UNITED STATES OF AMERICA
                       ENVIRONMENTAL PROTECTION AGENCY
        
        
        
               CONTROL OF AIR POLLUTION FROM NEW MOTOR VEHICLES
               PROPOSED HEAVY DUTY ENGINE AND VEHICLE STANDARDS
             AND HIGHWAY DIESEL FUEL SULFUR CONTROL REQUIREMENTS
                        EPA PUBLIC DOCKET NO. A-99-06
        
        
                                PUBLIC HEARING
                               DENVER, COLORADO
        
                                June 29, 2000
        
        
        
        
        
        
        
        
        
                                  I N D E X
                                                                Page 
        Welcome and Opening Remarks
        Richard Long, Region 8 Air Division Director. . . . . .   5
        
        Opening Statement        
        Chris Grundler, Deputy Director, Office of                  
        Transportation and Air Quality  . . . . . . . . . . . .   5
        
        Will Toor, Mayor, City of Boulder . . . . . . . . . . .  12
        
        JoAnn Sorenson, Commissioner  . . . . . . . . . . . . .  14
        
        Vickie Patton, Environmental Defense  . . . . . . . . .  18
        
        Gene Burden, Tesoro Petroleum Corp. . . . . . . . . . .  26
        
        Eric P. Skelton, Director, Spokane County Air 
        Pollution Control Authority . . . . . . . . . . . . . .  32
        
        Lisa Stegink, Engine Manufacturers Association. . . . .  39
        
        Beth Law, American Trucking Association . . . . . . . .  42
        
        Jeryl Feeley, RN, ND  . . . . . . . . . . . . . . . . .  50
        
        Zakariah Feeley . . . . . . . . . . . . . . . . . . . .  57
        
        Bob Neufeld, Wyoming Refining Company . . . . . . . . .  57
        
        Paul Berger, MD . . . . . . . . . . . . . . . . . . . .  66
        
        Rich Kassel, Natural Resources Defense Council  . . . .  68
        
        John Fox . .. . . . . . . . . . . . . . . . . . . . . .  75
        
        Dr. Sanford Avner, Colorado Allergy and Asthma Centers.  76
        
        Lea Ann Purvis, American Lung Association of CO . . . .  80
        
        Matthew Gill. . . . . . . . . . . . . . . . . . . . . .  82
        
        Gina Porreco, Clean Air Network . . . . . . . . . . . .  84
        
        Greg Dana, Alliance of Automobile Manufacturers . . . .  89
        
        Gerald Faudel, Frontier Oil Corporation . . . . . . . .  93
        
        Brian Whalen, International Truck and Engine Corp . . .  99
        
                                  I N D E X
                                   (Cont.)
        
        
                                                                Page
        
        Robert Elliott, Cenex Harvest States Cooperatives . . . 102
        
        John Bunyak, National Park Service. . . . . . . . . . . 108
        
        William Frick, American Petroleum Institute . . . . . . 114
        
        Bruce Bertelsen, MECA . . . . . . . . . . . . . . . . . 120
        
        Stanley F. DeVore, Jr., American Truck Dealers Assoc. . 126
        
        Lynn Westfall, Ultramar Diamond Shamrock. . . . . . . . 136
        
        Angie Farleigh, US PIRG . . . . . . . . . . . . . . . . 142
        
        Curt McIntosh, Diesel Workers Union, Cummins Engine . . 144
        
        Blakeman Early, American Lung Association . . . . . . . 146
        
        Mayor Wellington Webb, City and County of Denver. . . . 152
        
        Richard Severance, Conoco Refining and Marketing
        North America . . . . . . . . . . . . . . . . . . . . . 154
        
        John Kowalczyk, Oregon Department of
        Environmental Quality . . . . . . . . . . . . . . . . . 164
        
        Ronald Hagmeyer, National Association of
        Convenience Stores  . . . . . . . . . . . . . . . . . . 168
        
        Marie Valentine, DaimlerChrysler Corporation. . . . . . 173
        
        Kelly Nordini, CoPRIG . . . . . . . . . . . . . . . . . 177
        
        David Bartlett, Diesel Technology Forum . . . . . . . . 179
        
        John H. Stern, Countrymark Cooperative  . . . . . . . . 184
        
        Susan LeFever, Sierra Club  . . . . . . . . . . . . . . 191
        
        Sally Allen, Gary-Williams Energy Corp. . . . . . . . . 193
        
        Jeffrey Kramer, SIGMA . . . . . . . . . . . . . . . . . 196
        
        Representative Ken Gordon . . . . . . . . . . . . . . . 204
                                  I N D E X
                                   (Cont.)
        
        
                                                                Page
        
        Doug Young for Congressman Mark Udall . . . . . . . . . 206
        
        Chris Arend for Congresswoman Diana DeGette . . . . . . 208
        
        Lucinda Smith, City of Fort Collins,
        Natural Resources Department  . . . . . . . . . . . . . 211
        
        Ken Toltz . . . . . . . . . . . . . . . . . . . . . . . 215
        
        Robin Hubbard, CoPIRG . . . . . . . . . . . . . . . . . 219
        
        Clark Wilson  . . . . . . . . . . . . . . . . . . . . . 221
        
        Anna Brower . . . . . . . . . . . . . . . . . . . . . . 222
        
        Paul Argyropoulos, Clean Fuels Development Coalition. . 224
        
        Jim Stevenson, CENEX Harvest States Cooperatives. . . . 232
        
        Jody Kennedy, Colorado Environmental Coalition. . . . . 237
        
        Tom Byers, Williams Energy Services . . . . . . . . . . 240
        
        Dale Hill, Transportation Techniques. . . . . . . . . . 246
        
        Daryn McBeth, National Biodiesel Board. . . . . . . . . 249
        
        Dr. Maury Albertson, Colorado State University. . . . . 255
        
        David Orr, National Alternative Fuels Association . . . 258
        
        Fernando Martinez . . . . . . . . . . . . . . . . . . . 266
        
        Justin Wettstein, National Center for
        Atmospheric Research  . . . . . . . . . . . . . . . . . 268
        
        Stan Dempsey, Colorado Petroleum Association. . . . . . 275
        
        
        
        
        
        
        
