen. Don't 16 make us do it alone. Thank you. 17 CHAIRPERSON LLOYD: Thank you very much. 18 Ms. Witherspoon, I think you made an 19 understatement when you said the industry wasn't too happy 20 with us. 21 David Achiro, Harry Miller, and Alan Marchant. 22 EXECUTIVE OFFICER WITHERSPOON: I think you've 23 heard them all say they support our objective. It's all 24 concern about cost. 25 CHAIRPERSON LLOYD: Yes, exactly. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 162 1 MR. ACHIRO: Hi. I'm David Achiro from Tahoe 2 Truckee Sierra Disposal. We have about 40 trucks. I just 3 want to concur with Kelly and with Doug Button. I want to 4 make it short. I'm going to keep it short for you guys. 5 I concur with what they say. 6 We're in the Tahoe Truckee area. My father 7 started the business in 1964. Back then, we had one 8 truck, one, you know, tractor, and one pickup. And now 9 we've grown a little bit. But I just want to concur with 10 them that we do need to get the municipalities involved 11 with this, if this is going to work at all. Because they 12 can -- they can say no. 13 We just negotiated a contract with the county, 14 and we want to keep in good terms with them. But we -- we 15 were a little beat up. And without some sort of something 16 on the municipalities, they can -- even if we do give them 17 the information and the cost, they can still say no. I'll 18 just end it there. 19 CHAIRPERSON LLOYD: Thank you very much indeed. 20 Harry Miller, Alan Marchant, and John McNamara. 21 MR. MILLER: Good afternoon, Board members. 22 Thank you. And good afternoon, I guess. I'm with Tracy 23 Delta Solid Waste Management. We're the hauler for the 24 city of Tracy and the southwestern portion of San Joaquin 25 County. We operate some 50 vehicles there in the solid PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 163 1 waste business. And it's a small family-owned company, a 2 second going into third generation right now. I am, among 3 other things, Recycling Coordinator with the company. As 4 with most small businesses, we wear a lot of hats. 5 Hopefully not too many of them at the same time because it 6 gets confusing. 7 I bring greetings from the Repetto family this 8 case, which is the owners of the company. And the reason 9 they're not here is because they're presently 10 negotiating -- well, probably having lunch now -- but 11 negotiating the agreement to upgrade the recycling 12 services for the city of Tracy to go into a full -- let's 13 call it a single-stream system now. That's another 14 subject. 15 We fully support clean air. We love in the 16 central valley of California and families and children, 17 what have you. And you know, we want everything that 18 everyone else wants, but we want businesses that are going 19 to survive as well. 20 We operate under a contract with the city of 21 Tracy and San Joaquin County and a couple of other areas. 22 In every instance we have the agreement that we can go 23 back and say, "Yeah, we've had this increased cost," but 24 it doesn't necessarily mean that they're going -- that the 25 city or the county or whoever is going to increase our PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 164 1 funding. It's just all iffy. And in business we hate 2 being iffy. 3 Which brings me to the second point. You know, 4 the staff's numbers we think are a little bit fuzzy, just 5 simply. We operate, as I said some, 50 trucks. If we're 6 retrofitting 50 vehicles at -- I heard the number of 7 $9,000 or 9500, I believe it was a vehicle, we've got 8 $500,000 we're looking at. Our city and our surrounding 9 area, there's 20,000 people. At a dollar a home per year, 10 that's $140,000 over seven years. There's some bit of a 11 discrepancy here. So I have some question about the cost. 12 We operate old trucks for one very good reason; 13 we have to be competitive. We, unlike the large haulers, 14 can't afford to go out and buy new trucks all the time. 15 And the new recycling program we're putting in, we are 16 using trucks that we bought from one of the larger haulers 17 and we're refitting those at the present time. 18 I just recently heard one of the staff members 19 say that, "Well, you know, all the haulers are talking 20 about is cost." And I don't really think that's the case. 21 I think what we're talking about is survival. Because if 22 we can't recover our costs, there's a very good chance 23 we're not going to. And particularly small haulers are 24 going to be subject to predatory large companies coming in 25 and forcing us to sell. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 165 1 And with that, thank you very much. 2 CHAIRPERSON LLOYD: Thank you. We understand the 3 issue. 4 Alan Marchant, John McNamara, Richard Caglia. 5 MR. MARCHANT: I'm Alan Marchant, President of 6 Turlock Scavenger Company. Third generation in our 7 company. We've been here for 68 years in Turlock, and we 8 operate some 30 trucks. We're in the 30 truck category. 9 I would love to be able to cure the air pollution problem 10 in the San Joaquin Valley area. It's a soot bowl. We 11 know that. I have children, grandchildren, and definitely 12 don't want to see them with any problems either. 13 One of the concerns I have is we're a small 14 company. The only thing I can offer my city is service. 15 We don't have the big funds like the big companies. We 16 can't do that. The concern I have is we put the 17 particulate filters on these trucks -- a lot of our trucks 18 are the old trucks. We're not going to be able to repower 19 those trucks because they don't make engines for this 20 model of truck that we invested in in the past. We're 21 going to have to go out and purchase a lot of new trucks. 22 The concern I have is putting these particulate 23 filters on these newer trucks that aren't the 2007s and, 24 yeah, I know there's supposed to be a guarantee on this 25 particulate filter, but in the meantime, this truck blows PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 166 1 up. That truck's sitting. And somebody's arguing who's 2 going to be who -- who's going to take care of that. I 3 got to get that truck on the road. I don't have a choice. 4 I have to pick up that garbage. 5 The other concern I have is I've probably got one 6 of the greatest rapports I think with my city. We have a 7 great city. They've just had major increases on clean 8 water issues and sewage issues and all this. For me to 9 come in and ask them for more money from my side, I 10 question it in this these times. And I can tell you that 11 if I don't get these rate increases to purchase these 12 trucks, I will be out of business. Thank you. 13 CHAIRPERSON LLOYD: Thank you. And rest assured 14 that -- I understand that you actually serve one of our 15 Board members, and that we will hear firsthand how this 16 rule is being implemented. So D.D. does a great job of 17 representing that part of the valley. And in this case we 18 really have -- we will have real time feedback. So rest 19 assured, I'm sure we will hear firsthand. 20 MR. MARCHANT: She does do a good job. And thank 21 you. 22 CHAIRPERSON LLOYD: John McNamara, Richard 23 Caglia, and Sean Edgar. 24 MR. McNAMARA: Good afternoon, Mr. Chairman. My 25 name is John McNamara, and I represent the CRRC Southern PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 167 1 District. I'm here from Southern California this morning. 2 I want to share with you a case study. It's a 3 story about our recent experiences in Southern California 4 with fleet emission rules that taught us a lot. The South 5 Coast Air Quality Management District implemented the rule 6 1193 that regulates the refuse fleet industry in Southern 7 California. It's been in place for two years. My company 8 working for CRRC documented many failures that occurred in 9 the first year and -- actually year and a half of that 10 implementation. We provided a copy of that report to your 11 staff back in April. 12 And it documented -- and I want to highlight some 13 of the things -- some of the most notable things; 40 14 engines that were a failure in a fleet of 300 natural gas 15 vehicles. All the fuel tanks in one fleet of 30 natural 16 gas vehicles failed completely. The municipal fleet of 17 105 vehicles that had dual fuel vehicles had a 70 percent 18 downtime rate. We documented all that in order to try to 19 better the rule. And to this point, we're not satisfied 20 that's occurred with the South Coast AQMD. 21 As a result of that, what we also documented in 22 the refuse industry in Southern California is that truck 23 orders have flattened and are declining in sales. We now 24 in Southern California have less options for clean burning 25 engines. And in one case, one vehicle class or engine PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 168 1 class we have no manufacturer that can provide us with the 2 product that some of the tractor trailer class of vehicles 3 that we have use for taking away from the transfer station 4 to the landfill. 5 In our opinion, as we've documented this, rule 6 1193 has actually resulted in dirtier air. We haven't 7 been able to move on to clean burning engines like we 8 wanted to and they're not available. There's less 9 providers now than when we started in the rule process. 10 The irony of this is that the private refuse 11 haulers have historically been out in front on this issue 12 of regulations in clean burning engine technology. We've 13 been -- you heard about some of them, how we had a propane 14 fleet and a CNG fleet. And we feel that the CARB rule -- 15 and we provided you specific technical issues we feel 16 inhibit us from going forward with this same type of rule. 17 I want to give you an example of some of the 18 types of programs that the refuse industry has introduced 19 and done on a voluntary basis before the rules were ever 20 written. 21 CHAIRPERSON LLOYD: What should we be doing with 22 respect to this rule? 23 MR. McNAMARA: We provided you with written 24 comments earlier this month. We ask that dual fuel be 25 introduced as a option in the rule and be addressed. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 169 1 We've been asking for that for a couple of years. We're 2 not saying it be 100 percent adopted or embraced, but at 3 least you give us some consideration. And we've heard 4 some testimony on that earlier. 5 I also wanted to address one of the Board 6 member's comments that this is a small portion of the 7 fleet. Actually, the city of L.A. has 105 vehicles that 8 are being used right now. They're planning on adding 100 9 more so it will be 205 in the city of Los Angeles. 10 Republic Industries has about 30 dual fuel LNG vehicles. 11 Waste Industries has about 30 dual fuel vehicles. Waste 12 Management and BPI both have dual fuel vehicles. 13 CHAIRPERSON LLOYD: Just a matter of application 14 here from the legal counsel. Clearly, you're subject to 15 the South Coast fleet rule. If we pass this, which takes 16 priority? 17 MR. McNAMARA: I couldn't answer that. 18 GENERAL COUNSEL WALSH: Both rules would apply. 19 The rules have been -- 20 CHAIRPERSON LLOYD: Both rules would? 21 GENERAL COUNSEL WALSH: Yes. 22 CHAIRPERSON LLOYD: How would both rules be 23 implemented? 24 EXECUTIVE OFFICER WITHERSPOON: Within our rule 25 BACT definition includes natural gas vehicles, so the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 170 1 purchase of any of these vehicles would apply. To the 2 extent that diesel vehicles also existed in some of these 3 fleets, existing diesel vehicles not subject to the 4 purchase requirements -- which is what the South Coast 5 rule does -- would be subject to the retrofit, repowering 6 or replacement. But as they got replaced, our rule would 7 push them into the South Coast rule. When you go waste, 8 then you have to buy a natural gas vehicle. 9 CHAIRPERSON LLOYD: With the natural gas you 10 mentioned some problems. Are they still operating them? 11 MR. McNAMARA: Not all of them. In some cases 12 the fleets have actually shrunk or parked the vehicles 13 because they don't have the support. We found a lot of 14 problems with the warranty issues and who's responsible 15 for what. For instance, an LNG vehicle, they have a fuel 16 tank. It's a cryogenic tank, and it costs about $5,000 as 17 compared to a diesel tank that costs maybe $200. Those 18 tanks were provided, and the warranties weren't extended 19 all the way through in the way they should have been. So 20 their product wasn't supported. Some of these -- like I 21 said, the city of Los Angeles had 70 percent of its fleet 22 parked last year. 23 CHAIRPERSON LLOYD: Do these vehicles have oxi 24 cats on them? 25 MR. McNAMARA: Pardon me? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 171 1 CHAIRPERSON LLOYD: Do they have oxidation 2 catalysts on them? 3 MR. McNAMARA: The city of L.A. might have on 4 some of them. 5 CHAIRPERSON LLOYD: What about your fleet? 6 MR. McNAMARA: I don't have a fleet. I'm just a 7 regulator service director for California Refuse Removal 8 Council. 9 CHAIRPERSON LLOYD: So it's just the city of L.A. 10 that has the oxidation catalyst? 11 MR. McNAMARA: That's the only one I'm aware of, 12 but there may be others. 13 EXECUTIVE OFFICER WITHERSPOON: Mr. McNamara also 14 brought up the issue of dual fuel vehicles, and we talked 15 about that earlier today with respect to San Diego and 16 15-day changes that we'll be looking at to address that 17 case. 18 CHAIRPERSON LLOYD: Thank you very much. 19 Sean Edgar -- oh, sorry. Richard Caglia. 20 MR. CAGLIA: My name is Richard Caglia. I 21 represent Industrial Waste and Salvage. I, too, am a 22 third generation family member. Our hauling company has 23 about 20 trucks currently. I'm not going to stand up here 24 and echo everything you've already heard. But there is -- 25 I'm starting to feel like one of the first monkeys going PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 172 1 into space with unproven technology and burdensome 2 technology and regulations that are going to cost our 3 company millions of dollars, potentially. 4 We're currently financing a $9 million facility 5 which is a new facility. It's a transfer station facility 6 and recycling facility. And I don't have to tell you 7 again what you've already heard. I just want you to know 8 that I'm here. We want to be part of the central valley 9 solution. We do support clean area. I grew up with 10 asthma, so I still deal with it. My daughter has it. I'm 11 currently a Board member in our local Mayor, Alan Autry's, 12 Task Force for Clean Air. I can appreciate everything 13 you're doing. I was up here during the Archie Crippen 14 hearings with the Waste Board. And I just appreciate you 15 listening to what we have to say. And we appreciate 16 further comment and study from the staff's perspective. 17 And I don't want to feel like a monkey anymore. Thank 18 you. 19 CHAIRPERSON LLOYD: Thank you very much indeed. 20 Sean Edgar, Paul Wuebben, Ruben Martinez. 21 MR. EDGAR: Chairman Lloyd and Board members, 22 thank you. I'm Director of Regulatory Affairs for the 23 California Refuse Removal Council, north district. In 24 this capacity I've personally spent more than 500 hours 25 working on this rule package alone. Much of that quality PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 173 1 time has been spent with Ms. Witherspoon and your staff. 2 And to not belabor this, but there are a few 3 quick issues I want to address, number one being our 4 industry does not build itself using uncertainty as its 5 guide. I've heard you mention San Diego so I just want to 6 follow up very quickly. Mr. Medonza was before your Board 7 in April and went out and bought plus or minus of these 8 super duper all fuel trucks and only eight of them 9 grenaded, but we're really committed to the program. Ten 10 percent failure rate -- I don't know if any of the eleven 11 members of your Board, if one or two or more of you would 12 be satisfied with a lesser degree of service when you roll 13 your recyclable or garbage cart out to the curb, we would 14 like to know that as an industry. Because we do not 15 invest hundreds of millions of dollars in building the 16 facilities and the infrastructure to enjoy the benefits 17 that our industry is instrumental in providing to all 18 Californians in terms of resource conservation. 19 And perhaps your staff really hasn't zeroed in on 20 the amount of air quality benefits that recycling delivers 21 now. As an example, material recovery versus virgin 22 resources. Fed EPA is an example, has some very 23 compelling evidence that tells us that 90-plus percent 24 reductions in air emissions from using recyclable aluminum 25 versus mining new aluminum. The same for paper. Plastic PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 174 1 has its benefits. The air quality emissions that we're 2 delivering by virtue of every fewer ton that we put into 3 the landfill every day is an exact benefit. 4 We're not coming forward as someone in the ag 5 team may have said, "Hey, we're a sacred cow, please don't 6 regulate us." This business has been used to being 7 regulated. We were regulated for public health and safety 8 reasons. We're regulated because we need to establish a 9 recycling mandate. In the same room every month, the 10 Waste Board tells the cities we serve, "recycle or die." 11 That is our livelihood. And I say very clearly, 12 we've heard comments today from your staff and also from 13 the folks behind me, and I'm also speaking for the 20 or 14 30 others members who are out running their companies 15 today, we heard very clearly from them, they cannot rely 16 on uncertain technology to carry out their critical 17 business. They cannot rely on "maybe." When it comes 18 down to whether they'll be able to pick up your garbage or 19 recyclables, "maybe" does not work. 20 The last thought I will leave you with -- and due 21 to this tremendous degree of uncertainty, specifically in 22 Item 56 in the package, pages 3 through 6, there are about 23 20 bullets of specific requests that were made from this 24 Board. We have highlighted those requests with your staff 25 and many of them for an extended period. And staff, yes, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 175 1 in the last few days have really been able to zero in to 2 understand some of the frustration and anger that is 3 expressed by the folks behind me. 4 The last idea I will give you is that we are 5 committed to work through some amendments to this package 6 that make it more acceptable. Ultimately if we fail, you 7 as our customers fail. The cities and counties mandated 8 to recycle fail. When everybody goes away and microphones 9 are dead and the lights go down and our companies need to 10 go out, the truck needs to turn over at 3:00 in the 11 morning. We're not at the stage with the technology that 12 our people are comfortable doing that. 13 They cannot risk the continued livelihood of 14 their families on a maybe, on a birthing process, on an 15 uncertainty that's not quite there yet, on representations 16 from folks who want to sell all sorts of different 17 products they can't stand behind long enough in order for 18 us to successfully use it in a field. Because as 19 Mr. Pellegrini indicated, where the rubber meets the road 20 is where our obligations to you as our customer is. And 21 we are not at that stage yet. 22 Appreciate your attention. And I will dedicate 23 myself to another several hundred hours or however long it 24 takes to get through what our members, the folks that are 25 here, and the ones who aren't here need to get out of the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 176 1 package. We figured out how to make recycling work. We 2 can do this, figure out how to make this work. We need to 3 do a lot of tweaking on it. We're dedicated to do it. 4 Appreciate your time today. Thank you. 5 CHAIRPERSON LLOYD: Thank you. 6 We got a change in order here. It's Chuck 7 Helget, Kent Stoddard, David Wilson, then Paul Wuebben. 8 You'll see Board members going periodically to 9 the back. We're trying to get a lunch. But there's 10 microphones back there so we can hear -- speakers back 11 there so we can hear back there. So that's what you see. 12 But we will be taking a shortened lunch break. We're 13 listening all the time. 14 MR. HELGET: Mr. Chairman, members of the Board, 15 I'm Chuck Helget representing Allied Waste Industries. 16 And Allied Waste Industries is offering qualified support 17 for this rule. Allied is the second largest waste hauler 18 in the country, and we have about 1500 vehicles operating 19 in California. 20 Again, we're offering qualified support of the 21 regulations because we believe that a reasonable and 22 technically sound statewide program for particulate matter 23 reduction is in the best interest of the communities that 24 we serve. From our perspective, however, this is not just 25 about cost recovery from the industry's perspective. It PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 177 1 is about technology, technology availability, and 2 technology warranties, and about cost controls on these 3 technologies. 4 We are concerned that the rules proposed depend 5 heavily upon the availability of control technologies that 6 are not yet commercially available or verified to achieve 7 the various minimum levels of the PM reductions. We are 8 also concerned that there is no reasonable estimates that 9 the cost of applying these yet-to-be-determined 10 technologies and for the new infrastructures necessary to 11 implement some of the alternative fuel technologies. 12 In order to provide our customers with reasonable 13 priced solid waste collection, we need a dependable fleet 14 of solid waste collection vehicles and a cost effective 15 fleet. The time line for converting our fleet is 16 critically tied to the availability of control 17 technologies and to the operation of reliability of those 18 technologies. At a minimum, we believe the rule should 19 stipulate that the warranty period for those -- for the 20 hardware portions of the diesel emission control 21 strategies be about ten years. 22 The compliance extension authority granted to 23 executive officers, as we said in our letter, we believe 24 shouldn't be discretionary. And we also want to ensure 25 this rule remains balanced and encourages innovative PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 178 1 technologies that achieve the state air quality goals in 2 the most economically efficient manner. 3 Allied has implemented a biodiesel strategy for 4 our fleet in Chula Vista with excellent results using a 20 5 percent biodiesel blend with an additive called ethos. We 6 have achieved field verified 70 percent PM reductions for 7 the entire fleet and strongly urge the Board to include 8 biodiesel as a compliance option. The current 9 verification process is expensive and extensive, and as a 10 result discourages, to some degree, technological 11 innovation. The rule should encourage high compliance 12 standards and cost effectiveness by providing the 13 flexibility of the fuel industry's projects. When the 14 technology has been proven in the field, there should be 15 some mechanism to allow that technology to be used until 16 the compliance strategy has been completed in the lab. 17 Finally, these costs -- if the costs that we bear 18 from these technologies is significantly higher than your 19 staff has estimated, we will have a very difficult time 20 passing these costs through, not just with the communities 21 we serve and the franchises agreements that we have with 22 them, but with the commercial customers. Because the 23 pricing for our commercial accounts are what the market 24 will beat. And it will be difficult. 25 This is why we urge the Board to ensure that PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 179 1 local governments are kept in the compliance loop. And in 2 doing that, we believe it will ensure that we all share in 3 the common goal of achieving a higher level of compliance 4 and cost effectiveness through a fair rate setting 5 structure. We support the Board's efforts here -- 6 BOARD MEMBER HUGH FRIEDMAN: Excuse me, sir. 7 Your time has elapsed. 8 MR. HELGET: We support the Board's efforts today 9 and pledge to work with the Board and staff. 10 BOARD MEMBER HUGH FRIEDMAN: Thank you very much. 11 Any questions? 12 Mr. Stoddard. Kent Stoddard. 13 MR. STODDARD: Mr. Chairman, members, Kent 14 Stoddard representing Waste Management. We are the 15 largest fleet of solid waste collection and recycling 16 vehicles in California. We have approximately 3500 17 collection vehicles and about 10 or 12 percent of the 18 number are dedicated to 100 percent natural gas vehicles. 19 We met with staff yesterday about the rule to 20 express our concerns along with other representatives of 21 the industry. And as a result of that meeting, we're 22 supporting the rule. But I want to make it absolutely 23 clear this is a leap of faith for us. We have many of the 24 same concerns that have been articulated by all of the 25 small haulers. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 180 1 In effect, I'm a collection of small haulers. We 2 have about 70 terminals running on average 50 trucks at 3 each one of those terminals. This is a monstrous program 4 for every hauler, whether they're big or small, to 5 implement. 6 And what I would ask the Board today is to really 7 look hard at this issue of stranded costs. There are 8 many, many haulers that are going to have a tough time 9 recovering the costs from local government. And there's 10 been some discussion today about maintaining the proper 11 balance in the rule. But the fact of the matter is in the 12 operative language of this particular rule, there is no 13 balance at all. The burden falls entirely on the local 14 hauler -- that private hauler to comply with the rule. 15 What we're asking today is that you go as far as 16 you can with intent language and an expression of what the 17 desire of this Board is to encourage local governments to 18 work with their haulers. I think at some point we need 19 some joint workshops with the industry, with environmental 20 groups, with the League of Cities, with the Board to make 21 sure local governments clearly understand the benefits of 22 this rule, and they are huge. I mean, this is a very cost 23 effective regulation. It will either fall on the industry 24 at a cost of $100 million or more, much of which they 25 can't recover, or it will be passed through to every PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 181 1 consumer, every rate payer at a rate of about 12 cents per 2 month for clean air. 3 So we are strongly supportive at what you're 4 trying to do. This is a good rule. But there are some 5 issues that have to be addressed. We're all nervous about 6 the technologies. We haven't used these technologies very 7 much. We've seen enough to feel like we can get through 8 it. But this issue of making sure we don't have stranded 9 costs, which would have just a devastating impact on 10 companies, whether they're large or small, is really a 11 critical issue. 12 We would really ask that at the end of the day, 13 at the end of this hearing when it's time to sit down and 14 work out that language, do everything you can to express a 15 clear interest that this is a partnership between haulers 16 and local governments and Air Board to make sure this 17 program is fair and equitable and works. Thank you. 18 BOARD MEMBER HUGH FRIEDMAN: Thank you. 19 Any questions? 20 BOARD MEMBER RIORDAN: Mr. Chairman, just to the 21 staff. Regarding the meetings that Mr. Stoddard asked 22 for, that seems to be a realistic request where you would 23 get those effected parties in a room. Is that your idea 24 with outreach that you might do in terms of our role -- 25 education bringing together the various constituents? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 182 1 EXECUTIVE OFFICER WITHERSPOON: We haven't fully 2 thought through exactly what form the outreach would take. 3 I was happy to hear the suggestion for the workshop and 4 was immediately nodding at staff yes, let's do that. And 5 let's get the Waste Board there with us, along with the 6 cities and the waste haulers and the rest to bring these 7 issues together. 8 And Supervisor DeSaulnier and I were talking 9 about it, too, having a sidebar of how do we accomplish 10 this both prospectively before the rate haulers show up to 11 ask for what they need, and retroactively to keep tabs on 12 how it's going and if we need to do follow-up outreach. 13 BOARD MEMBER RIORDAN: I think it's very 14 important prospectively because while the haulers have 15 certainly had an opportunity to work through this, most of 16 the cities have relied on their key staff people here in 17 Sacramento, League of California Cities or the Association 18 of County Governments. But they've not been individually 19 properly involved, except maybe a rare few. And I think 20 we need to reach out to all of those city councils and all 21 of those boards of supervisors because they're the ones 22 that are, you know, having their staff negotiate 23 contracts, and to understand why there may be a need to 24 reopen the discussion on capturing some of the costs of 25 this program. So I think it's an excellent idea, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 183 1 Mr. Stoddard, and we need to move forward on that. 2 MR. STODDARD: Thank you very much. 3 BOARD MEMBER HUGH FRIEDMAN: Mr. Stoddard, you 4 have an attachment to your letter dated today, which 5 proposes additional language for a resolution. It seems 6 to be very similar to the 15-day notice. Is it similar to 7 the one staff came back with? 8 MR. STODDARD: It's very similar to the one staff 9 came back with. 10 CHAIRPERSON LLOYD: What we already have. 11 MR. STODDARD: The only difference I actually did 12 notice when they showed it to me yesterday is I think the 13 staff has come back and suggested biennial review as 14 opposed to an annual review. There may be a 'tweener 15 there. We'd like to see an annual review, at least in the 16 early years of implementation. If things are going well, 17 as we hope they will, we can go to a biennial review. We 18 feel that that's a really critical mechanism. There's a 19 lot of trust here in local government stepping up to do 20 what needs to be done for the implementation of this rule. 21 But we would say let's trust and let's also verify and 22 make sure that this is actually going to work. 23 BOARD MEMBER HUGH FRIEDMAN: Are there any 24 particular reasons for the biennial rather than annual? 25 EXECUTIVE OFFICER WITHERSPOON: It's just staff PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 184 1 resources. I think that Mr. Stoddard is right, it should 2 start at annual and become biennial. The other nuance is 3 that his language talks about surveying regulated haulers 4 only, and it would be our intent -- 5 BOARD MEMBER HUGH FRIEDMAN: You're talking 6 broadly? 7 EXECUTIVE OFFICER WITHERSPOON: We would talk to 8 the municipalities about their interpretations. 9 MR. STODDARD: We're fine with that. We agree. 10 BOARD MEMBER HUGH FRIEDMAN: I think we have time 11 for maybe one for two more before the reporter needs to 12 take a break. 13 Mr. Wilson. 14 MR. WILSON: Good afternoon. My name is Dave 15 Wilson. I represent the city of Los Angeles, Department 16 of General Services, Fleet Services. And there's been a 17 lot of stuff talked about our fleet. I'm kind of here to 18 set the record straight of what is happening with our 19 fleet. 20 Basically at this time we have 350-plus vehicles 21 fitted with the retrofit program of the particulate trap. 22 We also have about 150 to 160 dual fuel vehicles also 23 fitted with traps, but they were purchased from the 24 factory and the dealer. And to make a long story short, 25 we've had pretty good luck with them. There's been some PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 185 1 failures. The failures that we have had, the 2 manufacturers have stepped up -- either the manufacturer 3 of the truck or the manufacturer of the trap has basically 4 stepped up to the plate. We were having an issue at one 5 time with the traps breaking apart. There was some 6 integrity issue with the trap itself. They stepped up to 7 the plate and fixed it. 8 It was mentioned earlier L.A. is flat. L.A. is 9 not flat. I have trucks that work exclusively in the 10 hills, Hollywood Hills, Pacific Palisades. And then the 11 only landfill that I have basically I have to pull 6 12 percent grade. So I mean, this technology that we have 13 that we're working pretty good with basically is being 14 tested on a pretty good basis. 15 I don't know -- again, a lot of other stuff was 16 thrown out. We have invested a lot in all fuel and these 17 resources. We have two fuel sites going for dual fuel. 18 We have invested in some new shops that are all fuel 19 compliant. Basically this is an undertaking that we kind 20 of saw the handwriting on the wall. We decided to go with 21 it, and we have committed to it totally. 22 There have been some issues. There have been 23 some mechanical issues. But I've been involved in the 24 truck repair industry for close to 30 years, and I've had 25 a whole fleet of trucks out for a rear-end or transition. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 186 1 So I mean, to hold this technology to a higher standard 2 than that is unfair also. 3 Again, you know, if there's any questions I can 4 answer. 5 CHAIRPERSON LLOYD: Thank you. 6 Any questions? 7 BOARD MEMBER RIORDAN: Only, Mr. Wilson, would 8 you be willing to serve as sort of a resource for people 9 who do want more information? Are you available for that 10 if the city -- so that if people want to talk to you, 11 other haulers, to see what your experience has been, would 12 you give them that information? 13 MR. WILSON: Absolutely. And all the same 14 questions that are being asked here, all the same fears, 15 we've been through that already. 16 BOARD MEMBER RIORDAN: Would you participate in 17 some of our outreach that we want to do early on in this 18 process when we talk to the various people who are going 19 to be involved? 20 MR. WILSON: Absolutely. 21 MS. RIORDAN: Thank you. 22 CHAIRPERSON LLOYD: Thank you. 23 On that high note, we'll take a very brief recess 24 for the reporter. Five minutes, seven minutes, something 25 like that. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 187 1 (Thereupon a recess was taken.) 2 CHAIRPERSON LLOYD: I'd like to restart. 3 Continue with Paul Wuebben, Ruben Martinez, and 4 Dr. Kubsh. 5 Sorry to keep you waiting, Paul. 6 MR. WUEBBEN: Thank you very much, Mr. Chairman. 7 For the record, I'm Paul Wuebben representing South Coast 8 Air Quality Management District. And to address first the 9 important question that the Chairman has been asking, we 10 have no refuse trucks, but we have lots of smog. So with 11 that, we did provide a comment letter on this rule. And 12 just to briefly summarize, that we strongly support the 13 staff-recommended rules. We certainly appreciate the 14 complexity and the pragmatism that the Board is struggling 15 with here, and we do think that the staff's 15-day changes 16 that were brought forward are certainly sound and well 17 reasoned. 18 We would request that you consider some 19 acceleration of the implementation, as it's been suggested 20 by the staff. If there were some acceleration of one of 21 the categories -- for example, I think they mentioned 14 22 percent enhanced PM reduction -- or an 18 percent 23 increased benefit with a 14 percent increased cost, based 24 on the tremendous cost effectiveness of this rule, it 25 would seem to be that would be a reasonable balance of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 188 1 benefits to cost. But we'll certainly let you sort that 2 out. But we would suggest that you at least consider 3 providing the local districts possibly the authority to 4 consider enhancing those timetables and accelerating them. 5 So with that, I just would close by commending 6 the staff for a lot of diligent work, especially in the 7 updating of all the cost factors and in keeping this and 8 all these changes, I think, relevant to the marketplace. 9 And we close with urging your adoption of the rule. 10 CHAIRPERSON LLOYD: Thank you very much, Paul. 11 We appreciate it. 12 Ruben Martinez and Dr. Kubsh. 13 MR. MARTINEZ: Mr. President, Board members, my 14 name is Ruben Martinez. My company is Diesel Air Fleet 15 Service. I'm a smoke testor. I've been smoke testing 16 diesel for five years now. 17 I actually just came to see what was going on in 18 Sacramento. I service the Southern California area. And 19 in listening to the discussion and reading some of the 20 material, I'm in favor of any program that's going to help 21 reduce PMs and NOx. I just saw a couple of slides about 22 NOx. PM naturally we can see. It's visible. What I see 23 and hear, it's going to be a hardship on smaller companies 24 and generally every one. 25 But what I would like to see is maybe from a PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 189 1 different angle. You know, what I see out there is that 2 there isn't the presence and the enforcement of the 3 companies that are not complying. I have companies that 4 refuse to comply. I have companies that crank up the 5 engine -- I also used to be 22 years diesel mechanic -- 6 deliberately. And I would like to see more presence of 7 the ARB out there and a governing force in which to, you 8 know, put more stringent on these people. And if we were 9 just to do that, we'd be able to bring the PMs 10 substantially down. 11 I have also tested some of the catalytic 12 converter particulate traps. And with the new 13 technologies over the engines, they're real close. So to 14 me it's like a waste of money. I would rather them go 15 through NOx, you know, focus more than the PM, because 16 that's going to clean up with the new technology. 17 But just in saying that, it is going to create a 18 hardship. But I would like to see more presence of the 19 ARB enforcement out there because it would really help a 20 lot of these people that are not complying. 21 Thank you very much. 22 CHAIRPERSON LLOYD: If I understand it correctly, 23 if we are successful in eliminating air pollution and 24 eliminating visible emissions, you're out of business too? 25 MR. WUEBBEN: I'll be out of business too. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 190 1 CHAIRPERSON LLOYD: A laudable goal for both of 2 us. We have a way to go. 3 Professor Friedman. 4 BOARD MEMBER HUGH FRIEDMAN: Mr. Martinez, one 5 quick question. When you say the polluters are out there, 6 are you talking about waste haulers or are you talking 7 about -- 8 MR. MARTINEZ: I have waste hauler customers. I 9 have trucking customers. I have bus people, yes. And I 10 have independent contractors that I can get because they 11 got fined, so they need to be smoke tested. 12 BOARD MEMBER HUGH FRIEDMAN: So they do get fined 13 sometimes? 14 MR. MARTINEZ: Yeah. So you need to get what -- 15 I have a graph I give my customers comparing each year so 16 they see where their vehicles are. And I have some 17 customers that really want to improve. And really, you 18 know, do better so I'm happy for that. 19 CHAIRPERSON LLOYD: Thank you. 20 MR. MARTINEZ: Thank you. 21 CHAIRPERSON LLOYD: That raises, of course, the 22 issue -- and Paul, you can maybe recount for me the status 23 of the South Coast visible emissions reporting program. 24 Is that still active? Maybe tell our staff what happens 25 when we use the call-in number. Is this still active, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 191 1 Paul? 2 MR. WUEBBEN: I don't believe that it is. 3 CHAIRPERSON LLOYD: You'll have to get back to 4 me. Okay. 5 What about our staff, any -- 6 GENERAL COUNSEL WALSH: We do have our smoking 7 vehicle line, which is still operational. And we do get 8 calls on it on a regular and on-going basis. 9 CHAIRPERSON LLOYD: Okay. Thank you. 10 Joe. Joe, and then Scott Smithline and Karen 11 Wilson. 12 DR. KUBSH: Good afternoon, Dr. Lloyd and members 13 of the Board. My name is Joe Kubsh. I'm Deputy Director 14 of the Manufacturer's Emission Control Association, and 15 I'm here to indicate our industry's strong support of the 16 proposal that's been put in order by staff today. 17 We think this proposal represents a balanced, 18 fair, and flexible approach to achieve significant PM 19 emission reductions and refuse hauler fleets here in 20 California in a cost effective manner. We've provided our 21 written comments. 