        
                            P R O C E E D I N G S
                                                         (10:00 a.m.)
                  MR. LONG:  Good morning everyone.  I'm Richard
        Long.  I'm the Director of the Air and Radiation Program for
        the Regional Office here in Denver.  It's my pleasure to
        welcome all of you to Denver today.  For those of you who are
        coming from out of town, it's a pleasure that you were able
        to come in and participate in this process.  We welcome your
        comments.  It's important to the agency to get the breadth of
        comments that are represented by the different points of view
        from all of you.  It is a very important serious process that
        we are engaged in, and we look forward to all of the various
        points of view and the constructive suggestions we're sure
        that we're going to hear today.
                  At this point, I will turn it over to Chris
        Grundler.
                  MR. GRUNDLER:  Good morning on behalf of the
        Environmental Protection Agency.  I want to also add my
        welcome to all of you for coming out to testify and provide
        us with comments on this critical proposal for improving our
        nation's air quality.
                  I'm the Deputy Director of the Office of
        Transportation and Air Quality, which has been working in
        this area, has developed this rule.  I'm joined up here by my
        colleagues, in addition to Dick Long from our Denver office,
        to my right is Chet France, who is the Director of our
        Assessment and Standards Division.  To my left is Sam
        Napolitano from our Senior Science Advisor out of Washington,
        D.C., and Paul Machiele, who has been helping to lead this
        effort.
                  The proposal we are considering today was announced
        by Carol Browner, our Administrator, on May 17th, and
        published in the Federal Register on June the 2nd.  We think
        this is a bold and historic proposal.  Our goal is nothing
        short of making heavy duty trucks, on the road trucks, as
        clean as, or cleaner, as some cars are today.  This is a
        challenging proposal and one that we think will improve our
        air quality dramatically.
                  This follows on the heel of our new program that we
        announced I think last December.  The President announced it. 
        It's known as the Tier 2 Proposal.  This program dramatically
        increased the effectiveness of passenger vehicles and light
        duty trucks and SUVs, making them and the fuel they use, the
        gasoline they use, dramatically cleaner.  We think this is
        the next step in our quest to make our air quality as clean
        as possible by dealing with diesel engines and diesel fuel.
                  This means that for the first time ever, heavy duty
        trucks and buses would be able to use the same kinds of
        pollution control devices that are used on today's cars after
        treatment devices, things like catalytic converters.  Cars
        have had these devices for the last 25 years.  However, to
        make them work effectively, just like in cars, lead had to be
        removed from gasoline to allow those devices to work.  For
        diesel engines, sulfur also has a similar sort of effect as
        lead did.  It contaminates these after treatment devices and,
        thus, to get these diesel engines as clean as possible, we
        have to look at these systems just as we did the Tier 2
        program as a system.  And so we need to look at the sulfur
        effects on these after treatment devices and remove the
        sulfur.
                  This action will provide greatly improved air
        quality for all Americans.  It will reduce smog causing
        nitrogen oxides from these vehicles by 95 per cent.  It will
        reduce harmful particulate matter or soot by 90 per cent. 
        This action is essentially the clean air equivalent of
        removing 13 million of today's trucks off the road.
                  As I mentioned, these trucks and buses are largely
        powered by diesel engines.  Diesel engines are the work horse
        of today's economy.  They're more durable and get higher fuel
        economy than gasoline engines.  But they also tend to pollute
        more, and air pollution continues to be a major problem in
        the United States.  Over 100 million people are exposed to
        unhealthy air, and will continue to do so without the kinds
        of reductions that would come from the proposed standards
        that we're going to talk about today.
                  We estimate that by the year 2007, heavy duty
        vehicles will account for about 30 per cent of the national
        mobile source nitrogen oxide emissions, and 14 per cent of
        the national mobile source particulate matter emissions.    
        This pollution causes lung damage and respiratory damage, and
        there's increasing evidence that diesel exhaust may cause
        lung cancer in humans.
                  The proposed program we're going to talk about
        today would have a substantial impact on these emissions. 
        Urban areas, which include many poor Americans, can be
        disproportionately impacted by diesel emissions, and they
        would receive badly needed benefits from this proposed
        program.  
                  Let me give you some numbers.  We're proposing a
        particulate matter emission standard for new heavy duty
        engines of .01 grams per brake horsepower-hour.  This would
        take full effect in the 2007 model year.  This represents a
        90 per cent reduction from today's standards.
                  We're also proposing standards for NOx, nitrogen
        oxide emissions, of 0.2 grams per brake horsepower-hour. 
        This would be a 95 per cent reduction from today's standards.
                  They will be phased in for diesel vehicles between
        2007 and 2010, and gasoline vehicles would have to meet these
        standards by the year 2007.
                  To make the new diesel engine technologies work,
        we're proposing to take most of the sulfur out of highway
        diesel fuel beginning in 2006, which is when we would expect
        to see these newer technology heavy duty engines showing up
        on our roads.  Specifically, we're proposing that sulfur
        limits be established at 15 parts per million.  This would be
        a 97 per cent cut from the current highway diesel fuel sulfur
        limit, which is at 500 parts per million.
                  We think this is a very cost effective proposal for
        our society.  The low sulfur diesel fuel we estimate would be
        about 4 1/2 cents more per gallon.  We estimate that vehicle
        costs would increase about $1,000 to $1,600, depending on the
        size of the vehicle.
                  We decided to design this program to include
        significant lead time for the introduction of both the
        cleaner fuel into the marketplace, and we also have proposed
        various phase-in schemes to provide additional flexibility so
        that we can transition to the new clean diesel fuel and
        reduce costs.
                  In addition, we have special considerations to
        accommodate small businesses and farmer cooperative refiners
        who have special considerations, and we've got flexibility
        and other assistance in the proposal to allow them to be able
        to continue to compete.
                  The proposed program also allows the phase-in of
        the new engine standards over four years, from 2007 to 2010. 
                  This is the last of five public hearings that we've
        been holding on this proposal.  We've been hearing from a
        wide variety of stakeholders across society with different
        perspectives, and we expect that's going to continue today.
                  Please keep in mind that this is not your only
        opportunity to comment.  We'll also be providing an
        opportunity to provide written comments in addition to your
        oral comments, and the comment period will remain open for
        another 45 days, until August 14th.
                  We're conducting this hearing in accordance with
        Section 307(d)(5) of the Clean Air Act, which requires EPA to
        provide interested persons with an opportunity to provide
        oral presentation of data, views or arguments, in addition to
        an opportunity to write written statements.
                  I'm very happy to note that in the previous four
        sessions, we had a large number of people who came to provide
        testimony, and that's evident by the crowd today, and I think
        that is a tribute to your commitment to cleaning up the air
        and being involved in this process, and I congratulate you.
                  We do ask that you try to limit your testimony to
        ten minutes so that as many people as possible can make their
        points across.  There's no penalty for finishing earlier if
        you can get to your point in less than ten minutes.  But
        we're committed to staying here as long as it takes so that
        everyone can be heard.
                  We'll be conducting this hearing informally.  We do
        have people in the front row.  Lynn Zohaki and Byron Bunker,
        Colleen Zavaris from our Ann Arbor lab will be assisting you
        to let you know when your time limit is approaching.  No
        bodily force will be used, I trust.  But they have some
        efficient means to let you know that your time is
        approaching.
                  Also, if you could please write your name clearly
        on the cards provided so that we know who is speaking, and
        also introduce yourself and your organization.
                  From time to time, we may be asking clarifying
        questions, and I want to remind the witnesses that any false
        statement or false response to questions may be a violation
        of law.
                  If there are any members of the audience who wish
        to testify who have not already signed up, please submit your
        names out at the reception table.  We'll make every effort to
        work you in.  But because of the large number of witnesses
        that have already signed up, this hearing may go on into the
        evening hours.  Given the list, we will probably work through
        lunch.
                  Finally, if you'd like a transcript of this
        proceeding, you should make arrangements directly with our
        court reporter during one of the breaks.  The transcript will
        be available on our web page and in the public docket shortly
        after we receive it from the reporter.
                  Any questions before we begin on logistics or
        otherwise?
                  (No response.)
                  MR. GRUNDLER:  I also want to let people know we're
        very grateful that they are here.  A couple of public
        officials will tour, the Mayor from the City of Boulder. 
        Your Honor, thank you for joining us.  And JoAnn Sorenson,
        who is a Commissioner from Clear Creek County, welcome.
                  I'd like to invite the first panel up to the table. 
        I'm sorry, Mayor Toor and Commissioner Sorenson, why don't
        you come up and make your statements.
                  I apologize for any misunderstanding.  We'd like
        the elected representatives to testify first, and then we'll
        bring the first panel up.
                  MAYOR TOOR:  Good morning.  My name is Will Toor,
        and I'm the Mayor of the City of Boulder.  I'm here today to
        urge you to adopt tough new emissions standards for heavy
        duty trucks and buses as soon as possible, preferably before
        2010.  The City of Boulder also urges the EPA to require
        diesel sulfur levels for on-road and off-road vehicles, with
        a cap of no more than 15 parts per millions sulfur nationwide
        by 2006.
                  In addition, the EPA should take measures to ensure
        that big trucks are meeting the emission standards on the
        roads, not just during the engine tests.  Specifically, both
        in-use and on-board diagnostic equipment should be required
        for all heavy duty trucks by 2007.  We should also increase
        the use of advanced technology vehicles such as hybrid
        electric buses or fuel cell trucks.  The EPA should include a
        provision in the heavy duty rule that would provide
        incentives to introduce more of these cleaner, efficient
        diesel alternatives into the heavy duty fleet.  These
        provisions are necessary to protect the public health.  We
        ask that you include them in your final rule-making.
                  You have heard the statistics.  More than 470,000
        children and 226,000 elderly in Colorado are estimated to be
        at risk for lung disease or respiratory distress because of
        exposure to unhealthy levels of air pollutants.  Colorado
        could save more than $240 million in health care costs each
        year if the state lowered its particulate pollution levels. 
        This is not only the best decision for the public health and
        the environment, it's the best fiscal decision as well.
                  Numerous scientific studies have begun to link
        diesel exhaust to cancer.  Nationally, heavy duty trucks and
        buses currently account for 27 per cent of the smog-forming
        nitrogen oxides and two-thirds of the particulate pollution
        emitted by all the vehicles on the road, even though they are
        only 2 per cent of the vehicles on the road.  Big trucks and
        buses are among the largest pollution sources, yet the oil
        industry and engine manufacturers have done little to curb
        this pollution.  We must require drastic reductions in
        pollution from these large trucks and buses.
                  Cleaning up diesel fuel by 97 per cent will allow
        the EPA to cut smog-forming pollution by 95 per cent in 2007
        and soot pollution by 90 per cent by 2007.  However, the EPA
        is proposing to wait until 2010 to fully clean up smog-
        forming pollution from these vehicles, meaning that Americans
        will have to wait ten years before all new trucks are cleaned
        up.  There should be no phase-in period for reductions in
        smog-forming pollution.
                  The City of Boulder has a strong record of
        supporting clean air, both through its environmental programs
        and our transportation programs and policies which encourage
        alternate modes of transportation.  The proposed standards
        will result in significant air quality improvements that may
        not be feasible through alternative transportation and
        behavior change efforts.  We welcome the efforts of the EPA,
        and look forward to continuing to work together on this and
        other issues.
                  Thanks for hosting this hearing.
                  MR. GRUNDLER:  Thank you, Mr. Mayor.  Commissioner?
                  MS. SORENSON:  Good morning, and thank you for
        having the hearings here in Denver and giving us the
        opportunity to comment to you.  I am from Clear Creek County,
        which is located about 60 miles west of Denver on I-70, and
        I'm here speaking on behalf of all the Commissioners from
        Clear Creek County today.
                  As Commissioners, we view this issue of cleaning up
        diesel emissions from a couple of perspectives.  One of them
        relates to our responsibility for public health in Clear
        Creek County, and the second relates to our sense of
        responsibility for water quality in Clear Creek.
                  We are particularly sensitive to the impacts of
        diesel emissions in our county because of the heavy truck and
        bus traffic on I-70.  As some of you may know, I-70 and U.S.
        40 travel the length of Clear Creek County and cut through
        all of our towns, Idaho Springs, Georgetown, Silver Plume,
        and Empire.  According to the American Lung Association,
        national figures indicate that diesel vehicles account for
        only 2 per cent of the vehicles on the road, but they're
        responsible for a great deal more of the pollution.
                  We are concerned that our citizens and our
        environment are exposed to an even greater relative amount of
        pollution because of the heavy truck traffic on I-70.  In a
        July, 1997 video traffic survey that was commissioned by the
        Colorado Department of Transportation, it was revealed that
        in our county, buses and trucks accounted for 5.9 per cent of
        the traffic, nearly three times the national average.
                  Also, according to the American Lung Association,
        medical research shows that people who live within a mile of
        roadways with heavy truck traffic are more likely to have
        respiratory problems.  They also tell us that diesel exhaust
        is responsible for 125,000 cases of cancer annually in the
        U.S.
                  Applying that information to Clear Creek County
        really caused us to raise our eyebrows.  Virtually every
        citizen in our towns, and many in the unincorporated part of
        the county, live within a mile of I-70.  And when I pulled
        the Colorado Department of Public Health and Environment 1997
        figures on critical health issues for Colorado counties, I
        learned that Clear Creek County ranked fourth out of 63
        counties for lung cancer as the cause of death.  We ranked
        14th out of 63 counties for pulmonary disease as a cause of
        death.
                  Now, I'm not a medical researcher and I can't tell
        you that these disease issues are directly related to diesel
        emissions, but the coincidence is striking and probably
        deserves further investigation.  And it also indicates to us
        that we need to be urging you folks to go ahead and clean up
        some of these serious sources of pollution.
                  The other perspective from which we view this
        diesel emissions issue is that of the watershed protection. 
        We, along with all the other municipal and county members of
        the Upper Clear Creek Watershed Association are committed to
        improving the water quality of this creek, which provides
        water to hundreds of thousands of folks on Colorado's Front
        Range.
                  We are also committed to improving the overall
        quality of life in the watershed.  To us, that means clean
        water and a healthy forest.  Our citizens and we participate
        in costly efforts to achieve those ends, with numerous public
        and private partners.  We believe that the polluters who
        travel I-70 in numbers that are triple the national average
        need to step up and do their part in this clean-up effort
        also.
                  For nearly 100 per cent of the distance through our
        county, I-70 and U.S. 40 parallel the creeks.  For about a
        third of the distance, these highways cut through the Arapaho
        National Forest, and this is a very high elevation.  We
        expect that the sulfur, nitrogen and carbon monoxide and
        particulate matter reductions that are anticipated because of
        these new regulations would have a positive effect on our
        watershed and forest.
                  We also join Boulder in urging you to move ahead
        with these new standards more quickly than the year 2010.  We
        have found that through the CDOT surveys that traffic is
        projected to double every seven years on I-70, and with that
        kind of increase in pollution, we think we need to move as
        quickly as possible to implement new solutions to these
        problems.
                  Thank you again for having the hearing here, and
        for allowing us to speak.
                  MR. GRUNDLER:  Thank you very much.  As public
        officials, I know how busy your schedules must be, and thank
        you for taking time out of those schedules to give us your
        perspective.  It's very valuable.
                  At this time, I'd like to invite the first panel
        up, Vickie Patton, Gene Burden, Eric Skelton, Lisa Stegink,
        Beth Law, Jeryl Feeley--I'm sorry--Jeryl Feeley and Zakariah
        Feeley, and Bob Neufeld.
                  If you could write your names on the card, and also
        as you begin your testimony, to state your affiliation.
                  Ms. Patton, you may begin.
                  MS. PATTON:  The Rocky Mountain Office of
        Environmental Defense greatly appreciates this opportunity to
        comment on EPA's proposed emission standards for large diesel
        trucks and buses, and the integrally related proposal for
        cleaner diesel fuel.  We are testifying today on behalf of
        the approximately 300,000 members of our non-profit, non-
        partisan, non-governmental environmental organization that
        live in communities across the country that would benefit
        from dramatically cleaner, healthier air if EPA finalizes its
        proposed standards.
                  There is overwhelming public support for EPA's
        action.  A recent public opinion survey found that 87 per
        cent of the public, nearly nine out of ten people, agree that
        18 wheeler trucks, buses and other big diesel vehicles should
        be required to use the best available pollution control
        technology even if it will impose higher costs.
                  We should recognize today the sentiments of those
        who can't be at this hearing, including the parents who must
        care for their children and provide for their families.  The
        broad-based, public support for EPA's action by those who
        don't have the luxury to attend a midday, midweek public
        hearing must be counted.
                  The overwhelming public support for EPA's
        initiative is not at all surprising.  Large diesel trucks and
        buses are obvious and ubiquitous polluters.  The all too
        common and all too familiar exhaust that billows from these
        vehicles is harmful to our health and our environment.  The
        adverse impacts occur from Denver, Albuquerque and Phoenix,
        to New York, Philadelphia and Atlanta, from the Adirondacks
        to the Rockies.
                  Diesel exhaust contains a variety of harmful
        pollutants that contribute to toxic air pollution in our
        neighborhoods, communities and cities; fine particles that
        lead to premature death and hospitalization; summertime smog;
        acidification of our forests, lakes and streams; the haze in
        our national parks and the "brown clouds" in our cities; and
        eutrophication of coastal water bodies.  Stated differently,
        the economic investments made in cutting the harmful
        pollution in diesel exhaust will reap tremendous, multi-
        faceted public health and environmental benefits.
                  We believe it is especially imperative that EPA
        finalize its proposed emission standard for diesel
        particulates without any backsliding, to protect communities
        in the West and across the country from the carcinogenic
        effects of diesel exhaust.  Numerous public health studies
        show increase lung cancer risks of 20 to about 90 per cent
        from diesel exhaust.  In addition, major state, national and
        international public health agencies have found that diesel
        exhaust or diesel particulates are a probable or known
        carcinogen.
                  In 1988, the National Institute for occupational
        Safety and Health classified diesel exhaust as a "potential
        occupational carcinogen."
                  In 1989, the International Agency for Research on
        Cancer found that diesel exhaust is considered to be a
        "probable" human carcinogen.
                  In 1996, the World Health Organization found that
        human epidemiological data suggest that diesel exhaust is
        "probably carcinogenic."
                  The California EPA found that data have
        demonstrated that diesel exhaust is a carcinogen.
                  Last month, the Department of Health and Human
        Service's National Toxicology Program issued its 9th edition
        of its Report on Carcinogens, in which it classified diesel
        exhaust particulates as "reasonably anticipated to be a human
        carcinogen."
                  In March, 2000, local officials in Los Angeles
        completed one of the most comprehensive urban monitoring
        studies of toxic air pollution.  The study found that
        emissions of diesel particulates are responsible for 70 per
        cent of the cancer risk associated with air pollution--70 per
        cent.  Moreover, the study found that the greatest risk
        levels were in the south-central and east-central portions of
        Los Angeles that are highly populated by minorities and low
        income residents.
                  Based on this analysis, consortium of state and
        local Air Pollution Control officials estate that diesel
        particulates may be responsible for hundreds of cancers in
        Denver and other communities across the country.  And just
        yesterday, the health Effects Institute, which is jointly
        funded by industry and EPA, released the result of a major
        epidemiological study of particulate health effects in 90
        cities across the country, finding compelling correlations
        between increasing concentration of particulate matter, and
        premature death and hospitalizations.
                  In taking final action on its proposal, EPA must
        issue the most stringent particulate emission standards
        feasible to help rid our communities of harmful, cancer-
        causing diesel exhaust.
                  While Environmental Defense applauds EPA's proposed
        cuts in NOx emissions from large trucks and buses, we're
        concerned about the proposed delay in implementing those
        standards.  NOx emissions have increased more than 3 1/2
        million tons since the advent of the modern Clean Air Act in
        1970.  In 1998, 24 1/2 million tons of NOx air pollution were
        emitted nationwide, approximately 400,000 tons in Colorado
        alone.
                  NOx pollution and its byproducts contribute to a
        variety of health and environmental problems in the western
        United States and across the country.  NOx is one of the
        major contributors to ground-level smog in the Denver
        metropolitan area and other communities across the country. 
        NOx contributes to fine particles that are breathed deep into
        the lungs.  NOx is one of the major contributors to
        acidification of our forests, lakes and streams.  Indeed,
        University of Colorado scientists believe that NOx pollution
        is likely contributing to nitrogen saturation in sensitive,
        high elevation ecosystems in the Rocky Mountains.  In turn,
        large trucks and buses are one of the major contributors to
        NOx air pollution.  EPA projects that large trucks and buses
        alone will soon comprise nearly one-third of the national NOx
        air pollution from the transportation sector.  If we are to
        protect the health of our children, the elderly and our
        sensitive ecosystems, we must cut the NOx air pollution from
        large diesel trucks and buses.
                  Unfortunately, EPA is proposing unacceptable delays
        in the implementation of the NOx emission standards.  Instead
        of postponing the tremendous air quality benefits from
        cutting NOx, EPA should require diesel engines to achieve
        full compliance with the NOx emission standards by no later
        than 2007.
                  The linchpin of EPA's clean air initiative is its
        proposed 15 parts per million cap on the sulfur content of
        highway diesel fuel to be achieved in 2006.  Cleaner fuel is
        a critical ingredient to achieve the tremendous clean air
        benefits that are possible under EPA's proposal by enabling
        state-of-the-air control technology.  Like the engine
        manufacturers that must produce the clean engine technology,
        the oil refiners must do their share to produce cleaner fuel. 
        Unfortunately, this critical dual system is under attack by
        the refiners that oppose EPA's clean air initiative.
                  We urge EPA to consider the facts, not the rhetoric
        of the refining industry, in taking final action on its low
        sulfur diesel proposal.
                  Fact Number 1:  The suggestion by some refiners to
        relax the limit on sulfur to 50 parts per million instead of
        15 would fundamentally undermine the air quality benefits
        that could be achieved from this program, by realizing only a
        small fraction of the air pollution reductions possible.
                  Fact Number 2:  EPA's cost estimate of 4 to 5 cents
        per gallon to achieve a 15 part per million sulfur limit is
        eminently reasonable given the magnitude of the air quality
        benefits, and is entirely consistent with the findings of
        MathPro, a leading industry consulting firm.
                  Fact Number 3:  A six year lead time to achieve
        EPA's low sulfur diesel standards standing alone provides
        tremendous compliance flexibility.  In 1990, EPA issued the
        first phase of its low sulfur diesel initiative by requiring
        refiners to cut sulfur levels from approximately 2500 parts
        per million to 500.  In that rulemaking, EPA generally
        allowed a three year lead time for compliance.  Refineries
        complained then that this deadline was too tight.  In the
        pending rulemaking, EPA has proposed to double the phase-in
        period to six years, but now that is not enough time.  The
        bottom line according to the refining industry is that no
        time is a good time to produce cleaner diesel.  If we let the
        refining industry dictate public policy, we would still have
        lead in our gasoline.
                  Fact Number 4:  Producing low sulfur diesel is
        proven and is feasible.  ARCO, which has recently merged with
        BP AMOCO, is voluntarily producing diesel fuel with a maximum
        sulfur content of 15 parts per million in the Los Angeles
        area.  In addition, Tosco, a large refinery, has vigorously
        supported EPA's action, stating that it is prepared to make
        the necessary investments to produce cleaner fuel for the
        American public.  The voluntary initiative actually producing
        low sulfur diesel now in conjunction with the strong support
        from Tosco are very power evidence that EPA's proposal is
        feasible.
                  Fact Number 5:  Other countries are already leading
        the way to low sulfur diesel.  In 1991, Sweden instituted
        policies to facilitate low sulfur diesel, and by 1996, 85 per
        cent of its diesel fuel had a sulfur content of 10 parts per
        million or less.  Like Sweden, Germany is putting in place
        measures to achieve a 10 part per million low sulfur diesel
        fuel level.  In both Germany and Japan, progress toward
        producing low sulfur diesel has been based on joint
        agreements between the vehicle manufacturers and the oil
        marketers.  In other words, big businesses in those countries
        are working together to deliver better emission standards for
        the public.
                  The final fact is that diesel prices are volatile
        over the short-term, but have decreased over the long-term. 
        We have data from the Energy Information Administration that
        we'd like to just briefly present to you.  We'll just present
        the first chart.
                  This long-term data which compiles monthly diesel
        prices from 1983 to the year 2000, and is adjusted for
        inflation, demonstrates that in any given month, in any given
        period of time, diesel prices may be high or they may be low. 
        But what this very powerfully demonstrates is over the long-
        term, diesel prices have decreased.
                  During today's hearing, you will hear from major
        engine manufacturers that support EPA's action, from major
        automobile manufacturers that support EPA's action, from
        public officials that support EPA's action, and from parents
        and children that support EPA's action.  Unfortunately, you
        will also hear the all too familiar rhetoric from the
        refining industry, the countless reasons they oppose EPA's
        clean air initiative.  Heed the facts, not the rhetoric.
                  We, too, believe the EPA's proposal is bold and
        historic.  Please issue your proposal without relaxing the
        strong measures you put in place.