22 I'd just like to make a few comments with respect 23 to some of the technology remarks that were made by some 24 of the previous fleet operators, just to maybe allay some 25 of their concerns about the technologies that -- the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 192 1 retrofit technologies that will be used to help provide 2 some of the reductions in this rule. Obviously, it's not 3 staff's intent or our industry's intent to force people to 4 put filters on technologies where they won't work. That's 5 why the verification process we worked very diligently 6 with staff on is there to guarantee there's a good match 7 between technologies and the applications and that they're 8 proven to work in these applications. 9 And as indicated by the staff presentation, the 10 experience in Los Angeles and New York with putting 11 filters on refuse haulers has been excellent. The 12 experience based on filter applications both on these 13 classes of vehicles and others is growing every month. By 14 our count, there are more than 70,000 filter-equipped 15 vehicles in the world today. Most of those being 16 retrofits. And when there's a good match between the 17 temperature window characteristics that are required to 18 achieve generation in the applications, the experience has 19 been excellent. And we are confident that that experience 20 will be the same here in California. 21 But we also understand that filters will only 22 play a part of the role in achieving the reductions that 23 are required by this rule. And it's important, I think, 24 for the fleet operators to understand that, again, 25 technologies will be verified to work with certain PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 193 1 temperature window constraints, in the use of ultra low 2 sulfur fuel, for example. And those technologies will not 3 be forced into applications where they're outside of those 4 boundaries. 5 So, again, I want to commend the staff for the 6 fine work they're doing in this area. We continue to work 7 very closely with them in trying to understand the role of 8 retrofit technologies in these fleets and other fleets 9 that you'll be considering in the coming months. And with 10 that, I'd be happy to answer any questions that you might 11 have. 12 CHAIRPERSON LLOYD: Thanks. You'll be 13 participating in the meeting next month? 14 DR. KUBSH: Yes, we will. 15 CHAIRPERSON LLOYD: Will you be here also for the 16 next item? 17 DR. KUBSH: Yes, sir. 18 CHAIRPERSON LLOYD: Any questions? 19 Thank you very much. 20 Scott Smithline, Karen Wilson, Todd Campbell -- 21 Councilman Campbell. 22 MR. SMITHLINE: Mr. Chairman, Board members, my 23 name is Scott Smithline. I'm with Californians Against 24 Waste. Californians Against Waste has been advocating for 25 environmental protection and promoting and recycling PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 194 1 economy for 25 years. We are in strong support of these 2 proposed measures today. 3 I won't go into the health effects of particulate 4 matter. It's, at this point today, obviously been well 5 established. 6 We do have some concerns, however. We are 7 concerned that the proposed measures failed to adequately 8 deal with the financial relationship between contract 9 service providers and the local agencies. Many of these 10 fleets, as it's been testified to today, are under these 11 long-term contracts that are rate regulated. We think 12 this will have on the ground, environmental impacts. 13 Basically the situation as we see it is 14 there's -- not only is there no incentive to try to 15 achieve the best environmental compliance, but there's 16 actually a restriction on funding to do that. As I said, 17 we think this will have real environmental impacts. We 18 would ideally like to see a very different approach, 19 something like Senate Bill 1078, Chesbro's Bill, where 20 there would be a fund set aside by increased tipping fees. 21 We understand that's not your venue. But until such time 22 as something like that becomes available, we would 23 definitely like to see local agencies be required to work 24 with the contract service providers in such a way that 25 funding compliance -- funding for compliance will be PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 195 1 established. 2 Again, we are in very strong support of these 3 measures, and we urge you to adopt them with the 4 amendments proposed by the NRDC. However, at the same 5 time, we also urge you to take the strongest steps you can 6 to ensure that funding will be available for compliance 7 with these measures. Thank you. 8 CHAIRPERSON LLOYD: Thank you very much. 9 Karen Wilson. 10 MS. WILSON: Good afternoon, Mr. Chairman and 11 members of the Board. My name is Karen Wilson. I'm 12 Director of the Strategic Planning Division for the 13 Sacramento Metropolitan Air Quality Management District. 14 We would like to thank your staff for the hard 15 work that they have done on this measure and note that we 16 have worked with them for a number of years because, as 17 you are aware, our region continues to struggle to meet 18 the one-hour federal non-attainment standard for ozone. 19 And we are NOx limited, and so NOx reductions are what 20 we're going to have to get or we will fail to meet our 21 goal by 2005. 22 As you move forward with this regulation, your 23 staff has included NOx reductions as one of the flexible 24 BACT requirements that allows NOx reductions to occur. We 25 really appreciate that. We anticipate that this measure PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 196 1 will get us up to a third of a ton a day of NOx reductions 2 as written with that option in it, so we appreciate that, 3 in addition to the .02 tons per day of diesel particulate 4 reductions. That's very important on the ground in the 5 neighborhoods. 6 And I would like to point out, furthermore, that 7 our city and county of Sacramento have worked with us over 8 the last few years to convert their refuse fleets to 9 alternative fuel vehicles. Those are dual fuel trucks. 10 There's about 130 trucks between those two jurisdictions. 11 I have been in touch with your Ombudsperson today 12 to indicate that I don't know why the city and county are 13 not here, but they would be included with San Diego with 14 that request that as you look at that 15-day period for 15 additional comment and working through issues, that those 16 dual fuel trucks that don't meet the full particulate 17 emission reduction requirement in this rule. They come 18 very close, but they were certified with the diesel in it 19 as part of the certification. So that would void both 20 their certification and their warranty, apparently, to 21 change that out -- that technology out at this time. So 22 we're in with San Diego and perhaps some from the 23 discussion of L.A. County as well. 24 So we have been assured by your staff, as we were 25 sure we would be, that you'll meet with the city and PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 197 1 county of Sacramento as well in clarifying the impact of 2 this rule on the dual fuel vehicles they have in place 3 because they taken the liberty of only about half. So 4 they still have -- as you know, the ordering time line on 5 these vehicles is very long. And they won't have the 6 orders that they put in until the end of 2004. So they 7 have an existing issue with those that have that been 8 delivered, as well as money they committed, some of their 9 -- from their tobacco settlement money, recognizing the 10 public health link. They've been very cooperative with 11 us. These were purchased a couple years ago in 12 anticipation of NOx reduction benefits, when we did 13 calculate the particulate emission reduction benefits at 14 that time. However, as you move forward with this rule, 15 we've gotten a little bit behind you. 16 So thanks very much for the work your staff has 17 already done. We hope that our city and county can be 18 included in those discussions. 19 CHAIRPERSON LLOYD: Thank you very much. 20 Councilman Campbell, Bonnie Holmes-Gen, Tom 21 Addison. 22 COUNCILMAN CAMPBELL: Thank you, Chairman Lloyd. 23 Todd Campbell, Policy Director for the Coalition for Clean 24 Air and Councilmember for the city of Burbank. 25 I just want to first say that we're going to miss PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 198 1 you, Kathleen, but we're looking forward to working with 2 you in the Bay Area. 3 I also want to thank the Chairman and others that 4 attended the Port of Los Angeles trip. I was with the 5 Governor when he announced that Kenneth Hahn Park -- his 6 plans to reduce emissions down at the ports. And as you 7 said, the Port of Los Angeles and Long Beach combined 8 being the third largest port in the world expecting to 9 triple by 2020, it's a very important first step. And 10 we're hoping to see further commitments in the future. 11 CHAIRPERSON LLOYD: I can comment, Todd, if you 12 haven't had a tour down there, it's really worth while. 13 COUNCILMAN CAMPBELL: Absolutely. 14 CHAIRPERSON LLOYD: And I know you had a lot to 15 do with pushing to clean it up. It seems to be working. 16 COUNCILMAN CAMPBELL: We'd like to think so. And 17 we're going to keep on trying. We're not done. But thank 18 you, Chairman. 19 Board members, I stand before you today in strong 20 support as an advocate and a Councilmember of the rules. 21 And I think I join at least seven other public health and 22 environmental groups in addition to dozen of cities that 23 firmly support the rules in prior testimony. 24 The adoption of this rule before you today is 25 instrumental in the emissions reduction goals set forth in PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 199 1 the agency's diesel risk reduction plan, which was 2 originally adopted -- or started since our adoption of the 3 risk with the acknowledgement of the toxic air contaminant 4 identification of diesel particulates in 1998. As you 5 know, diesel particulates are extremely harmful, 6 especially not only for our urban but also for our rural 7 areas in California. 8 Controlling diesel PM from refuse trucks is 9 critical because waste collection vehicles spew toxic 10 diesel PM throughout residential neighborhoods. And as a 11 Councilmember, I cannot tell you how many times I get 12 constituents complaining about refuse trucks running up 13 and down their streets. I must at least get one call a 14 week, sometimes five calls a week. And the biggest 15 frustration for me as a Councilmember is I can't regulate 16 the contracted portion of our fleets. We're a 17 full-service city. But we do have for the long haul 18 contracted fleets. 19 And in terms of costs, I can only speak for the 20 city of Burbank. But I know that my staff or at least the 21 City Manager at the city of Burbank would be more than 22 willing to do to the right thing and work it out with the 23 waste haulers. I don't see that as an issue. Certainly, 24 there will be some negotiations. But I certainly see and 25 I also view my Council as being proactive. And especially PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 200 1 given we're inside or way deep in the South Coast air 2 basin, it doesn't take a genius to figure out that we have 3 an air quality problem, and we need to do everything we 4 can to reduce not only emissions that are like smog 5 emissions, but also reduce toxic emissions in our 6 community. 7 Despite our strong support, we would like to 8 actually encourage some strengthening. And this is 9 particularly what you're interested in, Chairman. It's 10 the -- we would like to see the cleanup of the pre-1988 11 vehicles move forward two years to 2005. 12 The staff has run analyses. They found it would 13 be more cost effective. They also found that it would 14 reduce 175 tons of additional toxic PM. And there are 15 some concerns that were raised by the waste hauler 16 industry. I acknowledge that. I want you to remember 17 that there's a one year exemption. I think that partially 18 addresses the issue of cost because certainly cities that 19 do have the contracts with refuse haulers can renegotiate 20 I think within a two-year period. For example, if you 21 have a city that's not willing to renegotiate, you know, 22 the exemption may be granted by the Air Resources Board, 23 and then you'd have two years. 24 I think that would also give adequate time for 25 city councils and staff to get educated on the issue, and PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 201 1 I think that's really one of the main important goals that 2 we all have here in this room is to educate city councils 3 and local government about how important it is to reduce 4 diesel exhaust. 5 And in terms of technology, really the 6 representative from the city of Los Angeles really 7 explained most of what I wanted to express to you, but 8 certainly diesel particulate filters and advanced 9 technologies have not -- this is not the first time we are 10 applying them. We have applied them also with the school 11 bus rule, which you know has been overcommitted in terms 12 of well subscribed, and certainly you don't have districts 13 turning away that money on those traps. I think it's been 14 a very effective program, and the children are benefiting 15 from that. 16 The second thing that we would ask of the Air 17 Resources Board is to not allow first -- or Level 1 in 18 Level 2 traps for these pre-1988 vehicles. We think that 19 these vehicles are so polluting -- remember, they're ten 20 times the emission levels of a 1994 model year refuse 21 truck. So they are tremendous amount of -- source of 22 pollution in the vehicle fleet. We would suggest that 23 they either retire them, they either repower them, or they 24 retrofit them with a Level 3 trap, which achieves about an 25 85 percent reduction in PM emissions. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 202 1 Third, we would ask that at a later date the Air 2 Resources Board commit to future NOx reductions. In other 3 words, we'd like to see a commitment from the Board and 4 staff of developing a regulation that would specifically 5 address smog forming oxide in refuse vehicles at a later 6 date. You know, given next months's meeting, we have a 7 tremendous task in front of us to reduce emission or smog 8 forming emissions, and I think that needs to be at least 9 put out there so that we have in our sites and we see 10 opportunities as technology advances to take advantage and 11 harness those opportunities. 12 And then finally, we support the staff proposed 13 changes that limit the exemption to one-year for pre-1988 14 vehicles. 15 In conclusion, I want to leave you with one last 16 thought. The air quality in the South Coast air basin is 17 the worst that it's been in the last six years or six 18 years ago. The San Joaquin is no different. In fact, I'd 19 say it's in the worst shape it's ever been. We are 20 running out of time to reach attainment by 2010, and every 21 opportunity that we miss prevents us from achieving all of 22 our -- you know, the goal that I think we all share. 23 And I just want to say that I urge you to take action and 24 adopt a strong refuse rule today to stay the course for 25 future fleet rules that intend to reduce diesel toxic PM PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 203 1 and smog-forming nitrogen oxides. With that, I thank you. 2 CHAIRPERSON LLOYD: Thanks very much, Todd. 3 Thank you. 4 Bonnie Holmes-Gen. 5 MS. HOLMES-GEN: Thank you, Mr. Chairman. Bonnie 6 Holmes-Gen with the American Lung Association of 7 California. And we also are a strong supporter of the 8 rule that's before you today. In fact, I don't think we 9 can overemphasize how important this rule is to all of us 10 and especially to everyone who suffers from lung disease 11 such as asthma or other lung diseases. 12 You've singled out in your staff report the 13 premature deaths, and the number is very dramatic and 14 compelling. And I think that it's very helpful to 15 understand that we are preventing up to 80 premature death 16 by 2020. But premature deaths is really the tip of the 17 iceberg, as you know. It's just as important to look at 18 the numbers of asthma attacks that would be prevented, the 19 number of upper and lower respiratory illnesses, 20 hospitalization from lung and heart disease, emergency 21 room visits, chronic bronchitis, school absences. There 22 are so many impacts that are going to be avoided by 23 reducing diesel pollution from these vehicles and from 24 other vehicles in the fleet. So I just wanted to point 25 out, of course, as you know, the impacts are so widespread PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 204 1 and affect so many people and the quality of life for so 2 many in California, especially children. 3 Our emphasis in this rule and others that you'll 4 be looking at in the diesel risk reduction plan is to look 5 at doing everything possible as quickly as possible to 6 address the oldest vehicles, along with cleaning up, of 7 course, newer vehicles also. But that's one key focus 8 that we have. And that's why we've joined with the 9 comments of the Natural Resources Defense Council, Union 10 of Concerned Scientists, Coalition for Clean Air and other 11 groups suggesting that there's more we can do to address 12 these older vehicles, to accelerate cleanup dates for the 13 '87 and older vehicles, to tighten up the control 14 requirements so that they cannot use the weaker Level 2 15 controls. And we would hope you consider those comments 16 very seriously. 17 As has been mentioned, you have done some 18 analyses of these recommendations and found they are cost 19 effective, that they would result in reducing even more 20 diesel pollution without adding substantial cost to the 21 regulation. So we believe you should move forward with 22 some strengthening changes. We also, of course, committed 23 to look at what more can be done to reduce NOx emissions 24 and that would, of course, need to be at a later date in 25 terms of revisiting another regulation to deal with NOx. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 205 1 Finally, I want to say that it's not surprising 2 that when the Board is venturing out the adopt a rule that 3 will affect a whole new sector that there are going to be 4 some -- many questions and concerns and fears being 5 raised, as you're hearing today. And we just want to urge 6 you to forge ahead as you have so many times in the past. 7 The technologies are proven. The staff has done a good 8 job in trying to address as many of the concerns as 9 possible, providing flexibility where it's reasonable. 10 You're talking about your willingness to support efforts 11 of haulers to achieve cost recovery by conducting 12 additional outreach and workshops and assisting them any 13 way we can. 14 I think you're doing everything possible you can 15 to make this a workable regulation, and now you just need 16 to move forward and adopt the rules. Your charge is, of 17 course, to cleanup the air, reduce diesel pollution, and 18 this is an essential step forward, and we fully support 19 you in moving ahead. 20 CHAIRPERSON LLOYD: Thank you very much, Bonnie. 21 And again, maybe you can pass on to Todd since you're 22 pretty well -- most of our Board meets in Sacramento, that 23 we actually are doing stuff and we have stuff in the last 24 five years to cleanup the air and maybe we should let Todd 25 know that. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 206 1 A question from staff. Is it possible -- I 2 didn't think it was possible on some of the older engines 3 to put on Level 3 traps. 4 EXECUTIVE OFFICER WITHERSPOON: It's not 5 possible. So the effect of denying Level 2 means that you 6 force them to reengine or retirement. 7 And what we've done is Level 1, 25 percent 8 control is not good enough. These are gross emitters. We 9 have to do better. Level 2 is not yet certified, but 10 we're hopeful that some strategies may emerge, most likely 11 emulsified diesel fuel in combination with an oxidation 12 catalyst would be certified for this application. That 13 would be 50 percent control, and we want to keep that 14 opportunity on the table in the event that the 15 verification comes through and that the owners have that 16 choice. If we take that away, there is no Level 3. There 17 will not be traps certified for these old vehicles. The 18 only thing left is a new engine and an old chassis or a 19 new vehicle all together. 20 MS. HOLMES-GEN: Can I comment, we don't think 21 the 50 percent is really adequate for those oldest 22 vehicles that are virtually uncontrolled. 23 CHAIRPERSON LLOYD: Thank you. Tom Addison 24 Patricia Monahan, Diane Bailey. 25 MR. ADDISON: Good afternoon, Dr. Lloyd and PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 207 1 members. I'm Tom Addison with the Bay Area Air Quality 2 Management Districts. I'm here today to speak in strong 3 support of this regulation. For the formal record, we 4 submitted written comments, and I trust that you have 5 those. 6 I'd like to begin actually by agreeing with 7 Mr. Mandel of the Engine Manufacturers Association on one 8 critical point. We also appreciate the abilities of your 9 legal counsel. But really that's not why I'm here. 10 SUPERVISOR DeSAULNIER: Obviously, Tom. If we 11 didn't, we wouldn't have given her the job. 12 MR. ADDISON: So reducing public exposure to 13 diesel particulate really is a critical goal. From our 14 perspective, that's one of our most important mutual 15 goals. We think this regulation is key in helping that 16 happen, really because of where these vehicles are. This 17 really held well on the transit bus rule. That really is 18 largely where our support is coming from. In dense urban 19 areas, like the Bay Area, you know, that's an especially 20 important issue. 21 We think that is a fleet sector that really lends 22 itself to cleanup well. To date we've put $9.3 million of 23 our money, of local -- not state money or Moyer money, but 24 our money into cleaning these vehicles up. We really see 25 this as being an area that is right for reduction. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 208 1 Essentially, though, the problem that we sort of 2 see is that we'll never have enough incentives to cleanup 3 all these vehicles. So it really is time to move from 4 fishing with bait, which is what we've been doing, to 5 fishing with nets. So the regulatory approach now we 6 think is the right one, and we think the proposal before 7 us is both flexible, it's fair. The reliance on BACT and 8 how BACT is defined is a strategy that we support 9 completely. 10 In an ideal world, the one thing that we would 11 love to see would be moving ahead a little bit faster on 12 the pre-'88 vehicles. We've done a lot of them in the Bay 13 Area because we've gone after some of the vehicles that 14 lend themselves well to cleanup. In an ideal world, we'd 15 love to see a little bit faster action on those, but I 16 think there are some legitimate reasons why, you know, 17 you've come up with the rule that you did today that 18 you've got in front of you. 19 I just close by reiterating our support for this 20 rule and by pledging to do what we can to work together to 21 continue to reduce public exposure to diesel particulate 22 before more rules come before you. 23 CHAIRPERSON LLOYD: Thanks, Tom. Appreciate it. 24 Patricia Monahan, Diane Bailey, Bob Lucas. 25 MS. MONAHAN: I wish I was saying good morning PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 209 1 and not good afternoon. My name is Patricia Monahan. I'm 2 a senior analyst with the Union of Concerned Scientists. 3 I'd like to say from the start if you see a tear in my eye 4 or if my voice starts to get a frog in it, it's just 5 because I'm having an allergy attack. I'm not actually 6 trying to persuade you with overly emotive signs. 7 CHAIRPERSON LLOYD: And Kathleen is only going to 8 the Bay Area so -- 9 MS. MONAHAN: Well, in my three minutes I'd like 10 first to step back a moment and talk about the genesis of 11 this rule, which is diesel risk reduction plan -- the risk 12 reduction plan was published in 2000. It anticipated that 13 this rule would have actually been published last year. 14 And given that the rule development began in 2001, you 15 would think that would be a reasonable time frame. 16 I think ARB has done a good job of really 17 workshopping this issue to death. I mean, there's been 18 eight workshops -- at least eight workshops. I attended 19 the first one in the summer of 2001. I think staff has 20 tried to accommodate a lot of diverse interests in this. 21 But the reason why we're all working for this rule is 22 because of the tremendous health impacts, not just of this 23 rule, but of all the other ones that are comprising the 24 diesel risk reduction plan. There are just the start. 25 There are many more to come. And I think if we start this PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 210 1 rule by setting a precedent of, you know, having weak time 2 frames, allowing for a lot of exemptions and loopholes, 3 then we don't just impact this rule but we impact all the 4 ones to come. 5 One of the reasons I think staff chose this is 6 because refuse haulers operate in communities. They go 7 through our neighborhoods. Day to day they're exposing 8 children, mothers, families. So I think it's very 9 important that we set a precedent right from the start 10 that we recognize there are going to be costs for 11 implementing these rules, but that the tremendous public 12 health benefits far outweigh the costs. And that has to 13 be the root of our actions. 14 The diesel risk reduction plan proposed to get 15 280 tons per day. This rule would get a little over one 16 ton per day reduction in 2010. Again, it's not a 17 significant part, but it's an important precedent we're 18 setting here. 19 Compared to earlier drafts of the rule, the rule 20 has been weakened over time. The earlier drafts contain 21 some NOx controls and now are not present in the rule. 22 You're heard from other environmentalists. We would like 23 to see some find of future commitment to have the ARB 24 address NOx in the future so we're guaranteed emission 25 reductions from these vehicles. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 211 1 You've also heard about -- that we would ask for 2 an acceleration of the time frame. ARB's own staff report 3 indicated that moving forward the implementation time for 4 these oldest vehicles is cost effective. It will cut PM 5 reduction costs from $54 per pound to $50 per pound. And 6 it adds 66 cents per household. 7 Finally, we'd like to see stronger controls for 8 the dirtiest engines, these pre-'88 engines that did not 9 have to meet any emission standards. Emission standards 10 started in 1988. And the level of these -- the level of 11 emissions from these engines is at least ten times more 12 than 1994. It's at least ten times. We see a degradation 13 over time with PM from engine exhaust. 14 In conclusion, I'd like to say that we believe 15 the time is ripe to move forward. This is about public 16 health. This is about cost effectiveness. This is a rule 17 that has been workshopped over and over again and an 18 opportunity for California to really take an important 19 step forward in implementing our diesel risk reduction 20 plan. Thank you for the opportunity to speak. 21 CHAIRPERSON LLOYD: Thank you, Patricia. Again, 22 obviously we're committed to the same goal as you are. 23 We're a little bit disappointed that we've not been able 24 to move as fast as we can for the reasons staff said. But 25 trying to work through all the technical issues. We have PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 212 1 to be cautious there, otherwise we may be doing something 2 we don't want to. Getting that balance, and also as we 3 seeing here, trying to get the balance with the different 4 properties, that's very important because as you say, it's 5 important technically to get underway. But it's also 6 important that we also treat the affected parties fairly 7 as well. And we've taken a little bit more time, but we 8 hope it will be a more effective rule. 9 MS. MONAHAN: We appreciate that. 10 CHAIRPERSON LLOYD: Diane Bailey, Bob Lucas, and 11 then lastly, Wendel Smith. 12 MS. BAILEY: Good afternoon, Chairman Lloyd, 13 members of the Board and staff. My name is Diane Bailey. 14 I'm a scientist with the Natural Resources Defense 15 Council. And we have no waste haulers. We don't have a 16 fleet. But we're here today because we care a lot about 17 clean air and public health. So thank you for the 18 opportunity to comment. And I'll keep my remarks brief. 19 We strongly urge your support on this rule, and 20 we'd like to see it strengthened today in several ways 21 that you've already heard. So I'll just summarize for you 22 again. First, it's imperative the oldest vehicles be 23 addressed beginning in 2005, two years earlier than 2007. 24 We also urge that Level 2 controls, which only reduce 25 particulate matter by 50 percent, not be allowed for use PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 213 1 on these oldest vehicles that are pre-1988, as Level 1 2 controls are currently not allowed in the present 3 language. 4 And finally we also urge you to come back and 5 regulate NOx for the same vehicles in the future. It's 6 extremely important to cleanup the oldest and most 7 polluting vehicles as soon as possible. Statewide less 8 than one-fifth of solid waste collection vehicles are 9 these old pre-1988, yet they account for the majority of 10 the pollution from the entire fleet. 11 To illustrate how dirty these vehicles are, we 12 ran modeling shifting the implementation of these vehicles 13 up just two years showed that that would reduce PM by 14 350,000 pounds per year. This is significant. In 15 addition, this would only raise costs by 6 cents per 16 household for a total of 61 cents per household annually 17 for the whole rule. And this is less than the tip that I 18 left for my coffee this morning. We would argue this is 19 truly insignificant. And again, this rule -- the changes 20 that we're asking for for this rule would actually improve 21 the cost effectiveness. 22 Furthermore, it's important to make sure that 23 when the oldest vehicles comply with this rule, they are 24 truly being cleaned up. Because the oldest vehicles never 25 had to meet emission standards, we don't know exactly how PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 214 1 much they pollute. But EPA estimates it's ten times more 2 than comparable vehicles that are middle-aged in the same 3 fleet. Therefore, we believe that Level 2 controls, the 4 ones that reduce by only 50 percent are inappropriate for 5 these oldest vehicles. 6 You've heard from many waste haulers today that 7 they agree that cleaning the air is really important. 8 Yet, for some reason many seem unwilling to be a part of 9 the solution, while we believe that every business and 10 every sector has to be a part of cleaning up the air. 11 And in conclusion, we urge you today to adopt a 12 strong rule making the cleanup of the oldest most 13 polluting vehicles a priority and the cleanup of the 14 oldest -- and setting a standard for future retrofit rules 15 to address these polluter vehicles first. 16 Finally, on another note, we really appreciate 17 the Board's attention in visiting and considering 18 pollution from container ports and dairies. Thank you. 19 CHAIRPERSON LLOYD: Thank you. Bob Lucas. He 20 was are earlier. I guess he's gone. And Wendel Smith. 21 MR. SMITH: If I had seen the sign-up sheet, I 22 would have signed up first rather than last. I'm Wendel 23 Smith. I serve on the Metropolitan Air Quality and 24 Transportation Committee. I'm the incoming President of 25 the El Dorado County Chamber. And I am working as a PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 215 1 consultant to a company called Global Fuel. 2 We had a test unit that we know will increase 3 mileage. We've had it tested on diesels for several 4 years. We're a little short in cash, so we're looking for 5 a partner to do some subsidized testing because we know 6 this unit will get 15 percent increase in mileage that can 7 offset some of the cost. And so with it, we ask for two 8 things to be considered; one, a fast track approach to 9 testing; secondly, potentially to identify some testing 10 partners. And if there's any funds out there in any way 11 that we can have a controlled test be involved because we 12 know we're taking it with all the gas fueled engines. 13 We're making dramatic improvements. So the thought is to 14 get a subsidized testing program so the other technologies 15 out there would have an opportunity to move forward in 16 accelerated testing. Thank you so much. 17 CHAIRPERSON LLOYD: Thank you very much. 18 With that, that comes to the end of the public 19 testimony. 20 Do the staff have any additional comments to make 21 at this time before we -- 22 EXECUTIVE OFFICER WITHERSPOON: No. I'll just 23 wait for questions from you. 24 CHAIRPERSON LLOYD: I will now close the record 25 on this agenda item. However, the record will be reopened PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 216 1 when the 15-day notice of public availability is issued. 2 Written or oral comments received after this hearing date 3 but before the 15-day notice is issued will not be 4 accepted as part of the official record on the agenda 5 item. When the record is reopened for a 15-day comment 6 period, the public may submit written comments on the 7 proposed changes which will be considered and responded to 8 in the final statement of reasons for the regulation. 9 So with that, I will throw it open to my 10 colleagues to begin discussion and then we'll get into 11 some ex partes. 12 Supervisor DeSaulnier. 13 SUPERVISOR DeSAULNIER: Did you want to do ex 14 parte now? 15 CHAIRPERSON LLOYD: No. Let's have a discussion 16 now. They'll get into that before we go -- 17 SUPERVISOR DeSAULNIER: Well, first of all, I 18 think staff's done its usual great job. Obviously this 19 took a lot of work. It strikes me that there are four or 20 five things this comes down to just where I believe we 21 could move forward and continue and actually get on with 22 this work that's taken so long. 23 The dual fuel trucks, it seems like, from what 24 you have said, Kathleen, this is an opportunity to work 25 with San Diego and Sacramento to carve those out so we can PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 217 1 take care of that. 2 On what the environmentalists have asked for, I 3 would be supportive of all three of those, although it 4 sounds like two of the issues are doable. That is moving 5 the date up on the pre-'88 trucks from 2007 to 2005 and 6 making some kind of commitment -- maybe you could respond 7 to that -- about future NOx reductions. 8 The one that sounds more problematic is Level 2 9 to Level 3. So I don't know how we could -- my view would 10 be that we would continue to sort of monitor that. If the 11 technology were to change in any way, we encourage that. 12 I'm sure we're supportive of trying to do that. But with 13 what you have explained, it's pretty difficult to get 14 there. So maybe you can respond to that when I get 15 through with the last couple. 16 I'm really concerned about the smaller haulers. 17 In my experience in local government -- you know, not 18 unlike other corporate entities and retail business, the 19 smaller haulers in the state of California have been 20 unduly punished because of the global marketplace and 21 national marketplace. It's not there's anything 22 inherently evil or wrong with large companies, but I've 23 seen lots of small companies in my experience in the Bay 24 Area, particularly in Contra Costa County where they were 25 eliminated. And to large degree they were lowballed out PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 218 1 of business. 2 They all turned -- all the haulers turned out all 3 right because they sold their interest and did quite well. 4 But the result for the rate payer and for local government 5 was you had a lot of short-term savings, but that changed 6 very quickly because in other retail instances when the 7 competition went away, and particularly the small 8 competitors, then the pressure came back on local 9 government to raise the rates. 10 I understand the balance here of not somehow us 11 becoming a party to either incentivizing local government 12 or haulers to pass the cost to the rate payer. I don't 13 want to be a party to that. But on the other hand, I want 14 to encourage local government to do the right thing and 15 pass this through. 16 And I know that those of us who have held local 17 office are sensitive to this. We're the ones that will 18 get blamed for raising the rates on trash collection. For 19 me at least, this is an inexpensive thing to do given the 20 public health benefits. But we have to help our 21 colleagues in local government to see that and be able to 22 express it in the same form or fashion. And from that 23 perspective I would, as I said earlier, along with D.D., 24 I'd be more interested in stronger language rather than 25 the current language. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 219 1 I think the idea of workshops and education, that 2 would be really helpful particularly in partnership with 3 some of the haulers and the Integrated Waste Management 4 Board. 5 So for me, I think that's about it. Just again, 6 I think staff has done a great job. I know, Alan, you've 7 been very involved. And I think we're right on the cusp 8 of doing something really good. I think most of these 9 things, as someone said -- it might have been Bonnie -- 10 once we go through this, I think most of the haulers will 11 be pleased with what's happened. But I think we do need 12 to partner with them to get the message out to local 13 government that we need to help them recover the costs. 14 Thank you, Mr. Chairman. 15 CHAIRPERSON LLOYD: Just follow up so I don't -- 16 I agree with you on both the first two points, Mark -- 17 actually all the points you made -- about trying to 18 accelerate for the older vehicles. Clearly it's 19 increasing hazard there. And the more we can reduce that 20 faster for the older engines, the better off we're going 21 to be. 22 The other issue as staff knows, I've been 23 constantly pushing on trying to get whatever NOx we can 24 along with the particulate. Because as we've heard for 25 the Sacramento area -- and they've been hitting us hard on PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 220 1 that in the South Coast. So wherever we can, we need to 2 capture both NOx along with the particulates because 3 obviously NOx is a precursor to particulate, as well as a 4 precursor to ozone, as well as a precursor to some of the 5 nitro Ph's. 6 So for all those reasons -- but I understand. So 7 I hope that staff will continue to make that push and 8 whatever possible to try to get some co-commitment for NOx 9 and PM. And I also thoroughly agree with you, although I 10 think you're more knowledgeable in that, and I think D.D. 11 is going to express that as well and my colleagues here, 12 the concern that we look at some of these smaller 13 properties and are recognizing some of the difficulty they 14 have, because clearly we want to respect them. We want to 15 clean up the air. But we don't want to, as you say, put 16 some of these properties out of business, where then you 17 end up with large monopolies which in the longer term may 18 not be as effective with us. 19 Ms. D'Adamo. 20 BOARD MEMBER D'ADAMO: Yes. In the interest of 21 time, I'm just going to concur with what you just said, 22 Mr. Chairman, and Mark here as well. 23 On the issue of the smaller operators, my concern 24 mainly has to do with the acceleration. I just want to 25 clarify that. I'd be supportive of looking into anything PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 221 1 that we can do sooner. But the concern that I have on the 2 smaller operators is, not only is it rough on them, but 3 also any possible unintended consequences if we end up 4 with some of these larger companies coming and taking 5 over. I'm just looking at the situation in the valley 6 where they are mostly run by smaller operators with the 7 larger operators from, say, the Bay Area come in and would 8 they be hauling perhaps waste into the valley and 9 creating, you know, some unintended environmental 10 consequences. 11 So that has to do with -- that's my main concern 12 with wanting to make sure that if we do have an 13 accelerated program, that we have, you know, some way -- 14 and we're asking how many trucks these operators have. 15 And it seemed like a range from anywhere from 10 to 50 16 trucks. And then when the last two companies came in, 17 1500 trucks 500, you could add up all these small 18 operators that were here today wouldn't even come close. 