                  MR. GRUNDLER:  Thank you very much, Ms. Patton. 
        Mr. Burden?
                  MR. BURDEN:  Well, thank you for the opportunity to
        make some comments today.  My name is Gene Burden.  It's
        probably very appropriate that I'm following Vickie.  I am
        with an oil company, and we are--the company is Tesoro
        Petroleum.  We're a relatively small refinery with operations
        in Alaska, Washington state and Hawaii.  We operate retail
        distribution facilities in the Western States primarily.
                  The comments that--I'm going to limit my comments
        today to several operational issues that we think are
        important for consideration.  But let me preface it by saying
        that we are supportive of efforts to reduce air pollution,
        and yet we are maintaining support for a 90 per cent
        reduction in diesel fuel sulfur levels to the 50 part per
        million that's been adopted by the European union.
                  I want to go through just a few of the issues that
        we see as important to our operations, and I think to the
        public, because we operate--or a refinery operates as a
        system similar to any other system, and impacts in one area
        can have impacts in other areas that we provide services to.
                  The biggest issue we see is in regards to the
        distribution system to our operations, and we think to other
        regional operations.  We don't think that the Agency has done
        a thorough enough analysis of just what the distribution
        issues are going to be with this.  We transport all grades of
        diesel fuel via pipeline, via tanker, various transportation
        sources, and the fuel will go through, say, pipelines that
        may have gasoline that with the new diesel standards on
        gasoline is 80 parts per million in 2006, jet fuel, jet fuel
        can have as high as 2000 parts per million, and the issue of
        contamination os the ultra low diesel is really a significant
        issue to our company.
                  We see a great increase in the amount of
        contamination of what we would start off sending as ultra low
        diesel, and then having to do something with that product
        once it's been contaminated.  And this is a very real issue
        to us.  And the alternatives to that are to put that into
        other market areas, off-road diesel or other areas, and
        attempt to get the value out of it in that process.
                  Now, EPA in your notice of proposed rulemaking, you
        asserted that something along the line of standard industry
        practices can avoid these product contaminations.  But in our
        view, the current distribution system, at least regionally in
        the areas that we're familiar with, are going to require
        considerable additional infra-structure to accommodate yet
        another grade of diesel fuel.
                  We don't have adequate tankage of pipelines in our
        distribution system, and for those of you not familiar, many
        of our customers are small businesses that are distributors,
        we distribute our products.  They don't have distribution
        facilities sufficient to add another level of product either. 
        So that's culminated in our general concern about what are
        the implications to not only delivering the product, but to
        the whole consumer base for the distillate cut from the
        refinery.
                  One of the Agency's comments was that standard
        industry practices, if followed carefully, should be able to
        virtually eliminate the potential contamination.  That's on
        Page 275 of your notice of proposed rulemaking.
                  The "should be" and "virtually eliminate" when I
        read that, I thought, well, the Agency recognizes that there
        are certainly going to be situations where you're going to
        have contamination.  Employing the best of practices, it's
        very difficult to move products with that range of sulfur.  I
        think one of the papers I read equated 15 parts per million
        as equivalent to less than a teaspoon in an olympic size
        swimming pool.  And if you put that in with a product that
        has hundreds times more, thousands times more sulfur, it's
        very easy to have that contaminated.
                  I guess sort of an aside issue in this is that
        under the terms of the proposed rule, at least as we read it,
        any failure to--any violation of exceeding the cap of 15
        parts per million would be subject to prosecution under the
        Clean Air Act, which as I recall, is up to $27,500 per
        violation, as well as economic benefit.  And I guess with
        EPA's acknowledgement of the fact that it should be able and
        virtually eliminate, we'd like to see more flexibility to
        address those situations, regardless of what the level is, to
        address those situations where there is an occasional amount
        over, say, the level is 15 or 50 or whatever you adopt, so
        that calls from our standpoint for an averaging approach for
        the standard that's finally adopted.
                  Another concern internally, our company is not a
        major oil company.  We do not have oil exploration and
        production operations.  We essentially buy our crude oil,
        refine it, and sell it.  And the investments necessary to
        address this standard, or even the 50 part per million
        standard, are significant.  We are faced with the prospect
        here of trying to start planning for this standard, assuming
        it's adopted this year, in advance of knowing what the
        standard is for off-road.  And that might not seem to be a
        big deal to some folks, but our own lead time for the
        engineering, arranging construction and installation of the
        necessary facilities is close to four years.  
                  So we have a real issue with that.  We'd like to
        have some idea of what the off-road standards are going to be
        so that can be incorporated into the planning process.  And
        that's one of the reasons we'd like to see those two go
        together and have an across the board coverage.  Whatever the
        standard is for this and whatever the standard is for off-
        road, let us know what that is.
                  I think the other issue is yes, it does have a
        significant cost impact.  But I'm not here on behalf of
        Tesoro to complain about the cost.  The cost at 50 parts per
        million is substantial also.  I think the additional
        operating cost and distribution system issues with that lower
        standard is really our major concern.  The fact is we would
        have to essentially produce 5 to 7 parts, maybe 8 parts per
        million sulfur in order to have a chance to hit 15 by the
        time we got it to the final end point.
                  And our point I guess also that we'd like to share,
        at least that we think might affect the customers in areas we
        serve, is that the effect of the proposed 15 part per million
        standard will likely not be limited just to consumer of on-
        road diesel.  As I mentioned, the cuts that get contaminated
        go into other areas.  There may be some geographic areas
        where it's not economic to produce more than one grade.  And
        we think that that impact on all customers, that middle cut,
        that distillate cut, the home heating oil, jet fuel and off-
        road diesel, that impact has not really been given very much
        attention in the proceedings up to this point.
                  The issue of actions in other countries has been
        raised, and it may be just a difference in legal research,
        but the European union has adopted a standard that's
        effective in 2005 that goes to 50 parts per million.  That
        applies to all EU countries.  Sweden correctly is--they
        started with a city diesel program at 10.  The effort in
        Germany is a--was an effort to obtain a tax credit for
        producers who produce 10 parts per million or less.  It's not
        a move to a statewide standard, at least to my knowledge, as
        of when I researched that a month or so ago.
                  I think I'm running out of time here, so I may jump
        just a little bit.  There's also been a suggestion that there
        might be some phase-in of one level followed by another
        level.  And at least from my company's standpoint, Tesoro's,
        that's really not a benefit to us, and we want you to know
        that, if that's viewed as a concession or an assist, it would
        not be.  The time frames that we've seen for the transition
        from one to the other would preclude taking actions to meet
        one.  We'd go ahead and go to the final level.
                  I guess in conclusion--is my time up?  Okay, thank
        you.  
                  MR. GRUNDLER:  Thank you.  I'd like to welcome Mr.
        Skelton, who's a partner EPA in administering the Clean Air
        Act, representing local government.  Welcome.
                  MR. SKELTON:  Good morning.  My name is Eric
        Skelton.  I'm the Director of the Spokane County Air
        Pollution Control Authority in Spokane, Washington.  I'm also
        the immediate past president of ALAPCO, which is the
        Association of Local Air Pollution Control Officials, and I'm
        appearing this morning on behalf of ALAPCO, which represents
        my own agency, as well as approximately 165 other local air
        pollution control agencies across the country, and also on
        behalf of STAPPA, the State and Territorial Air Pollution
        Program Administrators, which represents the air pollution
        control agencies in the states and territories.
                  I also serve as Co-Chair of the STAPPA/ALAPCO
        Mobile Sources and Fuels Committee.  I'm pleased to have this
        opportunity to provide the associations' testimony on EPA's
        recent proposal to set more stringent standards for on-road
        heavy-duty engines and vehicles, and to reduce the level of
        sulfur in on-road diesel fuel.
                  On behalf of STAPPA and ALAPCO, I'd like to commend
        EPA for its continued leadership in reducing air pollution
        from the mobile source sector.  Your final promulgation last
        December of the Tier 2 motor vehicle emission standards and a
        national low-sulfur gasoline program was a remarkable
        accomplishment that will benefit the entire country.  This
        month's heavy-duty engine and low-sulfur diesel proposal is
        further demonstration of the agency's commitment to
        efficiently and cost-effectively reducing a wide variety of
        mobile source-related emissions to achieve meaningful
        improvements in air quality across the nation.  We applaud
        this initiative and the systems approach, which addresses
        both the engine and its fuel upon which it is based.
                  And we're especially pleased that the proposed
        heavy-duty engine and diesel sulfur program reflects the key
        recommendations made by STAPPA and ALAPCO over the past year
        and a half.  
                  As the officials with primary responsibility for
        achieving and maintaining clean, healthful air across the
        country, state and local air agencies are keenly aware of the
        need to aggressively pursue emission reductions from the
        heavy-duty mobile source sector, which contributes
        substantially to a variety of air quality problems.  As EPA
        acknowledges in this proposal, by 2007, when the proposed
        engine standards would take effect, on-road heavy-duty
        engines and vehicles will account for 29 per cent of mobile
        source NOx emissions and 14 per cent of mobile source PM
        emissions.  
                  Under the control strategy being proposed here, by
        2030, on-road heavy-duty vehicle NOx emissions would be
        reduced by 2.8 million tons and PM emissions by approximately
        110,000 tons.  These emission reductions, as well as others
        that the proposed rule would affect, will play a pivotal role
        in addressing an array of significant environmental problems
        that contribute to and pose health and welfare risks
        nationwide.
                  Because many heavy-duty vehicles travel back and
        forth across the country, their emissions are ubiquitous, and
        for this reason, regulation of the heavy-duty mobile source
        sector and of the fuels by these sources must be done on a
        national basis, as EPA has proposed.
                  In the coming weeks, STAPPA and ALAPCO will be
        providing comprehensive written comments on the complete
        proposal.  Today, however, I would like to focus my comments
        on a few fundamental issues related to heavy-duty diesels and
        their fuel.
                  The air pollution that comes from big diesel buses
        and trucks is not only among the most visible there is, it's
        also among the most offensive.  What is worse, however, is
        that the noxious exhaust from heavy-duty diesels brings with
        it adverse health impacts that can be dire, posing a serious
        health threat to public health nationwide.  And perhaps the
        greatest risk posed by heavy-duty diesels comes from their
        toxic emissions.  Diesel exhaust contains over 40 chemicals
        that are listed by EPA and California as toxic air
        contaminants, known human carcinogens, probably human
        carcinogens, reproductive toxicants and endocrine disrupters. 
        In 1998, California declared particulate emissions from
        diesel-fuel engines a toxic air contaminant, and this was
        based on data that supported links between diesel exposure
        and human cancer.
                  As has already been alluded to, last fall, the
        South Coast Air Quality Management District in Los Angeles,
        California released a draft final report, referred to as
        MATES-II, which included an analysis of the cancer risk in
        the region from exposure to diesel particulate.  And based on
        this analysis, which estimated diesel particulate levels by
        using elemental carbon as a surrogate and applied a cancer
        potency factor determined by the state of California, South
        Coast concluded that of the cancer risk posed by air
        pollution, 70 per cent is attributable to diesel particulate
        emissions, with mobile sources being the dominant
        contributor.
                  STAPPA and ALAPCO congratulate EPA for responding
        to a serious environmental problem with an equally serious
        strategy that establishes rigorous emission standards for on-
        road heavy-duty diesels and a commensurately low cap on
        sulfur and diesel fuel, all within a time frame that will
        allow us to reap the benefits of this program beginning with
        the 2007 model year.  Although there are several aspects of
        the proposal with which we have concerns, and we will offer
        recommendations to address these in our written comments, the
        fact remains that the key components of this proposal are
        rock solid and we support them.
                  With respect to the emission standards, we strongly
        endorse the levels EPA has proposed, a particulate matter
        standard of .01 grams per brake horsepower-hour and a NOx
        standard of .2 grams per brake horsepower-hour, which are 90
        and 95 per cent cleaner than today's standards, respectively. 
        However, although we are very pleased that the PM standard
        will take full effect in 2007, we have concerns regarding the
        four year phase-in period proposed for the NOx standard, and
        we will offer further discussion of this in our written
        comments.
                  Inextricably linked to the proposed engine
        standards is the issue of low-sulfur diesel fuel.  The
        ability of heavy-duty diesels to comply with stringent engine
        standards that EPA has appropriately proposed is directly
        dependent on the timely, nationwide availability of diesel
        fuel with ultra-low levels of sulfur.  Without such fuels,
        the technologies capable of achieving such low emission
        standards will be rendered inoperable.  For this reason,
        STAPPA and ALAPCO vigorously supported the proposed 15 parts
        per million cap on sulfur in diesel fuel to take full effect
        across the country in mid-2006, with no phase-in.  This
        provision of the proposal is absolutely essential, while an
        even lower cap may prove to be necessary; it is crucial that
        the final rule include a fully effective cap of no higher
        than 15 parts per million by mid-2006.
                  We are concerns that over the course of this
        rulemaking, EPA will be pressured to go to a higher cap on
        sulfur.  If this is the case, then other states may be forced
        to follow the leads of California and Texas, adopting their
        own fuel standards in order to meet their air quality goals. 
        This patchwork approach would be less desirable than a
        uniform national cap.  We, therefore, urge EPA to hold the
        line at 15 parts per million, as proposed.
                  Finally, while non-road diesel engines are not
        addressed by this proposal, STAPPA and ALAPCO view the
        control of non-road diesels to be as critical as the control
        of on-road diesels.  Further, we firmly believe that the
        technological advances that will occur in order to meet
        future, more stringent on-road heavy-duty diesel standards
        will carry over to non-road equipment, but only if very low
        sulfur diesel fuel is available for this sector as well.  We
        are extremely concerned, however, that EPA may not be
        proceeding as quickly or aggressively as necessary to develop
        non-road diesel engine and fuel programs that are
        commensurate with the enormous contribution non-road diesels
        make to air pollution.  More must be done.
                  To this end, STAPPA and ALAPCO urge EPA to
        accelerate its program development strategies for non-road
        diesel engines and fuels, so that we can more effectively
        reduce the huge air quality and public health problems posed
        by these sources as well.  We recommend that EPA adopt engine
        standards and a sulfur cap for non-road heavy-duty diesels
        and fuel that are equivalent for those for on-road heavy-duty
        diesels, and in the same time frame.  And this may alleviate
        some of those contamination and multi-grade concerns that
        were alluded to earlier.  We urge the agency to use the 2001
        non-road technology review as an opportunity to significantly
        strengthen the non-road diesel control program.
                  In conclusion, I thank you for this opportunity to
        provide our associations' comments on this important
        rulemaking.  We applaud EPA for seizing the opportunity to
        take another enormous step towards cleaning up the mobile
        source sector and achieving our nation's clean air goals.  We
        commend your leadership in developing a technologically,
        economically and environmentally credible approach for
        addressing on-road heavy-duty diesel engines and fuels, and
        preserving the framework that you have proposed is imperative
        to the viability of this program.  And, moreover, to the
        efforts of states and localities across the country to
        achieve and sustain clean, healthful air.  Without it, we
        cannot succeed.
                  In the coming weeks, we will more thoroughly
        analyze the proposal and provide written comments to you, and
        we look forward to working closely with EPA as it continues
        to refine this extremely important program.  On behalf of our
        associations, I offer to you our continued cooperation and
        partnership as you move ahead.
                  MR. GRUNDLER:  Thank you very much, Mr. Skelton.
                  Next, Ms. Stegink.
                  MS. STEGINK:  Good morning.  My name is Lisa
        Stegink and I'm here today on behalf of the Engine
        Manufacturers Association.  Among EMA's members are the
        principal manufacturers of the truck and bus engines covered
        by today's proposal.
                  As we sit here today, we are on the cusp, the
        critical turning point, of something spectacular.  We have
        within our grasp the potential to dramatically reduce the
        emissions of the most fuel efficient, reliable and durable
        source of motive power available today and the backbone of
        our nation's transportation and delivery system.  The diesel
        engine can be as clean, if not cleaner, than any other power
        source.  It is capable of meeting emission standards
        significantly below today's levels.  And let me remind
        everyone that the emissions from today's diesel engines
        already have been reduced by over 90 per cent.  Yet we
        recognize that much more can and should be done.
                  The key, of course, is to greatly reduce the sulfur
        content of diesel fuel.  Future reductions in diesel engine
        emissions are going to require much more than new engine
        designs and technologies.  As EPA appropriately recognizes,
        future emission reductions require a systems approach
        involving the engine, after-treatment and fuel.  In a sense,
        the future of clean, low emitting trucks and buses rests on a
        three-legged stool.  And the stool will fall without all
        three legs in place.  One of those legs, fuel quality,
        enables the technologies necessary to make the other two legs
        stand.
                  Without removing essentially all sulfur from diesel
        fuel, advanced NOx after-treatment devices will not be
        feasible; advanced PM after-treatment will be poisoned; and
        engines will be exposed to excessive wear, increased
        maintenance costs, and impaired durability.  We cannot
        emphasize enough the critical importance of ultra-low sulfur
        fuel.  It enables substantial NOx and PM emission reductions;
        it provides direct PM emission reductions; and it provides
        benefits not just from new engines, but from the entire fleet
        of diesel fueled vehicles.  Improved diesel fuel also has a
        role in responding to potential health effects concerns. 
        Ultra low sulfur fuel lowers the total mass of particulate
        from the entire fleet and enables the use of known after-
        treatment technologies, such as oxidation catalysts and
        catalyzed particulate filters, which can reduce the organic
        and carbonaceous components of PM emissions, can reduce
        hydrocarbon emissions and enable technologies to reduce NOx
        which, in turn, will reduce secondary PM.
                  We applaud EPA for recognizing the critical role of
        fuel sulfur.  We strongly support the need for a uniform,
        nationwide low sulfur fuel standard with a hard cap on sulfur
        content.  Regional differences in sulfur content will not
        allow the systems approach necessary to meet EPA's very
        stringent NOx and PM emission levels.  Further, a hard cap on
        sulfur is critical.  Averages simply will not work.  They are
        difficult and impractical to enforce.  Moreover, the engine
        and after-treatment legs of the stool must be assured of
        never being exposed to high sulfur fuel.
                  In our view, 15 ppm does not go far enough.  And,
        fuel improvements shouldn't only be limited to trucks and
        buses.  Non-road fuels also must be improved.  We are aware
        of the various arguments raised by the oil industry against
        improving fuel quality.  They don't want to reduce sulfur to
        15 ppm, let alone to lower levels.  Nationwide ultra low
        sulfur fuel can and must be achieved, and it can be done cost
        effectively without undue economic harm to either the oil
        industry or to the trucking industry, the users of both our
        engines and the oil industry's fuel.  We will provide
        detailed comments on the need for ultra low sulfur fuel in
        our written submission.
                  So today, we are enthusiastic, excited and hopeful
        about the future of the diesel engine and our industry's
        ability to produce reliable, durable, fuel efficient, high
        performing diesel engines that also are as clean or cleaner
        than any other power source.  There are issues which will
        require a great deal of work by manufacturers and the Agency,
        but it is no longer a question of if.  Give us fuel
        improvements, sufficient time, compliance flexibility, and
        testing certainty, and tremendous emission reduction can be
        achieved.
                  Thank you.
                  MR. GRUNDLER:  Thank you.  Ms. Law, welcome.
                  MS. LAW:  Good morning.  My name is Beth Law, and
        I'm the Vice-President for Law and Environmental Affairs at
        the American Trucking Associations.  We appreciate the
        opportunity to appear at this public hearing to present our
        views regarding the United States Environmental Protection
        Agency's new proposed highway diesel fuel and engine
        standards.  ATA will file more detailed written comments on
        the proposed standards before the close of the comment
        period.
                  ATA is the national trucking association for the
        trucking industry, representing more than 2,500 motor carrier
        companies of every type and class in the country.  Some of
        those trucking companies are multi-billion dollar companies
        whose names you know.  Most of the trucking industry,
        however, is composed of small businesses whose livelihood can
        be dramatically impacted by new regulatory requirements. 
        According to the Department of Transportation, almost 50 per
        cent of motor carriers have only one truck, and fully 95 per
        cent of motor carriers, almost 395,000 of them, have 20 or
        fewer trucks.
                  As the national representative of the trucking
        industry, ATA is thus vitally interested in matters affecting
        the trucking fleet, including the regulation of diesel fuel
        and diesel engines.  In this regard, the membership of ATA,
        like other Americans, supports EPA's overall objectives of
        cleaner air and protecting the environment.  ATA support a
        national low sulfur diesel fuel standard.  Mandating one
        diesel fuel nationwide for on-road and off-road engines and
        vehicles would advance those objectives.  ATA approaches this
        rule from the perspective of its longstanding commitment to
        cleaner air.  For example, we supported the switch to cleaner
        burning low-sulfur diesel fuel in 1993, a move not shared by
        other major users of diesel fuel, such as trains,
        construction equipment and agricultural equipment.  Since
        that time, we also have supported new standards and measures
        that have reduced average diesel engine emissions to
        approximately one-tenth of what they were ten years ago.  The
        trucking industry supports responsible regulation that will
        lower emissions.
                  At the same time, in pursuing those objectives, we
        believe the government should base its efforts on sound
        science, technology that has been tested in real life
        situations, public safety and the needs of the American
        economy.
                  In order to provide some context for our comments,
        I would like to briefly describe the critical role the
        trucking industry plays in our national livelihood.
                  The trucking industry is a vital part of the United
        States' economy, representing about 5 per cent of the
        nation's gross domestic product and providing employment for
        almost 10 million people in jobs that directly relate to
        trucking.  Trucking represents over 80 per cent of the
        freight transportation market in the United States, and
        transports practically every type of product and raw material
        used in the economy.
                  As the predominant mode by which United States
        consumers receive virtually all of their goods, the trucking
        industry also has significant influence on the cost of
        finished goods and raw materials in the economy.  Over 70 per
        cent of all communities in the United States rely exclusively
        on trucks to deliver all of their food, clothing, medicine,
        and other consumer goods.  In sum, the nation's trucking
        industry provides the essential transportation resources,
        infra-structure and services that are necessary to sustain
        the growing economy that benefits all Americans.
                  The proposed rule would mandate restrictions in
        emissions of nitrogen oxides, a key ozone precursor, and
        hydrocarbons from trucks and buses by 95 per cent from
        current levels.  Particulate matter emissions from these
        sources similarly face a mandated reduction of 90 per cent
        from current levels.  EPA proposes to achieve these
        reductions by establishing new exhaust emission standards for
        heavy-duty on-road engines and vehicles through the
        introduction of advanced, high-efficiency engine after-
        treatment and emission control devices.
                  A key concern the proposed rule raises is the fact
        that it discriminates against on-road sources.  Despite the
        fact that they are a major source of emission concerns, off-
        road diesel sources, trains, boats, construction equipment,
        agricultural equipment, and stationary diesel sources, will
        not be subject to these same engine emission reduction and
        fuel usage requirements.  Instead, EPA has singled out
        diesel-fueled truck for tighter restrictions.  EPA's decision
        to focus on on-road diesel emission sources and exclude off-
        road users is unjustified.  Indeed, EPA did not even attempt
        to justify it.  EPA simply said they "plan to initiate action
        in the future to formulate thoughtful proposals covering both
        non-road diesel fuel and engines."  EPA should initiate a
        thoughtful proposal now and cover off-road diesel emission
        sources.
                  This exclusion not only raises obvious issues of
        fairness, but also promises to create an inconsistent,
        balkanized regulatory scheme governing diesel fuel and diesel
        engines.  This inconsistent environment will create confusion
        and complicate delivery, management and use of the low sulfur
        fuel that is critical to the success of this proposal.
                  The proposed rule's emission targets will be
        feasible only through the use of very low sulfur fuel that is
        compatible with the contemplated emissions control device. 
        Absent the availability of such fuel, there appears to be no
        dispute that the treatment technology envisioned by the
        proposed rule, NOx adsorbers, PM traps, and selective
        catalytic reduction devices, would be rendered ineffective in
        actual operational scenarios.  EPA admits the proposed
        emission reduction standard represents an ambitious target
        for the emissions control technology, and that the
        application of this technology presents significant
        challenges.  Nonetheless, these yet to be developed
        technological fixes form the linchpin of the proposed
        emission reduction targets.  The regulatory fate of an
        industry critical to the economic well being of the United
        States economy is thus being premised on unproven, uncertain
        and effectively unknown technological advances.
                  An addition problem is whether the country's
        pipeline system will be able to deliver the 15 parts per
        million low sulfur diesel fuel.  Assuming that this is
        possible, the next question is whether, in the time provided,
        the separate distribution, storage, handling and retail
        facilities necessary to support both low sulfur and higher
        sulfur diesel fuel demands can be readied.
                  Fuel costs are another concern for the trucking
        industry.  While EPA projects increased fuel costs of four
        cents per gallon as a result of the proposed rule, petroleum
        industry studies indicate that production costs will be
        substantially higher.  Moreover, as recent dramatic price
        increases for reformulated gasoline in the Midwest have
        demonstrated, regulatory restrictions can drive fuel costs