19 So anything we can do on that. 20 And also I think we should do what we can to push 21 with the NOx reductions. I think that cuing this issue 22 up, especially for where we're going to be next month in 23 South Coast is particularly important. 24 CHAIRPERSON LLOYD: I think on the -- you know, 25 maybe we look at two-tier system here because you say -- PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 222 1 and again, I assume that as staff looks at it, they will 2 do the usual good job of looking at the impact. But for 3 example, on the refinery side, we look at some exemptions 4 or delayed implementation to smaller refiners. Maybe 5 staff could look at whether that could be implemented 6 here. 7 EXECUTIVE OFFICER WITHERSPOON: I'm sorry, 8 Chairman Lloyd. We were talking about some of the things 9 you were already discussing. Can you repeat the last part 10 about the small refiner -- 11 CHAIRPERSON LLOYD: All I was saying, I assume 12 staff is going to do its usual good job at looking at 13 impacts. And you've heard from us that we're all 14 concerned that we want to push ahead as rapidly as 15 possible to get the older vehicles off the road, but we 16 also want to make sure that we're not unfairly impacting 17 some of these smaller properties. In that case, can we 18 look at some of the larger properties maybe having an 19 accelerated schedule. And then before we impose on some 20 of the smaller ones, to look at some of the economic 21 impacts. 22 EXECUTIVE OFFICER WITHERSPOON: Have you thought 23 about what line you would draw between small and large 24 properties? Are you looking for a suggestion from us? 25 Because I was hoping it would emerge from the testimony, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 223 1 and it didn't break out. They were all -- 2 CHAIRPERSON LLOYD: I was hoping so too. 3 EXECUTIVE OFFICER WITHERSPOON: They were 4 relatively big, what we would think of as big. Even 50 is 5 pretty big. And for example, in the South Coast with 6 their rule, they have a threshold of 15 for who's in who's 7 out, and that would give very little relief on an 8 accelerated schedule. 9 We do believe that the older vehicles are 10 concentrated in the smaller fleets with pull ahead causes. 11 The only vehicles could be changed out faster. It means 12 that the small guys will have to go seek the capital, 13 negotiate the rates, and be very successful because their 14 direct costs will be higher on average than what was 15 presented to you as, you know, for everyone will be. But 16 the kinds of rate changes that they will need will be more 17 than that. 18 CHAIRPERSON LLOYD: I think Supervisor DeSaulnier 19 maybe had a question. 20 SUPERVISOR DeSAULNIER: Maybe, D.D., what I 21 was -- what I felt from the testimony is that if we can 22 help all of the haulers recover the cost, then we can 23 accelerate it. And maybe there's a way -- and you 24 expressed it a little bit differently. I agreed with you 25 to begin with. But if we can recover the cost and it's PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 224 1 just intuitively -- even though I think someone from Waste 2 Management said it wasn't true. Intuitively it strikes me 3 the small ones are the ones that are going to have the 4 most trouble articulating the need for rate increases and 5 the revenue stream. So I was more interested in helping 6 them all, but particularly focusing on the small ones. 7 And maybe there's an option if they really are having 8 trouble, we give them some kind of period for an exemption 9 like -- pardon the expression -- a hybrid of what you 10 suggested. That's not in the gold category, I know but -- 11 BOARD MEMBER RIORDAN: It is, I think, a 12 difficult -- staff's going to have to work on this because 13 there's going to be a whole host of items that affect a 14 smaller, you know, business. Some of them are going to 15 have the older trucks, as Ms. Witherspoon just pointed 16 out. If you require replacement of the older trucks, 17 that's going to be an immediate need for cash flow. And 18 you provide then the rates to be up and that's going to 19 affect fewer people. 20 I think there are some times that we just are 21 going to have to look at this on a case by case basis and 22 try to help. If our intent is to help some of the smaller 23 companies, you're just going to have to have the wisdom 24 of -- I don't know whom, but someone to figure out how to 25 do it without unintended consequences. And good luck on PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 225 1 that. 2 Otherwise, I think it's very commendable what 3 you've all worked out. And I think that if we can do the 4 outreach -- and I'm just going to hope that we get on that 5 very quickly, so that we can explain to the city councils 6 and the Board of Supervisors the tremendous health 7 advantages that accrue to this particular item. I think 8 we can be successful, but we need to start right away. 9 CHAIRPERSON LLOYD: Professor Friedman. 10 BOARD MEMBER HUGH FRIEDMAN: Well, first, I, too, 11 want to applaud the staff for a very thoughtful balanced 12 solution or proposal for very a complicated, challenging 13 issue. 14 And I picked up on one concern, that is that -- I 15 think you've raised it, but we haven't directly addressed 16 it in our discussions here. And that is the issue of 17 reliability or dependability, certainly. And my sense is 18 that there is the best available proven technology, 19 certainly in Europe and other places. And it's really the 20 application to a specific engine that's the issue or the 21 concern. And I guess's that's education. That's 22 experience, for particularly for smaller haulers or 23 operators. And there may be the need for some individual 24 exemptions and so forth. There may not be technology 25 available to retrofit, as we've seen, with the older PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 226 1 engines. And so with these time lines, unless you're just 2 operating three or fewer, you're going to have an 3 automatic deferral of reckoning day. We may be faced with 4 the cost of replacement. 5 In any event, I think with the periodic reviews 6 that we built in -- I see that the latest version of the 7 15-day notice now does have an annual review until 8 sometime much later when it kicks in to biennial. And so 9 I think that it's about as good as we can do. It may not 10 be perfect, but we haven't achieved perfection very often. 11 And as I like to think, it's good enough for jazz. I 12 commend you for your effort. 13 CHAIRPERSON LLOYD: Mr. Calhoun. 14 BOARD MEMBER CALHOUN: One comment, I'll admit we 15 heard today in testimony was cost, cost, cost. And 16 anything that we can do to help out in that regard, I 17 would certainly like to encourage us to do so. 18 The next item, I guess I'd like to remind the 19 staff and the Board that this Board has had one 20 unfortunate experience with the retrofit program I happen 21 to be very aware of. I would just encourage us to really 22 stay on top of things. And if there's a problem, we need 23 to try to correct it as soon as possible. 24 CHAIRPERSON LLOYD: I think that's a good 25 reminder, Joe. But also I think all of us want to get to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 227 1 the situation whereby we can take advantage of some of the 2 tremendous advances being made with the new engines. And 3 so we don't run the same risk that we're doing now and 4 work our way through that. And I think all of us are 5 committed to try to do that. It's a good reminder. 6 SUPERVISOR PATRICK: Thank you, Mr. Chairman. 7 I, too, would like to say how very much I support 8 this and how much I support or I appreciate the good work 9 that staff has done. 10 I think it's safe to say that we have a lot of 11 really nervous people in the audience and understandably 12 so. Because, you know, you're concerned about cost 13 recovery and about reliability, and I think that you have 14 every right to be. So I think that, you know, we need to 15 begin immediately starting a dialogue. And we have a 16 representative from the League of Cities, someone from 17 CSAC can be brought on board to begin immediately to be 18 working with the folks that are going to -- are 19 representing the taxpayers and the folks with whom our 20 disposal companies negotiate so that these costs can be 21 recovered, because I think it's important that they be 22 recovered. I think when we emphasize how important this 23 is to public health, I think that will certainly help us. 24 I, too, share concerns about some of our smaller 25 disposal companies. And my concern about accelerating the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 228 1 pre-1988 conversions is that many of those small 2 companies, those are the trucks that those folks are going 3 to have. And also those folks may be serving some 4 communities that are economically challenged as well. So 5 I think it's incumbent upon staff to work closely with 6 them and to bring our elected officials on board as 7 quickly as we can to make them understand that this is an 8 important move toward public health, and it's something 9 that is very necessary and to continue the dialogue with 10 all the stakeholders here today. Some are happy. I don't 11 think anybody's really happy -- but some relative degrees 12 of happiness. But I think the most important thing is 13 that we try to address some really beneficial comments 14 that were made today, and that we move forward with it. 15 But I think as controversial as this has been for 16 probably a year and a half, I would say that today all of 17 the folks who talked to us were very -- gave very 18 passionate feelings about this whole process. And I think 19 that they all felt they had been listened to. They may 20 not be happy with the end result, but I know there are 21 folks who worked really hard on this. So my compliments 22 to staff and all the people who worked on it. And I don't 23 know that the work is over. I think it's just begun. I 24 know that staff is up to that task. 25 CHAIRPERSON LLOYD: And I think as we were PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 229 1 reminded earlier, I think the industry is really committed 2 to working here. We all live and breathe the same air. I 3 think there's a strong commitment to move ahead. 4 With that, I'd like to call upon my colleagues 5 starting with Supervisor Patrick to identify any ex parte 6 communications. 7 While we may communicate off the record with 8 outside persons regarding rule making, we must disclose 9 the names of our contacts and the nature of the contents 10 on the record. This requirement is specifically to 11 communications which take place after notice the Board 12 hearing has been published. 13 And Supervisor Patrick, anything? 14 SUPERVISOR PATRICK: No. 15 CHAIRPERSON LLOYD: Mr. Calhoun. 16 BOARD MEMBER CALHOUN: On the 15th of July I met 17 with two representatives from the Rainbow Disposal 18 Company, Jerry Maffet and Mike Rumble. And during the 19 brief session that we had, we had discussed costs. And 20 nothing I heard from them was different from what I heard 21 today. 22 BOARD MEMBER RIORDAN: I have none. 23 CHAIRPERSON LLOYD: On September the 19th I had a 24 conference call with Todd Campbell, Coalition for Clean 25 Air; Bonnie Holmes-Gen, American Lung Association; with PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 230 1 Diane Bailey and Gail Rudemenfer of NRDC; and Patricia 2 Monahan, Union of Concerned Scientists. 3 BOARD MEMBER HUGH FRIEDMAN: On July 23rd I had a 4 brief meeting with Gene Erbin with the firm Nielsen, 5 Merksamer here in Sacramento and his client, Kent Stoddard 6 of Waste Management. They basically indicated that they 7 had some concerns that were discussed here today by them, 8 but they were generally supportive. 9 BOARD MEMBER WILLIAM FRIEDMAN: I have nothing. 10 BOARD MEMBER D'ADAMO: On Tuesday, September 11 23rd, I participated in a conference call with Todd 12 Campbell, Coalition for Clean Air; Bonnie Holmes-Gen, 13 American Lung Association; Diane Bailey, NRDC; Patricia 14 Monahan, Union for Concerned Scientists; and Don Anair, 15 Union of Concerned Scientists. 16 On Wednesday, September 24th, I met in my Modesto 17 office with Alan Marchant, Turlock Scavenger; and Sean 18 Edgar; California Refuse Removal Council. And the 19 discussions mirror their testimony today. 20 SUPERVISOR DeSAULNIER: Mr. Chair, I met on 21 August 25th in my office in Concord with Sean Edgar from 22 the California Refuse Removal Council; and Sheryl 23 Granzella from the Richmond Sanitary Services. And the 24 discussion was consistent with their testimony today. 25 CHAIRPERSON LLOYD: With that, I'd like to read PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 231 1 in the resolution and be willing to entertain a motion. 2 SUPERVISOR DeSAULNIER: I'd be happy to attempt a 3 motion. 4 CHAIRPERSON LLOYD: Okay. 5 SUPERVISOR DeSAULNIER: I move the Board adopt 6 Resolution 03-24, and then incorporate in our motion the 7 issue that Todd Stoddard brought up about -- and ask staff 8 to -- in regards to pass-through cost to work with all 9 affected stakeholders as Mr. Stoddard suggested, including 10 the Integrated Waste Management Board and others, to 11 develop an outreach program to help the haulers, 12 particularly the smaller ones, be able to recover their 13 costs and work with CSAC and the League of Cities. And 14 then also as part of the motion is to move the start-up 15 date from 2007 to 2005 on pre-'88s, and then reiterate one 16 more time our long-term commitment for further NOx 17 reductions. 18 CHAIRPERSON LLOYD: You were perfect on 19 everything besides the number. I think it's 03-21. 20 SUPERVISOR DeSAULNIER: Okay. We've had so many 21 of these come up here. I'll move whatever the last one 22 was. 23 CHAIRPERSON LLOYD: And I would -- do we have a 24 seconder? 25 BOARD MEMBER D'ADAMO: I have a question. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 232 1 CHAIRPERSON LLOYD: Professor is going to second, 2 but D.D. has a question. 3 BOARD MEMBER D'ADAMO: I have a question about 4 where we ended up. I'd be supportive of that, but I need 5 some clarification of where we ended up on the small 6 companies. Are we going to leave that up to staff to come 7 up with perhaps a number and a waiver? Because as I read 8 through the proposal -- I know it's changed quite a bit, 9 but as I read through the document, I don't see that there 10 is an extension based upon cost. It's only based upon 11 whether or not the technology is available. 12 EXECUTIVE OFFICER WITHERSPOON: That's correct. 13 There is no forgiveness for cost, for hardship, or 14 anything of the kind. I'm glad you pointed that out. 15 And earlier I asked did the Board have a 16 threshold in mind as you were casting about, is the 17 pull-ahead for everybody or just the bigger companies? 18 And Supervisor DeSaulnier answered back, "Well, if we are 19 able to solve the rate problem, then everyone can play." 20 Since you're bringing it up again, Tom and I have 21 been having a sidebar down here that we'd like the 22 opportunity to consider and maybe solicit some comment 23 about a threshold. We're still toying with the 15-vehicle 24 as taking the littlest of the littles out, or giving them 25 more time is basically what it would do. They wouldn't PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 233 1 have to pull-ahead as fast, and they'd have more access to 2 exemptions perhaps than the biggers. 3 And also concentrate staff's own efforts as we go 4 out and do this outreach and working with individual 5 communities and selling the program, we're not torn in 6 every direction at once. Because we have some concern 7 about our ability to deliver. 8 SUPERVISOR DeSAULNIER: I'd be fine to consider 9 something like that as an amendment to the motion. My 10 interest was giving it a shot first to see if you can 11 recover it, but be sensitive. What Barbara said, a lot of 12 these haulers may be in communities that don't have the 13 ability to recover cost just in terms of paying it through 14 the rate payer. 15 BOARD MEMBER RIORDAN: Exactly. You're going to 16 have some -- if you move it too fast, you're going to have 17 unintended consequences that I think we need to be 18 sensitive to. And it seems to me 15 would be the 19 reasonable number. 20 SUPERVISOR DeSAULNIER: I think that's good. 21 CHAIRPERSON LLOYD: I think we're putting quite a 22 burden on staff here. But that's good and bad. It gives 23 you some flexibility because I think you'll come up with 24 better data than we have. I think you can read the 25 sentiment of the Board. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 234 1 EXECUTIVE OFFICER WITHERSPOON: Just to be clear, 2 the way we'll fix it is through finding that magic 3 threshold and figuring out the right timetable for the 4 littles, as opposed to constructing a hardship exemption 5 which would just blow a hole in the side of the 6 regulation. 7 BOARD MEMBER WILLIAM FRIEDMAN: Just a question. 8 Did we not, with respect to the issue of negotiations 9 between haulers and municipalities, include some provision 10 so that we could hear back? 11 SUPERVISOR DeSAULNIER: Yes. 12 CHAIRPERSON LLOYD: Yes. 13 BOARD MEMBER WILLIAM FRIEDMAN: Perhaps that can 14 be included. 15 CHAIRPERSON LLOYD: And also to provide some cost 16 data to some of the municipalities there. And also, 17 please, when we have the meeting that was suggested by 18 Kent, make sure that the Trucking Association is 19 represented. 20 SUPERVISOR DeSAULNIER: Given that I was almost 21 perfect, I was fine with all those comments and 22 corrections. 23 CHAIRPERSON LLOYD: So with that, we have a 24 seconder. And so all in favor say aye. 25 (Ayes) PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 235 1 CHAIRPERSON LLOYD: Any against? 2 Thank you very much. 3 And again, thank you, staff, for a great job in 4 bringing this together. Unfortunately, the work isn't 5 finished. But thank you very much indeed. 6 With that, we will take a break until 3:00 when 7 we'll start the item on the small off-road engines. 8 (Thereupon a recess was taken.) 9 CHAIRPERSON LLOYD: Thank you. After that 10 10-minute break we move on to the next agenda item, 11 03-7-3, proposed exhaust and evaporative standards for 12 small off-road engines. 13 Staff has been working on this regulatory 14 proposal for several years and is now ready for our 15 consideration. I've witnessed firsthand the incredible 16 number of staff hours devoted to this task; the extensive 17 negotiations that have gone on with the affected industry 18 groups; and, most recently, the strenuous efforts 19 undertaken by staff, California's two senators, the 20 Governor's Washington DC office, environmental groups, and 21 our air quality colleagues throughout the nation to defend 22 states' rights to proceed with these essential emission 23 control measures. 24 I wish I could report that the latter issue was 25 resolved at this time. Unfortunately, it is not. And, in PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 236 1 fact, that's why we had the slight delay because we're 2 still getting communications coming in on this issue. 3 But what is absolutely clear in my mind is that 4 the small off-road engine regulation is one of the most 5 thoroughly analyzed and most carefully constructed rules 6 our staff has worked on for some time. It is not 7 half-baked, it is not premature, and my colleagues on the 8 Board should be confident that staff understands this 9 source category quite well. 10 And I remember several months ago I was asked to 11 take a look at what staff was doing on this issue to make 12 sure that there was communication between the industry and 13 staff. And, again, I can attest that maybe there was some 14 lack of interest on industry, or at least maybe not taking 15 this too seriously, but since that time I feel that staff 16 has been fully engaged. We've had many proposals. We've 17 worked -- the staff was worked especially with many pieces 18 of the industry. And, again, today while we clearly don't 19 have everybody on board, I'm convinced that those people 20 who are interested in really cleaning up the air have 21 worked with us very carefully and that we are ready to 22 hear this item. 23 Next month the Board will consider a revision to 24 the State Implementation Plan for the South Coast Air 25 basin. That plan contains several regulatory commitments PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 237 1 for this Board's consideration. And we already are 2 receiving letters that should contain even more. Two of 3 the commitments in the proposed South Coast plan relate to 4 reducing emissions from small off-road engines. If the 5 Board approves the proposed SORE rule today, we would be 6 fulfilling both of those SIP commitments. 7 And so this is an important rule, it's an 8 important challenge as we look ahead, as I mentioned, to 9 next month the challenge we have in the South Coast basin. 10 We need every pound of pollution that we can get from 11 every category that we can get. 12 And, again, I continue in the tradition of 13 looking at making sure we can get the technology that's 14 proven elsewhere into various categories is very, very 15 important. 16 So, Ms. Witherspoon, would you please begin the 17 staff presentation on this important item. 18 EXECUTIVE OFFICER WITHERSPOON: Thank you, 19 Chairman Lloyd, and members of the Board. 20 Small off-road engines are a major source of 21 emissions in California. Exhaust standards previously 22 adopted by the Board have stopped the growth of tailpipe 23 emissions in this category. However, there are no 24 evaporative emission controls in place today. The 25 proposal you are considering would tighten exhaust PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 238 1 emission standards by one-third and would establish 2 evaporative standards for the first time. 3 As you will hear in the staff presentation, we 4 have continued to work with the major stakeholders right 5 up to the eve of this hearing. As a result of these 6 discussions, staff will be proposing revised exhaust 7 emission standards and two new options to comply with the 8 evaporative emission requirements. 9 The revised proposal reduces costs, addresses 10 engineering challenges related to using a catalytic 11 converter on these small engines, and provides additional 12 compliance flexibility. We believe the staff's revised 13 proposal addresses all the major technical issues raised 14 by industry representatives, while achieving nearly the 15 same emission reductions as the original staff proposal. 16 I'd like to emphasize these changes are fully 17 within the scope of our original notice and can be acted 18 upon by the Board today even though staff is still working 19 on the specific regulatory language to accomplish them, 20 which would be circulated for comment during the routine 21 15-day change process. 22 At this time I'd like to turn the presentation 23 over to David Salardino of our Mobile Source Control 24 Division, who will present staff's recommendation on the 25 exhaust side. Following David's presentation Jim Watson PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 239 1 of our Monitoring and Laboratory Division will discuss the 2 evaporative emission portion of the proposal. 3 (Thereupon an overhead presentation was 4 Presented as follows.) 5 MR. SALARDINO: Thank you, Ms. Witherspoon. 6 Greetings, Chairman Lloyd, members of the 7 Board -- 8 CHAIRPERSON LLOYD: Microphone please. It's not 9 on. 10 MR. SALARDINO: Sorry. Thank you. 11 Greetings, Chairman Lloyd, members of the Board, 12 ladies and gentlemen. 13 Today staff is proposing for the Board's approval 14 amendments to the current small off-road engine exhaust 15 emissions regulations as well as new regulations to reduce 16 evaporative emissions from small off-road engines and 17 equipment. This item is a joint effort between staff and 18 the Mobile Source Control Division and the Monitoring and 19 Laboratory Division. 20 --o0o-- 21 MR. SALARDINO: In this presentation I'll begin 22 by viewing some of the background information regarding 23 the small off-road engine category. I'll then summarize 24 our proposal to reduce exhaust emissions from small 25 engines, after which I will turn the presentation over to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 240 1 Mr. Jim Watson of the Monitoring and Laboratory Division 2 to summarize the evaporative emission reduction proposal, 3 the environmental benefits of staff's proposal, as well as 4 the economic impacts. 5 Mr. Watson will then conclude the presentation 6 with a brief summary and a recommendation to the Board. 7 --o0o-- 8 MR. SALARDINO: The small off-road engine 9 category consists of engines at or below 19 kilowatts. It 10 includes and consists of both two and four stroke engines, 11 which are used primarily in lawn and garden and small 12 industrial and commercial equipment. By definition, this 13 category does not include equipment that qualifies under 14 the farm and construction equipment preemption that was 15 contained in the 1990 federal -- 16 BOARD MEMBER HUGH FRIEDMAN: Excuse me. We're 17 having trouble hearing you. If you wouldn't mind putting 18 that microphone real close to your chin, I'd really 19 appreciate it. 20 MR. SALARDINO: Sorry about that. 21 BOARD MEMBER HUGH FRIEDMAN: Thank you. 22 MR. SALARDINO: California cannot regulate 23 emissions from new farm and construction equipment less 24 than 175 horsepower that would otherwise be in this 25 category. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 241 1 --o0o-- 2 MR. SALARDINO: This shows examples of some the 3 equipment in the small engine powered category. Small 4 engines are typically categorized as handheld and 5 non-handheld. 6 Handheld engines have small engine displacements 7 and are typically used in applications in which the 8 operator supports the equipment, such as a leaf blower or 9 a string trimmer. 10 Non-handheld engines are larger. A majority of 11 the non-handheld category consists of walk-behind mowers. 12 Please note that for the remainder of this 13 presentation you will see a drawing of a string trimmer in 14 the lower lefthand corner and/or a drawing of a lawnmower 15 in the lower righthand corner denoting slides specifically 16 pertaining to this equipment. 17 --o0o-- 18 MR. SALARDINO: Small off-road engines were 19 California's first off-road category subject to emission 20 control regulations. In 1990 the Board adopted exhaust 21 emission standards for small engines with implementation 22 dates starting in 1995. 23 Manufacturers were able to meet these standards 24 for the most part by modifying engines to run at a leaner 25 air/fuel ratio and improving engine cooling. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 242 1 In 1998 the Board amended the small engine 2 regulations to incorporate more stringent exhaust 3 standards and included a requirement that manufacturers 4 show emission compliance over the useful life of the 5 engine. These new durability-based standards were 6 implemented started in 2000. 7 --o0o-- 8 MR. SALARDINO: During this time period the U.S. 9 EPA finalized its own exhaust emission reduction 10 requirements for small engines, which are similar to 11 California's program. There currently are no federal or 12 State requirements to control evaporative emissions from 13 small engines. Staff is now returning to the Board to 14 propose requirements to further reduce small engine 15 emissions. 16 --o0o-- 17 MR. SALARDINO: The combined exhaust and 18 evaporative emission contribution from small off-road 19 engines is significant, at 152 tons per day in 2000, with 20 evaporative emissions making up about 30 percent of the 21 total. 22 The adopted emission standards will continue to 23 reduce exhaust emissions as older diurnal units get 24 replaced with new cleaner units. However, after 2010 the 25 small engine emissions are expected to increase as the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 243 1 addition of cleaner engines is offset by population 2 growth. 3 In addition, with no regulatory requirements 4 evaporative emissions will continue to increase with 5 growth and will make up about 40 percent of the total by 6 2020. 7 --o0o-- 8 MR. SALARDINO: Next month staff is scheduled to 9 present a new State Implementation Plan that measures -- 10 that includes measures to reduce air pollution throughout 11 the state. Today's proposal is designed to meet the 12 emission reduction commitments outlined in two of the 13 measures. Those two measures, Small Off-Road 1 and Small 14 Off-Road 2, count on exhaust and evaporative emission 15 reductions from handheld engines and non-handheld engines 16 respectively. 17 --o0o-- 18 MR. SALARDINO: I will now discuss staff's 19 proposal to reduce exhaust emissions from small engines. 20 As I mentioned earlier, the U.S. EPA has 21 promulgated federal emission standards for small engines. 22 EPA's HC+NOx standard for handheld engines gets 23 increasingly more stringent through 2005, reaching a level 24 of 50 grams per kilowatt hour for engines less than 50 cc, 25 which is more stringent than California's current standard PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 244 1 of 72 grams per kilowatt hour. 2 Therefore, staff proposes a third tier standard 3 equivalent to the federal HC+NOx standard for engines less 4 than 50 cc. Implementation would begin with the 2005 5 model year. This would be a 30 percent decrease from the 6 current Tier 2 standards. 7 --o0o-- 8 MR. SALARDINO: Technologies already exist which 9 enable manufacturers to meet the proposed Tier 3 10 standards. There are currently 25 engine families 11 certified in California that already meet the Tier 3 12 levels. These certified engine families include all types 13 of handheld equipment. 14 Manufacturers have used a variety of technologies 15 to comply with the handheld standards, such as replacing 16 two-stroke engines with four-stroke engines, addition of a 17 catalyst to a two-stroke engine, advanced stratified 18 scavaging, and two stroke/four stroke hybrids. 19 In addition, zero emission electric equipment is 20 also available. 21 These technologies have allowed manufacturers to 22 comply with the current emission requirements as well as 23 confirm the feasibility of the proposed emission 24 requirements. 25 --o0o-- PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 245 1 MR. SALARDINO: Non-handheld engines are 2 separated in to two classes: Engines between 80 and 225 3 cc are classified as Class 1 engines; and engines 225 cc 4 are Class 2 engines. 5 Staff proposes emission standards for these 6 engines that are consistent with reductions achievable 7 with the addition of a catalytic converter. Staff has 8 taken part in meetings within the last few weeks in which 9 manufacturers and manufacturer associations have made 10 counterproposals to staff's original proposal as outlined 11 in the staff report. 12 The industry counterproposals suggest additional 13 flexibility to use compliance and/or reduce the cost of 14 compliance. In response to these discussions, staff is 15 proposing alternative Tier 3 standards for HC+NOx of 10 16 grams per kilowatt hour or engines between 80 and 225 cc 17 and 8 grams per kilowatt hour for engines 225 cc and 18 above. These standards are an alternative to staff's 19 originally proposed standards of 8 and 6 grams per 20 kilowatt hour. 21 Staff's alternative standards will reduce the 22 amount of heat generated from the catalytic converter that 23 must be managed, reduce costs, and eliminate the chance 24 that major engine redesign may be needed for some older 25 engine designs. Tailpipe emissions from these engines PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 246 1 would be reduced by about one-third with the alternative 2 proposed standards. 3 In addition, staff proposes to stagger the 4 implementation date of these standards to allow 5 manufacturers appropriate lead time for engineering and 6 development, while providing the earliest start to 7 achieving the desired emission reductions. Thus for 8 engines between 80 and 225 cc's staff proposes an 9 implementation date of 2007, and 2008 for engines 225 cc 10 and above. 11 As shown in the next few slides these proposed 12 standards were based on test results in which several 13 engines were equipped with catalytic converters. 14 --o0o-- 15 MR. SALARDINO: ARB funded a catalyst test 16 program designed to show the technical feasibility of new 17 emission standards based on the use of catalysts on 18 non-handheld engines. Small engine and equipment 19 manufacturers participated with ARB in the test program 20 through monthly meetings and technical assistance. 21 ARB contracted with the Southwest Research 22 Institute to conduct exhaust emission durability testing 23 on six small engines over 80 cc. The objective of the 24 program was to develop six non-handheld engines and 25 low-emission configurations and then age and test the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 247 1 engines throughout their useful life. The six engines 2 chosen for the program are shown here. 3 These engines all meet the current California 4 Tier 2 emission standards. Four engines are using 5 walk-behind mower applications. One is for a riding 6 mower. And one is used in constant-speed generator 7 applications. 8 These engines were tested when new, i.e., at zero 9 hour, and then tested again after running for hundreds of 10 hours over a service-accumulation cycle. 11 Each engine was equipped with a three-way 12 catalytic converter and a relatively simple air induction 13 system to enhance the catalytic reaction. 14 In addition, for the Briggs & Stratton engine No. 15 1 and for the Kawasaki engine, Southwest adjusted the 16 carburetor to lean out the air/fuel mixture. 17 --o0o-- 18 MR. SALARDINO: Here we see three of the engines 19 that Southwest equipped with catalysts. The mufflers 20 shown installed on the engines are the developed mufflers 21 with the catalyst. The original mufflers are shown next 22 to the engines on the left for comparison. 23 As you can see, in some cases the muffler was 24 increased slightly or modified to accommodate the 25 catalyst, as in the case with the Honda No. 2 engine. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 248 1 However, in many cases, such as the Briggs engine shown, 2 the catalyst was fit into the existing muffler housing. 3 --o0o-- 4 MR. SALARDINO: The objective of the test program 5 was to develop small engines in low-emissions 6 configurations, with the ultimate goal of reducing 7 tailpipe HC+NOx emissions by 50 percent or more at the end 8 of the useful life. 9 As shown in this table, each developed engine 10 except for the Briggs & Stratton No. 2 met or exceeded the 11 50 percent target level at each of the test points. 12 --o0o-- 13 MR. SALARDINO: This slide shows the emission 14 levels achieved by engines in the Southwest test program 15 as compared to the revised proposed alternative standards. 16 The testing of Southwest was designed to be a 17 proof-concept project which ultimately demonstrated that 18 small engines can be designed to meet the proposed 19 standards over the useful life of the engine. While the 20 proposed emission standards are certainly feasible, some 21 engines may require additional development beyond the work 22 completed at Southwest as evidenced by two of the engines 23 in this program. 24 Manufacturers have raised safety concerns related 25 to increased temperatures resulting from the incorporation PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 249 1 of a catalyst on small engines. Oxidation of HC and CO 2 creates heat, and along with any enleanment of the 3 air/fuel mixture could lead to increased exhaust gas 4 temperatures and catalyst muffler skin temperatures. 5 This temperature slide shows that in some cases 6 the addition of a catalyst resulted in increased muffler 7 skin temperatures. While we believe that in some cases 8 the increase of temperature will be small, on the order of 9 less than 50 degrees Fahrenheit, in other cases it might 10 be significantly higher. 11 Manufacturers will need to address surface 12 temperature issues when developing a catalyst system to 13 meet the proposed standards. But as has been done with 14 many two-stroke engines currently equipped with catalysts, 15 these issues can be adequately addressed in the design of 16 the system by, for instance, improving cooling flow and 17 providing additional shielding of the catalyst. 18 As shown in this slide by the purple bar, the 19 catalyst shield temperature on the Honda engine was almost 20 500 degrees lower than the catalyst surface temperature. 21 Staff is certain that the lawn and garden 22 manufacturers will be able to address temperature concerns 23 by using approaches similar to those developed by other 24 manufacturers who have successfully and safely implemented 25 catalyst technology over the last 28 years. The staff's PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 250 1 proposal was designed to provide manufacturers with the 2 lead time necessary to address such design changes. 3 --o0o-- 4 MR. SALARDINO: So to summarize: 5 Staff is proposing a Tier 3 HC+NOx exhaust 6 emission standard of 50 grams per kilowatt hour for 7 engines less than 50 cc, equivalent to the most stringent 8 federal standard for these engines. 9 For engines 50 to 80 cc the HC+NOx standard will 10 remain at the current level of 72 grams per kilowatt hour, 11 as it is already equivalent to the most stringent federal 12 standard for these engines. 13 --o0o-- 14 MR. SALARDINO: The Tier 3 standards for engines 15 above 80 cc will be based on the addition of a catalytic 16 converter and will begin implementation with the 2007 17 model year. 18 --o0o-- 19 MR. SALARDINO: To encourage the manufacture and 20 use of engines that go beyond mandatory emission 21 standards, the staff proposes voluntary optional low 22 exhaust emission standards for small engines in connection 23 with the proposed Tier 3 standards. 24 An engine found to be certified to the voluntary 25 standards will be classified as a California Blue Sky PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 251 1 engine. The Blue Sky standards represent a reduction of 2 50 percent below the proposed Tier 3 levels for HC+NOx. 3 The Blue Sky Engine Program provides an 4 opportunity for these engines to participate in clean 5 labeling and incentive programs. The manufacturer must 6 declare at the time of certification whether it is 7 certifying an engine family to a Blue Sky series standard. 8 In order to guarantee that emission credits associated 9 with the Blue Sky engine are real, engines certified to 10 these voluntary standards would not be eligible to 11 participate in the corporate averaging programs allowed in 12 the small engine exhaust emission regulations. 13 At this time staff is also suggesting amending 14 the Blue Sky Engine Program to include zero emission 15 equipment. 16 --o0o-- 17 MR. SALARDINO: In addition to new standards, 18 staff also proposes a few other modifications to the 19 existing exhaust emission regulations and test procedures. 20 To more closely align with the federal 21 regulation, staff proposes to adopt the use of kilowatt as 22 the unit of power for small off-road engines. 23 Staff also proposes to include the federal 1,000 24 hour durability option for engines certified at or about 25 225 cc. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 252 1 In addition, staff proposes to incorporate the 2 federal small engine test procedures subparts A, B, D, and 3 E of CFR Part 90 in to California's test procedures for 4 2005 and later model year engines. 5 These changes will further ease the burden on 6 manufacturers certifying an engine family. 7 In 1998, the Board adopted a 65 cc displacement 8 limit on engines subject to the handheld emission 9 standards. However, since that time manufacturers have 10 noted increased consumer demand for more power from 11 handheld engines, requiring engine size above the 65 cc 12 limit. 13 Manufacturers requested a higher limit for 14 handheld engines and promised the continued introduction 15 of clean technologies. Staff, therefore, proposes to 16 increase the handheld category to include engines up to 80 17 cc beginning with the 2005 model year. 18 --o0o-- 19 MR. SALARDINO: Staff also proposes a requirement 20 that a manufacturer report emission-related defects 21 affecting a given engine family -- a given family of 22 engines. A manufacturer will be required to file the 23 report with ARB whenever the manufacturer determines that 24 either a safety-related or performance-related defect 25 exists in 25 or more engines of a given family. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 253 1 ARB will then require the manufacturer to submit 2 a plan to resolve the nonconformity of the engines. A 3 resolution could be in the form of a recall of those 4 engines or alternative measures that offset the 5 noncompliance. 6 This requirement for defect reporting and recall 7 is similar to the current federal program and is also 8 included in staff's proposed evaporative emission 9 reduction program. 10 Staff also proposes to include additional text in 11 the test procedures that clarify engine clearing 12 requirements for certification emissions testing. This 13 clarification is necessary in order to ensure that the 14 test conditions are representative of real-world 15 conditions. 16 This concludes staff's proposal for amendments to 17 California's small engine exhaust emission programs. 18 At this point the presentation will show a slide 19 representing evaporative emission sources from small 20 engines. And I would like to turn the presentation over 21 to Mr. Jim Watson to discuss staff's evaporative emission 22 proposal. 23 (Thereupon an overhead presentation was 24 Presented as follows.) 25 BOARD MEMBER DeSAULNIER: For those of us who PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 254 1 need visuals. 2 MR. WATSON: Good afternoon, Chairman Lloyd and 3 members of the Board. 4 The animated slide David shared with us depicts 5 the major sources of evaporative emissions from small 6 off-road engines. The proposal I will present today 7 covers staff's proposal -- the proposal I will present 8 today covers staff's proposal and two alternatives 9 suggested as 15-day changes that control emissions from 10 these sources. The addition of these alternatives provide 11 manufacturers some needed flexibility in implementing the 12 proposed standards. 13 The first topic of the presentation will 14 highlight three elements of staff's proposal: 15 The discussion will briefly cover the proposed 16 standards, controlled technologies, test data, and 17 industry issues. 18 The presentation will then focus on ARB 19 alternative options developed as a result of our working 20 with industry after the release of the staff report. 21 These alternatives are proposed as 15-day modifications. 22 I will close the presentation with a discussion 23 of the proposal's overall cost effectiveness, cost, 24 overall controlled emissions comparison, and finally 25 staff's conclusions. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 255 1 --o0o-- 2 MR. WATSON: The primary elements of the 3 evaporative proposal are a fuel tank permeation standard 4 for handheld equipment, three diurnal standards for 5 non-handheld equipment, and certification. 6 --o0o-- 7 MR. WATSON: This chart summarizes the proposed 8 permeation standard and implementation date for handheld 9 equipment. 10 Permeation occurs when a gas or liquid 11 saturates a permeable material and is released on the 12 other side. 13 An example of permeation would be the old 14 helium-filled rubber balloons. After several hours the 15 helium would permeate through the balloon's walls and the 16 balloon would go flat. That is why we now have mylar 17 party balloon, to control permeation. 18 For small gasoline engines permeation emissions 19 occur when gasoline saturates permeable materials like 20 high density polyethylene and rubber and evaporates on 21 their outside surfaces. 22 This proposal sets a 23 two-gram-per-square-meter-per-day fuel tank permeation 24 standard. Since most handheld equipment use sealed 25 systems to control tank and carbon vapors, staff's PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 256 1 proposal does not include a diurnal evaporative emission 2 standard for this category. 3 The next slide discusses the diurnal standards as 4 they apply to non-handheld equipment. 5 --o0o-- 6 MR. WATSON: This slide summarizes the proposed 7 diurnal standards and implementation data for non-handheld 8 equipment. 9 Diurnal emissions occur as a result of daily 10 temperature variations and include vented and permeation 11 emissions. This proposal does not include separate 12 permeation standards for non-handheld equipment tanks 13 because permeation is addressed by the proposed diurnal 14 standards and test procedures. 15 The three diurnal standards that apply to 16 non-handheld Class 1 and Class 2 equipment include a 17 one-gram-per-day diurnal standard for Class 1 walk-behind 18 mowers, a diurnal standard based on tank volume for other 19 Class 1 equipment, and a two-gram-per-day diurnal standard 20 for Class 2 equipment. 21 --o0o-- 22 MR. WATSON: The final element of the evaporative 23 proposal is certification. Staff's proposal requires all 24 equipment to be certified. Manufacturers must test at 25 least one worst case engine or fuel tank for non-handheld PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 257 1 equipment within each evaporative family with the highest 2 emissions potential. 3 Handheld tanks and non-handheld equipment are 4 tested and certified per applicable test procedures as 5 listed in the slide. The certification and test 6 procedures are an integral part of the evaporative 7 proposal. 8 --o0o-- 9 MR. WATSON: I would now like to discuss 10 technologies for controlling permeation emissions. 11 Controlling permeation emissions is meeting the 12 proposed standards. There are a number of proven 13 technologies that can be used to control fuel tank 14 permeation emissions, which include metal tanks, nylon 15 tanks, and barrier treatments. 16 Options for controlling permeation emissions from 17 other fuel system components include the use of thermal 18 plastic materials and teflon. 19 --o0o-- 20 MR. WATSON: Based on experience from the 21 portable fuel container rule, barrier treatments are an 22 option that can be used to control fuel tank permeation 23 emissions when optimized resins and additives are used. 24 Staff validated the effectiveness of applying a 25 barrier treatment by performing permeation testing on PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 258 1 three untreated and three fluorinated fuel tanks. The 2 average test results show that fluorination is quite 3 effective and to reduce permeation emissions by more than 4 98 percent when optimized. 5 I will now go on to a discussion of technology 6 that controls the portion of the diurnal emission that 7 arises from vented tanks. 8 --o0o-- 9 MR. WATSON: There are three basic technologies 10 that control vented diurnal emissions. The technology 11 consists of sealed systems, carbon cannisters, and hybrid 12 systems. 13 Sealed systems are the most effective in reducing 14 emissions, but require fuel tanks designed to withstand 15 pressure. 16 Cannister technology has a proven track record in 17 on-road applications. 18 And the hybrid systems are basically sealed 19 systems that vent to a cannister above a fixed pressure 20 limit. 21 --o0o-- 22 MR. WATSON: Staff evaluated prototype equipment 23 configured with technology to control permeation and 24 vented emissions in an effort to develop appropriate 25 diurnal standards. Staff tested six walk-behind mowers PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 259 1 configured with sealed systems, fluorinated tanks, and 2 low-permeation fuel lines. We also tested a generator and 3 a commercial mower configured with carbon cannisters, 4 metal fuel tanks, and low-permeation fuel lines. 5 --o0o-- 6 MR. WATSON: In regard to the sealed system 7 testing, this chart showed the uncontrolled and controlled 8 test results for six mowers tested by ARB. The blue and 9 green columns represent uncontrolled results from mowers 10 tested with fuel containing MTBE and fuel containing 11 ethanol, respectively. The purple and gray columns 12 represent controlled emissions. 13 The controlled columns clearly show that the 14 proposed standards are feasible when tested with fuel 15 containing ethanol. However, staff is proposing that all 16 equipment be certification tested only with certification 17 fuel. 18 --o0o-- 19 MR. WATSON: In regard to the cannister testing, 20 this chart shows the uncontrolled and controlled tests for 21 the generator and commercial mower when tested with 22 certification fuel. Staff were able to reduce average 23 emissions by 95 and 87 percent for the generator and 24 mower, respectively. The test results support staff's 25 finding that large non-handheld equipment can meet the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 260 1 proposed two-gram-per-day diurnal evaporative emission 2 standard. 3 In the last few slides I presented technical data 4 that supports staff's proposed permeation and diurnal 5 standards. 6 I would now like to discuss two additional 7 changes to the proposal that will be included as 15-day 8 changes. 9 --o0o-- 10 MR. WATSON: Staff suggests lowering the 11 cannister design requirements in Test Procedure 902 from 12 two grams per liter of fuel tank volume to 1.4 grams per 13 liter of fuel tank volume for tanks one gallon and 14 greater, and one gram per liter for tanks less than one 15 gallon. The change will help solve packaging issues on 16 equipment configured with carbon canisters. 17 Another suggested 15-day change concerns small 18 volume manufacturers. Staff proposes to require small 19 volume manufacturers to submit a letter of conformance. 20 The change will allow certification staff to track small 21 volume equipment being sold in California. 22 There were many issues raised by industry. Most 23 of these issues had been resolved by staff's proposal. 24 However, several major issues were not resolved such as 25 stringency of the exhaust and evaporative standards, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 261 1 compliance flexibility, and costs. We invited industry to 2 come up with alternative proposals that would address 3 these issues while still achieving equivalent emission 4 reductions compared to staff's proposal. 5 --o0o-- 6 MR. WATSON: Over the last several weeks Briggs 7 and Stratton, EMA and OPEI and Honda responded to staff's 8 invitation by proposing three alternative proposals. 9 Staff evaluated each proposal with respect to emissions 10 equivalency and enforceability. Subsequently staff 11 developed two alternatives from industry proposals which I 12 will identify as Alternative No. 1 and Alternative No. 2. 13 --o0o-- 14 MR. WATSON: Key benefits of the alternatives is 15 that they provide industry with greater flexibility and 16 compliance, while providing additional evaporative 17 emission benefits at a lower cost. 18 The alternatives achieved essentially the same 19 level of benefits of the base proposal and still enables 20 the ARB to meet its SIP commitments. 21 --o0o-- 22 MR. WATSON: Shown on the graph are the overall 23 exhaust and evaporative emission reductions of staff's 24 proposal in the Alternatives 1 and 2. 25 The alternatives achieve between 91 and 97 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 262 1 percent of the emission reductions contained in staff's 2 proposal in 2010. 3 In 2020 the alternatives achieve between 98 and 4 99 percent of the reductions in staff's proposal. 5 --o0o-- 6 MR. WATSON: I will now discuss the major 7 elements of the first alternative. 8 This alternative provides additional evaporative 9 emission reductions while equipment is operating, which 10 are defined as running loss emissions. It also contains a 11 requirement for testing complete engines, implements low 12 permeation fuel hoses one year earlier than staff's 13 proposal, and allows fleet averaging. 14 --o0o-- 15 MR. WATSON: The first alternative sets a 2006 16 fuel hose standard and less stringent interim diurnal 17 standards based on tank volume for all Class 1 engines. 18 Setting interim standards will allow manufacturers time to 19 control production variability as evaporative technology 20 is adapted to off-road equipment. 21 In 2009, the diurnal standards for Class 1 22 engines are lowered. Standards that apply to Class 2 23 engines under the first alternative include a 2006 24 implementation of a fuel hose permeation standard and a 25 less stringent diurnal standard based on tank volume PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 263 1 implemented in 2008. 2 --o0o-- 3 MR. WATSON: I will now discuss the second 4 alternative. It also achieves additional running loss 5 emission reductions. Other major elements of the second 6 alternative include a requirement to test Class 1 7 walk-behind mowers, implementation of a low permeation 8 fuel hose is two years earlier than staff's proposal, and 9 reduces compliance testing for equipment certified by 10 design. 11 --o0o-- 12 MR. WATSON: The second alternative requires 13 diurnal testing of walk-behind mower engines as part of 14 certification. This requirement ensures that the majority 15 of Class 1 engines meet specific emission targets. 16 Design-based standards apply to non-walk-behind mowers. 17 Beginning in 2005 all Class 1 equipment must meet a 18 post-permeation standard. For model years 2007 through 19 2011 interim performance and design standards apply to all 20 equipment. In 2012 the interim standards are lowered to 21 be equal to staff's proposal. 22 --o0o-- 23 MR. WATSON: In this second alternative, 24 design-based also applies to Class 2 engines. In 2005, 25 they must meet a fuel hose permeation standard. In 2008, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 264 1 90 percent of a manufacturer's production volume must 2 comply with the additional interim design standards. The 3 following year, 100 percent of a manufacturer's production 4 volume must be compliant. In 2010, design standards for 5 fuel hoses in catalysts apply to small-volume 6 manufacturers. In 2013, the interim design standards are 7 lowered by setting a more stringent tank permeation 8 standard for 90 percent of a manufacturer's volume. In 9 2014, 100 percent of the manufacturer's volume must meet 10 the lower requirements. 11 This concludes staff's discussion of the 12 alternative options. The remaining portions of the 13 presentation will include both exhaust and evaporative 14 aspects of the proposal. 15 --o0o-- 16 MR. WATSON: Staff's proposal for exhaust and 17 evaporative emissions is cost effective for both handheld 18 and non-handheld equipment. 19 Staff determined that the cost effectiveness for 20 handheld equipment will range from $1.71 to $6.21 per 21 pound of hydrocarbon reduced. 22 The cost effectiveness for non-handheld equipment 23 will range from a low of 20 cents to a high of $4.30 per 24 pound of hydrocarbon and NOx reduced. 25 For the alternatives under consideration staff PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 265 1 expects the cost effectiveness will improve. 2 --o0o-- 3 MR. WATSON: The estimated increase in the retail 4 price of handheld equipment will range from $2.16 to 5 $4.84, depending on the type of equipment purchased. The 6 estimated increase in the retail price of non-handheld 7 equipment will range from $37 for a walk-behind mower to 8 $179 for a commercial mower. 9 As the cost effectiveness improvement for the 10 alternatives under consideration staff expects retail 11 increases to be lower. 12 --o0o-- 13 MR. WATSON: This chart compares the cost 14 effectiveness of major regulations adopted by the Board. 15 The $4 per pound average cost effectiveness of the 16 proposed handheld standards is lower than recently 17 approved control measures for some consumer products, 18 on-road motorcycles and enhanced vapor recovery. The 19 average $2.25 per pound cost effectiveness for 20 non-handheld equipment compares favorably with other 21 regulations. 22 --o0o-- 23 MR. WATSON: The green columns of this chart show 24 the controlled emissions should the Board adopt the 25 proposal, which are significantly lower than the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 266 1 uncontrolled columns shown in light blue. 2 This shows a 22-ton-per-day reduction in 2010 and 3 a 50-ton-per-day reduction in 2020. Also shown in this 4 chart is a maximum change in controlled emissions for the 5 alternatives, which are represented by small purple 6 segments above the controlled emissions column. 7 As you can see, in 2010 the maximum shortfall of 8 the alternatives is .8 tons per day. In 2020, the maximum 9 shortfall is .9 tons per day. 10 --o0o-- 11 MR. WATSON: In conclusion, staff has determined 12 that the proposal and alternative provide significant 13 emission reductions and will help to achieve attainment of 14 air quality standards that will benefit the health of all 15 Californians. Staff has determined that the proposed 16 standards are cost effective and attainable with existing 17 technologies. 18 Staff recommends Board adoption of the staff's 19 proposal including the alternatives. Adopting staff's 20 proposal and the alternatives will provide industry with a 21 great flexibility while retaining our emission-reduction 22 goals. 23 This completes my presentation. At this time I 24 would be happy to answer any questions you may have. 25 Thank you. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 267 1 CHAIRPERSON LLOYD: Thank you very much. 2 On your penultimate slide there, when you talk 3 about emissions reductions, what emissions reductions are 4 you talking about? 5 MR. WATSON: These are the exhaust and 6 evaporative emission reductions. 7 CHAIRPERSON LLOYD: Hydrocarbon plus NOx? 8 MR. WATSON: Hydrocarbon plus NOx or non-handheld 9 and handheld equipment. 10 CHAIRPERSON LLOYD: And what's the breakdown? 11 MR. WATSON: In 2020 there are about 6 tons per 12 day for handheld equipment and 43.5 tons per day for 13 non-handheld equipment. 14 EXECUTIVE OFFICER WITHERSPOON: There's more ROG 15 than NOx because they're new evaporative standards and 16 strengthened exhaust standards. 17 CHAIRPERSON LLOYD: So what was that again? 18 MR. WATSON: In 2020 there are about -- 19 CHAIRPERSON LLOYD: In 2010 what was the 20 breakdown for hydrocarbon? X hydrocarbon plus Y NOx, what 21 was that? And the same for 2020. 22 EXECUTIVE OFFICER WITHERSPOON: He was providing 23 it in handheld and non-handheld, which is why I jumped in 24 and gave it -- told you that the thrust of it is ROG. 25 But they'll get that answer. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 268 1 CHAIRPERSON LLOYD: You see you're talking to a 2 chemist. 3 EXECUTIVE OFFICER WITHERSPOON: It should mostly 4 be ROG. 5 CHAIRPERSON LLOYD: While you're working that 6 out, again, just for clarification, that the way it was 7 described, staff came up with their proposal and then 8 worked with the industry after shipping an earlier 9 version, tried to get some of the ideas from industry and 10 then tried to incorporate those. And as a result we've 11 come up with a proposal which incorporates several of the 12 ideas that the industry has. Is that a fair -- 13 EXECUTIVE OFFICER WITHERSPOON: That's correct. 14 And they came very, very close to our original staff 15 proposal, within less than a ton of what our regulation 16 would provide. 17 CHAIRPERSON LLOYD: Okay. 18 Professor Friedman. 19 BOARD MEMBER HUGH FRIEDMAN: I didn't hear you 20 address the safety concern that's been raised in the 21 correspondence we received, the fire specifically. I 22 guess that has to do with the exhaust controls and the 23 catalytic conversion. 24 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Yes. 25 We did address it partially in the charts that showed the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 269 1 testing we did down in Texas where we measured the 2 increase in exhaust temperatures. And you saw mixed 3 results. The catalyst actually resulted in a slightly 4 cooler muffler lower and some engines and up to 200 5 degrees higher in other engines. 6 One of the points that we've considered is the 7 fact these are hot exhaust without a catalyst, and they 8 could catch fire to things. And for that reason the 9 engines provide shielding and other protection to protect 10 against fires and to protect against you putting your hand 11 on it. 12 BOARD MEMBER HUGH FRIEDMAN: Tom, I want to be 13 sure I understand this. I think it's very important. 14 Would you mind repeating what you're saying. And I want 15 to -- I want to be sure I'm hearing it. 16 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: And 17 I've got about a three-part answer unfortunately here. So 18 bear with me on -- if the first part doesn't answer all 19 the questions. 20 We were aware of the -- very aware of the safety 21 issue. We equipped engines -- six different engines with 22 catalytic converters in a test facility down in Texas. 23 And we measured the temperatures of the surface of the 24 catalyst, the temperatures of the exhaust, and so forth. 25 What we found was on some of the mowers the temperature PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 270 1 didn't go up and some of them it did go up. And the 2 temperature of the exhaust and the muffler is very hot 3 either way. Adding a catalyst on several engines raised 4 it by up to 200 degrees. So it got hotter. 5 We then looked at, can that be shielded? Here's 6 the data here. Can it be shielded and protected? The 7 manufacturers already do that because at, you know 500 to 8 600 degrees, which is a current muffler temperature, they 9 don't want you to put your hand on it and they don't want 10 grass to go on it because it could catch on fire. 11 So these are -- there's additional heat. But we 12 believe that they could manage that heat by shielding and 13 proper design of the exhaust system. 14 Subsequent to that testing and in publishing and 15 in our staff report the industry came back and said, "You 16 know, this does cause a lot of problems for us." The 17 catalyst, because it's burning up a lot of pollution from 18 these engines, which are fairly high polluting engines -- 19 burning them up creates heat. That's what the process is. 20 And they came back and said, "Look, it still causes us a 21 lot of problems. When the temperature goes up, there's 22 plastic next to it, we might have to change the plastic. 23 It creates the need for more shielding. More shielding 24 might catch the grass more and cause a fire hazard." All 25 these different things. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 271 1 We were personally convinced that there were 2 engineering solutions to that. The purple bar shows you 3 one of them. It shows you how much the temperature can be 4 dropped by a good heat shield on that Honda. But, you 5 know, we were sensitive to the arguments. So when, as in 6 the previous discussion, we invited the industries to come 7 back with alternative proposals, they came back with an 8 alternative proposal -- two different alternative 9 proposals that had a less stringent exhaust emissions 10 standard. And instead of getting a 50 percent reduction 11 in tailpipe emissions, it was about 35 percent. 12 And what they have told us, a number of them, and 13 you'll hear it in testimony I believe today, is that 14 because less pollution is being converted by the catalytic 15 converter, there will be less heat and that the heat that 16 will be there is manageable and does not create a safety 17 hazard. So we believe that the alternatives that we're 18 offering for your consideration today remove any safety 19 issues that were there at all. We don't think they were 20 there in the first place. They could be solved. But they 21 removed them from the table. And we hope that you will 22 hear that in testimony today. 23 BOARD MEMBER HUGH FRIEDMAN: Sufficiently reduces 24 the emission reduction resulting in greater heat by 25 reducing the -- and, therefore, reduces the heat? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 272 1 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Yeah. 2 If there's less -- if the catalyst is less efficient -- 3 BOARD MEMBER HUGH FRIEDMAN: And, therefore, 4 reduces the risk of fire. 5 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Right. 6 So the tradeoff is the heat comes down, we get less 7 emission reduction. But in the proposals we challenged -- 8 BOARD MEMBER HUGH FRIEDMAN: But you get more 9 evap? 10 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Right. 11 We challenged the industry to come and take that -- 12 BOARD MEMBER HUGH FRIEDMAN: Which doesn't reduce 13 NOx so much, but it does reduce -- 14 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Well, 15 it loses -- the exhaust side loses both NOx and 16 hydrocarbons. And it's made up with hydrocarbon evap 17 control that goes beyond what we had proposed. 18 BOARD MEMBER HUGH FRIEDMAN: Has there been any 19 additional communication with any of the fire fighting 20 groups? 21 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Yes, we 22 have talked to a number of them today. I can't -- you'll 23 have to wait until they testify, but I believe that there 24 will be evidence that they believe this addresses the 25 associations -- PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 273 1 BOARD MEMBER HUGH FRIEDMAN: So that's why it's 2 really not listed as an ongoing issue of any -- 3 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Right. 4 We think it has been solved by this. 5 BOARD MEMBER HUGH FRIEDMAN: Okay. Thank you. 6 CHAIRPERSON LLOYD: Go back to the previous 7 slide, the previous one to this. 8 Just to clarify there, that -- because black and 9 white doesn't come through so well. So what we're saying, 10 if I look at the different engines, that there are a 11 certain number at zero hours and then after 125 hours, 12 depending on the engine, there's a significant 13 degradation. Am I reading that correctly? 14 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Yes. 15 The ones labeled Briggs and Stratton, we had problems with 16 both of those engines. It's not related, we don't 17 believe, to the catalyst. It was related to changes in 18 the engine that resulted in higher emissions. And as you 19 can see from the other manufacturers, the deterioration 20 was quite minimal. The purpose of doing this testing in 21 part was to determine if these very inexpensive catalysts 22 would wear out real fast. And the data suggests that they 23 will not. 24 The conversion efficiency in those tall blue 25 bars, the first two under Briggs and Stratton was still PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 274 1 very high. It's just that the engine was putting out a 2 whole, whole bunch more emissions due to some problem with 3 the engine. 4 CHAIRPERSON LLOYD: So was this typical of Briggs 5 and Stratton? 6 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: I don't 7 know. It's a sample of two, so I don't -- I couldn't tell 8 you that. 9 CHAIRPERSON LLOYD: So two out of two? 10 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: I think 11 the staff could comment on whether they figured out what 12 the problem was and resolved it. 13 CHAIRPERSON LLOYD: Well, one of the -- and what 14 I'm driving at here, if we got some inherently high 15 emitters in this category and if certain varieties are 16 more prone to that, how do we follow up? I mean we can 17 have these engines, which maybe meet our certification 18 numbers, but they get out in the field and then they 19 become gross polluters. 20 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Well, 21 until -- 22 CHAIRPERSON LLOYD: So what mechanism is there to 23 prevent that? 24 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Well, 25 until -- well, first of all, the regulation is structured PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 275 1 so that there could be testing of these when they're new. 2 And if there's a problem, there can be a recall. We know, 3 however, that a recall in the traditional sense is not 4 going to work very well because we're not going to -- you 5 know, who's going to turn their lawnmower in? With cars, 6 you know, we can tie it to registration. But in this 7 case, it's harder to do with lawnmowers. But despite 8 that, that is a regulatory lever that we have -- or 9 enforcement lever. 10 Second of all, we are in the stages of completing 11 construction of a test facility down in El Monte where we 12 could test these engines ourselves. And based on that we 13 can take appropriate action if we find that the emissions 14 are high. 15 CHAIRPERSON LLOYD: How many lawnmowers have we 16 recalled because of emissions problems? 17 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Well, 18 we've never -- until now we've never been able to test 19 them ourselves. We've only been able to go to their 20 assembly line and look at an assembly line. We have had, 21 quote, recalls on the assembly line of several models that 22 were not meeting emissions standards. 23 CHAIRPERSON LLOYD: But do we have a plan for 24 looking at in-use testing? 25 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Yes. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 276 1 We will test them when they're new or, you know, picked up 2 from the dealership. And we can also test them in use. 3 CHAIRPERSON LLOYD: So maybe we could work with 4 the districts on that and looking at a mechanism where we 5 can pull these in and test them. 6 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Right. 7 CHAIRPERSON LLOYD: Unless you're thinking of OBD 8 for lawnmowers. 9 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Not 10 yet. 11 CHAIRPERSON LLOYD: Well, but that's -- again, 12 that's a real cause for concern as we look at that because 13 it can be in doing our best efforts here to get it. And 14 particularly as we look at the variation in the quality of 15 the different manufacturers. 16 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Right. 17 And this is -- unfortunately this is symptomatic of all of 18 the off-road engine equipment. It's not registered; 19 therefore, it's harder to enforce through license plates 20 and annual registration. And, you know, we also don't 21 have the capability of testing much of this stuff. So we 22 are -- we have a weaker ability on the off-road to enforce 23 it. But we're trying to address it with the best tools 24 we've got, given -- 25 CHAIRPERSON LLOYD: But if we buy the cleanest PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 277 1 cars possible and we get in to the P-ZEVs and AT P-ZEVs, 2 one trip around our lawn -- finish our lawn, we've undone 3 a lot of the good we've done. 4 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Yes, 5 that is absolutely true. 6 BOARD MEMBER D'ADAMO: Mr. Chairman? 7 CHAIRPERSON LLOYD: Yes, Ms. D'Adamo. 8 BOARD MEMBER D'ADAMO: Along those lines, I think 9 one way to address this issue is with a zero emission 10 requirement. And I'm a little disappointed that we 11 weren't able to accomplish that in this proposal. But I'm 12 interested in seeing what this Board can do on that issue 13 perhaps at a future date. 14 So I'd just like to put that out there to other 15 Board members. And when we wrap things up, I'd be 16 interested in including a component in the resolution that 17 we come back on that issue. 18 BOARD MEMBER RIORDAN: Mr. Chairman? 19 CHAIRPERSON LLOYD: Yes, Mrs. Riordan. 20 BOARD MEMBER RIORDAN: I'm just wondering if 21 staff has completed their work on your original question. 22 MR. WATSON: Yes, we have. 23 CHAIRPERSON LLOYD: Thanks for reminding them. 24 MR. WATSON: Well -- 25 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: we PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 278 1 stalled for a long time there so they could get to it. 2 MONITORING AND LABORATORY CHIEF LOSCUTOFF: Okay. 3 The emission reductions in 2010 are roughly 22 tons a day. 4 And that's split between about 6 tons per day for the 5 non-handheld, 16 for the -- excuse me. 6 CHAIRPERSON LLOYD: Repeat that. 7 MONITORING AND LABORATORY CHIEF LOSCUTOFF: Six 8 tons a day for the handheld. 9 CHAIRPERSON LLOYD: Six. What's the total there? 10 MONITORING AND LABORATORY CHIEF LOSCUTOFF: 11 Twenty-two. 12 CHAIRPERSON LLOYD: Twenty-two. 13 MONITORING AND LABORATORY CHIEF LOSCUTOFF: Six 14 for handheld, 16 for non-handheld. That's roughly 22/78 15 percent split. 16 Then in 2020, we're talking about a 17 50-ton-per-day reduction, which is approximately 43 tons a 18 day for the non-handheld and 7 tons a day for the 19 handheld, which is about a -- I did that in reverse. 20 The NOx/hydrocarbon split. Okay. 21 CHAIRPERSON LLOYD: That was the question. 22 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Just of 23 the 22 -- 24 MONITORING AND LABORATORY CHIEF LOSCUTOFF: The 25 NOx/hydrocarbon split for the 22 tons in 2010, 4 tons of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 279 1 that are NOx. The rest of it is hydrocarbon. 2 In 2020, the NOx is reduced by roughly 8 tons per 3 day of the 50 tons a day total. 4 EXECUTIVE OFFICER WITHERSPOON: And those 5 calculations are for the base staff proposal where if we 6 did any of the alternatives, the NOx reduction would be 7 less, correct? 8 MONITORING AND LABORATORY CHIEF LOSCUTOFF: Yes. 9 EXECUTIVE OFFICER WITHERSPOON: It would go up in 10 hydrocarbons and down in NOx? 11 CHAIRPERSON LLOYD: Thank you. 12 Mr. Calhoun. 13 BOARD MEMBER CALHOUN: Yes. I want to get back 14 to the question that you asked, Mr. Chairman. And at 15 least I thought I heard you ask the question about these 16 lawnmowers in use and testing them. Are you talking about 17 testing my lawnmower or are you -- 18 CHAIRPERSON LLOYD: Well, random sample of how do 19 we find out what the, if you like, the emissions from this 20 category is in use. 21 Well, I know you got an electric lawnmower, so 22 you don't have a problem. 23 (Laughter.) 24 BOARD MEMBER CALHOUN: Well, I have to talk to 25 Jerry about that. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 280 1 CHAIRPERSON LLOYD: Professor Friedman said -- 2 maybe I misunderstood you -- you were offering yours to be 3 tested at El Monte? 4 BOARD MEMBER CALHOUN: No. 5 CHAIRPERSON LLOYD: No. Okay. 6 BOARD MEMBER CALHOUN: I'm just -- there are a 7 lot of lawnmowers out there, an awful lot of them. And 8 there are a lot of hydrocarbon emissions from these 9 lawnmowers. But I question whether or not it's practical 10 to get in-use lawnmowers and retrofitting them or just new 11 ones. 12 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: No, 13 there's no talk about retrofitting them. It's just -- the 14 question was, if the lawnmower emits 1 gram per hour, 15 whatever the number is, when we certify it, is it going to 16 be one in use or is it going to be two in use. And so we 17 can find that out reasonably well with a sample of, I 18 don't know, 50 lawnmowers. With our new facility we can 19 test those pretty quickly. 20 So, you know, over time we would get an audit of 21 whether or not these engines are complying. 22 BOARD MEMBER CALHOUN: Well, what happens if you 23 do test it and find that it's exceeding the standard? It 24 may be exceeding because Bob Cross tampered with it. 25 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Well, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 281 1 we'll have to -- we'll find that out from those mowers, 2 yeah. I mean that's what we could do. 3 BOARD MEMBER CALHOUN: And then what do you do? 4 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: It's no 5 different than what we've done on cars. I mean we sort of 6 found the same thing on the earlier cars. They were clean 7 when they were produced. They were dirty six months 8 later. And we had to come up with anti-tampering programs 9 and various other things to assure that their emissions 10 are low. And we were successful. 11 We just want to do the same due diligence on 12 lawnmowers. I don't know the answer, and so I don't know 13 what the solution would be if there is a problem. But we 14 have to figure it out. But at least we have the tool now 15 to be able to do it. We can do it in southern California 16 and -- 17 CHAIRPERSON LLOYD: Bob -- 18 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: -- give 19 you feedback. 20 MOBILE SOURCE CONTROL DIVISION CHIEF CROSS: 21 Jack, you reminded me that the current proposal stops with 22 new. In other words, it is defects reporting and assembly 23 line testing type of measures. So the activity that we're 24 doing with the in-use would be data gathering as opposed 25 to real enforcement at this point. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 282 1 We have done some in the past. And I think we'll 2 just -- and that's really kind of helped us understand 3 some in-use -- not in-use test, but at least durability 4 testing. That's helped us understand what the mowers do 5 in the first place. An we'll just continue that. 6 So I don't think you have to worry about 7 lawnmower smog check for a few years. And I'll probably 8 still be able to tamper. 9 That was a joke at the end. 10 CHAIRPERSON LLOYD: Professor Friedman. 11 BOARD MEMBER HUGH FRIEDMAN: One other question. 12 It's I guess related, but broader. 13 Is it true that to the extent that these rules 14 would only apply to small engines, under 175 horsepower, 15 or small motors, that they only account for 1 percent of 16 our smog-forming emissions in California overall? Is that 17 a true statement? 18 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: I think 19 the numbers that have been floating around all the press 20 releases get a little mixed up. 21 As I recall, the lawnmowers, which are the ones 22 under 25 horsepower, are on the order of a few percent of 23 our emissions. The ones that -- 24 BOARD MEMBER HUGH FRIEDMAN: So it's the little 25 lawnmower's 2 percent? But -- PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 283 1 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Yeah, 2 lawnmowers and other lawn and garden. And that's under 3 25, which is the subject of the proposal. 4 BOARD MEMBER HUGH FRIEDMAN: Yeah. But under 5 175? 6 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: It was 7 13 percent of -- the non-preempted engines were 13 percent 8 of all the mobile source emissions, which is -- for HC and 9 NOx is probably 60 or some percent of all of the 10 emissions. So we're probably talking about 7 percent or 11 something, on that order, for the under 175 off-road 12 equipment. 13 BOARD MEMBER HUGH FRIEDMAN: Seven percent? 14 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Yeah, 15 and of the -- that had a lot of diesels in it. And they 16 represent the off-road. Diesels represent about 44 17 percent of the toxic particulate emissions overall. 18 BOARD MEMBER HUGH FRIEDMAN: Okay. Thank you. I 19 just wanted to get the record straight, at least. 20 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: My 13 21 was 17 percent. So it's probably 17 times .6. So maybe 22 like 10 percent for all of -- of the smog-forming 23 emissions for all of -- all of the under-175, which is 24 gasoline, diesel, way more than this proposal deals with. 25 And this is a few percent. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 284 1 CHAIRPERSON LLOYD: Thank you. 2 Seeing no other questions, I guess we go to 3 our -- well, first of all, ask Madam Ombudsman -- pleased 4 to see you had your wake-up call. 5 Would you please describe the public 6 participation process that occurred while this item was 7 being developed, and share any concerns or other comments 8 that you may have with the Board at this time. 9 OMBUDSMAN TSCHOGL: I was going to apologize for 10 the misbehavior of my device. But, anyway, I'll just get 11 on with this. 12 Mr. Chairman and members of the Board, this 13 control measure has been developed with input from the 14 Engine Manufacturers Association, Outdoor Power Equipment 15 Institute, Portable Power Equipment Manufacturers 16 Association, Manufacturers of Emission Controls, and 17 several private companies. 18 In 2000, staff began its effort to draft a 19 regulation to control evaporative emissions from small 20 off-road engines. And on November 9th of that year they 21 held their first public workshop. 22 Subsequent workshops were held in 2002 and 2003. 23 In 2002, staff introduced its exhaust emission reduction 24 proposal for small off-road engines. During this nearly 25 three-year period, four public workshops were held. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 285 1 Staff also had approximately 40 meetings with 2 trade associations and a significant number of one-on-one 3 meetings with several companies. 4 That concludes my comments. Thank you. 5 BOARD MEMBER DeSAULNIER: They're trying to 6 figure out, is it Bach, Beethoven, Mozart, or was it Howdy 7 Doody? 8 (Laughter.) 9 OMBUDSMAN TSCHOGL: I have no idea. 10 BOARD MEMBER CALHOUN: May I ask the staff one 11 question. 12 About how many workshops? I counted four or 13 five. 14 OMBUDSMAN TSCHOGL: There were four public 15 workshops. 