        far beyond EPA estimates.  Our concern is that further
        increases in already high diesel fuel prices, or a reduction
        in the supply, could have a deleterious impact on the
        trucking industry and on its ability to deliver the food,
        medicines, and other consumer goods on which we all rely.
                  If sufficient quantities of low sulfur fuel are not
        available in 2006 and the additional infra-structure is not
        in place to support it, this proposed rule puts our fuel
        supply at risk.  For the oil and transmission companies, this
        may simply mean that they cannot sell as much product as they
        would like in 2006, or that they will have to pass costs on
        to end users.  For the end users in the trucking industry,
        however, it means idle trucks, undelivered shipments,
        unusable equipment, and loss of livelihood.
                  EPA's cost calculations largely ignore the unique
        impact of such considerations on the trucking industry. 
        Trucking is a very competitive and marginally profitable
        industry that is less able to pass along or effectively
        absorb these costs without some adverse economic impacts to
        its overall health and stability.  Profit margins in the
        trucking industry are very slim, averaging in the 1 to 4 per
        cent range, meaning that a small change in the cost of fuel
        can have a dramatic impact on the viability of a trucking
        business.
                  EPA's figures claim that the increase in cost of a
        new truck as a result of the rule will be $2,768.  EPA also
        estimates a $3,362 increase in the life cycle operating cost
        of a new truck, for a total cost increase per truck of
        $6,230.  However, the required technological fixes are
        admittedly still on the drawing board and not in widespread
        use.  As such, there could be significant maintenance and
        cost issues associated with the standards that simply are not
        capable of being evaluated and addressed, or perhaps even
        identified at this time.
                  The trucking industry shares the goals of a strong
        economy and a better environment for all Americans.  We are
        committed to responsible environmental regulation.  The rule
        that EPA has proposed has worthwhile objectives, but remains
        flawed, particularly because of the balkanized regulatory
        regime for diesel fuel and emission standards it would
        create.  Half-measures which exclude other major users of
        diesel fuel such as trains, construction equipment, and
        agricultural equipment and do not mandate one national low
        sulfur diesel fuel will not be sufficient to achieve our
        shared goal of cleaner air.  A national low sulfur diesel
        fuel standard should be just that; uniform in application to
        on-road and off-road engines and vehicles and uniform across
        the country.  In addition, EPA needs to revisit those
        portions of the rule that are premised almost entirely on
        assumptions regarding cost, feasibility, technological
        advances and the ability of the fuel and trucking industry to
        achieve unproven operational and maintenance mandates.
                  In closing, let me reiterate that ATA remains
        committed to improving the quality of the air that the public
        breathes and we are prepared to work with Congress, the
        public, and the EPA to achieve that objective as it relates
        to diesel fuel and diesel engine emission standards.
                  We appreciate the opportunity to express our views. 
        Thank you.
                  MR. GRUNDLER:  Thank you, Ms. Law.  Now I'd like to
        welcome Jeryl and Zakariah Feeley.
                  MS. FEELEY:  Hi.  My name is Dr. Jeryl Feeley, and
        my son will introduce himself, and I have the dubious
        distinction of being here and able to represent three
        populations affected by diesel exhaust.  As a health care
        provider, I can represent health care providers and the
        research that indicates that without distinction, indeed,
        diesel exhaust causes health care morbidity and mortality.
                  MR. GRUNDLER:  Dr. Feeley, could you move the
        microphone a little bit closer so people in the back can
        hear?
                  MS. FEELEY:  In addition, I can represent the point
        of view of myself, being a severe asthmatic, and having to
        deal with the effects of air pollution on my own health.  But
        more importantly to my point of view, and to my heart, is my
        ability to represent what it's like to have two children who
        have lung disease and who are every day impacted by air
        pollution.
                  Based on that information, I can tell you as a
        researcher and a health care provider, that research
        continues to indicate that there are direct correlations
        between lung disease, lung morbidity and lung mortality based
        on the particulate matter, the ozone resulting in diesel
        exhaust, and the carcinogenic emissions associated with
        diesel exhaust.
                  We have research that indicates there's an increase
        in the risk to adults exposed to diesel exhaust
        occupationally that increases chronic obstructive pulmonary
        disease, increases the likelihood of developing lung cancer. 
        Research indicates not only for people currently suffering
        from lung disease, but from people with normal lung function,
        that exposure to diesel exhaust can cause a decrease in lung
        function and a decrease in the lifetime expectancy of
        individuals.
                  More importantly to me, the research clearly
        indicates that the diesel exhaust initiates bronchial hyper-
        responsiveness, or what we would call an asthma attack. 
        Across this country, the federal government has acknowledged
        that we are almost in an epidemic with the increased
        diagnosis of asthma, particularly for children under the ages
        of four and five where the diagnosis of asthma rises
        logarithmically and there's no explanation why.
                  We do know that indoor and outdoor air pollution
        contribute to the morbidity and mortality of children with
        asthma, and adults with asthma.  And as we wait each and
        every day for a cure for asthma and better improved
        treatment, more and more children in our country and adults
        are being diagnosed with asthma.
                  Not only is this dear to my heart because my own
        children have asthma, but I have the opportunity and the
        privilege to work with multiple patients of lung disease in
        the state of Colorado.  I have had the opportunity to work
        with children from a public health perspective, and help
        educate their teachers, their parents on how to help them
        live with this disease.  I've also had the opportunity to
        work with adults who are learning to live with a disease that
        they've only now become diagnosed with and haven't had to
        deal with for their entire lives.
                  Each day in this state alone, and across the
        country, 10 to 20 per cent of children and 10 to 20 per cent
        of adults in this population suffer from asthma.  And we can
        talk about the effects and the costs associated with the
        diesel policy that's being proposed here today, and I'd like
        to remind you of the costs for every parent, for every
        patient with a lung disease. 
                  An inhaler that people use to just rescue their
        airways known as a bronchodilator can cost anywhere from $15
        to $25 per inhaler.  That's not a monthly cost.  It's a per
        inhaler cost.  The protective medications that we give these
        children run anywhere from $50 to $100 per canister, and it
        depends on how often they have to use that medication.  I can
        speak on behalf of myself that I am fortunate to have health
        care insurance for my children, so I only pay a co-pay.  But
        as we know, also an epidemic in this country is the people,
        particularly children in this country, who are uninsured and
        cannot afford these medications.  That would explain the
        increase in ER utilization for children with asthma and the
        increase in hospitalizations, because the only time they can
        seek health care without insurance is in a crisis situation.
                  In addition, I'd like you to consider the costs of
        hospitalizations, the costs of emergency room visits, and the
        costs every single day to the quality of lives to people with
        lung disease.  I know from my own perspective, I can tell you
        it's frustrating to do the best I can to care for my health
        and to know that there are things that I have no external
        control over, such as diesel exhaust.  I can tell you as a
        mother how frustrating it is to do everything I possibly can
        for my child to protect him, and inevitably, just like on the
        drive here today, if I get stuck at a stop light behind a
        diesel truck, and with an RTD bus on the side of the car,
        there's absolutely nothing I can do to protect my child.  I
        can give him his medications in the morning, every night,
        just like I'm supposed to, but I cannot control air
        pollution, and that's why we need people to help us control
        what we cannot for our children.
                  We carry an inhaler in our car for my son.  Every
        car that he is frequently involved in being transported in
        also has an inhaler in it, because we never know when he will
        be exposed to something that will make him ill.  I encourage
        multitudes of patients to do the same thing, because we don't
        know what it will do to their airways when they're travelling
        to and from locations if they are exposed to diesel exhaust.
                  Research indicates so clearly that diesel exhaust
        exacerbates asthma.  The medications that are trying to be
        approved through the FDA for utilization and efficacy in the
        treatment of asthma consider how well they protect the
        airways to noxious air pollutants.
                  When we consider the fact of the 90 to 97 per cent
        differential in the sulfur content, 97 per cent is an
        absolute minimum because it's the only thing that makes the
        protective equipment efficacious.  And if we don't want to
        make it 97 per cent, it does nothing for the people with lung
        disease.
                  I'd also like to say we all see the diesel exhaust
        and we can see the beautiful visual aids where we can watch
        the pollution come out of the trucks.  First of all, the
        black stuff that we see in the air is not what causes the
        problems in the airways.  Diesel exhaust is known to make
        small--or fine particles that are so small that they're
        incredibly efficient and being deposited directly into the
        airways and, thus, their impact on lung function is much,
        much more profound.
                  What we don't see is the children like my son, or
        the children in the emergency rooms, or the adults with lung
        disease, and how this impacts their lives.  We don't have
        pretty visuals to show you what it's like every time a child
        on a school bus has to use an inhaler, or in some cases,
        doesn't have access to their inhaler, and so later that
        night, their parents take them to the emergency room.
                  I'd also like you to consider the--to us as adults
        in this room, and especially as business and financially
        sound people, we consider the impact of five to seven years
        in implementing this plan.  I'd like to put that in the
        perspective of the life of a child.  My son is ten years old
        and my other son is three.  By the time this is in effect,
        this bill is in effect as it stands, my son will be preparing
        to graduate for college.  He will have spent his lifetime in
        an air polluted environment.  My other son will be getting
        ready to go into high school and, again, he will have spent
        his entire life exposed to these chemicals.  It is not their
        choice to have lung disease.  It is not their choice to
        suffer from asthma, and it is not their choice to be exposed
        to diesel exhaust, but it's not something as a parent or as a
        health care provider I can protect them from.
                  I would also like to say that there's statistical
        evidence that it increases not only increase in morbidity or
        mortality, asthma is the leading cause of school absence, and
        there is research to indicate that school absences,
        hospitalizations and ER visits are higher in schools among
        children--for children with asthma in schools that are close
        to major highways, again, a direct correlation.
                  And then I would like to say when we talk about
        particulate matter and the analogy of a teaspoon of chemicals
        in a swimming pool, the airways can tell the difference.  The
        airways don't know whether we're compromising on the parts
        per billion.  All they know is what irritates them.  And it's
        a chemical physiological reaction, whether we can see it or
        detect it or not.
                  And in conclusion, before I introduce my son, I'd
        like to say my children are fortunate because they have a
        health care provider for a mother, and so they have benefits
        in life living with their asthma that many children don't. 
        And yet despite those benefits, my children still suffer on a
        daily basis, still visit a physician, still take medications
        that side effects are detrimental to them, but it is
        important to breathe every day, so it's a cost benefit
        analysis from my mother perspective.  But I'd also like to
        say that there are children that are not as fortunate as
        mine.  And then I'd like to say publicly that I'd like to
        thank my son for his courage for being here today.
                  MR. FEELEY:  Good morning.  My name is Zakariah
        Feeley and I'm ten years old.  I'll be turning eleven on
        Sunday.  I have asthma since I was a baby.  My little brother
        has asthma too.  He is three.  I've learned to control my
        asthma and diesel trucks make me have trouble breathing.  And
        the sooner you fix this problem the better I breathe, and I'm
        glad my--I'm glad that my mom can help me whenever I'm having
        trouble breathing.  And I ask you to please clean up the air
        that me and my mom and my little brother breathe.
                  Thank you.
                  MR. GRUNDLER:  Thank you, Dr. Feeley, and your
        brave son for reminding us what this is all about.
                  Mr. Neufeld?
                  MR. NEUFELD:  Well, I must say it's an honor and a
        privilege and no small challenge to present the views of a
        refining company behind Zakariah.  However, he's a very well
        behaved young man for ten years old.  I can hardly sit here
        long enough to listen to all of this stuff, and he's done an
        admirable job.  I hope I can come behind you on another
        panel, Zakariah.
                  My name is Bob Neufeld.  I am the Vice-President of
        Environment and Governmental Relations for Wyoming Refining
        Company.  We are a small company.  We employ less than 100
        people.  Our only significant asset is a 12,500 barrel per
        day refinery in Newcastle, Wyoming.  We are the largest
        single employer, private employer, in Newcastle, and we
        provide probably more than 50 per cent of the motor fuel
        supplies for our area of Eastern Wyoming and the Black Hills
        region of South Dakota.  We are currently a 90 per cent
        supplier of jet fuel for Ellsworth Air Force Base in Rapid
        City, South Dakota.  I think I can safely say that our
        employees, the economy of Newcastle, Wyoming, the customers
        and motorists and consumers in Eastern Wyoming and Western
        South Dakota and Ellsworth Air Force Base continue--depend on
        our continued existence, if not for their supply, but for our
        competitive presence to keep the costs of their fuels down