16 BOARD MEMBER CALHOUN: Okay. And the industry, I 17 assume, had adequate time to express its views regarding 18 the feasibility of the technology? 19 OMBUDSMAN TSCHOGL: I believe so. 20 EXECUTIVE OFFICER WITHERSPOON: They had years. 21 OMBUDSMAN TSCHOGL: I believe everyone was quite 22 involved. 23 BOARD MEMBER CALHOUN: Okay. Thank you. 24 That's all. 25 CHAIRPERSON LLOYD: Thank you. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 286 1 I'd like to call up our first three witnesses. 2 Bonnie Holmes-Gen, Jed Mandel, and David Raney. 3 Bonnie? 4 I saw her earlier, but maybe she has left. So I 5 guess -- we have Bonnie's testimony on behalf of the Lung 6 Association, the California Electric Transportation 7 Coalition, Center for Energy Efficiency and Renewable 8 Technologies, Coalition for Clean Air, Natural Resources 9 Defense Council, Steven and Michele Kirsch Foundation, 10 Sierra Club, Union of Concerned Scientists. And this is 11 in support of our regulation. 12 Jed Mandel. 13 MR. MODISETTE: Excuse me, Mr. Chair. That 14 was -- I'm going to be presenting the letter that you just 15 read. 16 CHAIRPERSON LLOYD: Later on? 17 MR. MODISETTE: Yes. 18 CHAIRPERSON LLOYD: Okay. Thanks, Dave. 19 Jed Mandel, David Raney, Bill Guerry. 20 MR. MANDEL: I know you're excited and pleased to 21 see me so soon again from this morning. I was actually 22 hoping not to see you so soon again. I'd asked to testify 23 at the end of this item because there's a lot of new 24 information that has been shared just in the staff report. 25 And it's possible there will be some new information PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 287 1 shared by subsequent testifiers. 2 I'm pleased to go now, but if I might be able to 3 have a couple moments afterwards. 4 CHAIRPERSON LLOYD: No, if you'd like to go at 5 the end, and I respect your desire to do that, if staff 6 has no problem. 7 MR. MANDEL: It would save time in case there's 8 something else that I need to respond to. 9 CHAIRPERSON LLOYD: As long as -- you know, as 10 long as we can assume you're going to move across from 11 left. As long as you go left. 12 MR. MANDEL: I promise to cut my hour testimony 13 down to at least 45 minutes. 14 CHAIRPERSON LLOYD: Thanks. 15 So then we have David Raney and Bill Guerry. 16 MR. RANEY: Gosh, I wanted to go last. 17 (Laughter.) 18 CHAIRPERSON LLOYD: Okay. 19 MR. RANEY: I believe everybody has a written 20 copy of our statement. 21 There's a major change I need to ask you to make, 22 and that's to change "good morning" to "good afternoon." 23 That's the most major change. 24 Good afternoon, ladies and gentlemen of the Board 25 and Chairman Lloyd and Executive Officer Witherspoon and PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 288 1 staff. 2 My name is David Raney. I'm the Senior Manager 3 of Environmental and Energy Affairs at American Honda 4 Motor Company headquartered here in California. 5 I'm pleased to be hear on behalf of my company, 6 our Power Equipment Division, which is based in 7 Alpharetta, Georgia, just north of Atlanta, and our Honda 8 R&D teams both here and in Japan. 9 I also have with me here Tom Bingham from 10 American Honda, whose desk is actually at our Power 11 Equipment Division office in Georgia, so he has a vested 12 interest in this as well. 13 I'm going to spend a few minutes with you just 14 explaining a little bit about Honda's product line so you 15 can kind of see where we have an interest in this. 16 We do design and produce in the United States a 17 significant portion of small engine products that we sell 18 here. We have a significant employment presence at our 19 factories and research and development facilities in North 20 Carolina, as well as a broad nationwide dealer network. 21 Our associates in North Carolina produce a 22 diverse product line of walk-behind mowers and engines for 23 countless OEM products. And we manufacture engines and 24 complete products in all displacement categories covered 25 by the staff proposal. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 289 1 In the small engine category we've got engine 2 models ranging from a four stroke 1 horsepower 25 cc 3 handheld engine for string trimmers to a 25 horsepower 4 V-twin engine that is primarily used on construction 5 equipment. 6 Honda supplies engines to thousands of equipment 7 manufacturers nationwide, both directly and through 28 8 engine distributors. The three engine distributors in 9 California supply engines directly to a 200 plus equipment 10 manufacturer network. The distributors have their own 11 dealer network that supplies engines and service for the 12 California market. And these folks are very important to 13 our business as well. Many of the Honda engines sold here 14 in California are used in rental and construction 15 equipment, and they are supported by 600 plus servicing 16 dealers. 17 We also supply engines for walk-behind mowers and 18 other products to several large volume equipment 19 manufacturers that produce product for sale in California. 20 And, finally, we manufacture complete products under the 21 Honda brand such as walk-behind lawnmowers, tillers, 22 generators, trimmers, and water pumps that are retailed 23 directly through a Honda dealer network, with some 24 lawnmowers and a tiller model also available at Home 25 Depot. There are 400 plus Honda sales and service dealers PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 290 1 in this state. 2 Our primary interest is in protecting and growing 3 our business for these products and supporting our dealers 4 and customers by providing highly efficient, long lasting, 5 and quality products branded with the Honda name. And I 6 can assure you that we have no intention of reducing 7 employment or manufacturing capacity as a result of this 8 regulation. 9 As a corporation, Honda's philosophy of advancing 10 and applying cost effective low emissions control 11 technology to our products doesn't stop with our 12 light-duty vehicles and light duty trucks. It also 13 applies to the small engines and products under 14 consideration before you today. 15 We have a significant vested interest in the 16 outcome of this regulatory proposal, both for increased 17 environmental protection as well as in protecting the 18 availability and affordability of our products for our OEM 19 business partners, our dealers, and our retail customers. 20 With that said, I'll say that there are many 21 remaining concerns with the proposal before you today. 22 But that Honda can support the proposal if the Board can 23 direct the staff to resolve these concerns that we'll 24 discuss briefly in a satisfactory manner. 25 We have come a long way with staff during the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 291 1 past few months. And my company believes we have reached 2 a point today where we're almost there. I don't want to 3 give you or our customers or our colleagues in this 4 industry the idea that we wholeheartedly support the 5 proposal in its present modified form. There are several 6 concerns that must be resolved before we can fully support 7 the proposal. But we do not believe these are 8 insurmountable. Honda is prepared and very willing to 9 continue to work with staff on this under whatever the 10 decision the Board makes today. 11 It is important that you understand our remaining 12 concerns though and I want to outline those to you and 13 staff. 14 Before I begin, I would like to especially thank 15 the staff and its management for the open channels of 16 communication that have been maintained with industry 17 while we've deliberated this process. They have listened 18 and learned and so have we. I believe we have all 19 benefited from this. And we look forward to continuing 20 the open communication as we head to a final rule. 21 Now, several months ago, as the content of this 22 regulation and staff's original direction came clearer, we 23 began to express significant concerns about the following 24 issues: 25 We were concerned about the potential performance PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 292 1 and cost differential between California and 49-state 2 product that might exist under the original proposal and 3 absent any new federal regulation that actually harmonized 4 CARB and EPA regulations. We expressed concern that our 5 customers and dealers in California could be penalized if 6 the products sold here had a significantly higher price 7 tag caused by the stringency of standards relative to 8 products sold outside of the state. 9 And, secondly, we expressed significant concern 10 about the potential impact on safety that the exhaust 11 portion of the original proposal and its level of 12 stringency might pose to our products and customers. 13 Finally, we clearly stated to staff the need for 14 an equitable and fair playing field in the certification 15 process, specifically on test procedure issues and the 16 means by which certain performance aspects could be 17 demonstrated under design-based standards. 18 While it is generally understood that increased 19 cost is usually associated with regulation, we believe 20 that staff has thoroughly addressed in its latest 21 revisions or will and can try to resolve these issues 22 before finalizing the rule, therein mitigating their 23 significant effects that were originally raised on the 24 market. The modifications to the exhaust and evaporative 25 emissions proposals put forth today have given us PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 293 1 increased possibility to greatly lessen cross-border cost 2 differentials. And we believe staff is listening to our 3 concerns expressed about the need for a level playing 4 field in the certification process. 5 I want to say a few things specific to the issue 6 of safety. We have continued throughout this process to 7 bring this concern to the staff. It was a significant 8 concern. The proposal originally put forth by staff was 9 not acceptable to Honda because of the potential for 10 exhaust flames resulting from the high conversion rate 11 that you discussed earlier necessary to meet the 12 originally proposed exhaust standards. We think that the 13 modified exhaust emissions proposal presented today of 10 14 and 8 grams will make it possible to have an exhaust 15 system with a lower risk of being a fire safety hazard. 16 It's manageable today on our current products. And with 17 this revised proposal it will be manageable on the future 18 engines. 19 The revised proposal will also be significantly 20 more cost effective air quality improvement for 21 California. 22 This modification has been a positive and very 23 helpful change. While there is always risk, even on 24 today's products, due to their diversity of use or even 25 misuse in their application, we don't believe that the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 294 1 staff proposal presented here today for future exhaust 2 emission standards will have any significant impact on the 3 safety of our future engines in comparison to current 4 engines or products. 5 Now there are several issues that do remain as 6 concerns to Honda, as I stated earlier. I have attached a 7 list of these concerns to our testimony for the record. 8 And for the sake of preserving time, Chairman Lloyd, I 9 won't go through them specifically. 10 CHAIRPERSON LLOYD: We have copies here. 11 MR. RANEY: Okay. Again, happy to meet with 12 staff at any time to discuss our concerns there. 13 These are all important issues and we do believe 14 they must be addressed. But as I said earlier, they are 15 not insurmountable. We hope that the Board will guide the 16 staff today to work with our industry on these issues. 17 And we look forward to working with staff to address them 18 in the complex regulatory text that will no doubt 19 accompany them as soon as possible. 20 Our engineers need to have some certainty about 21 the timing of the regulation and clarity in the regulatory 22 language in order to continue the development of new 23 products in an efficient and timely manner. And as you 24 know and have seen this morning, some of the provisions in 25 the current proposal take effect even in the 2005 model PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 295 1 year. For our development teams, that's today. 2 In closing, Chairman Lloyd, we hope that the 3 Board and staff view these comments as helpful and 4 constructive. And I thank you very much for your 5 attention and for your serious attention that you will 6 give to them. 7 CHAIRPERSON LLOYD: Thank you very much, Mr. 8 Raney. 9 Just a couple of questions there. Can I read 10 into your comments here that you would support us adopting 11 the regulation today provided that staff worked with you 12 to address those concerns in the 15-day period? 13 MR. RANEY: Yes. 14 CHAIRPERSON LLOYD: And the other one which you 15 had raised. And I think I read your statement correctly 16 there that this would be unacceptable because of safety 17 concerns early on. But given staff's modifications here, 18 you don't feel now that safety will be -- safety would be 19 a concern as a result of this regulation? 20 MR. RANEY: That's true. 21 CHAIRPERSON LLOYD: Fire hazard. Okay. 22 Well, that's very helpful. And, again, we really 23 appreciate your ability to work with staff on this issue 24 and staff worked with you. And clearly your pioneering 25 work on the automobile is a -- we're delighted to see that PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 296 1 you're now turning that to helping us on some of the 2 smaller sources as well. 3 Professor Friedman. 4 BOARD MEMBER HUGH FRIEDMAN: To me this is 5 really, if not optimal, it's as close as it can get to the 6 way this should work, this process. Staff puts out a 7 proposal after a dialogue with the sources to be 8 regulated. And the regulators -- those to be regulated 9 respond. They give their concerns. Staff responds. They 10 have more conversation at workshops. And at least from 11 what I've just heard from Honda, there has been a 12 collaborative resolution, with a number of items yet to be 13 considered and addressed. But they're not so major in 14 principle that they prevent support from those to be 15 regulated, at least from Honda. 16 So to me, I congratulate you both at this point. 17 I hope we'll hear more of that. And I hope that -- I mean 18 it's always wonderful when you're presented with a 19 proposal that those who are going to have to bear the 20 cost, and hopefully pass it on to the consuming public, 21 have engaged in the process of working out the solution, 22 creatively and constructively, as you put it. 23 So I thank you, for one. And, again, I thank the 24 staff for being able to work this way. 25 MR. RANEY: I'd like to say that you've got a PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 297 1 good staff and a tough staff as well. This was not an 2 easy thing to convince them of. But we kept bringing 3 bigger hammers. 4 (Laughter.) 5 CHAIRPERSON LLOYD: Well, of course one of your 6 biggest assets is one of your biggest problems. And, that 7 is, that your ability to meet the toughest standards 8 possible obviously helps us enormously, but also we 9 realize that it's a challenge for you. But you've always 10 come through. 11 Any other questions from the Board? 12 Thank you very much indeed. 13 Thank you, colleagues. 14 MR. RANEY: Chairman Lloyd, I will do that. And 15 if I could violate protocol a bit as well and ask for 15 16 more seconds. I'd like to do the same thing that Jed 17 Mandel said on behalf of our executive team at Honda. 18 You're going to miss Kathleen Walsh. We really 19 do appreciate the access that she's given to us in the 20 industry, clarifying questions and so forth. And I really 21 don't envy the person at the California Air Resources 22 Board that's got to make the decision to fill her shoes. 23 CHAIRPERSON LLOYD: Thank you very much. 24 MR. RANEY: So thank you, Kathleen. 25 CHAIRPERSON LLOYD: That's very nice. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 298 1 Bill Guerry, Joe Kubsh, and Rick Bell. 2 MR. GUERRY: Good afternoon. My name's Bill 3 Guerry. I serve as counsel for the Outdoor Power 4 Equipment Institute. 5 OPEI has a broad membership. We have 78 members. 6 American Honda is one of our important members. And we 7 are very diverse in our membership. We have sophisticated 8 world leaders like Honda that produce integrated products. 9 For the most part though the OPEI membership is comprised 10 of smaller and midsized companies who are non-integrated, 11 meaning that the large group of OPEI members are equipment 12 manufacturers that receive engines from separate 13 independent suppliers. And it's important to recognize 14 that those non-integrated equipment manufacturers, 15 particularly the small ones, are in a very, very different 16 place in terms of companies such as Honda. 17 And in that regard, it's the small members of 18 OPEI, many who are mom and pop operations with less than 19 50 employees, that critically rely on the association to 20 represent their interests. And they critically rely on 21 the CARB Board to ensure their procedural due process 22 rights are adequately represented. 23 In this regard, over the last 15 years OPEI takes 24 great pride in working proactively with CARB staff in the 25 development of numerous regulatory proceedings that PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 299 1 resulted in success in providing cost effective and 2 practical emission reductions. 3 In this vein, OPEI has succeeded resolving the 4 most significant compliance issues for our separate and 5 distinct handheld members. And there is a separate 6 statement in the record for the OPEI handheld membership 7 that have come very close to working out to an acceptable 8 solution in this proceeding. 9 OPEI also recently submitted earlier this month 10 an industry counterproposal along with the Engine 11 Manufacturers Association. And as the staff presentation 12 showed, the industry counterproposal will achieve 13 California's air quality goals in a much more cost 14 effective and practical manner. 15 During the last few months OPEI has expressed and 16 shared its concerns -- and you heard Honda raise some of 17 the concerns -- on safety and cost effectiveness with CARB 18 staff. And we share the safety problems that have been 19 raised -- and I know that Mr. Friedman raised -- from 20 various safety organizations, particularly with regard to 21 pressurization of fuel systems and with regard to very 22 large, very hot catalyst systems; which given the 23 non-integrated nature of our industry and the fact that we 24 have many small equipment manufacturers who are relatively 25 unsophisticated, those safety issues take on added and, I PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 300 1 think, unique dimensions that perhaps California and CARB 2 have not dealt with in other scenarios. 3 OPEI very much appreciates CARB staff's recent 4 recognition to basically -- you know, fundamentally 5 restructure the August 8th proposal and to work to develop 6 a framework for more cost effective regulations. 7 Unfortunately, we did not receive, in the OPEI 8 the framework on the evap program until late Monday night 9 of this week. It will take additional time for OPEI to 10 receive meaningful input and questions back from its 78 11 members who are located around the world. 12 At this time, we strongly feel that neither the 13 Board nor the public nor all these small OEMs have had 14 enough information about the new fundamentally different 15 approach that's been set forth in the three or four page 16 concept piece to determine how that document would be 17 implemented. For this reason, to ensure a meaningful 18 notice and comment process and to ensure a meaningful 19 Board review, OPEI urges the CARB Board to reschedule this 20 matter for final adoption at a future public board 21 hearing. 22 We also ask that the Board specifically instruct 23 CARB staff to work very closely with the independent 24 safety and fire stakeholders who have submitted 25 correspondence in this matter in drafting a new regulatory PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 301 1 package that would be subject to the required 45-day 2 notice and comment period. 3 Finally -- and this is set forth in Section 6 of 4 the written comments that OPEI has submitted -- because of 5 the inherent production, distribution, and cost 6 limitations associated with relatively inexpensive lawn 7 garden products, most lawn and garden manufacturers simply 8 could not produce for the national market the very 9 expensive CARB-compliant products with catalysts and 10 carbon canisters. 11 I think you saw staff numbers that are exceeding 12 a hundred dollars a unit. And we've submitted a cost 13 study from that indicates much higher numbers, even 14 associated with the -- with basically all the alternatives 15 before the Board. 16 Consequently, OPEI requests the Board to limit 17 the Tier 3 new program at a final Board hearing to 18 products sold in California. CARB has effectively done 19 this and structured several other programs to focus on the 20 California market and not to create the likelihood of de 21 facto national standards. In fact, the current Tier 2 22 exhaust standards for lawn and garden industry products 23 are on the wheel-product side limited to the California 24 market. 25 In summary, OPEI remains committed to working PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 302 1 with the CARB staff to expeditiously bring back to this 2 Board a comprehensive cost effective, safe, and practical 3 regulatory package. 4 I'm happy to answer any questions. 5 CHAIRPERSON LLOYD: Thank you very much. 6 Professor Friedman. 7 BOARD MEMBER HUGH FRIEDMAN: I don't know so 8 much, Mr. Guerry, whether my question is to you or to 9 staff or both. But I understood that staff was in large 10 measure responding to or adopting the industry proposals 11 in modifying the original proposal of the staff and giving 12 us what we have before us today, whatever the time line. 13 And is that correct? Was -- is OPEI part of 14 the -- 15 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Yes, 16 that's correct. We received two different alternatives in 17 the process here. And the -- or two different proposals. 18 And the two alternatives that you saw on our proposal to 19 you today reflect those -- in large sense reflect those 20 two industry proposals. 21 BOARD MEMBER HUGH FRIEDMAN: And is OPEI part of 22 the industry? 23 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Yes. 24 One of them was EMA, OPEI, Briggs and Stratton proposal. 25 MR. GUERRY: If you look at Exhibit 8 to my -- PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 303 1 the OPEI written statement, that is the OPEI/EMA 2 counterproposal that was submitted on September 9th. If 3 you look on the first page of that, the bottom bullet says 4 that a core element of the counterproposal, quote, "limit 5 the scope of the program to California only." 6 So we've been very clear throughout this process 7 of one of the fundamental core elements because of the 8 problems with infrastructure, production, distribution has 9 been a California program. I know the Board, at least 10 looking at the public staff report, that information and 11 that -- and the importance of that program of course we 12 don't believe has been adequately fleshed out for you guys 13 to make a decision today. And that's one of the critical 14 reasons we feel this is an important Board decision with 15 significant policy implications, and that -- that you need 16 more time and you need clear options presented to evaluate 17 how to structure and how it could be structured in various 18 ways. 19 EXECUTIVE OFFICER WITHERSPOON: If I might 20 respond to the travel issue head on, because Mr. Cackette 21 responded to the technical aspects of the 22 counterproposals. Travel is a fundamental policy issue. 23 Whether or not this Board wishes to deny other 24 states the benefits of our work -- we do collaborate with 25 other states, most notably Texas and New York, and other PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 304 1 states on the eastern seaboard, who join with us on motor 2 vehicle regulations, for heavy duty -- for example, the 3 NTE issue we worked on together. We've had states adopt 4 our low-emission vehicle regulations. And so as a policy 5 matter, we try not to draw a moat -- or create a moat 6 around California and say, "Well, we're figuring out our 7 problem, but you're stuck alone with yours." We like to 8 export our knowledge around the world. 9 But since the time that the question was first 10 raised to us and rebuffed it at a policy level, of course 11 to ultimately your decision, we have been engaged in a 12 fight in Congress with -- brought by one of the members of 13 OPEI, Briggs and Stratton, through an amendment introduced 14 by Senator Kit Bond to the VA HUD appropriation, which 15 would take away all states' ability to regulate this 16 category and other categories of off-road engines. And 17 states throughout the nation have rallied to our side to 18 defend the importance of these regulations. 19 And so at this time, given all that has gone on, 20 it would be most improper in our view to turn our back on 21 our allies in that fight and say, "We're going to 22 construct a measure that California and California alone 23 can implement," even if in return for doing that, Briggs 24 and Stratton agreed to drop the Kit Bond amendment. It's 25 just simply not a possibility anymore because of the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 305 1 battle that's been joined and the way that the lines were 2 drawn. 3 So it's correct to say we've made that 4 distinction before. We've created optional compliance 5 paths that don't export. We've done memorandas of 6 understanding that don't export. But generally we wish to 7 work with our colleagues in air pollution control around 8 the world and share our expertise and experience rather 9 than only look out for our own interest. 10 MR. GUERRY: Can I address that? Because my 11 client, the Outdoor Power Equipment Institute, has not 12 been a sponsor of the rider she mentioned. 13 However, having said that -- and I've had this 14 conversation with Tom and others -- it seems to me that 15 the objective and purpose of the CARB Board should be to 16 focus on the air quality for the breathers in California. 17 And to the extent that you create the likelihood of a de 18 facto national standard, you raise the bar significantly 19 in terms of scrutiny of national interest groups, 20 including national safety interest groups and other 21 stakeholders. 22 And it makes it a much harder pill for industry 23 to swallow because you're -- I think a lot of my members 24 would be willing to provide extremely clean, extremely 25 expensive -- the testing ground in California have serious PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 306 1 reservations if you multiply that by a national market for 2 a product such as this. And, therefore, you create a much 3 greater burden and much greater difficulty for industry 4 and staff to reach a solution that would be in the best 5 interests of the public of California. 6 So by -- 7 CHAIRPERSON LLOYD: Is Briggs and Stratton a 8 member of your -- 9 MR. GUERRY: Briggs and Stratton is a member of 10 ours, as is -- 11 CHAIRPERSON LLOYD: Well, let me also add to what 12 Ms. Witherspoon said, because I was also approached. 13 Because, as she said, this is a policy issue on travel. 14 And the feedback I gave was that I'm not high on travel. 15 But I don't know where my colleagues stand, and I would 16 entertain what was going on. 17 Before anything proceeded, then in fact one of 18 your members went to Washington. And the whole complexity 19 of the game changed. And I stand 100 percent behind staff 20 on this issue. Because talking about good faith, we were 21 operating in good faith. The rules were changed, not by 22 us. Staff continued to work in spite of that, continued 23 to work to bring a proposal before us. 24 And to say that we -- our obligation here is -- 25 that we are somehow doing something wrong, I think it PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 307 1 really relates to the facts and it skews the facts. When 2 I see one of the members, as you saw earlier, providing 3 products to us, and when I see another member coming 4 forward and saying they can live with this, and that their 5 products clearly are cleaner, our obligation to clean air 6 in California is very clear. 7 We didn't start the game in California -- in 8 Washington. We would not wish to do that. We would like 9 to work with you. We've demonstrated we have by a hundred 10 percent. We cannot turn our backs on our allies and the 11 rest of this country and our representatives in 12 Washington. We cannot do that. 13 So then let's make it clear. Our obligation is 14 to the citizens of California, to protect air quality. 15 We've done that throughout the years, no matter what the 16 administration. 17 And in fact we can go out and drive cars today -- 18 we've seen the results of that. And we have a very proud 19 record. And we're not going to go down and play the game 20 that's being played. 21 So it's very clear to us the message you're 22 getting. We may lose, but we will lose with honor. And 23 we will lose trying to protect the rights of the citizens 24 of California and every other state. 25 That's all to be said on this issue. I would PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 308 1 like to move on. 2 And I sympathize with you, by the way, because 3 all of us would not like to be in this place. 4 Professor Friedman. 5 BOARD MEMBER HUGH FRIEDMAN: So I guess except 6 for the travel issue, which you've raised, the proposals 7 that are in -- you also said you needed more time -- 8 MR. GUERRY: Well, I -- 9 BOARD MEMBER HUGH FRIEDMAN: -- to evaluate the 10 cost elements. 11 MR. GUERRY: No, no. Let me be very clear. 12 Travel was one of the core elements in the 13 counterproposal that I wanted -- I was responding to your 14 question that has not been addressed. 15 There are, we believe, numerous Board policy-type 16 issues that have also not been addressed in the four-page 17 outline that we got for the first time shortly before this 18 meeting and that we saw in, I guess, a two-page outline 19 late Monday night. And we believe that there are major 20 significant issues -- 21 BOARD MEMBER HUGH FRIEDMAN: What are they, 22 please, besides travel and cost? 23 MR. GUERRY: I mean some of it has to do with the 24 framework of the new alternatives that have been added 25 that have not been part of any discussion with the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 309 1 associations and CARB staff, including there appears -- 2 there apparently is now an entirely new alternative with 3 an averaging program that I'm not in a position to even be 4 able to get approval from my membership as to what that 5 even means and how that will come unfold. 6 There are also significant issues in terms of 7 executive office approval of some sort of equivalent 8 running loss controls. And that's something that's a 9 promising option, but it's something that needs to have 10 greater clarity and Board review. And I guess we see -- 11 and I think talking to some of the CARB staff, I think 12 every -- I think CARB staff is in an untenable position 13 that in the time that we've made this progress, they're 14 put with having to not get the ultimate Board approval 15 that I would certainly want if I was in their shoes. 16 And I think you guys need to stay involved in 17 overseeing the process. And I don't see a downside in 18 doing that. And all we're asking for is to have -- let us 19 continue to work this out, get it to a more refined clear 20 notion, fill in some of the big holes, and have greater 21 comfort that at the Board level there's been a review and 22 approval, as I think it was intended for the CARB to 23 operate in a meaningful review role. 24 CHAIRPERSON LLOYD: Well, I think we can do this. 25 We have the 15-day comment period. We could do this. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 310 1 EXECUTIVE OFFICER WITHERSPOON: We do believe 2 except for travel that the issues are mostly ministerial. 3 If we're wrong about that and something major were to 4 arise, we would of course return to the Board. But we 5 don't think you need to make a presumption today that 6 that's going to occur. You can trust us to bring it back 7 and seek your policy direction if in fact a major policy 8 issues erupts. 9 CHAIRPERSON LLOYD: And we have checked with our 10 legal staff. And we feel confident about going ahead. 11 But, again, I wish we were not in this position. 12 But that's where we find ourselves. 13 MR. GUERRY: Thank you very much. 14 CHAIRPERSON LLOYD: Thank you. 15 Joe, Rick Bell, Don Anair. 16 MR. KUBSH: Good afternoon again, Chairman Lloyd 17 and members of the Board. Joe Kubsh, Deputy Director of 18 the Manufacturers of Emission Controls Association. 19 I'm proud to stand here to strongly support the 20 proposal as put forward, even with the modifications as 21 presented by staff this afternoon. 22 We commend the Board for its continuing efforts 23 to develop and implement effective control programs for 24 major sources of air pollution, including small off-road 25 engines. We believe that the proposed amendments are an PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 311 1 important step forward in further reducing emissions from 2 small off-road engines. 3 We also commend the ARB staff for its technical 4 report that reflects a comprehensive and balanced analysis 5 of the issues presented by this proposed rulemaking and 6 for staff's willingness to work cooperatively with all 7 interested stakeholders. 8 I'd like to specifically talk about the issue of 9 applying catalysts to non-handheld applications as covered 10 by the staff presentation. 11 MECA strongly concurs with the staff analysis and 12 conclusion that the proposed hydrocarbon and NOx emission 13 standards for these engines are technologically feasible. 14 In fact, we were ready to stand here and say that they 15 were technologically feasible even with the proposal that 16 was contained in the original staff report at the 8 and 6 17 grams. 18 And I think the test results that were generated 19 at Southwest Research Institute also indicate that even 20 those lower levels are technologically feasible and can be 21 reached with the application of catalyst technology to 22 non-handheld engines. 23 I'd also like to take a minute to talk about the 24 issue of thermal management or the safety issues around 25 dealing with high exhaust temperatures. This issue of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 312 1 heat management that has been raised by the industry is, 2 as Mr. Cackette indicated in his remarks, a 3 straightforward engineering challenge that is well 4 understood and can be readily addressed. These types of 5 issues have been raised virtually every time the use of a 6 catalyst technology has been proposed for use on a 7 spark-ignited engine, whether it be 30 years ago when 8 catalysts were first talked about on cars or more recently 9 with catalysts on applications such as motor cycles or 10 mopeds or forklift trucks or small handheld engines. 11 In each case, all of these issues were 12 successfully addressed for each application. The 13 situation we feel is no different here for these 14 non-handheld engines. 15 Indeed, 30 years of catalyst experience in 16 general and over 10 years experience with applying 17 catalysts to small engines provide an experience base that 18 has enabled catalyst technology to continue to be improved 19 and has provided an increasing understanding of how to 20 optimize the engine catalyst exhaust system to work 21 effectively in these situations. 22 Two striking examples of this type of success in 23 dealing with thermal issues can be gleaned from the fact 24 that more than 15 million two-stroke motorcycles and 25 mopeds worldwide have been successfully equipped with PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 313 1 catalysts and dealt with thermal management issues. As 2 well as more than a million small handheld pieces of 3 equipment using two-stroke engines, that again have been 4 successfully integrated with catalysts without causing any 5 safety-related issues. 6 So, again, I'd just like to commend the staff for 7 the fine work they've done here. I'd also like to commend 8 the engineers at Southwest Research Institute for the fine 9 job that they did in completing this test program. 10 And in closing, again I would like to commend the 11 Board for its leadership in reducing emissions from these 12 small engines. 13 CHAIRPERSON LLOYD: Thanks very much. 14 No questions? 15 Thank you. 16 Rick Bell, Don Anair, Jeff Arnold. 17 MR. BELL: If it's acceptable for the Board, I 18 have approximately six slides I'd like to present to help 19 substantiate some of the information I'll be discussing. 20 (Thereupon an overhead presentation was 21 Presented as follows.) 22 MR. BELL: My name is Rick Bell. I'm a 23 development manager with the Dupont Company. 24 Dupont is a polymer and elastomer supplier. We 25 supply a lot of the -- excuse me just a second. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 314 1 (Thereupon a discussion was held off 2 the record.) 3 MR. BELL: Should I take a -- should I let the 4 next person go ahead of me, and then I'll -- 5 CHAIRPERSON LLOYD: How long, Victoria, is this 6 going to be? 7 Does anybody not have overheads here? What about 8 Don? 9 Yeah, maybe Don can fill in while -- 10 MR. BELL: I was considering it more for the 11 audience rather than the staff, because some of these 12 technologies -- 13 CHAIRPERSON LLOYD: Then let's hold on then. 14 Maybe Don can come up and -- yeah. And when we 15 get this fixed, we'll -- 16 MR. ANAIR: Good afternoon. 17 CHAIRPERSON LLOYD: Good afternoon. 18 MR. ANAIR: My name is Don Anair and I'm with the 19 Union of Concerned Scientists. And I'd like to express 20 our support of the rule proposed by the staff. 21 Off-road engines in California are becoming a 22 significant source of air pollution, as on-road cars and 23 trucks are required to meet tighter emission standards. 24 With existing regulations, off-road hydrocarbon and 25 nitrogen oxide emissions in California are expected to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 315 1 become 60 percent of total California mobile source 2 emissions by 2020, compared to 37 percent in the year 3 2000. 4 Cleaning up smaller engines that have high 5 emissions is critical to meeting California clean air 6 goals and SIP commitments. The potential savings from 7 this rule are quite significant. According to the staff's 8 estimates -- original estimates, the reductions of 9 hydrocarbons and nitrogen oxide achieved by 2020 would be 10 equivalent to removing 1.8 million cars from California's 11 roads. These are the pollutants that are directly 12 responsible for producing urban ozone. Nine out of ten 13 Californians live in areas that do not obtain the national 14 ambient air quality standards for ozone. 15 California has the authority to clean up small 16 off-road engines and should do so for the health of all 17 Californians. 18 While we support this rule as proposed by the ARB 19 staff and agree that it will achieve significant emissions 20 reductions, zero-emissions equipment should be more 21 strongly encouraged. Electrical equipment in this 22 category can be and is used in many applications and 23 offers clear emissions benefits over combustion engine 24 equipment. A strong zero emission component will achieve 25 emissions benefits above and beyond the proposed PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 316 1 regulation. 2 We urge the Board to adopt the proposed 3 strengthened emissions requirements proposed today by the 4 staff for small off-road engines to benefit the health of 5 all Californians. We also urge the Board to direct ARB 6 staff to investigate and propose a future amendment to the 7 regulation that strongly promotes the manufacture and use 8 of zero-emissions equipment. 9 I'd like to thank the Board for the great job 10 they've done in proposing the original and the amended 11 proposal. 12 Thank you. 13 CHAIRPERSON LLOYD: Thanks very much. 14 We're still out of action, I guess. 15 We're not. Okay. 16 So maybe, Rick, you could come back. 17 And then we'll have Jeff Arnold and Tom Addison. 18 (Thereupon an overhead presentation was 19 Presented as follows.) 20 MR. BELL: I guess sometimes new technology 21 doesn't always work well. 22 But, again, I'm Rick Bell. I'm a development 23 manager with Dupont. And Dupont is a polymer and 24 elastomer supplier for this supply chain, small off-road 25 engines. We supply materials that are commercially used PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 317 1 today. We also supply materials and technology that could 2 be part of a solution to meet the new proposed 3 recommendations. 4 Really my testimony here today is to help 5 validate a lot of the information that Jim Watson 6 presented. But what I'd like to do is to add a few more 7 comments to some of that, addressing some of the concerns 8 that have come up in past workshops around some of these 9 new materials or ways of meeting lower evap limits. 10 --o0o-- 11 MR. BELL: The area where Dupont has expertise is 12 in fuel tanks -- plastic fuel tanks, excluding the 13 diurnal. Although when you look at the diurnal, Dupont 14 does also supply nylon for the canisters, fuel lines, and 15 engine seals. So I'm specifically going to discuss these 16 components. I am not going to talk about exhaust 17 emissions. 18 --o0o-- 19 MR. BELL: One of the potential solutions we see 20 for blow molded polyethylene fuel tanks is a technology 21 called Selar RB. It's a very simple solution to make a 22 low permeable polyethylene fuel tank. 23 Basically Selar is an additive which is added to 24 polyethylene. It's used extensively today in the 25 automotive industry and for packaging industry, for things PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 318 1 like hazardous chemicals. It's approved also by CARB as a 2 low-perm technology barrier resin for portable or jerry 3 can plastic fuel tanks. 4 --o0o-- 5 MR. BELL: Again, this is -- it's patented 6 technology. But basically it involves just adding 7 7 percent of a barrier resin to your polyethylene and you 8 would blend it in-line. And it can reduce permeation over 9 the straight polyethylene by a factor of 95 percent. It 10 requires very little capital investment. Basically a new 11 screw is required in your blow molding machine, but that's 12 all the investment requires. 13 We're looking at the upcharge for this type of 14 technology as being less than 75 cents per tank for a tank 15 on the size of approximately one and a half liters, which 16 is roughly one and a half quartz. So this is very easy 17 technology to implement. 18 Some of the concerns raised at past workshops 19 have been that this technology will reduce the impact 20 strength of a polyethylene fuel tank. And while, in fact, 21 that is true, when you look at the other applications 22 where this is used, such as automotive fuel tanks and 23 hazardous chemicals, these applications require an impact 24 test where you drop a tank from six meters at minus 40 25 degrees C filled with water and glycol, and these PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 319 1 polyethylene tanks will bounce off concrete at those 2 conditions. So while there is a small reduction in impact 3 strength, that reduction can be managed by a modification 4 of the pinch off. Again, these are relatively simple 5 things that can be done to be in compliance. 6 --o0o-- 7 CHAIRPERSON LLOYD: That's it? 8 MR. BELL: No. 9 And this just shows here a comparison of Selar 10 versus other alternatives to reduce permeation. Again, 11 what this is highlighting is Selar is one solution. You 12 also have a solution using fluorination or sulfonation or 13 core extrusion. These are all viable technologies. 14 We believe though that one area we don't directly 15 address here is rotomolded polyethylene fuel tanks. For 16 that specific application we believe a fluorination or a 17 sulfonation process would be a very practical solution. 18 --o0o-- 19 MR. BELL: And I don't think I'm pointing the 20 clicker at the right machine to get it to -- just point up 21 here? 22 Okay. The other solution for plastic fuel tanks 23 is to simply look at a different base resin. CARB has 24 done a lot of testing with nylon. And that's because 25 nylon plastic fuel tanks for small off-road engines are PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 320 1 used today. So, again, this is commercial technology that 2 already is in compliance with low evap requirements. 3 In addition to nylon, you could also look at 4 acetone as an alternative material. 5 Again, these products will tend to have lower 6 impact strength versus polyethylene. But they will also 7 tend to strengthen and stiffen the tank. So if you're 8 looking at situations where you might have slight 9 pressurization, a change of material will help in 10 preventing too much ballooning of the tank. 11 There could be some questions with shrinkages. 12 You may need some new tooling. But, again, we look at 13 this for a one and a half liter tank as the upcharge being 14 less than $2.25 to have a low-perm solution. 15 --o0o-- 16 MR. BELL: Another area I'd like to address is 17 low-perm plastic fuel lines. We -- 18 CHAIRPERSON LLOYD: How long are you going to go 19 on? 20 MR. BELL: Five minutes. 21 CHAIRPERSON LLOYD: You mean -- you've already 22 had ten. 23 MR. BELL: Okay. 24 CHAIRPERSON LLOYD: I think -- let's cut it. 25 MR. BELL: Okay. Again, I don't think there's PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 321 1 any question around low-perm plastic fuel lines. One 2 point I would like to add is the new proposal looked at a 3 15-gram-per-square-meter limit. There are technologies 4 out there such as F-200 from Moldex which can actually 5 reduce that below 5. So there are even lower perm 6 alternatives commercially used today. 7 --o0o-- 8 MR. BELL: Again, engine seals, there are 9 low-cost solutions. This is commercial technology which 10 is used in other applications today, easily appliable to 11 this market. 12 --o0o-- 13 MR. BELL: So that is in brief I guess all we 14 wanted to present. Again, just substantiating the numbers 15 we see that CARB has presented, we do believe those are 16 valid numbers and this is technology easily implemented. 17 CHAIRPERSON LLOYD: Oh, that's the measure. 18 That's excellent. Again, thank you very much. 19 Any questions from the Board? 20 Thank you very much. 21 We're going to take a five-minute break for the 22 court reporter before we get to the home stretch here. 23 So let's get back at 5:15 by that clock there. 24 (Thereupon a recess was taken.) 25 CHAIRPERSON LLOYD: We commence with Jeff Arnold, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 322 1 Tom Addison, Todd Campbell. 2 MR. ARNOLD: Good afternoon. 3 Chairman Lloyd and Board members, thank you for 4 giving me the opportunity to speak to this group. My name 5 is -- 6 CHAIRPERSON LLOYD: Yeah, we've got a couple of 7 Board members listening in the back, by the way. There 8 are -- you can hear them back there -- they can hear you. 9 MR. ARNOLD: Thank you. 10 CHAIRPERSON LLOYD: There's speakers back there. 11 MR. ARNOLD: So I don't have to talk real loud 12 then, right? 13 CHAIRPERSON LLOYD: Well, you still have to talk 14 loud. No, not loud though. 15 BOARD MEMBER DeSAULNIER: Just don't have your 16 cell phone go off. 17 (Laughter.) 18 MR. ARNOLD: No, it plays a different tune, I 19 play, than hers, so we're okay. 20 (Laughter.) 21 MR. ARNOLD: My name is Jeff Arnold, and I am the 22 Executive Director and CEO of the Association of 23 Rotational Molders International, which is based in Oak 24 Brook, Illinois, outside suburban Chicago. Our 25 association represents over 350 rotomolders and PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 323 1 rotomolding material and equipment suppliers in 60 2 countries around the world, with 15 rotomolders in 3 California alone. 4 The vast majority, around 90 percent, of U.S. 5 rotomolders are small, privately-held companies with a 6 single plant and four to five rotational molding machines. 7 Most of our members fall in to the Category 2 or 225 cc 8 greater category. 9 I'd like to address my comments briefly to two 10 issues that arise in connection with CARB's proposed 11 regulation, keeping them specifically to limiting 12 evaporative emissions from small off-road equipment fuel 13 tanks. 14 The exhaust issue is not applicable to our 15 industry. We are in the plastics field. 16 One is CARB's contention that rotomolded fuel 17 tanks on SORE can be cost effectively and safely replaced 18 with units made from metal or alternative plastic 19 processing methods. And, two, the damage to the U.S. 20 rotomolding industry on their material and equipment 21 suppliers if this important market were to be limited or 22 lost due to these proposed regulations. 23 The study, conversion from steel to plastic fuel 24 tanks over the recent past, satisfies a number of economic 25 mandates from the marketplace as well as the environmental PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 324 1 mandates coming from federal and state agencies, to wit: 2 Longer life expectancy, enhanced safety, enhanced 3 flammability resistance, parts consolidation, greater 4 design freedom, weight savings, corrosion resistance, and 5 sound dampening. 6 The reason why rotomolding is preferred in small 7 scale SORE fuel tanks relates to rotomoldable plastic 8 material options, the nature of the process, and the total 9 cost burden of the process. 10 Rotomolders can utilize cross-linked 11 polyethylene, which as a thermal setting plastic, is quite 12 rigid and its mechanical properties are not heat 13 sensitive. 14 Second, rotomolding yields a part with uniform 15 thickness. Third, machine and cast rotomolds and 16 rotomolding machines are lower in cost. And, fourth, 17 rotomolding is the ideal process for low-volume hollow 18 part production, and has a significant presence in SORE 19 fuel tank businesses. 20 In closing, since 2000 the U.S. economy has 21 suffered through economic conditions. Here in 2003 there 22 are signs of economic recovery, yet it is turning out to 23 be a jobless recovery. It would be both untimely and 24 unfortunate if these proposed regulations impact adversely 25 on a sector of the plastics industry that provides jobs PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 325 1 and plants here in California, especially southern 2 California. 3 Rather than contemplating the replacement of 4 rotomolded SORE fuel tanks, we feel that CARB should 5 consider providing incentives to regional rotomolders to 6 explore technological changes in material, machinery, and 7 processing methods, would make a highly cost-effective 8 product even better. 9 And I'd like to add just at the very end of the 10 comments that historically -- our association is 28 years 11 old this year. And historically we have been -- our main 12 mission is to promote the industry in the process. So we 13 are not typically involved in this type of process. And 14 we would be happy to work, you know, with the CARB Board. 15 This came to our attention from a couple of our members 16 just within the last 30 days. And that is why we have not 17 been here previously. 18 So thank you very much. 19 CHAIRPERSON LLOYD: Thank you for coming. And 20 I'm sure staff will work with you on these issues. 21 MR. ARNOLD: All right. Thank you. 22 CHAIRPERSON LLOYD: Thank you very much. 23 Tom Addison. 24 I didn't see Tom. That's okay. 25 Todd Campbell. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 326 1 No Todd. 2 Jim Medich. 3 BOARD MEMBER DeSAULNIER: For Tom Addison. After 4 five Bay Area Air Districts, the employees don't work. 5 So -- 6 (Laughter.) 7 BOARD MEMBER DeSAULNIER: -- he'll be happy to 8 hear that. They're out watching the sunset in the hot tub 9 or something. 10 (Laughter.) 11 MR. MEDICH: Chairman Lloyd, members of the 12 Board. I'm Jim Medich. I'm a fire division chief with 13 the West Sacramento Fire Department. 14 I'm here today representing the California Fire 15 Chief's Association. That organization is comprised of 16 fire Chiefs from over 1,100 fire departments in 17 California. 18 The California Fire Chiefs Association is 19 concerned that the California Air Resources Board's plan 20 to require installation of high efficiency, hot catalytic 21 exhaust systems on lawn and garden equipment could 22 increase the risk and severity of operator burns and wild 23 land fires. Also, they could have associated problems 24 with refueling fires and fires in garages after the hot 25 equipment is stored after use. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 327 1 It appears that most of our concerns from the 2 July 2nd meeting that I attended have been addressed in 3 the alternative standards that were presented today. Cal 4 Chiefs would like more time to study the new changes to 5 see how their impacts would affect fire safety. 6 As we have stated before, the California Fire 7 Chiefs Association would welcome the opportunity to work 8 with other safety experts to address the unresolved safety 9 issues to ensure that the citizens of California are 10 getting not only the best environmental policy, but also 11 the best safety policy we can give them. 12 I'd be glad to answer any questions. 13 CHAIRPERSON LLOYD: Professor Friedman. 14 BOARD MEMBER HUGH FRIEDMAN: We -- I don't know 15 if you're familiar with our process. But if we adopt this 16 proposal today, with some modifications, there's still a 17 15-day period in which we receive additional information 18 and comment. And I'm wondering if you can't give us 19 further input if there is any additional concern or 20 further concern in that period of time. 21 MR. MEDICH: I think that'd be reasonable. 22 BOARD MEMBER HUGH FRIEDMAN: Am I correct on 23 that? 24 EXECUTIVE OFFICER WITHERSPOON: You're quite 25 right. It also takes as an amount of time to put together PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 328 1 the package for 15-day changes. So there is a month or so 2 of time even before that goes out where we can be talking 3 and meeting and the fire chiefs can do their evaluation. 4 And then we'll have actual regulatory language for them to 5 look at. 6 BOARD MEMBER HUGH FRIEDMAN: Yeah, these rules 7 don't go into effect themselves by their own terms for a 8 while. So there's a lead time. But we don't want to 9 unduly delay. On the other hand, I for one want to be 10 sure that we have got the full benefit of the 11 professionals on this safety question. 12 CHAIRPERSON LLOYD: Thank you. And, again, your 13 comments are very helpful. And I think staff has looked 14 through and addressed the safety issue as far as we could 15 see very well. And the fact that Honda indicated they 16 don't see a major issue there, also that's very helpful. 17 But we really appreciate your comments. Look 18 forward to working with you to make sure that we do 19 everything we can to mitigate that. 20 MR. MEDICH: Thank you, sir. 21 CHAIRPERSON LLOYD: Thanks very much for coming. 22 Dave Modisette and Jed Mandel. 23 MR. MODISETTE: Yes, thank you, Chairman Lloyd, 24 members of the Board. I'm Dave Modisette. I represent 25 the California Electric Transportation Coalition. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 329 1 Although I'm here to present a position statement that 2 includes seven other organizations: The American Lung 3 Association of California, the Center for Energy 4 Efficiency and Renewable Technologies, the Coalition for 5 Clean Air, the Natural Resources Defense Council, the 6 Steven and Michele Kirsch Foundation, the Sierra Club, and 7 the Union of Concerned Scientists. 8 We strongly support CARB's proposed rulemaking to 9 strengthen exhaust and evaporative emission control 10 requirements for small off-road equipment and engines. 11 The proposed measure, if adopted, would be a significant 12 step towards achieving California's clean air goals and 13 would provide essential public health benefits for all 14 Californians. In addition to supporting the adoption of 15 the regulation, we urge the Board to commit to a future 16 rulemaking that would encourage the sale of zero emission 17 equipment in this category. 18 Off-road engines in California are responsible 19 for a significant amount of air pollutants and 20 traditionally have not been held to the same emission 21 standards as on-road engines. 22 Under the current regulations, off-road engines 23 are expected to account for more than 60 percent of 24 California's total mobile source hydrocarbon and nitrogen 25 oxide emissions by 2020, compared to only 37 percent in PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 330 1 the year 2000. 2 There is a clear need to address the increasing 3 significance of off-road engine pollution in California. 4 The proposed regulation for reducing exhaust and 5 evaporative emissions from small off-road engines and 6 equipment is the necessary step in reducing air pollution 7 from these engines. 8 While we support the adoption of the rule as 9 proposed by the staff, we would also like a commitment by 10 the Board to promote the adoption of zero emission 11 equipment in a future rulemaking. The current regulation 12 has no provision for either encouraging the use or sale of 13 electric powered zero emission equipment. And maybe just 14 as a footnote I should say that this is based on the 15 August 8th staff proposal. It does not include any 16 changes that were presented today. I did see a reference 17 to zero emission equipment in the staff presentation 18 today, and I think we'd like to learn more about that. 19 The August 8th, 2003, CARB staff report describes 20 the benefits of zero emission technology in this category. 21 I won't repeat that here. The staff report also states 22 that electric powered handheld equipment was readily 23 available for the residential user market. This equipment 24 includes both cordless and corded models of line trimmers, 25 hedge trimmers, leaf blowers, chain saws, tillers, and PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 331 1 lawnmowers. 2 Markets for much of this electrical equipment are 3 already well established. For example, electric mowers 4 are estimated to be about 10 percent of the California 5 market according to the staff report. 6 Manufacturers should be encouraged and rewarded 7 for increasing their proportionate sales of zero emission 8 equipment in California. This could be accomplished in 9 several ways. But the use of a manufacturer's fleet 10 average standard that includes zero emission equipment 11 sold by manufacturers in California may provide the best 12 combination of additional emissions reductions and 13 compliance flexibility. 14 This fleet average concept is not included in the 15 rulemaking that is before you today, and will take 16 additional work to develop. Further, the fleet average 17 concept is not incompatible with the minimum ICE standards 18 proposed by staff in the rulemaking before you. 19 We urge the Board to direct staff to begin work 20 to develop a fleet average construct or other mechanism 21 that includes and encourages zero emission equipment in 22 these small off-road categories. This construct would be 23 subject to the rulemaking process and should have an 24 appropriate implementation lag to provide compliance 25 flexibility. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 332 1 In order to develop the fleet average construct, 2 staff needs to have information on the annual sales of 3 zero emission equipment and on the existing inventory of 4 the equipment. We do not know if staff has this 5 information or has a current means of getting it. It may 6 be that a reporting requirement is needed whereby 7 manufacturers report their annual sales of zero emission 8 and other equipment within the small off-road category. 9 The Board should consider this issue today. 10 In conclusion, the proposed rules are 11 technologically feasible, as shown by the staff, and will 12 achieve cost effective emissions reductions from small 13 off-road equipment. We urge the Board to adopt the rules 14 as proposed for the benefit of all Californians. We also 15 urge the Board to direct staff to begin work to include 16 zero emission equipment in the regulatory framework for 17 small off-road equipment in a way that encourages and 18 rewards manufacturers for increasing their proportionate 19 sales of this equipment and reducing emissions even 20 further than required by the currently proposed 21 regulations. 22 Thank you. 23 CHAIRPERSON LLOYD: Thank you, Dave. And I think 24 we would support that. Maybe staff can look at the zero 25 emission. And that would include push mowers, too. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 333 1 EXECUTIVE OFFICER WITHERSPOON: We did evaluate 2 the issue of electric power equipment to as much as we 3 could during the process of this rulemaking. And we were 4 unable to arrive at either a regulatory approach -- well, 5 we were unable to arrive at a regulatory approach that we 6 believed would work. 7 And the fleet average, which sounds so 8 compellingly simple, does not work easily in this market 9 where there's both integrated and non-integrated equipment 10 and against whom is the fleet average levied and who's 11 held responsible for that. 12 So we also encountered a barrier with the 13 difference between residential and commercial users going 14 to the same retail site, and could not think of a way to 15 prevent a residential user from walking away from that 16 site with a fuel-power piece of equipment that when they 17 arrive there they're only allowed to purchase an electric. 18 So our tentative conclusion is that an 19 incentive-based strategy on electric is ultimately going 20 to be more successful. And to the extent the Board wants 21 us to keep endeavoring in this area, we would hope you 22 would say not to come back certainly with a regulation 23 because we're still not sure that's feasible, but instead 24 to come back with recommendations on how it is we should 25 increase the penetration of electric equipment. It's just PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 334 1 a very complicated issue. 2 And we support completely the goal of doing it. 3 But we couldn't figure out how in this regulation, and 4 that's why it isn't here. And it wasn't just a matter of 5 time. Give us six more months and we'll tell you how we 6 think there's some fundamental issues about trying to do 7 it through a regulatory method. 8 CHAIRPERSON LLOYD: Professor Friedman. 9 BOARD MEMBER HUGH FRIEDMAN: Well, Ms. D'Adamo 10 mentioned it earlier. And I whispered to her, "I like the 11 idea." I wonder if it wouldn't be productive for Mr. 12 Modisette to meet with staff and, as staff continues, to 13 see what could incentivize zero emission equipment of this 14 sort, and whatever else you can come up with. 15 I don't know that it should be then part of this 16 rulemaking. But it could always be a separate but related 17 proposal later. 18 EXECUTIVE OFFICER WITHERSPOON: We'd be happy to 19 talk to him about it. Maybe he's got some -- 20 BOARD MEMBER HUGH FRIEDMAN: Could we put some 21 time on it? Six months? 22 EXECUTIVE OFFICER WITHERSPOON: Sure, for a 23 report back. I just didn't want to promise you we could 24 get back here with a regulation. 25 BOARD MEMBER HUGH FRIEDMAN: No, I understand. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 335 1 But a concept and a recommendation that -- 2 EXECUTIVE OFFICER WITHERSPOON: Sure. 3 BOARD MEMBER DeSAULNIER: We have a model. 4 Go ahead, Didi. 5 BOARD MEMBER HUGH FRIEDMAN: So do we keep it on 6 our agenda? 7 BOARD MEMBER DeSAULNIER: No, no. We were 8 thinking about maybe an MOU that would just be required. 9 They'd agree to sell, say, 10 percent, 20 percent of 10 their -- 11 (Laughter.) 12 CHAIRPERSON LLOYD: Well, I think Dave has 13 been -- 14 BOARD MEMBER DeSAULNIER: Worked so well last 15 time. 16 (Laughter.) 17 CHAIRPERSON LLOYD: Dave has been very helpful, I 18 think, in creative -- in bringing stuff before the Board. 19 So that would be very good. 20 And, Didi, you've got a better suggestion? 21 BOARD MEMBER D'ADAMO: Well, no, not that I have 22 a better one. But I just think -- you know, we push so 23 hard on cars, which was so much more difficult. The 24 technology is definitely there. We know it. And I can 25 see why there would be issues with a fleet average PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 336 1 concept. But I'm kind of thinking that the 2 incentive-based program is not, you know, far enough. 3 So we'd just be hopeful that staff could remain 4 open to some of these other concepts, and flexible. And, 5 again, I suggest that you work with Dave's groups. I'd be 6 happy to join in the effort as well. I feel pretty 7 strongly about this. 8 EXECUTIVE OFFICER WITHERSPOON: In terms of 9 timing -- I just chatted with Mr. Cackette -- six months 10 seems like about the right amount of time to report back 11 to you on where that stands, if that's amenable to you 12 all. 13 CHAIRPERSON LLOYD: Can we offer any incentives 14 to shorten that? 15 (Laughter.) 16 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Three 17 more staff. 18 (Laughter.) 19 CHAIRPERSON LLOYD: Good call. 20 And, by the way, I realize how tough it's been 21 and how much there is on the staff's plate. So I respect 22 that. And I was only kidding. 23 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: And I 24 didn't mean to be -- adjust either. But, you know, 25 there's quite a bit of work following up on this Board PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 337 1 meeting should you approve this regulation. And they have 2 to do that work first to make sure we get through the 3 process, so -- 4 CHAIRPERSON LLOYD: I agree. 5 Thanks very much, Dave. 6 MR. MODISETTE: That sounds very good. I've 7 already had -- you know, Tom and I and Bob Cross have 8 already had some discussions on this. So, yes, I'd very 9 much like to work with staff on this. 10 CHAIRPERSON LLOYD: Great. We really appreciate 11 your offer to help there. 12 Jed is now so much smarter than he was earlier 13 on. So we've got the benefit of that wisdom. 14 MR. MANDEL: Of course that's not saying very 15 much. 16 BOARD MEMBER HUGH FRIEDMAN: Clean-up batter. 17 MR. MANDEL: What I was going to say is the real 18 reason why I wanted to go last was for once you'd be 19 pleased to see me come up here. 20 CHAIRPERSON LLOYD: By the way, I didn't like 21 your suggestion to address this safety issue a little more 22 is that in fact we require your operators to provide 23 asbestos gloves for the operation of the equipment. 24 MR. MANDEL: Well, I'm investing my stock -- 25 maiden stock in that asbestos company right now. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 338 1 Good afternoon, almost good evening. 2 Again, my name is Jed Mandel. I'm here today on 3 behalf of the Engine Manufacturers Association. And as I 4 think you know, EMA's members include the principal 5 manufacturers of the Class 1 and Class 2 non-handheld 6 spark-ignited engines for the subject of today's proposal. 7 We believe that further exhaust and evaporative 8 emission reductions can and should be implemented in 9 California. And we are committed to do so. But we cannot 10 support the original staff proposal that was incorporated 11 in the mail-out. 12 Instead, we developed an alternate proposal that 13 would provide California the same benefits as it would 14 have achieved under the staff's proposal at a far lesser 15 cost, with substantially less burden and disruption to the 16 industry, in a manner that is practical, realistic, and 17 enforceable. 18 Two days ago the staff provided us with the 19 outline of an alternative program that is similar but not 20 identical to what we proposed. In fact, it proposes some 21 programs that go beyond what we asked for. And I might 22 add, it is completely different from and not within the 23 scope of the original staff proposal that was part of the 24 mail-out package. 25 No details have yet been developed on how the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 339 1 staff's alternate program would work and no draft 2 regulatory language has yet been developed. 3 There are complex, innovative, and challenging 4 aspects of the staff's proposal that cannot fully or 5 properly be assessed without a modest amount of additional 6 time. Based on the staff's representations, we think we 7 might be close. But we do not yet have enough of the 8 critical details to know whether we can reach an agreement 9 for sure. 10 The failure to reach an agreement today, that we 11 can stand up here and represent we already have, is simply 12 the result of running out of time. Admittedly, the 13 industry originally advocated regulatory concepts quite 14 different from that which we proposed to the staff. And 15 the staff only had a few weeks to assess our recent 16 proposal. 17 Now, we only have really a couple of days, and in 18 some detail only a couple of hours, to assess the staff's 19 outline of its proposal, and without knowing the critical 20 details. 21 I know Professor Friedman asked earlier -- and 22 I'm going to try and anticipate your question -- as what 23 some of the examples are of where they're not necessarily 24 aligning up. 25 I represented to you that in one case the staff's PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 340 1 proposal provides more than what the industry asked for. 2 And when I say the industry, I'm talking about the 3 EMA/OPEI proposal. And the area of concern there is the 4 fleet averaging program. As many of you know, and I know 5 as the staff knows, because we've worked on these programs 6 over the years, EMA and its members historically are 7 advocates of averaging programs. And, in fact, we're 8 interested in exploring this averaging program. 9 But one of the things that we've always found 10 interesting in our internal discussions and interesting in 11 some of our discussions with regulators is that averaging 12 programs have the potential for creating an unlevel 13 playing field if they're not very carefully developed. 14 This is an averaging program, or at least a concept, that 15 developed without any input from any of the Engine 16 Manufacturers Association's members or obviously from the 17 Association itself. And, candidly, we're a little 18 concerned that it doesn't play out in a way that creates 19 an unlevel playing field between competitors. 20 I'm also -- was mindful of the comment about the 21 interest in electric mowers and in push mowers. And it 22 strikes me that it would not be in the Board's best 23 interests if at the end of the day the fleet averaging 24 program would allow an engine manufacturer and equipment 25 manufacturer to package up a relatively inexpensive push PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 341 1 mower in with their regular spark-ignited internal 2 combustion engine and claim on average it was not having 3 very many exhaust or evaporative emissions. 4 So I think averaging programs, while they're 5 interesting, have a lot of, as the classic phrase goes, 6 "Devil in the Details" that we're very concerned about, 7 and we think you as a Board ought to be concerned about. 8 Another area that was new to us is the compliance 9 validation plan that's just referenced again at the end of 10 the staff's proposal. We don't know what that means. We 11 don't know how it will work. Obviously, we have an 12 opportunity through the 15-day notice process to work out 13 those issues. But we are very concerned that in fact when 14 the staff represents to us that their proposal is exactly 15 what we've asked for, then in fact we may be talking past 16 each other since that program starts to look like an 17 individual manufacturer's year-by-year, sort of zero -- of 18 summing to zero individual compliance program as opposed 19 to an alternate industry-wide program not requiring 20 individual engine manufacturer demonstrations of 21 compliance for the manufacturer as opposed to the 22 industry. Again, we may be talking past each other. I 23 don't know. 24 There's also a very important requested-for 25 requirement of demonstrating equivalents on the running PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 342 1 loss cannister issue. We totally support that. We're 2 very appreciative of the staff's proposal. We just don't 3 know how it's going to work. And, again, a very, very 4 important detail. 5 There are also other areas that provide some 6 uncertainty or where it doesn't appear yet that what the 7 staff has represented as their alternative proposal is 8 exactly what the industry asked for. You've already heard 9 about the issue of defining the program in such a way that 10 its limits are only for the benefit of the State of 11 California. I'm not going to raise that up early, except 12 it is a point of some difference. 13 There's also a very important difference on the 14 enforcement side of the program. We very carefully 15 suggested to the staff, as I think the staff acknowledged 16 earlier in their own report, that the practicality of a 17 mandatory recall for a consumer product like lawnmowers, 18 unregistered in many cases at least in the high volume 19 cases, considered a throwaway product, it's just not a 20 very practical way to enforce the program. 21 Right now that's the only authority that's 22 provided in the package. And we have suggested that 23 EPA -- excuse me -- that ARB align itself more in the way 24 EPA does the enforcement program, which does suggest a 25 whole realm of enforcement options, with recall being PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 343 1 recognized as one that is not practical. 2 I'm also frankly a little concerned in terms of 3 the staff proposal, in understanding it, in that there's 4 an exhaust component -- which, by the way, we support. 5 Those are the numbers that we asked for. And, by the way, 6 a perfect example of changes that would be easily handled 7 in a 15-day notice. They're not very complex, very 8 understandable, and ones that we support. 9 As I understand the way it's being proposed 10 though, those exhaust numbers would now be paired with 11 three options for compliance with the evaporative side: 12 The original staff proposal, Alternate 1, and Alternate 2; 13 with Alternate 1 and Alternate 2 being evaporative 14 proposals specifically designed to provide 15 over-achievements on the hydrocarbon evaporative emission 16 side to balance out some of the shortfall on the exhaust 17 side. 18 But the original staff proposal doesn't have any 19 over-exceedance on the evaporative emission program. And 20 I believe that the August 8th mail-out, that evaporative 21 emission program, paired with the exhaust proposal that we 22 heard from the staff today, in fact would result in a 23 significant ton shortfall for California. And I believe 24 if you adopt that today, that becomes the law, and 25 manufacturers could choose that route. I don't think PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 344 1 that's what the Board intends. 2 We are committed to working with you and the 3 staff to assure that real emission reductions are achieved 4 in a cost-effective and timely manner. I am requesting 5 that we have modest additional time that would be required 6 for us to address these issues that I've noted today, 7 issues that, by the way, I'm very optimistic can be 8 addressed. And we'd like to do so in a process that 9 assures openness in a board hearing so that we're not 10 surprised as part of a final 15-day rule -- the rule 11 finalized as a result of the 15-day process, that other 12 new issues have surfaced that we never really had a chance 13 to comment on or report back to you on. 14 I do know because I've had a chance to talk to 15 staff throughout the course of the day, and I've had a 16 chance to talk briefly with Dr. Lloyd today, that there is 17 a great deal of obvious interest on the part of the Board 18 of adopting a rule today. I understand that. 19 I do think that the process issues and the real 20 issues that I've noted today do suggest that, again, 21 putting this over to December -- I might add, by the way, 22 that this industry has a history of having rulemakings at 23 Christmas time with the Board. We'd love to come back out 24 here when it's cold in the midwest. But putting this off 25 to December we don't think will put any delay in terms of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 345 1 implementation of the rules. 2 And the only other thing I'd say, in anticipation 3 perhaps of the Board's, as I said, reluctance to do 4 that -- although that is what we're asking for -- is 5 perhaps as an alternative to think about, first of all, 6 providing more than 15 days. The 15-day process, as I 7 understand California law, only says 15 days minimum. You 8 can provide more time. And also to put on your calendar 9 for December this item so that if it turns out that there 10 is difficulty in trying to get this rule resolved through 11 a staff process, that we have an opportunity in a timely 12 fashion without delay and without turning to any 13 acrimonious process to come back to the Board so we can 14 get closure on this and start producing product to the 15 clean standards that you will have adopted. 16 Thank you very much for your time. 17 CHAIRPERSON LLOYD: Thank you very much, Jed. 18 You raised a number of issues there. 19 Professor Friedman. 20 BOARD MEMBER HUGH FRIEDMAN: I think I heard 21 earlier the need for certainty. And I'm wondering if this 22 isn't -- to me it sounds very familiar, the list of open 23 questions about how it would work, precisely what the 24 details are, which is typically what we have our 15-day 25 notice for as long as the basic principles and concepts PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 346 1 are the policy, as opposed to all the procedures. And I 2 know that the Devil is in the details sometimes. But we 3 rarely have ever adopted a rulemaking that is finished 4 with every comma and every period when we act, as opposed 5 to under the 15-day notice. And that allows some time, 6 weeks, for such as the interested parties to work with 7 staff and thrash all this out without our having to do 8 that. And then they report back to us. And if amendments 9 are needed or something, that's a different matter. 10 But is 15 days notice adequate? 11 EXECUTIVE OFFICER WITHERSPOON: We're happy to 12 give them 30. We just did that on the 15-day process for 13 the ZEV regulatory changes, the full 30, recognizing the 14 complexity and how the pieces of the reg interacted with 15 one another. So there's no problem doing that. 16 We would not like to notice this again for 17 December though because it implies that it's coming back 18 to the Board. And I think you can let us determine if the 19 issues are sufficient enough to bring them back. 20 BOARD MEMBER RIORDAN: Mr. Chairman? 21 CHAIRPERSON LLOYD: Yes. Ms. Riordan. 22 BOARD MEMBER RIORDAN: If I heard the staff a 23 little bit earlier, you actually have usually a lead time 24 to the 15- or 30-day period. So you're actually, Jed, 25 getting many more days than the 30 days. And hopefully PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 347 1 that would accommodate your organization and others that, 2 you know, want to work with the staff through the details. 3 So it seems to me a 30-day period is a very realistic 4 period because we know it's actually many more days than 5 appears. 6 MR. MANDEL: If I could, I certainly want to 7 acknowledge that -- both with Mrs. Riordan's comment about 8 how the process really works and with the possibility of 9 that 15-day notice in fact being extended. It addresses a 10 significant part of my concerns, which is just having the 11 time to address complex issues. 12 But in response to Professor Friedman's comment, 13 I also want to remind you one of my concerns isn't just 14 having the time to respond to it, but having an 15 understanding of what this really means in an open process 16 that ultimately has everyone coming before a public 17 hearing and airing the issues. 18 The two proposals that came to the Board today 19 really did not spring out of the original staff proposal. 20 They were quite different. And I have particular concern, 21 as I said, about an averaging program, which may be the 22 solution to the world's problems, but we have not had the 23 chance to work it out. And it's very different than -- 24 and I should interrupt myself and say we've done I can't 25 remember how many 15-day notice issues with this Board and PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 348 1 with this staff very successfully. It's a process that 2 works. 3 My concern is that we have not even begun to 4 think about it. This isn't like changing a 10 to an 8. 5 This is in developing a whole new program, that I think in 6 fairness should come back to all stakeholders to hear what 7 it is and comment on it to you. 8 CHAIRPERSON LLOYD: Short of that, what would be 9 optimum? 