        and within reason.
                  I want to start out by saying that Wyoming Refining
        Company has fundamental support for the goals of this rule. 
        I would not be fooling anybody to suggest that we are an
        eleemosynary institution with charitable motives.  We simply
        believe that any rule that's capable of reducing the NOx
        contributions of heavy duty diesel from 15 per cent of
        national emissions today to 3 per cent or less in 2030, while
        doubling the vehicles miles travelled from those vehicles, is
        going to help us keep the internal combustion engine around
        for a long, long time in terms of its utility and its
        economic benefits for American society, and we see that as
        being in our long-term enlightened self-interest.
                  However, we're not sure that you've got the
        implementation of the goal quite correct in this rule.  In
        the Tier 2 gasoline sulfur rule, EPA stated, and I quote,
        "Not all refineries would be able to comply with the proposed
        standards in the time period provided."  And then recognized
        that by proposing what was called the geographic phase-in
        area, and special relaxed implementation schedule for small
        refiners.
                  The current diesel rule, however, proposes one
        compliance state for all refiners, and super-imposes that
        compliance state and construction schedule on top of the
        gasoline phase-in and compliance schedule.  We think you got
        it right the first time, and not the second time.
                  In the context of our company, I'd like to explain
        what that means.  We have a history in the last five years of
        particularly poor financial performance, and in fact in 1998
        and 1999, we reported losses.  Things got to the point where,
        believe it or not, as recently as January of this year, if we
        had closed operations, we would have reduced our losses by a
        million dollars a month.
                  Seeing the handwriting on the wall, we decided we
        needed to either to do something about it, and that something
        was to put in a new fluid catalytic cracker at our refinery
        to increase the efficiency of our gasoline and diesel
        production.  Well, that project is under construction and
        well on its way, but in February of this year, we had to
        close on a loan that leaves us with the business realities of
        moving forward.
                  There are about four things, or five things, that
        that loan and our business reality reflect for us in terms of
        this rule.  First, because that loan is existing, and it was
        given to us by the only bank in the country that would even
        loan us money, there was only one bank in the entire country
        that would loan us money, and this was on a project that's
        going to provide a significant, or project to provide a
        significant economic return, no bank loan will loan our
        company additional money for any other project, particularly
        projects that do not return a profit to our bottom line,
        because there's no increased income to repay that loan until
        our existing loan is either refinanced or paid off.
                  Second, as a result, we must either finance most of
        the gasoline and the diesel desulfurization projects out of
        projected cash flow increases from this new project, or we
        must refinance our current debt in a manner that allows us to
        finance both the diesel project and the gasoline project.
                  Third, the option of cash financing is highly
        unlikely.  We are limited in our diesel project to a capital
        expenditure rate of a million dollars a year by the loan
        agreement.  For the gasoline project, we are limited by a
        provision that requires us to spend 50 per cent of our cash
        flows into early retirement of our debt. 
                  Furthermore, we think that early retirement of our
        debt is probably, in terms of the long-run, a better solution
        for the longevity of our company.  Establishing a good debt
        retirement record, in light of our past financial
        performance, is imperative in order to be able to refinance
        our loan and go on and finance the capital for these diesel
        and gasoline projects.
                  Fourth, assuming that we can in fact establish a
        good debt repayment record over the next three or four or
        five years, our first opportunity to refinance our current
        loan and obtain new capital for the new projects is mid-2005,
        or the first half of 2005.  What that means is is that in
        order to--that leaves us only twelve months, which is really
        not enough time, to meet the 2006 implementation schedule for
        the diesel rule.  We would need to start planning in mid-
        2003, and probably start construction in mid to late 2004 to
        meet the 2006 deadline.  That requires having the financing
        in place in order to do it.
                  In light of that, we offer these observations. 
        One, in order to spread out the construction schedule, I'm
        not sure if everybody here is aware, but in terms of
        providing the high pressure compressors that will be needed
        for low sulfur diesel--providing that equipment.  You don't
        walk into their showroom and just pull it off the shelf. 
        You've got to place your orders years in advance, and two
        manufacturers are not going to be able to meet the demand of
        the entire refining industry in the United States in that
        time frame.  We think that there should be at least three
        years between diesel compliance and gasoline compliance for
        small refiners.
                  Second option in terms of timing, we think that EPA
        should seriously consider--and I find myself amazed at even
        agreeing just a little bit with my acquaintance down at the
        end of the table, Vickie Patton, from the Environmental
        Defense Fund, but it amazes me how often we land almost in
        the same position--that there should be simultaneous
        compliance with diesel refiners and with the NOx controls on
        the vehicles.  That is, they should all be brought on
        simultaneously in the same year.  We think we can achieve
        essentially the same emission goals of this rule if the
        vehicles are all brought in in the year 2008, and the fuel is
        compliant in year 2008.
                  With respect to the sulfur level, we adhere to the
        industry position of 50 parts per million, but we also
        believe that our industry trade groups may be as successful
        in achieving 50 parts per million as they were in achieving
        150 parts per million on gasoline.  Recognizing that, we
        think any amount of flexibility above 15 parts per million is
        useful.  EPA's example of 15 parts per million average, 20
        parts per million cap, in the rule is instructive.  The
        emission benefits are almost exactly the same as the 15 part
        per million cap, and it illustrates that we should try to
        explore moving that level up as much as possible.
                  To the degree that it poses uncertainty on the
        emission control industry, the vehicle manufacturing
        industry, we think that's where the uncertainty ought to be. 
        Once we put our concrete and steel in the ground, there's not
        much that we can do to respond to things like upsets from our
        power suppliers that make our compressors run lower, or a
        leak in our heat exchanger that takes high sulfur diesel and
        runs it across the heat exchanger into low sulfur diesel. 
        Whereas, the vehicle emission control industry on a yearly
        basis can evolve and improve and even retrofit the equipment
        on its products.  And so we think the uncertainty is better
        placed there than with the refining industry.
                  I'm going to skip part of my presentation and go
        directly to the end.  If you could put the overhead on?
                  I am personally convinced that in PADD IV, which is
        the petroleum distribution region--and I apologize for the
        air bubbles in my slide--the petroleum distribution region in
        which we live, probably as many as three, perhaps four
        refineries are going to close unless something is done to
        change the compliance schedule for this rule.
                  What we have done here is we took advantage of
        Amoco Corporation's magnanimous closure of a refinery in
        Casper, Wyoming in 1991.  I'm not sure why they closed it,
        but we went back to 1987 and looked at prices in Billings,
        Casper and Rapid City, South Dakota at major terminals in our
        market for gasoline, and compared them to prices in PADD III,
        which are not affected by Casper, the Casper closure.  And
        what we found was that the spread between the two regions
        increased by over 6 cents a gallon after the Amoco Casper
        refinery closed.
                  We think that that's an expensive thing for people
        to be playing with, that EPA could in fact be playing with
        fire in terms of forcing refinery closures, and that it's
        expensive.  Clean air is something we all need, but sometimes
        we wonder whether or not you can't have it all, and if you
        induce the necessary costs and force refinery closures,
        you're forcing consumers to pay money that could in fact be
        spent on better health care and better nutrition.
                  Thank you.
                  MR. GRUNDLER:  Thank you, Mr. Neufeld.  Questions?
                  MR. FRANCE:  Ms. Law, just a question of
        clarification.  In your testimony--as you know, I don't know
        how many hearings you've been to, but we've been provided a
        lot of testimony from engine manufacturers and suppliers of
        after-treatment that there's a great deal of optimism, if not
        confidence, if given the right fuel, that the technology will
        be there.  And, in fact, one manufacturer will be
        commercializing traps, offering them for sale as early as
        next year.  You make a comment in your testimony that the
        technology is unproven, uncertain.  I'm curious what that's
        based on, those statements.
                  MS. LAW:  Well, it's based on the fact that at
        least in the United States, there has not been significant
        mass production, certainly for diesel trucks, of this
        technology.
                  MR. FRANCE:  Okay.  And, again, I mean it's sort
        of--and we don't need to get into it now, but in your written
        comments, that sort of conflicts with the feedback that we're
        getting and the fact that as early as next year, you're going
        to have mass produced commercialization of traps, for
        example.  And, again, if you would in your written comments,
        follow up with any clarification on those points, okay?
                  MS. LAW:  We can certainly do that.
                  MR. FRANCE:  Thank you very much.
                  MR. GRUNDLER:  I think we are going to hear later
        on from a representative of the manufacturers of after-
        treatment devices, and perhaps they could also shed some
        light on that point.
                  I want to thank the first panel for their time and
        their commitment to participate in this hearing today.  The
        comments will be well considered.
                  At this time, I'd like to invite our second panel
        up.  Dr. Paul Berger will be speaking first, followed by Rich
        Kassel, Dr. Avner, Lea Purvis, Matthew Gill, and Gina
        Porreco.
                  Also, I'd like to invite John Fox up at this time. 
        He was not scheduled.  We'll try to fit Mr. Fox in before
        12:00.  I know he's got a commitment.  
                  Dr. Berger, why don't you begin.
                  DR. BERGER:  Okay.  I'm a family practitioner in
        Boulder, Colorado, and I've been asked to talk about some of
        the medical and medical/personal issues here.  Some of this
        is repetitive.  I won't talk about statistics because I think
        we've seen the statistics.
                  I see the studies in my journals on a monthly
        basis, studies that have shown that increased pollution
        causes exacerbations of people's asthma and emphysema
        symptoms.  So I'm just going to tell you some of the stories
        from my clinic and from my family.
                  On the high pollution days in the Front Range, I
        definitely do see more people suffering from their asthma and
        emphysema.  I have to give out more medications.  More people
        get admitted to the ICU and are put on ventilators or put on
        IV steroids.  And these medications have side effects, as Dr.
        Feeley was talking about earlier.  And Dr. Avner may speak to
        it as well.
                  The IV steroids can cause hallucinations.  They
        decrease skin thickness and skin health.  My wife asked me to
        add that it causes anxiety and insomnia.  Some of the other
        medications do as well.  And if we can reduce the need for
        these medications, then of course we'll reduce the need--
        we'll reduce the side effects.  So I wanted to tell you what
        it's like to wake up in the middle of the night with your
        wife basically slowly suffocating.
                  It's very disturbing to be woken up several times
        in the night during these high pollution days and have your
        spouse puffing on the inhaler.  She can't lay down because
        it's harder to breathe laying down.  And I guess I just
        wanted to say that, you know, there are a lot of people who
        have tried to deny the importance of pollution to save a few
        cents, and I think that the increased costs of these
        improvements that we've been talking about will just get
        passed on to the consumer, and I think we've had other
        statistics show that we'll actually save money in terms of
        health care if we spend the smaller amount of money now in
        creating these improvements in the industry.
                  So, in summary, I just wanted to say that I think
        that this is the least we can do.  I think we should have
        done this 20 years ago or 30 years ago.  We've known these
        effects for this long, and if we do improve the emissions of
        all our vehicles, I think this is just the start, this is the
        smallest thing that we can do at this time, and if we do make
        these small improvements now, then we will see less human
        suffering.
                  Thank you.
                  MR. GRUNDLER:  Thank you, Dr. Berger.  Mr. Kassel?
                  MR. KASSEL:  Thank you very much.  My name is
        Richard Kassel and I'm a senior attorney with the Natural
        Resources Defense Council, a national environmental advocacy
        organization.  At NRDC, I coordinate the Dump Dirty Diesels
        Campaign, which is a local, regional and even national effort
        to clean up the nation's diesel trucks and buses.  On behalf
        of our more than 400,000 members, I thank you for your
        proposal.  I also thank you for the opportunity to talk to
        you today about it.
                  NRDC has been working to clean up diesel emissions
        since the mid-1970s, at about the same time as we were spear-
        heading the national campaign to eliminate lead from the
        nation's gasoline supply.  The connection between the lead
        campaign then and today's proposal is an important one.  Just
        as lead in gasoline was the barrier to cleaner cars in the
        1970s, today's high sulfur levels in diesel fuel is the
        barrier to cleaner diesel buses and trucks today.
                  Your proposal, when finalized, will mean cleaner
        air and better health for everybody, emission reductions that
        will be the equivalent of removing the pollution from 13
        million of today's trucks from the roads, without actually
        removing a single truck.  
                  Every Coloradan, and more than 120 million
        Americans who currently live in areas that don't meet EPA's
        health standards for smog and soot, will benefit from the
        emission reductions from this proposal.