10 MR. MANDEL: Well, I thought the optimum sort of 11 middle ground, besides the additional time, would be to 12 have a real opportunity, if necessary, to avail ourselves 13 of the Board's hearing in December. And, again, I 14 understand -- I saw Catherine's head move and I heard her 15 loudly before -- but I understand it's not the staff's 16 goal. But I'm concerned that if the staff unilaterally 17 should decide it needs to come back to you, it takes a 18 while to get back on your agenda. We can always pull it 19 off easily. 20 CHAIRPERSON LLOYD: All right. But the other 21 thing, I think if you come back as an information item to 22 see whether we want to go ahead, that's one thing. But I 23 also share staff's concern that we've got to bring this to 24 some closure. And I think we're trying to meet you the 25 way -- and I have a lot of faith, and also as long as I'm PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 349 1 here working with staff to monitor what's going on and sit 2 in on some of these meetings, and my colleagues would be 3 happy to do that also, to make sure that if these are real 4 issues, then we will address them. 5 BOARD MEMBER RIORDAN: Mr. Chairman, if I might, 6 and Mr. Mandel. 7 It seems to me you always have access to our 8 Chairman. And I'm certainly willing to defer to him and 9 his good judgment, that if at the end of all of this 10 period that there are some remaining issues, at some time 11 in the very near future we could maybe undertake some of 12 those. But I trust his judgment, and I think it would be 13 very appropriate for him to hear the issues if you feel 14 there are some left. You may be able to resolve all of 15 them in this almost 60-day period. 16 MR. MANDEL: Well, we hope that. And obviously, 17 not only with all the Board members, but in particular 18 with Dr. Lloyd, we do know that we have access and we 19 would take advantage of that. 20 CHAIRPERSON LLOYD: And, again, I think it's our 21 obligation. And I think, as I said before, we've been 22 trying to work in good faith with the industry. And staff 23 has worked, I know, very hard and diligently. And as you 24 say, it seems a little bit ironic today when staff has 25 tried to incorporate some of those, people saying, well, PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 350 1 we haven't got -- and I understand the details. But I 2 think you've got to also recognize the tremendous effort 3 that's gone on, to recognize the concerns to ameliorate 4 those, to come from where I understood we were just 5 several months ago, to come this close and then have one 6 of the major manufacturers also say that they can live 7 with this provided some of those issues are addressed in 8 that time period. And, again, that's the same thing we'll 9 hold there as we work together. I think that's a 10 tremendous accomplishment and I think staff has done a 11 really excellent job. 12 MR. MANDEL: And obviously you should say that, 13 and I think I should take the time as well. Because in 14 the heat of trying to focus our concerns to the Board's 15 attention, sometimes we neglect to remind ourselves of how 16 far the staff has come. 17 And also the industry. The industry proposal 18 moved substantially from where we were. But I do want to 19 acknowledge the staff's hard work in working with us. I 20 wish we had had more time. I blame some of that on 21 ourselves in terms of working it. I'm hoping that we can 22 get closure and get closure quickly. 23 CHAIRPERSON LLOYD: And you understand, Jed, the 24 same as we were talking this morning or earlier this 25 afternoon, about the item we have next month going to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 351 1 South Coast and seeing all the pressures down there to do 2 something. I think we would be neglecting our duty to try 3 to keep these on track. But if there is again -- those 4 concerns are not being worked out, then we will surely 5 take those in to account. 6 EXECUTIVE OFFICER WITHERSPOON: There will also 7 be a vote on the Senate floor as to whether the bond 8 amendment in the VA HUD measure should pass. And I think 9 it's important for Congress to understand what the nature 10 of the rule adopted by the Air Resources Board is when 11 they're considering the necessity or not of overruling it 12 through that amendment. 13 CHAIRPERSON LLOYD: Thank you. 14 Thank you very much, Jed. And, again, as always, 15 we appreciate your wisdom and comments there. And we look 16 forward to working with you and your colleagues. 17 MR. MANDEL: Thank you, Doctor, very much. Thank 18 you, Board members. 19 CHAIRPERSON LLOYD: Okay. With that, I guess 20 it's the end of the public testimony. 21 Maybe here we'll have some discussion, and before 22 we go in to ex parte. 23 Yeah. Well, maybe I'll take ex partes. 24 First of all -- well, first of all, I'd like to 25 close the record on this agenda item. However, the record PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 352 1 will be reopened when the 15-day notice of public 2 availability is issued. 3 And will that be 30 days? 4 Is that right? 5 GENERAL COUNSEL WALSH: Yes. 6 CHAIRPERSON LLOYD: Thirty days. 7 So when the 30-day notice of public availability 8 is issued. Written or oral comments received after this 9 hearing date but before the 30-day notices are issued will 10 not be accepted as part of the official record on this 11 agenda item. 12 When the record is reopened for a 30-day comment 13 period, the public may submit written comments on the 14 proposed changes, which will be considered and responded 15 to in the final statement of reasons for the regulation. 16 And, again, just a reminder to my colleagues 17 about policy concerning ex parte communications. While we 18 may communicate off the record with an outside person 19 regarding Board rulemaking, we must disclose the names of 20 our contacts and the nature of contents on the record. 21 This requirement applies specifically to communications 22 which take place after notice of the Board hearing has 23 been published. 24 And, therefore, are there any communications we 25 need to disclose? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 353 1 Supervisor DeSaulnier. 2 BOARD MEMBER DeSAULNIER: I had one. Tim 3 Flannegan representing the Outdoor Power Equipment 4 Institute met with me yesterday at my office in Concord, 5 California. The discussion was largely consistent with 6 the testimony from Mr. Guerry today. But it was related 7 specifically to the issues of safety. 8 That was it. 9 CHAIRPERSON LLOYD: Ms. D'Adamo, while you're -- 10 oh, okay. 11 BOARD MEMBER D'ADAMO: Yes, on September 23rd I 12 had a conference call with Todd Campbell, Coalition for 13 Clean Air; Bonnie Holmes-Gen, American Lung Association; 14 Diane Bailey, NRDC; Patricia Monahan, Union for Concerned 15 Scientists. 16 And the testimony was consistent with the 17 testimony by Dave Modisette this afternoon. 18 CHAIRPERSON LLOYD: Thank you. 19 Mrs. Riordan. 20 BOARD MEMBER RIORDAN: Mr. Chairman, I also had a 21 meeting with Tim Flannegan representing the Outdoor Power 22 Equipment Institute in mid-September. And the discussion 23 revolved around the safety issues and their submittal of a 24 plan to staff. I did not see that plan, nor was it 25 discussed. It was just simply mentioned. And he provided PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 354 1 me with two letters, one from the National Association of 2 Fire Marshals, which we have today, and also a letter from 3 the California Fire Chiefs Association. 4 CHAIRPERSON LLOYD: Mr. Calhoun. 5 On September 27th -- September 22nd and September 6 23rd I had discussions -- telephone discussions with John 7 Dunlap, who was assisting Tim Flannegan on behalf of the 8 Outdoor Power Equipment Institute. 9 And August 25th, 28th, and September 4th, I had a 10 meeting with Kirk Markwald with the California 11 Environmental Associates representing Briggs and Stratton 12 to discuss this issue along the lines we had today, 13 discussing the desire of the industry to look at a 14 counterproposal and also to look at some of the -- address 15 the travel issues. 16 And on September the 8th I had a meeting with 17 Kirk Markwald and Bob Wyman, Attorney at Law with Latham & 18 Watkins, representing Briggs and Stratton. And that was 19 also to address the issue of a counterproposal to address 20 the issue of travel. And it was after the introduction of 21 the bond amendment. 22 So with that, let's throw it open for discussion. 23 BOARD MEMBER RIORDAN: Mr. Chairman, if I might. 24 It seems to me that we had staff accommodate many of the 25 issues that were in the plan. Obviously details need to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 355 1 be worked out. I certainly would support the 30-day 2 review period in recognition of those items that need to 3 be discussed in final detail; and then certainly allow you 4 the discretion if you think this Board should ever be 5 involved with any of the issues following that 6 approximately 60-day period. 7 CHAIRPERSON LLOYD: Okay. Other comments? 8 Ms. D'Adamo. 9 BOARD MEMBER D'ADAMO: Oh, I'm sorry. I took it 10 to mean it was a motion. I was just going to add to it. 11 No comments. 12 CHAIRPERSON LLOYD: Okay. Please do. 13 BOARD MEMBER D'ADAMO: If that could be offered 14 as a motion -- 15 BOARD MEMBER RIORDAN: I'll put that in the form 16 of a motion. 17 BOARD MEMBER D'ADAMO: -- for the resolution 18 that's before us with that addition. 19 Then in addition, I'd like to make certain that 20 the zero emission component is reviewed by staff with 21 regard to a number of different options, incentive or a 22 fleet concept or other mechanisms, and that staff report 23 back to the Board. I don't recall if we -- 24 CHAIRPERSON LLOYD: Six months. 25 BOARD MEMBER D'ADAMO: Six months? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 356 1 All right. Within six months. 2 With that, I'd second it. 3 CHAIRPERSON LLOYD: Sounds good. 4 So if there's no other discussion, again I -- 5 Professor Friedman. 6 BOARD MEMBER HUGH FRIEDMAN: Just to make the 7 record clear. I don't think that -- we're acting on this 8 proposal and resolution, and then as a follow-on we're 9 asking the staff to look in to this other. I don't want 10 to -- this is not part of this action. 11 BOARD MEMBER D'ADAMO: No. 12 CHAIRPERSON LLOYD: No, no, no, no. 13 BOARD MEMBER HUGH FRIEDMAN: It's related 14 obviously. 15 CHAIRPERSON LLOYD: Yeah, that's right. 16 BOARD MEMBER HUGH FRIEDMAN: It's not dependent 17 on it and it's not part of it so that -- 18 EXECUTIVE OFFICER WITHERSPOON: Thank you for 19 clarifying that. 20 CHAIRPERSON LLOYD: And, again, I think it's -- 21 you know, as I said earlier, this puts us in a somewhat 22 uncomfortable position. But I feel we have to bring this 23 to conclusion and send a signal. 24 BOARD MEMBER HUGH FRIEDMAN: I just wanted to add 25 that I think we are scrambling desperately to find every PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 357 1 pound, every ounce, every ton of emission reduction in 2 this state. We're seeing that we're losing ground in 3 South Coast and elsewhere. We have a federal mandate. We 4 have our own needs for the health of people. And we have 5 obviously a direct legitimate and important interest in 6 reducing emissions. And this is another area where we can 7 reduce them, and we've known that for a long time. And 8 we've tried to work out a reasonable, rational plan for 9 it. 10 The original proposal met with opposition from 11 those who would be regulated, and they responded. And 12 they proposed alternatives, which I understand we have 13 pretty much accepted as alternatives, which appear to me 14 to respond to and adequately address and take care of the 15 principal concerns that were raised in terms of safety on 16 the temperature issue, the exhaust reductions. 17 And at the same time we get a bigger -- as much a 18 bang or bigger bang through increasing the evaporative 19 emissions, which was part of the industry's proposal as I 20 understand it, including Briggs and Stratton and others. 21 So, again, I think this is a collaborative 22 effort. And there are details to be ironed out, 23 clarifications to be made that are sought by industry. 24 And that's the reason we have this 15- or now 30-day 25 process for notice. And I feel we're doing what we need PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 358 1 to do. It's important that we do it for a lot of reasons. 2 And so I -- if it was seconded, I third it. If 3 not, I'm ready to vote. 4 CHAIRPERSON LLOYD: Thank you. 5 And Supervisor DeSaulnier. 6 BOARD MEMBER DeSAULNIER: Just briefly. I do 7 think it's important, although it's separate, to reiterate 8 going after the zero. There's lots of potential there. 9 And all kidding aside, I think staff can come up with 10 something. 11 I also wanted to, in terms of something -- in 12 regards to Jed's comments. I remember last time the 13 Board, and some of us who were here, dealt with this 14 source and it was very contentious. And I remember a 15 quote in the Wall Street Journal about that directed at 16 the manufacturers. And unfortunately those -- and some of 17 my colleagues remember -- unfortunately broke in to the 18 Japanese manufacturers and the American manufacturers. 19 And the quote in the Journal story was critical 20 of the American manufacturers -- and I can't remember who 21 said it, it wasn't me, I wish I had -- was that Japanese 22 companies had spent more time on research and development 23 and the American companies, unfortunately, spent too much 24 time on lawyers and lobbyists. And I think that's changed 25 dramatically this time. We obviously have one unfortunate PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 359 1 situation. But I did want to acknowledge to Jed that I 2 think the industry has come a long way and hopefully we 3 can close those last remaining obstacles. 4 And then, lastly, I can't help but make a comment 5 about how many times I've heard the word "recall" in the 6 last couple hours. And it's nice to hear it in a 7 different context. Although I can't help but say it may 8 be harder to recall one lawnmower than it is to recall the 9 Governor of California. 10 Thank you, Mr. Chairman. 11 CHAIRPERSON LLOYD: Well, I think we need to fix 12 that. And so I will definitely -- 13 BOARD MEMBER DeSAULNIER: Do we have the 14 authority? 15 CHAIRPERSON LLOYD: No, I would definitely like 16 on the lawnmower side -- I think included in our 17 resolution I would like to follow up my earlier comments 18 about looking at an effective program to monitor end-use 19 emissions. And that's enough said. So we may have 20 opportunities there. 21 So with that I think -- no more comments. I'd 22 ask for a vote. We've got the resolution seconder. 23 All in favor say aye. 24 (Ayes.) 25 CHAIRPERSON LLOYD: Anyone against? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 360 1 No. 2 Thank you. 3 And, again, thank you very much, staff, for a 4 great job as usual there. And I really appreciate it very 5 much. 6 And thank you for coming -- for the industry 7 coming to testify. Hopefully we can get to a better spot. 8 But I think we've come a long way to answer that. 9 And, Jed, we can assure you you will have -- we 10 can keep you busy between now and Christmas. 11 BOARD MEMBER RIORDAN: All right, Jed. We've got 12 a -- you know, so 60 days from today, figure that all out. 13 You'll be here at the right time. 14 CHAIRPERSON LLOYD: We'll take just a five-minute 15 break. And then we'll go in to the last item for the day. 16 (Thereupon a recess was taken.) 17 CHAIRPERSON LLOYD: Final item on today's agenda 18 is 03-7-4, informational report on supplementary 19 activities related to the zero emission vehicle Program. 20 When we adopted modifications to the ZEV program 21 in April of this year, we made difficult decisions about 22 the direction and structure of the regulation. By the end 23 of the hearing I believe this Board crafted a delicate 24 balance that takes advantage of the strides made by 25 extremely clean gasoline vehicles and the full potential PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 361 1 of the rapidly growing hybrid vehicle market. 2 Most importantly, the revised regulation allows 3 for the continued development of zero emission vehicles on 4 a technically sound pace. 5 Our goals throughout the years remained the same: 6 Improved emissions from motor vehicles with a long-term 7 vision of commercializing zero emission vehicles. 8 We've learned in the course of the ZEV Program 9 that commercialization of pure ZEVs continues to be 10 challenging and many ideas and possibilities continue to 11 develop. As a consequence, the Board directed staff to 12 evaluate whether it was appropriate and beneficial to the 13 overall ZEV Program to provide incentives for stationary 14 fuel cells and hydrogen infrastructure, as well as 15 increasing incentives for transportation systems. I look 16 forward to the results of that assessment. 17 Ms. Witherspoon, I turn it over to you. 18 EXECUTIVE OFFICER WITHERSPOON: Thank you, 19 Chairman Lloyd and members of the Board. 20 At the March and April Board meetings, there were 21 some intriguing ideas for ZEV credits on the table. We 22 did not have a full chance to evaluate given the pressures 23 of time and the complexity of the larger issues the Board 24 was debating at those hearings. 25 Consequently, you asked us to come back with a PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 362 1 more detailed evaluation and specific recommendations on 2 three things: 3 Should stationary applications of motor vehicle 4 fuel cells receive ZEV credits? If yes, how should those 5 credits be structured? 6 Should ZEV credits be used to foster the 7 development of hydrogen infrastructure? 8 And should transportation system credits be 9 enhanced or expanded? 10 The informational report before you is staff's 11 attempt to describe what's at stake, to identify the pros 12 and cons; and when we've reached the conclusions, to give 13 you our advice about which, if any, credits should be 14 added to the ZEV Regulation you approved in April. 15 If you like anything that you see here and wanted 16 to pursue it further, staff will turn those ideas in to 17 actual regulatory language and run it through our normal 18 workshop and hearing process. That would bring us back 19 before the Board with a narrow proposal sometime next 20 spring. 21 Alternatively, if you conclude that no additional 22 ZEV credits are needed or warranted at this time, we'll 23 leave the existing credits in place until the next time 24 the Board revisits the overall ZEV Regulation, most likely 25 in the 2006 to 2007 timeframe. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 363 1 Mr. Gerhard Achtelik of the Mobile Source Control 2 Division will now make the staff presentation. 3 (Thereupon an overhead presentation was 4 Presented as follows.) 5 MR. ACHTELIK: Good evening, Chairman Lloyd and 6 members of the Board. I will begin the staff presentation 7 with a brief background on why we are coming to you with 8 this informational report, and some activities related to 9 the zero emission vehicle Program. I will also summarize 10 staff's findings and recommendations. 11 --o0o-- 12 MR. ACHTELIK: At the April 2003 public hearing 13 the Board considered and adopted amendments to the zero 14 emission vehicle regulations. At that time, the Board 15 directed staff to evaluate whether it was appropriate and 16 beneficial to the ZEV Program to provide incentives for 17 stationary fuel cells and hydrogen infrastructure, as well 18 as increase incentives for transportation systems. 19 The staff conducted their evaluation, and for 20 each topic identified the relevant parameters: That if 21 incentives would be beneficial to the zero emission 22 vehicle development and if zero emission vehicle credits 23 would be an appropriate incentive. 24 I will present the topics in the order listed. 25 --o0o-- PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 364 1 MR. ACHTELIK: For the first topic, staff 2 investigated if the use of vehicle fuel cells in 3 stationary applications could foster zero emission vehicle 4 development. 5 At this time, fuel cells are at an early stage of 6 commercial development. Only a limited number of 7 commercial products are available. Providing incentives 8 for the placement of stationary fuel cells could increase 9 production of fuel cells above the number anticipated 10 through the ZEV regulations. 11 The table on this slide identifies parameters 12 that could be affected through increased fuel cell 13 production. 14 The increased production of fuel cells have the 15 potential to positively influence manufacturing experience 16 and the component supplier base. This could provide 17 modest cost reductions. 18 In addition, the use of stationary fuel cells 19 could also provide accelerated service life information. 20 Within seven months of full-time operations a stationary 21 fuel cell could achieve the rough equivalent of 100,000 22 miles. However, a stationary application is very 23 different from a motor vehicle application and would not 24 address all issues facing fuel cell vehicles. 25 Staff research leads to the conclusion there PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 365 1 would be neutral impacts on the automation of fuel cell 2 assembly, vehicle integration, service condition 3 information, infrastructure, and codes and standards 4 development. 5 There are three areas of concern where the use of 6 ZEV credit incentives could create a negative or 7 unintended impact. 8 First, the fuel cell industry is still emerging 9 without a clearly established market. And staff 10 considered whether providing ZEV credits could create 11 disadvantages. It is important to note that there is only 12 one fuel cell type, the proton exchange membrane, or PEM 13 fuel cell, that is used in both the stationary and 14 vehicular markets. There are other types of fuel cells 15 that have advantages in specific applications, but are not 16 used in vehicles. 17 Through our research staff was unable to reach a 18 definitive conclusion on ZEV credits to vehicle PEM 19 manufacturers would disadvantage the competing fuel cell 20 manufacturers. 21 Second, when providing ZEV credits for any new 22 type of activity such as stationary fuel cells, the 23 tradeoff is fewer ZEV vehicles on the road. 24 And, third, although we think there is some 25 technical merit to providing ZEV credits for stationary PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 366 1 fuel cells, we are concerned about the precedent that 2 would be set by providing mobile source credits for a 3 stationary application. To date, the California vehicle 4 regulations require direct compliance and have not allowed 5 stationary credit of any kind. This approach has been 6 successful. We specifically seek policy direction from 7 the Board on this issue. 8 --o0o-- 9 MR. ACHTELIK: Given these findings, staff is 10 hesitant to recommend ZEV credit for stationary fuel 11 cells. If the Board chooses to award credits, staff 12 recommends the credits be limited as follows: 13 Provide silver credits. The use of vehicle fuel 14 cells in a stationary application is zero emission vehicle 15 engagement. It does not produce a vehicle, but 16 potentially fosters the development of technology that is 17 used in a vehicle. 18 Credits should be limited to fuel cell technology 19 with demonstrated use in motor vehicles. 20 Credits should be limited to California 21 placement. 22 Credits need to be capped so they do not 23 overwhelm the ZEV Program. 24 Credits should sunset after 2008, which is the 25 end of the initial phase of the alternative compliance PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 367 1 path. 2 And any credit continuation should be reviewed by 3 an independent expert review panel. 4 --o0o-- 5 MR. ACHTELIK: For the second topic, staff 6 investigated the role of incentives for developing 7 hydrogen infrastructure. Staff recognizes that the 8 availability of hydrogen refueling stations will be 9 critical to the success of fuel cell vehicles. However, 10 the fundamental question for this review is: What is the 11 role of government in specifically the ZEV Regulation in 12 developing hydrogen infrastructure? 13 Since ZEV credit is needed by automakers, not 14 energy suppliers, providing ZEV credits for fueling 15 infrastructure could send a confusing signal about who the 16 State is expecting to step forward. Staff finds that 17 energy providers are the best fit for infrastructure 18 development. Therefore, staff recommends that ZEV credits 19 not be used to develop fueling infrastructure. 20 A strong factor in staff's recommendation is the 21 existence of the Clean Fuels Outlet Program. The Clean 22 Fuels Outlet Program requires owners or lessors of a large 23 number of retail stations to provide a certain number of 24 clean fuel outlets on approximately 20,000 vehicles using 25 the same fuel that are in use statewide. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 368 1 Although the program was not developed with 2 hydrogen in mind, it is sufficiently broad to apply to 3 hydrogen. 4 Additionally, the California Fuel Cell 5 Partnership has proven to be an effective way to achieving 6 the early milestones needed to create hydrogen 7 infrastructure. The fuel cell partnership has 8 successfully placed seven hydrogen fueling stations in 9 California. The partnership is also a guiding contributor 10 to the development of vehicle and infrastructure-related 11 codes and standards, and ARB remains committed to being an 12 active member in this partnership. 13 --o0o-- 14 MR. ACHTELIK: Concerns over providing ZEV credit 15 for hydrogen infrastructure are the same as those 16 expressed for stationary fuel cells. They include the 17 impact on the ZEV production requirements and the 18 precedent that would be set by providing mobile source 19 credits for stationary applications. 20 While staff does not recommend providing the ZEV 21 credits for hydrogen stations, we did identify several 22 areas for some type of incentive which help achieve 23 specific important infrastructure development goals. As 24 the number of hydrogen fuel vehicles increases, 25 specifically incentives could be used to focus on hydrogen PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 369 1 production through clean or removable means, development 2 of fuel infrastructure at targeted locations, and to 3 assure a sufficient quantity of stations. 4 For the third topic staff was asked to determine 5 if incentives for car sharing, station car projects, or 6 transit-related projects should be implemented. Such 7 projects are valuable to ARB's efforts to improve air 8 quality, not only through their emission reduction 9 benefits, but also through their support of 10 commercialization of ZEVs. 11 --o0o-- 12 MR. ACHTELIK: Staff reviewed the existing 13 regulation and found that the current incentives are 14 appropriately generous to encourage these projects. 15 Therefore, staff recommends do not change the credit 16 value. However, staff did find that it would be 17 appropriate to allow Neighborhood Electric Vehicles, or 18 NEVs, to earn transportation system credits if their value 19 is limited. The current regulations specifically exclude 20 NEVs from earning such credit. 21 The use of NEVs in transportation projects 22 provides a relatively lower cost, clean vehicle option; 23 increases the number of miles traveled in clean vehicles; 24 and provides a vehicle appropriate for short trips. 25 An additional means to expand incentives to car PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 370 1 sharing or station car projects is to allow transportation 2 system credits to be applied to the goal ZEV is requiring 3 for manufacturers on the alternative compliance path. 4 While this could encourage more ZEVs to be used in car 5 sharing or station car projects, it could decrease the 6 number of ZEVs produced. Therefore, staff recommends that 7 these credits be included in the BEV substitution cap in 8 the alternative compliance path. 9 In determining appropriate credit ratios staff 10 could consider comparable costs for compliance options. 11 Another means of encouraging the use of ZEVs is 12 to provide credit for taxi or shuttle services that have 13 links to the transit systems and use ZEVs. Taxis and 14 shuttles typically are used in highly populated areas with 15 poor air quality and travel a significant number of miles. 16 In addition to the air quality benefit, the use of ZEVs 17 for taxis and shuttles would provide additional public 18 exposure to ZEV technologies. 19 While the availability of additional credits for 20 transportation system related activities can provide 21 benefit to the development of ZEVs, the use of credits 22 will decrease the overall number of vehicles required to 23 be produced. 24 Finally, staff will continue to work through an 25 agreement with the California Energy Commission and the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 371 1 California Department of Transportation to foster 2 non-regulatory projects that facilitate car sharing and 3 station car projects. 4 --o0o-- 5 MR. ACHTELIK: To conclude my presentation for 6 the three topic areas that the Board directed us to 7 review, I'll provide a brief summary of possible next 8 steps. 9 For the use of vehicle fuel cells in stationary 10 application, the staff was hesitant to recommend along the 11 ZEV credits because of the policy concerns described; and 12 recommend that if credits are allowed, that the credits be 13 limited. 14 For hydrogen infrastructure, staff recommends 15 against the use of ZEV credits. 16 And for transportation system, staff recommends 17 expanding the availability of credits to allowing the 18 restricted use of transportation credits in the 19 alternative compliance path. 20 If the Board decides additional ZEV credits are 21 appropriate, staff will begin a series of workshops and 22 meetings to develop a regulatory proposal. The regulatory 23 proposal would be brought to the Board for consideration 24 in spring of 2004. 25 In addition, staff will continue to work with PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 372 1 partners such as the California Energy Commission, 2 California Department of Transportation, and the 3 California Fuel Cell Partnership. 4 This concludes my presentation. And thank you 5 for your time. We would be happy to answer further 6 questions. 7 CHAIRPERSON LLOYD: Thank you very much. 8 Professor Friedman. 9 BOARD MEMBER HUGH FRIEDMAN: A couple quick 10 questions. 11 On the stationary fuel cells, am I correct in 12 assuming that they would replace otherwise emitting -- 13 pollution emitting motors? And unless they're on battery. 14 I mean wouldn't there be emission reductions as a positive 15 predictable from -- 16 EXECUTIVE OFFICER WITHERSPOON: That depends 17 where the hydrogens come from, I suppose. Because you 18 would have to consider stationary fuel cells of hydrogen 19 against the electricity that otherwise would have been 20 provided to that stationary facility. 21 Also, whether it's used in a backup context or 22 for a fullpower load, that's -- 23 BOARD MEMBER HUGH FRIEDMAN: So there are not 24 necessarily emission reductions using fuel cells -- 25 stationary fuel cells as compared to not using them? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 373 1 EXECUTIVE OFFICER WITHERSPOON: Well, we'll need 2 the Chairman because he's as knowledgeable about this as 3 anyone. I mean I do think it's -- I do think it's a life 4 cycle analysis sort of a thing, and it does depend where 5 the hydrogen came from and how it was produced in this 6 state, from what fuel stock. It's going to come in a 7 bottle is the thing. And so I -- you can analyze it in 8 terms of a large deployment theoretically. But in the 9 practical application of, you know, a handful of 10 stationary fuel cells, I don't know if it's a meaningful 11 analysis. 12 CHAIRPERSON LLOYD: I think it can have a 13 significant emission benefit or it could be neutral. 14 BOARD MEMBER HUGH FRIEDMAN: I mean if it's a 15 diesel -- a dirty diesel, that's -- 16 CHAIRPERSON LLOYD: And I think on a case-by-case 17 basis. 18 BOARD MEMBER HUGH FRIEDMAN: Okay. Well, I was 19 just wondering in an attempt here to relate positives and 20 negatives. 21 Also sunseting after 2008. There was something 22 elsewhere that said after 2009. 23 Is it 8? Is that the year that the staff was 24 suggesting? Assuming -- 25 EXECUTIVE OFFICER WITHERSPOON: Yes, it will run PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 374 1 through the first phase, the '05 through '08 deployment of 2 the fuel cell vehicles, the 250 fuel cell vehicles. And 3 then to be revisited later. And the question is: Is it 4 still vehicle enabling? Or are we now on to other 5 questions about the vehicles that cannot be addressed and 6 very helpful by the stationary fuel cells. 7 BOARD MEMBER HUGH FRIEDMAN: We have some I guess 8 people that -- 9 CHAIRPERSON LLOYD: -- that will be testifying, 10 yes. 11 Supervisor DeSaulnier. 12 BOARD MEMBER DeSAULNIER: Just briefly, Mr. 13 Chairman. 14 BOARD MEMBER CALHOUN: I guess I don't 15 necessarily agree with the -- if you have -- a previous 16 comment relative to the use of a fuel cell. If you have a 17 fuel cell that -- if there aren't -- one stationary -- 18 stationary source and another one in a fuel cell, you're 19 trying to -- assume that you're trying to really develop 20 this technology, maybe it isn't completely fully 21 developed. 22 Wouldn't there be an advantage to use -- if 23 you've used the same fuel cell, wouldn't there be an 24 advantage to get the information from the fuel cell that's 25 been used in the stationary source? PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 375 1 EXECUTIVE OFFICER WITHERSPOON: Well, you're 2 comparing the stationary fuel cell to putting it in a 3 vehicle and how many hours it might be driven and how much 4 fuel it might consume. And that's one comparison. I 5 understood Professor Friedman's question to be about 6 additional benefits that might happen by displacing 7 electricity sources -- 8 BOARD MEMBER CALHOUN: I'm just comparing two 9 fuel cells. I'm not displacing -- 10 EXECUTIVE OFFICER WITHERSPOON: Right. And 11 whether the hydrogen would be the same or not, I don't 12 know. But, again, we're talking about so few units. 13 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: I think 14 the differentiation we see in terms of the technology 15 we're seeing is that the stationary fuel cell is largely 16 "the fuel cell," and in a vehicle it's a complete system, 17 which includes the drive and all that stuff. 18 BOARD MEMBER CALHOUN: I understand. But the 19 staff concludes they're identical, are they not? 20 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Well, 21 they are. But the reason that we're saying that if you 22 were to do this -- which we're actually not 23 recommending -- but if you were to do this, that it fits 24 better in AT PZEV. Because AT PZEV's job, that we set it 25 up in the silver category, is to bring the components PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 376 1 along so later on you can build a real ZEV, fuel cell or 2 battery or whatever. And because the stationary thing 3 only deals with one piece, it's sort of enabling, but it's 4 not a substitute. So that's why we say it would be better 5 to fit it in the AT PZEV category. 6 And whether it creates emission reduction or 7 benefits, it's kind of hard to figure out. Yes, if you 8 put a fuel cell in place of a diesel generator, clearly 9 it's cleaner, right? But if you give it credits, it 10 depends on what those credits are used for. If you give 11 it gold credits, then those credits mean we're going to 12 get fewer fuel cell cars. And that might -- won't have 13 much of a direct impact on emissions, but it might stop 14 the technological movement and the stepping stones to what 15 is commercialization. If you give it AT PZEV credits, it 16 means there will be fewer AT PZEVs produced, which means 17 there will be more non-AT PZEVs or non-higher emitting 18 vehicles produced because you're using credits instead. 19 And that will have a negative impact on emissions. 20 How those actually trade off is -- you know, I 21 don't know what we can calculate because it depends on how 22 the fuel cell's used. 23 BOARD MEMBER CALHOUN: I disagree with that. So 24 we'll move on to the next question. 25 Why would it be necessary for an expert review PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 377 1 panel to review whether or not fuel cell stacked and used 2 in the stationary source be used in a vehicle? To me 3 that's strictly a policy issue. I don't see where the 4 expert panel comes in to this. 5 EXECUTIVE OFFICER WITHERSPOON: We were simply 6 saying that if the Board chose to give stationary credits, 7 which Tom points out the staff's not recommending, that if 8 you did it, you should have a sunset and not do it in 9 perpetuity, and that you should ask the question of 10 yourselves, of us -- and we could bring the outside review 11 panel in or not -- but ask the question: Is this enabling 12 to the vehicles? If we keep giving this credit past 2008, 13 are we helping anything or are we just giving cars away? 14 Because every time you grant credit you get fewer cars 15 because you're going to get stationary fuel cells instead. 16 CHAIRPERSON LLOYD: Well, I agree with Joe. I 17 don't think we need an expert panel on that. It's one of 18 the benefits of working through a partnership. We're all 19 working together and sharing in that experience. And 20 we're going to see as a partner whether that's still the 21 case. 22 EXECUTIVE OFFICER WITHERSPOON: We would still 23 suggest a sunset so it gets -- 24 CHAIRPERSON LLOYD: Oh, that's a separate issue, 25 a separate issue. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 378 1 What I'd like to do is call the first witness 2 here, because we've been speculating. But now I'd like to 3 call up Tim Vail from GM, who's actually the experts on 4 this. 5 Tim, you really scared the Board when I heard 6 that you were on the wrong presentation. Can you cut it 7 down to five and hit the highlights? 8 MR. VAIL: Yeah, well, I brought 110 slides. 9 CHAIRPERSON LLOYD: Well, I figured that. 10 MR. VAIL: So, you know, I would not want to go 11 through all of them. 12 But, no. I can shorten it up. 13 CHAIRPERSON LLOYD: You increase your chances of 14 the Board directing staff, you know, if you -- 15 MR. VAIL: Yeah, I understand the time. 16 Hopefully I'll be able to get through it in the time 17 period. And the first few slides are what's important. 18 And, you know, if we get through the rest, it's not -- you 19 know, we can move them along. 20 (Thereupon an overhead presentation was 21 Presented as follows.) 22 MR. VAIL: But I am -- I'm Tim Vail. I'm the 23 Director of our Fuel Cell Commercialization Activities at 24 GM. I'm based in Detroit. And my job is to try to figure 25 out a way so that we can get these fuel cells into the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 379 1 market before we actually have them available for cars. 2 DG is a big component of my work, and I think a 3 very, very important aspect of advancing fuel cell 4 technology. 5 --o0o-- 6 MR. VAIL: Why we're here today is we really 7 believe that stationary fuel cells are key to the 8 development path for automotive fuel cell placement. But 9 we have a challenge in that today the DG market with PEM 10 fuel cells is not supportable from an economics basis. 11 And what we need is we need other things to help us kind 12 of over that hill in the business case. And if we could 13 get some form of credit in California for our stationary 14 full cells, this would certainly make a compelling case 15 for us. 16 And so what we're asking today is that the Board 17 reaffirm its support for limited AT PZEV credits for DG 18 applications. 19 --o0o-- 20 MR. VAIL: And we actually have many areas of 21 agreement with the staff report. 22 We agree that AT PZEV credits are appropriate. 23 This does advance a component of a ZEV vehicle. It's an 24 important component, the fuel cell stack itself, but it 25 doesn't advance the entire system. So we think that the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 380 1 PZEV credits are appropriate. 2 We agree that there should be a limited term on 3 the -- excuse me. We agree that the full cell credit 4 should only go to vehicles. We also agree that there 5 should be a cap on the number of credits. 6 We agree that there should be a sunset provision, 7 and the 2008 sunset provision is acceptable. 8 And we agree that the fuel -- the credits should 9 be limited to just the LEVs. And what we really see this 10 as is not a replacement of ZEV vehicles, but we really see 11 this as a short-term measure in order for us to jump start 12 our long-term vision of commercial retail fuel cell 13 vehicles. 14 --o0o-- 15 MR. VAIL: Well, I just want to recap here. What 16 we're talking about is the technology is exactly the same 17 in the DG unit that we'd be putting in the vehicles. We 18 are very focused on producing what we call the fuel cell 19 power module. And that power module is what's key. We 20 know how to build cars. What we need to learn how to 21 build and what we need to build a supplier base around is 22 that module. And so the more modules we can produce, the 23 more it advances our program. What we'd like to do is put 24 a larger quantity in to stationary applications and limit 25 the number that go into cars. And there's a lot of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 381 1 reasons around that, but primarily it's cost and 2 supportability of the vehicles. 3 --o0o-- 4 MR. VAIL: And so today there really is no fuel 5 cell industry. I mean there's a lot of fuel cell 6 development activities. But one of the challenges we have 7 as the automotive maker is -- the supply place development 8 is incredibly important for us to be successful with the 9 vehicles. And today all they see is these runoffs that 10 are a limited number of demonstration applications. 11 And what we -- in discussions with them, what we 12 really find is that a real true commercial opportunity is 13 what really turns them on and gets them excited. And it 14 really is a -- it's really two reasons why: 1) When you 15 put them into a DG application, you really lower the -- 16 not only the support cost, but also the legacy risk of 17 those units, in the sense that if we got a technology 18 problem and we have something wrong with one of our 19 stacks, we can just go down there and replace it with 20 another one in the power unit. But if it's in a vehicle, 21 we have to actually strap the vehicle. You can't just do 22 an easy replacement. 23 Also when we have a -- had them in a DG 24 environment, we're much better at controlling the 25 environment. So when we really look for real-world PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 382 1 testing, we can do many more tests and many more cycles in 2 a stationary environment than we can in a car. 3 And I want to address a common misconception 4 about the stationary duty cycle and the automotive duty 5 cycle. They're very different. But what we intend to do 6 is operate our fuel cells in the majority of the time on 7 what we call the Rosso automotive duty cycle. 8 So, for example, in Dow Chemical one of the deals 9 we announced this summer, we're actually going to put 10 those fuel cells down there and run them like they're in a 11 car. We're going to cycle them up and down, start them 12 and stop them. And then when we have enough of them in 13 one location, we can balance -- and still produce power, 14 yet balance the needs of that testing. 15 So what's really important to us in our supplier 16 base is that we can start to build volume in these 17 modules, and we can do it now as opposed to waiting till 18 later. And what this really means is that we can bring 19 cars -- real volumes of cars to market much sooner when we 20 have this avenue. 21 --o0o-- 22 MR. VAIL: And a graphical depiction of that 23 is -- we have -- today we're in this kind of demo phase. 24 And demos are going to get us to a limited number. We're 25 also going to build some engineering vehicles, and that PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 383 1 will certainly help. But the industrial power in 2 distributed generation is where we really capture most of 3 our early-term volume. And it's -- you know, frankly I 4 don't know how we're going to be able to get over that 5 hump without some distributed generation market 6 penetration, because we just can't build enough cars that 7 make a difference in this interim period to be able to 8 engage the supplier base and get us there. And DG and 9 industrial power is clearly the way for us to do that. 10 But we can't make the business case for it today 11 without some sort of alternative value driver. And that's 12 why the credits are so important to us. And I think if we 13 were able to get AT PZEV credits -- granted, for just a 14 short time, we don't need it forever, we just need it for 15 this kind of introductory period -- that's going to give 16 our board at GM the real impetus to "Hey, let's start 17 building this DG market." 18 And we agree that we don't need to -- we're not 19 looking for the credits to replace those in states that 20 aren't part of the -- you know, the -- I guess the 21 traveling, you know, piece of it. And so we're looking to 22 put DG units in California in a quantity that will help us 23 get through the stair step. 24 Now, Alan, I have, you know, six more slides that 25 kind of go through the points one by one. You have our PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 384 1 written comments as well as this deck. And feel free to 2 look at it. But, yeah, I think that's, you know, the real 3 core of our position is that we need this early volume. 4 CHAIRPERSON LLOYD: I think you've hit the high 5 points as far as I'm concerned. 6 MR. VAIL: Any questions? 7 CHAIRPERSON LLOYD: Thank you. 8 MR. VAIL: Thank you. 9 CHAIRPERSON LLOYD: You can see the Board is 10 pretty stressed out here, I guess. But we made the key 11 points, which -- 12 BOARD MEMBER RIORDAN: Mr. Chairman, he made a 13 very good presentation. He covered it all. Look at it 14 that way, positive. 15 CHAIRPERSON LLOYD: Now, Tom, if you could do 16 likewise. 17 MR. FULKS: Mr. Chairman, Board members. My name 18 is Tom Fulks. I am the Executive Vice President of the 19 Green Car Marketing communications and a researcher for 20 the Green Car Institute. 21 (Thereupon an overhead presentation was 22 Presented as follows.) 23 MR. FULKS: We're working with DaimlerChrysler on 24 the NEV as a class of vehicle. And it's always my 25 pleasure to speak to your Board when I'm extremely rushed PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 385 1 for time, which seems to be the case every time I stand up 2 here. So I'm used to it. I'm prepared. So if you don't 3 mind, I'm just going to blast through. 4 --o0o-- 5 MR. FULKS: I'm here to talk about two things in 6 particular: 7 One is the station car concept, the systems 8 concept. Just to give you a brief update, we and Daimler 9 are in support of the staff recommendation to allow 10 credits for NEVs for station car programs and systems 11 programs obviously. 12 A quick update. We're doing a program now, a 13 demonstration program, data collection program with 14 Sacramento Regional Transit. Originally, the concept was 15 to place 20 NEVs in Natomas -- in the Natomas area because 16 it's a master planned community, which in our research is 17 the most promising area for the increased use of NEVs as a 18 class of vehicle. 19 Regional Transit's kind of pushing back, saying, 20 "Well, you know, we have actually some applications for 21 the NEV as a station car that may be better, in fact it 22 may bring you better data when you're tracking the use of 23 these vehicles." And the data we're collecting from these 24 users will be: Does it increase transit ridership? Does 25 it -- do we have higher occupancy in the NEV cars PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 386 1 themselves? And do we do a number of other things? Does 2 it encourage transit ridership as an incentive in any way? 3 We'll be tracking that information and bringing it back to 4 you at some point probably in the spring. 5 We expect a launch program by the end of this 6 year. We're in the implementation discussion phase right 7 now with Regional Transit. So that's where we are on that 8 one. 9 And the next issue I'd like to talk to you about 10 is the ZEV credit issue itself with NEVs. And if 11 you'll -- as you'll see, the staff report up here 12 basically said, "We'll come back and visit this when we 13 have more data." And so we actually have more data. And 14 that's what I wanted to talk to you about on my next 15 slide. 16 And obviously I'm not working this thing 17 correctly. 18 Thank you. 19 Is this working or are you doing it manually? 20 --o0o-- 21 MR. FULKS: Okay. We went in in July of this 22 year in -- oh, I'm going backwards. Excuse me. Sorry. 23 User error. 24 We went in in July of this year and did a study 25 of NEV users in California. We used the GEM database of PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 387 1 10,000 NEV users. We know for our own research in the 2 industry that there about 15,000 NEVs in California. I 3 think I testified to this effect several months ago. 4 While at that time staff -- and we have been talking to 5 staff about this -- basically said, "Well, let's go find 6 out more about this." And so that's what we did. 7 --o0o-- 8 MR. FULKS: So we used the GEM database because 9 it's really the only database of NEV users available in 10 California. The volume of NEV sales is smaller for 11 everybody else, so it was a reliable database. Although 12 we do know that as a result of forward thinking favors, 13 the club car and pathway, and of course they were given 14 away by another company, plus any others, there are about 15 15,000 in service right now. Which of course it does 16 represent the largest single concentration of pure Battery 17 Electric Vehicles anywhere in the world. And that's sort 18 of an assertion that we're making based on the data. 19 --o0o-- 20 MR. FULKS: If I could just get this doggone 21 thing to work for me, I'd be a lot happier. 22 So we interviewed 260 NEV users. One hundred 23 sixty of them were individual household users, buyers of 24 the vehicle; 98 were small fleet operators of four NEVs or 25 less. We interviewed them on the phone for 15 to 25 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 388 1 minutes. Margin of error was 6.8 percent. The numbers 2 were crunched by the Institute for Transportation Studies 3 over at UC Davis, Ken Coronni, who's a good statistician. 4 And we used that data to extrapolate out to the 10,000 5 user database -- 10,000 user number, meaning all the 6 numbers that we're representing are based on a 10,000 NEV 7 user baseline as opposed to 15,000. So we wanted to be 8 conservative. 9 --o0o-- 10 MR. FULKS: We found, interestingly, of all the 11 trips that NEV users took, they use their NEVs two out of 12 three times. When they were given a choice between an 13 internal combustion engine and a NEV, they chose the NEV 14 two out of three times. And so this is the type of mode 15 that they replaced when they did this. And so I'm trying 16 to make it quick. 17 But it's a really important point, that they 18 chose the NEV two out of three times. It's the only 19 technology we're aware of that actually not only provides 20 automobile drivers a choice, but makes them think about 21 how they travel about their communities. 22 Some quick statistics here. The average number 23 of trips a day in a NEV is 3 point -- whatever it is -- 24 3.3. Small fleets were 14.5. The average number of trips 25 for a NEV as it is every day is 7.5. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 389 1 Next slide, please. I'm just going to give up 2 with this thing. 3 --o0o-- 4 MR. FULKS: Most NEVs' trips are short. 5 Seventy-five percent of NEV trips are three miles or less. 6 So it's not the NEV making the trip, by the way. It's the 7 human being making the trip. So the behavior of an 8 automobile user is such that most of the trips are less 9 than three miles. 10 Within that category, we found out that half of 11 those small trips are actually less than one mile. So 12 that was a pretty interesting statistic. 13 So the point being, most people travel most of 14 the time on very short distance trips. It's their own 15 personal behavior. It's not the behavior of the car. 16 It's the behavior of the human being. 17 Next slide. 18 --o0o-- 19 MR. FULKS: And I'm just going to blow right 20 through this one. 21 Basically most of these trips were trips of 22 necessity, as we call them. They were going somewhere to 23 do something very specific. They weren't joyriding 24 around. One out of five trips was for fun. 25 --o0o-- PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 390 1 MR. FULKS: But what really -- what we found 2 quite astonishing was how these trips added up. And you 3 can see the statistics. They'll speak for themselves. 4 But what we found is the NEV users would account for -- 5 they do account for basically 8 million cold starts 6 eliminated every day. And we've got an area within our 7 study that discusses the methodology of measuring cold 8 starts. And I won't get in to it right now. 9 But to us, it was a very interesting statistic. 10 Although we know -- oh, great. Everybody in L.A. doesn't 11 start their car one time. You know, that's not that 12 significant overall. But it's a start. And it's 13 interesting. 14 Next slide, please. 15 --o0o-- 16 MR. FULKS: Now, this is one of the things that 17 we found really interesting. It's the land use categories 18 of where people live when they own a NEV. It defied the 19 common perception that this is just a golf community 20 vehicle. It's not. If you could take a look -- the 21 biggest category was "other," because we weren't right 22 enough to understand exactly where people live in their 23 own words. 24 The "other" category includes apartment complexes 25 and condominium complexes and places like that. The PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 391 1 largest identifiable area was a gated golf community of 16 2 percent. But then when you get down into the small town, 3 big town, urban center, rural, it's fairly evenly 4 distributed, meaning NEVs are used all over the place. 5 Next slide, please. 6 --o0o-- 7 MR. FULKS: In summary, the California NEV 8 user -- I'm not going to bother with that one. But the 9 biggest statistic that jumped out at us was that 10 two-thirds of the NEV trips are replacing an internal 11 combustion engine; and of the NEV trips that are taken, 75 12 percent are more than two people -- are more than one 13 driver. Seventy-five percent of high-occupancy rates. It 14 reverses the occupancy rates of the traditional automobile 15 in California of 70 percent drive alone. 16 Next slide. 17 --o0o-- 18 MR. FULKS: Now, what we did to quantify what the 19 benefit is -- 20 CHAIRPERSON LLOYD: How many slides have you got 21 here? 22 MR. FULKS: I've just got two more. I'm just 23 really hustling to get you guys out of here to go to 24 dinner. 25 What we did -- we went back and asked our PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 392 1 household users, "What kind of car are you leaving in the 2 driveway or the garage?" And what we found was it was 3 almost identical to the overall sales split of vehicle 4 types in California and the United States, which is 45.6 5 percent drive sedans and 54.3 percent drive SUVs, light 6 trucks, and vans. This is not published material. It's 7 not part of our study that we have on the website and 8 we've distributed to your staff and I believe to many of 9 the Board members. 10 But when we asked them, "All right. When you use 11 your NEV to replace these vehicles that you own, which one 12 do you replace?" they replace cars 43.6 percent and they 13 replace SUVs, trucks, and vans 47.6 percent. 14 Then we asked the SUV and van drivers, "Okay. 15 What specifically are you leaving in the driveway?" SUVs 16 were 50 percent -- 51 percent; light trucks, 27.1; 17 minivans; and then full-size vans. I thought that was an 18 interesting statistic. 19 Next slide, please. 20 --o0o-- 21 MR. FULKS: The future -- what this all means for 22 the future is that there are -- we have another study that 23 identifies about 31 master-planned communities that are 24 being built in California during the next 10 years with a 25 minimum number of homes of 1,000. So all together just PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 393 1 based on what's on the books for either in the entitlement 2 process or already approved, in the next 10 years 3 master-planned communities will account for 167,896 new 4 single-family homes in California. That's where the NEV 5 industry's probably going to be targeted over the next 6 couple of years in terms of volume of sales. 7 Next slide, please. 8 --o0o-- 9 MR. FULKS: So based on that, we do recommend 10 that you adopt staff recommendations on the transportation 11 systems. 12 And I'd also like to recommend that you direct 13 staff to open up a dialogue about the worth of a NEV in 14 this larger mix of California mobility, because we believe 15 the data proves the worthiness of the NEV as a class of 16 vehicle. It is deserving of a chance to at least make its 17 case in this overall discussion of NEV credit. And that's 18 pretty much what we're asking. We don't want to get in to 19 the numbers right now. Just give the NEV owners a chance 20 to make their case. And so that's what we would be 21 requesting today. 22 Thank you. 23 CHAIRPERSON LLOYD: Thank you. 24 Comments from staff? 25 EXECUTIVE OFFICER WITHERSPOON: We did have an PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 394 1 opportunity to hear a two-hour version of this 2 presentation or -- a two-hour meeting talking about it, I 3 think it was. And so it's intriguing data. But we did 4 not think in the context of what you asked us to report 5 back on we should be bringing up the fundamental issues of 6 NEV credits. And we did point out to the Green Car 7 Institute that NEV credits are very controversial with the 8 environmental community. And this is a request to change 9 the base credit, not just how they work in transportation 10 systems, which is what staff's proposal spoke to. 11 That being said, you know, I think we can 12 continue -- if we're going to be coming back on NEVs at 13 all, keep talking about the NEV issue and what role they 14 play and how much they're worth and showed the credit had 15 no jump at all from .15, which it is now. It used to be 16 .6. And we discussed in our meeting were there 17 intermediate values that anyone could accept, be that us, 18 you, the environmental community, or anybody else who 19 cared to express an opinion on the issue. But we most 20 wanted to report back to you about transportation systems, 21 which we did today, and did not entertain yet whether we 22 should change the base credit for NEVs themselves. 23 BOARD MEMBER CALHOUN: Did we not have the 24 proposed credit for NEVs in the meeting we had a couple 25 months ago -- two or three months ago? Wasn't ZEV -- NEV PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 395 1 included in that? 2 EXECUTIVE OFFICER WITHERSPOON: Yes. Part of the 3 regulation you adopted reaffirmed the declining value of 4 NEVs, which dropped from .6 to .15 as we phase in, you 5 know, to these cleaner vehicles. And before that hearing, 6 after that hearing, here today proponents are coming 7 forward -- DaimlerChrysler's come to see us about this 8 too -- and said, "We really want that to change. We 9 really want higher base credits for NEVs." 10 And we've said, "Well, the Board decided it's 11 .15." That isn't on the table at the moment. But we're 12 listening and learning about how the NEVs are being used 13 today. And I'm not saying we won't ever consider it or 14 ever make a recommendation, but it wasn't part of what we 15 brought in in this staff report. 16 CHAIRPERSON LLOYD: Move on to Robert Kittell and 17 then Kathryn Phillips. 18 BOARD MEMBER CALHOUN: Let me mention one thing. 19 You may want to take another look at it. And you 20 may come out to the same spot -- the same place where you 21 did before. 22 CHAIRPERSON LLOYD: I think that's going to be 23 part of it. 24 Robert Kittell and Kathryn Phillips. 25 MR. KITTELL: Mr. Chairman, I have a two-minute PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 396 1 prepared comment. 2 CHAIRPERSON LLOYD: Great. 3 MR. KITTELL: Dr. Lloyd, members of the Board, 4 my name is Robert Kittell and I'm Chairman of Electricab 5 Energy, owner and operator of the Electricab Taxi Company 6 here in Sacramento. 7 Our company supports the recommendations in the 8 staff report on supplemental ZEV credits. 9 CHAIRPERSON LLOYD: You know, I really didn't 10 know you operated a fleet of electric cars here as taxis. 11 MR. KITTELL: Yes. And I'll expand with a 12 little bit of detail. 13 CHAIRPERSON LLOYD: I never knew that. 14 How many staff knew that? 15 ON-ROADS CONTROLS BRANCH CHIEF KITOWSKI: Our 16 staff have been coordinating with him. 17 CHAIRPERSON LLOYD: So you knew all about it? 18 BOARD MEMBER DeSAULNIER: How many staff people 19 have used the service? 20 CHAIRPERSON LLOYD: Well, that's -- no, we should 21 be supporting that. And, as I said, I didn't know. 22 MR. KITTELL: Our company supports the 23 recommendations in the staff report on supplemental ZEV 24 credits: 25 "No" on ZEV credits for stationary fuel cells. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 397 1 "No" on ZEV credits for hydrogen infrastructure. 2 A qualified "yes" to expanding ZEV credits for 3 transportation systems. 4 And "yes" to transportation system credits in the 5 alternative compliance pack. 6 Our company fully supports extending the 7 transportation system ZEV credits to zero emission taxicab 8 and shuttle services that exhibit links to transit such as 9 airports and rail stations. 10 The Electricab Taxi Company has already 11 demonstrated such service here in Sacramento, including 12 real-world paid fares to Amtrak via our neighborhood 13 electric taxi. 14 Furthermore, our full-size, five-passenger, 15 freeway-capable electric minivan conversion taxicab has 16 demonstrated similar service to Sacramento International 17 Airport during our field testing. This vehicle, which is 18 parked out in front of the entrance to this building 19 today, has been calibrated and certified by Sacramento 20 County and only awaits a final inspection by the City of 21 Sacramento before officially going in to service. 22 Electricab would like the Board to go one step 23 further and recognize additional ZEV credits for such taxi 24 service that demonstrates integration of advanced 25 technologies in the operation of their vehicles. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 398 1 Electricab has been awarded a patent for 2 aggregate range optimation -- I'm sorry -- for aggregate 3 range optimization for battery electric and fuel cell 4 vehicles, which would be prominently demonstrated in the 5 Electricab fleet. 6 Such realtime wireless advanced out-driven 7 technology can only serve to maximize the impact of zero 8 emission vehicles and improve their commercial viability. 9 As such, incentives to support this type of innovation are 10 warranted. 11 Our company believes that extending car-sharing 12 and station-car-transportation-system ZEV credits to 13 factory NEVs is unwarranted. Unlike our company's fleet 14 of NEVs with advanced nickel-zinc battery pack upgrades 15 and 50-mile-per-charge and 300-mile-per-day capability, 16 factory NEVs offer limited range in battery life. These 17 factors combine to result in diminished real-world impact. 18 Unfortunately it is also clear that manufacturers 19 have gained ARB in the past with NEVs. And, in principle, 20 such additional opportunities should not be made available 21 to them again. 22 I thank you for your time and consideration, and 23 truly appreciate the opportunity to speak before the 24 Board. 25 CHAIRPERSON LLOYD: Well, thank you very much for PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 399 1 coming. 2 And maybe we can encourage staff here. I can see 3 how difficult a job you've got to advertise when in fact 4 our staff is reluctant to tell the Board of what was out 5 there. 6 (Laughter.) 7 CHAIRPERSON LLOYD: But thank you very much 8 indeed. 9 Unfortunately you're out there, but we've not had 10 a chance to get behind this -- from behind this dais 11 today. So please come back another time so we can 12 actually come out. And maybe staff would set something up 13 and we can take a look. 14 MS. PHILLIPS: I'm Kathryn Phillips with the 15 Center for Energy Efficiency and Renewable Technologies. 16 And today I'm representing a number of my colleagues with 17 the American Lung Association of California and the 18 California Electric Transportation Coalition, the 19 Coalition for Clean Air, Environment Now, Natural 20 Resources Defense Council, Sierra Club, Steven and Michele 21 Kirsch Foundation, Union of Concerned Scientists. 22 We appreciate the Air Resources Board staff's 23 efforts to analyze the pros and cons of affording zero 24 emission vehicle credits for stationary fuel cells in the 25 infrastructure and in the mass transit system. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 400 1 We agree with staff on the stationary fuel cell 2 issue that awarding stationary fuel cell ZEV credits 3 raises several areas of concern. And some of the groups 4 signing or that I'm representing have sent comments in the 5 past and raised these concerns in previous letters and 6 comments. 7 Staff's conclusions about whether to give ZEV 8 credits to stationary fuel cells might be best described 9 as suggesting a soft "no." And we think a really strong 10 "no" is warranted. We urge the Board to reject the idea 11 of providing ZEV program credits to stationary fuel cells. 12 And I'll just give you a few reasons why. 13 A few months ago when the ZEV mandate reiteration 14 was being -- was going through its process, the Sierra 15 Club commented in a letter that this proposal is 16 essentially to promote -- is promoted by General Motors. 17 And we've had discussions with General Motors about the 18 company's ideas. We worry that this push for ZEV credits 19 for stationary fuel cells will essentially result in one 20 more loophole for an automaker to avoid complying with the 21 spirit and intent of the ZEV Program. 22 Additionally -- 23 CHAIRPERSON LLOYD: We've been assured though 24 that GM is now reforming -- being reformed. And so -- 25 MS. PHILLIPS: Well, you know, it almost pains PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 401 1 me to have to say this because -- we've had multiple 2 conversations with Mr. Vail. And he's very genuine and we 3 wish him well in his division. But we have a harder time 4 with the company that's overseeing the whole process. 5 CARB established the ZEV Program in 1990 with the 6 specific goals of advancing vehicle technology and putting 7 zero emission vehicles on California's roads. And we're 8 concerned that the link between the stationary fuel cell 9 production and getting real fuel cell vehicles on the road 10 is not strong. 11 Additionally, historically the mobile sources and 12 the stationary sources have been regulated by separate 13 divisions within CARB, and in many cases separate agencies 14 within the State. And credits have not been traded 15 between mobile and stationary categories in general. We 16 don't see any compelling reason to change the arrangement 17 now with this particular program. And, indeed, as the 18 staff's report suggests, offering the stationary fuel cell 19 credits opens the threat of general deterioration of the 20 integrity of CARB's vehicle regulations. 21 Finally, the stationary fuel cell industry is in 22 its infancy. It offers a range of environmental benefits 23 that deserve incentives. And there are other programs 24 that exist in California to provide these incentives. And 25 in fact CARB has -- in its stationary program has produced PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 402 1 some regulations and worked in other ways to try to help 2 increase those incentives. 3 On the hydrogen infrastructure issue, the staff 4 report rejects the idea of providing ZEV credits, and we 5 support that. 6 The organizations that have signed this letter, 7 these comments, we participated for a number of years to 8 try to encourage hydrogen fuel cell vehicles, and we do 9 understand that there is going to be a need for 10 infrastructure. But we think the time isn't right. And 11 certainly for the Board to adopt the ZEV credit system for 12 any refueling infrastructure, there are relatively few 13 hydrogen fuel cells on the road now or anticipated in the 14 next few years. 15 And providing credits for infrastructure at this 16 point would likely reduce those numbers further. And I 17 understand that right now there isn't any automaker coming 18 forth saying that they want to be able to provide 19 infrastructure with a certainty, which is another 20 indication that maybe it's premature to be developing 21 credits -- 22 CHAIRPERSON LLOYD: It's not quite true. 23 MS. PHILLIPS: It's getting more certain? 24 CHAIRPERSON LLOYD: Well, we have heard 25 something. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 403 1 MS. PHILLIPS: Okay. We're concerned though 2 that mixing ZEV credits with stationary source activities 3 will offer opportunities for ZEV credit gain in this 4 category. So if you do do something, you're going to have 5 to very clearly define what qualifies as infrastructure. 6 In my wildest imagination I can see refineries -- rather, 7 chemical companies that produce hydrogen as a byproduct 8 saying that they should be getting some kind of -- or be 9 open to receiving some kind of credit. 10 On transit system credits, in theory we support 11 staff's recommendations to include NEVs in its 12 transportation credit system and to expand incentives for 13 car sharing and station car projects. However, we're 14 anxious about past gaining of the credit system, 15 especially with NEVs, and uncertain about the staff 16 proposal's effects on the placement in California and of 17 new zero emission vehicles, including fuel cell vehicles. 18 Therefore, we urge that before the Board makes a final 19 decision on this issue, that if the Board is inclined to 20 offer these credits, that it ask the staff for more 21 analysis on credit scaling, the effects that the proposed 22 credits would have on the ZEV Program's goal track and the 23 need to sunset the credits. 24 And, finally, for CERT alone, not for my 25 colleagues at the other organizations, I'd like to make PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 404 1 one more comment about the stationary fuel cells. 2 CERT is the Coalition of Environmental 3 Organizations Renewable Technology Companies and other 4 companies. And we include a couple of fuel cell -- 5 stationary fuel cell companies among our numbers. 6 I talked to one about this when this proposal or 7 this staff report first came out. And I have been 8 concerned that there might -- that somehow this might, as 9 the staff report suggests, might offer some kind of 10 competitive advantage to PEM fuel cell makers, but 11 especially to GM's stationary fuel cell. And before 12 revealing my concern to him, he immediately said that he 13 could see that this would have a competitive advantage -- 14 it would present a competitive advantage. 15 And while CARB has worked to help increase clean 16 DG, including fuel cells, I worry that if you offer this 17 hydrogen -- this stationary fuel cell advantage with the 18 ZEV Program, really only one fuel cell company will be 19 getting that advantage, and that would be GM. And it 20 would disadvantage the other fuel cell companies that 21 don't make PEM cells. And the industry itself is in such 22 an infancy. 23 And it's really sort of a 24 hang-on-by-your-fingernails sort of effort. And that's 25 why I understand why Mr. Vail is so anxious to make any PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 405 1 kind of effort to encourage his parent company to keep 2 plodding along with these fuel cells -- stationary fuel 3 cells. But I do think this isn't the proper approach. 4 Thank you. 5 CHAIRPERSON LLOYD: Thank you very much, Kathryn. 6 I guess since this is not a regulatory item, it's 7 not necessary to officially close the record. But I look 8 up to my colleagues on the Board for any discussion or 9 questions. 10 BOARD MEMBER DeSAULNIER: Thank you, Mr. 11 Chairman. But I was trying to get your attention awhile 12 ago. 13 CHAIRPERSON LLOYD: Sorry. 14 BOARD MEMBER DeSAULNIER: It goes back to that 15 debate last night where nobody -- if you were quiet, you 16 couldn't get the floor. 17 (Laughter.) 18 BOARD MEMBER DeSAULNIER: Yeah, I hear what 19 Kathryn's saying. And when I first talked to staff, I 20 must say when I got the briefing I was a little cranky 21 because when I was trying to explain my vision three 22 months ago and year ago, I was trying to do all things to 23 all people. I do think -- and I can see right now -- 24 certainly it's not my intention. I would hope my friends 25 in the environmental movement didn't think my PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 406 1 participation in these kind of initiatives was to 2 encourage opening large loopholes large enough for large 3 people to drive their Hummer through. So I agree with 4 staff's recommendation. But I think there's still a lot 5 of opportunities here, but they have to be very focused 6 and very directed. 7 And in terms of using it within the ZEV mandate, 8 I just saw it as an opportunity to use one currency, 9 meaning the credits, very few of them, within the mandate 10 to try to incentivize multiple opportunities. 11 And it's so difficult, you know. When I saw 12 General Motors -- I remember supporting something last 13 week that the Howard Jarvis Committee supported. And I 14 thought, "What's happening to me," you know. General 15 Motors -- similarly, my conditioned response is "Oh, my 16 God, I'm agreeing with General Motors. Maybe there is a 17 future for stationary." But I believe in redemption, 18 having had eight years of Jesuit training. So I believe 19 your marketing slogan. 20 So what my suggestion would be and I would like 21 to see, Mr. Chairman -- and given your help with the 22 interagency agreement with the Energy Commission and 23 Caltrans, which also involves the UC system -- there's 24 still some opportunities to refine this. There may be no 25 credits out of it, but I think there's an opportunity to PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 407 1 look at -- transportation systems are where my interests 2 are. But also hydrogen infrastructure and fuel cells on a 3 very limited possibility may be within transportation 4 systems. 5 So without giving you the whole -- I'll just give 6 you the cliff notes. And my nirvana would be a few pilot 7 projects in the next five years or so that were transit 8 stations, that were running heavy rail on electricity, 9 that had distributed generation, stationary fuel cells 10 providing power for the transit station, like a ZEV NEV, 11 and for the development around it. And that hydrogen was 12 coming from renewables. So it's from wells to wheels. 13 The whole process is clean. 14 Then you have maybe stationary cars -- station 15 cars in there that are electric or electric cars or 16 potentially fuel cell cars. So they're zero, they're 17 gold. And then you have the smart mobility, smart 18 infrastructure capacity. So someone who's going to the 19 train station can use their wireless. Or if the Bay Area, 20 we now have a 5.1 connected. You can find out realtime 21 with the transportation systems. Like if you're at your 22 console at home, you can bring up cameras and see what the 23 transportation system looks like. So you can use those 24 smart ability concepts. You can see realtime parking 25 information. PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 408 1 So that's sort of the nirvana, is combining the 2 transportation systems and from well to wheel distributed 3 generation stationary source at their -- that also 4 incentivizes the placements of, potentially NEVs, but also 5 city cars within a system. But it would be very narrowly 6 focused. And the credits, if there were credits, would 7 just be a small currency to encourage people to 8 participate in that kind of model. 9 So I think we can keep working on this for the 10 next three to six months with -- in the MOU between the 11 interagency agreement and the fuel cell partnership is 12 what I heard you say, Alan. And maybe at some point at 13 the appropriate time convene all the stakeholders and see 14 if we can narrow it down. If we can't, we come back to 15 close the book and move on to other things. 16 So that's what I hope comes out of this. 17 CHAIRPERSON LLOYD: Yeah. I would support that, 18 Mark. Again, splitting it down a little bit more, I would 19 like staff to come back on each of the areas that we've 20 talked about and explore that and see if you can come back 21 with some regulatory language. 22 I hear the concerns expressed and I understand 23 those concerns. But I think -- in this industry, I think 24 it is important to explore all those issues there. And, 25 again, I hear the concern about the stationary, about the PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 409 1 competitive side. I'm not sure that's true because there 2 are other people out there who will do both stationary and 3 mobile. 4 And, again, I appreciate General Motors 5 recognizing some of the concerns and the constraints that 6 are there so they're not talking about having carte 7 blanche here. But, again, a very limited piece. 8 And the other part on the hydrogen 9 infrastructure, some companies have not been interested in 10 that. Others have. I think with the DOE program going 11 on, with the efforts in California, with the continued 12 talk about broadening hydrogen in California, I think it's 13 important to look at this. But I do agree with Kathryn's 14 comment, her colleagues, that we also have to look at this 15 in a realistic context of where we stand on that. So do 16 we need that? Where do we need it? And I think fall in 17 to the other one. So -- and recognize basically what 18 we're doing today is saying they -- giving staff the green 19 light to move ahead with some additional work and coming 20 back to us, or do we put a stoplight. And I think -- I'm 21 not prepared to put a stoplight because I think each of 22 these have got some exciting opportunities. 23 BOARD MEMBER RIORDAN: Mr. Chairman, I think 24 there's potential here. We just have to look at it and 25 see where it might lead us. And so I would agree with PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 410 1 your position. 2 CHAIRPERSON LLOYD: Any other comments? 3 With that, I guess we'd -- anybody against -- 4 everybody all in favor, so unanimous -- 5 GENERAL COUNSEL WALSH: You don't have an 6 official action that you're taking. 7 CHAIRPERSON LLOYD: We don't have to have one. 8 Okay. 9 GENERAL COUNSEL WALSH: You do not. 10 BOARD MEMBER DeSAULNIER: How appropriate for 11 your last action. It's a non-action. 12 (Laughter.) 13 BOARD MEMBER RIORDAN: See, she's still trying to 14 keep us on the straight and narrow. 15 BOARD MEMBER DeSAULNIER: By the way, are there 16 other CARB staff who would like to come to the Bay Area to 17 live and work? We have all kind of benefits, like you 18 don't work after 5, from 5 to 6 is yoga and zen, from 6 to 19 7 is hot tubs and pinot, and you get paid better. 20 CHAIRPERSON LLOYD: Thank you. 21 Thank you very much. 22 And thank you, staff, again. And I realize this 23 is more work for you, but I think it's a just cause. 24 And seeing no other items, I officially bring the 25 September 25th meeting of the Air Resources Board to a PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 411 1 close. 2 And, again, thank you. 3 And I wish Tom and Kathryn a safe trip. 4 (Thereupon the California Air Resources 5 Board meeting adjourned at 7:15 p.m.) 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 412 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 Resouces 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 8th day of October, 2003. 15 16 17 18 19 20 21 JAMES F. PETERS, CSR, RPR 22 Certified Shorthand Reporter 23 License No. 10063 24 25 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345 413 1 CERTIFICATE OF REPORTER 2 I, TIFFANY C. KRAFT, 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 hearing was reported in shorthand by me, 7 Tiffany C. Kraft, a Certified Shorthand Reporter of the 8 State of California, and thereafter transcribed into 9 typewriting. 10 I further certify that I am not of counsel or 11 attorney for any of the parties to said hearing nor in any 12 way interested in the outcome of said hearing. 13 IN WITNESS WHEREOF, I have hereunto set my hand 14 this 8th day of October, 2003. 15 16 17 18 19 20 21 22 23 TIFFANY C. KRAFT, CSR, RPR 24 Certified Shorthand Reporter 25 License No. 12277 PETERS SHORTHAND REPORTING CORPORATION (916) 362-2345