                  Now, the reasons for our long-standing concerns
        about diesel emissions are clear.  Today's diesel engines
        emit high quantities of asthma attack inducing and toxic
        particles, smog forming nitrogen oxides, and more than 40
        chemicals that have been listed either as hazardous air
        pollutants by EPA or Congress, or as toxic air contaminants
        by California.
                  We have more information on these health impacts in
        our written comments, and of course others have spoken very
        eloquently already.  But I'd like to just touch on two
        issues.
                  We are particularly concerned about the growing
        incidence of asthma in our communities, as well as the
        growing associations that are being made by public health
        agencies around the world, between diesel and cancer.  
                  A word or two about asthma.  A recent study
        estimated that asthma cases will double by 2020, affecting
        roughly one out of every five American families.  Now, nobody
        knows what causes asthma, but numerous studies have shown
        associations between diesel's particulates and asthma
        attacks, hospitalizations for emergencies, and other
        indicators.
                  As a nation, we must attack the triggers of asthma
        attacks.  Even though we don't know yet what is the actual
        cause of the asthma itself, there's an analogy here to the
        early debates about tobacco and cancer.  In the mid 1960s,
        nobody knew, and before, nobody knew what the causal link was
        between tobacco and cancer, but it was important for
        government to begin to act because of the associations that
        had already been shown.
                  Now, some may argue that we don't need to act yet
        because of the failure to show--to establish a causal link
        between diesel's particulates and asthma itself.  But it
        would have been terribly wrong to not act in the 1960s based
        on what we knew about tobacco and the associations with
        cancer.  Likewise, it would be terribly wrong to not apply
        the same precautionary principle today when we see what's
        happening with asthma rates.
                  Now, a word on cancer.  Many agencies around the
        world, in this country as well, have found links between
        diesel's exhaust and cancer, probable carcinogen, likely
        carcinogen, different words are used.  I'll say here that the
        evidence is pointing in a clear direction, and I encourage
        EPA to finish its work and its own conclusions about the
        cancer links between diesel and cancer.  According to the
        National Association of State and Local Air Pollution
        officials, and we heard from them before, roughly 125,000
        potential lifetime cancers could result from today's levels
        of diesel exhaust.  That includes more than 1,200 cancers in
        Denver, more than 1,500 in Phoenix, and roughly 650 in Salt
        Lake City.  So I'd like to talk about the rule very briefly.
                  As we testified in New York and in Los Angeles, we
        strongly, strongly, strongly support the proposed national
        cap of 15 parts per million sulfur in mid 2006.  Likewise,
        we'd oppose any sulfur level with a cap above 15 parts per
        million.  Here's why, and I go back to the lead analogy. 
        Just as a small amount of lead in gasoline would poison or
        disable a catalytic converter in cars, a small amount of
        sulfur in diesel can disable some of the most promising
        particulate and NOx controls, including NOx adsorbers and
        some of the most advanced particulate filters and traps.
                  In other words, the oil industry's suggestion of a
        90 per cent cut to 50 parts per million as the cap sounds
        reasonable to casual observers of the proposal.  To somebody
        who first hears about this proposal in a 60 second story on
        the evening news, the industry sounds pretty good.  They're
        proposing a 90 per cent cap.  But that 90 per cent cap would
        render the particulate levels and the NOx levels that you've
        proposed unachievable.
                  Under the oil industry proposal, the most promising
        particulate traps would be likely to suffer high failure
        rates, leaving oxidation catalysts that yield much smaller
        particulate emission reductions as the most likely after-
        treatment technology that would make it through the
        certification process.  SCR would be the most likely NOx
        after-treatment that's used.  Now, while SCR certainly seems
        capable of very significant emission reductions, relying on
        it nationally would also mean that we're relying on the
        implementation of a national urea infra-structure which would
        cost billions of dollars to install and operate.  Only the
        near-elimination of sulfur would create a fuel supply that's
        clean enough to adequately support NOx adsorbers and the
        other of the most promising particulate and NOx emission
        controls that are most likely to meet the 2007 levels.
                  So the second step after sulfur, is of course EPA
        needs to slash levels of particulates, nitrogen oxides, and
        the other emissions from diesel trucks and buses, and your
        proposal does that.  We strongly support all of the new
        proposed emission standards.  However, as we discuss in depth
        in our written testimony, we urge you to eliminate the NOx
        phase-in.
                  There are some other important pieces I'd just like
        to touch on very quickly.  EPA also needs to adopt strong
        blue sky standards for advanced technology vehicles, to
        provide guidance to states and fleets that are trying to go
        beyond the mandatory minimums of your proposal, and it needs
        to develop a comprehensive end-use compliance and enforcement
        mechanism to make sure trucks on the road are as clean as
        they are on a certification test.
                  I'd like to use my last three minutes to respond to
        some of the arguments that have been put forth by the oil
        industry and its allies.
                  Predictably, some of the same companies that fought
        unleaded gasoline in the 1970s are lining up to fight against
        the reduction of sulfur today.  We've heard now in five
        different hearings similar arguments, and it's clear that the
        oil industry is fighting against cleaner air and improved
        public health when you really look at what they're saying.
                  The evening news of the past two weeks shows
        clearly that the oil industry is playing straight out of the
        old play book, trying to scare the American public that
        environmental regulations will drive fuel prices beyond their
        reach, even when the evidence shows demonstrably that these
        regulations actually play only a minor role in the fuel price
        at the pump.  Because they can't win on the science, the oil
        industry and its allies are making three arguments, poverty,
        the U.S. economy, and delay.  I'll touch on each of them.
                  First, poverty.  Oil companies are saying they
        can't afford the $3 to $4 billion that it will cost to
        implement this proposal, the low sulfur diesel part of it,
        nationwide by 2006.  Now, given that America's largest oil
        companies reported nearly $12 billion in profits in just the
        first quarter of this year, we think that an investment in
        cleaner fuel is actually an extremely reasonable cost of
        continuing an extremely profitable and record-setting
        business.
                  Second, U.S. economy.  It's estimated that the
        rules could add up to 4 cents to the price of a gallon of
        diesel fuel.  I'd just like to note that BP Amoco will be
        selling 15 parts per million diesel fuel in California next
        year, and they say that there will be a 5 cent incremental
        cost, with no benefits of economy of scale that would come
        with a national roll-out.  A recent poll found that 85 per
        cent of the American public would be willing to pay the
        incremental cost.
                  And, finally, delay.  Some opponents are veiling
        their opposition by asking you to slow down the process, that
        we shouldn't rush to judgment on diesels this year.  They
        seem to want it both ways.  They want to be perceived as
        supporting the environmental goals of the proposal.  They
        want to be perceived as wanting to see the end of the era of
        dirty diesels, but they're unwilling to commit to actually
        meeting the goals that could accomplish this on the time
        frame that you've laid out.
                  It's critically important that EPA hold the line
        against these kinds of arguments.  And if I could just take
        one sentence, I just want to note that there are industry
        representatives here today, and all week, the past two weeks,
        that have shown that industry isn't monolithic in its
        opposition to the proposal.  EMA, MECA, the Alliance of
        Automobile Manufacturers, California Trucking Association,
        TOSCO, BP Amoco, International, and others.
                  Thank you.
                  MR. GRUNDLER:  Thank you, Mr. Kassel.  Mr. Fox,
        would you go next?  I understand you've got a time
        constraint.
                  MR. FOX:  Thank you for the opportunity to speak
        today.  My name is John Fox.  I am here to urge you to adopt
        the toughest possible standards to reduce pollution from
        heavy-duty vehicles.  Here in Colorado, smog sends more than
        150,000 people to emergency rooms each year, and causes more
        than 6 million asthma attacks.  Making matters worse, a study
        by local air pollution control officials estimates that
        diesel exhaust is responsible for 125,000 cases of cancer in
        the U.S.
                  In order to protect the public health, we must
        require drastic reductions in pollution from these large
        trucks and buses as soon as possible.  I was, therefore,
        disappointed to learn that the EPA has proposed waiting until
        2010 to fully clean up smog forming pollution from trucks and
        buses.
                  In addition, because high sulfur fuel will poison
        the new diesel clean-up technologies, we must ensure that all
        diesel fuel is fully cleaned up and readily available before
        the trucks are required to clean up.
                  Specifically, I urge you to first of all reduce
        diesel sulfur levels to more than 15 ppm nationwide for both
        on and off-road diesels nationwide by 2006.  Secondly, clean
        up all big trucks and buses at least 90 per cent by 2007. 
        And, third, ensure that big trucks are meeting the emission
        standards on the roads, not just during the engine tests.
                  Finally, I urge you to increase the use of diesel
        alternatives, such as electric and fuel cell buses.  These
        measures are critical to the protection of public health and
        the environment.  I hope you seriously consider them in your
        final decision making.
                  Thank you.
                  MR. GRUNDLER:  Thank you, Mr. Fox.  Dr. Avner?
                  DR. AVNER:  Thank you very much.  Thank you for
        inviting me to participate in testimony on behalf of the
        advocates for cleaner air and lower visible and non-visible
        pollutants that are responsible for a great deal of
        discomfort in this country.
                  I am a board certified pediatrician, a board
        certified allergist, immunologist, with a specialty in
        asthma, and have been in practice for 28 years.  I serve as
        president and CEO of Colorado Allergy and Asthma Centers,
        which has hopefully served this community during that time. 
        We take care of literally thousands of people with
        respiratory illness.  Sitting in this room right now, one in
        four of you has upper airway problems that require some kind
        of attention each year.  And of those of you with those
        problems, half of you will have or do have asthma.  
                  As a fairly significant piece of information, when
        we land people on the moon, we slow down the speed of light. 
        We accomplish scientific miracles, such as charting the human
        genenome, and at the same time, are rather primitive in our
        consumption and utilization of energy sources that provide,
        at least in terms of asthma and associated diseases, a cost,
        both direct and indirect, in excess of $12 billion a year. 
        That is for every man, woman and child in this country,
        approximately $50, in contrast to $25 or $30 a year for those
        who have cars for the fuel price increase that this is going
        to distribute, according to the numbers I've just listened
        to.
                  Right now, as somebody has alluded to earlier,
        asthma in particular, but related diseases to asthma and
        chronic obstructive pulmonary diseases such as emphysema and
        chronic bronchitis, are the most common cause of emergency
        room visits in this country.  In Colorado and at Children's
        Hospital, it's the most common causes for visitations.  It's
        the most common cause for absenteeism from work and from
        school.  And absenteeism of children also means absenteeism
        of parents, which prescribes an enormous indirect cost.
                  I think our country has put the emphasis on the
        wrong syllable sometimes.  Rather than considering health
        care, I think we've been dealing with disease care, and this
        hearing, in my opinion, is one of the important hearings that
        develops a stand and a position for health care.  Disease
        care is much, much more expensive than preventive
        maintenance.  There are numbers of public reports, for
        example, that show preventive education has a kick-back ratio
        of $7 for every $1 spent in keeping a person living a
        healthier lifestyle.
                  The hydrocarbons that are not visible, the non-
        methylated hydrocarbons, sulfur products, even the carbon
        monoxide which is one of the important, yet not mentioned,
        byproducts of diesel fuel, and less clean non-diesel fuels,
        have a major impact not only in respiratory disease, but
        there are a number of published studies that can show that
        mentation, cognition, the ability to make decisions, to
        recognize danger, to abstract, are affected tremendously by
        parts, for example, in excess of 6 parts per million.  Carbon
        monoxide at some of the cross-streets in Colorado, or in
        Denver in particular, exceed 25 parts per million during rush
        hour.  These are dangerous thing for our community.
                  I think we are in a crisis really, and it is not a
        matter of just jobs.  It's a matter of public health.  It's a
        matter of public concern.  It's a matter of state of well
        being to keep our citizens functional, creative, at work in
        imaginative jobs that can solve some of the health care and
        crisis problems that we deal with every day.  You need not be
        in practice very long to know that the days when you see lots
        of truck traffic, lots of diesel fuels working in your
        community, people who live and work at jobs that approximate
        positionally those kinds of activities, get sick, and they
        get sick and it's an expensive, painful, almost frightening
        condition.  
                  People do die of these diseases, and we're dying
        more frequently now than we ever have before.  From the early
        Eighties to the mid Nineties, for example, just asthma alone
        has increased by about 60 per cent in its incidence.  Those
        of us who deal with the condition are convinced that air
        pollution is a major contributor to this, and it's going to
        take some courage, some imagination on the part of people who
        are trying to direct their efforts and energies and resources
        at cleaning the environment to change this.
                  But it has an economic impact that's far greater
        than what we have heard in terms of the cost of fuel and some
        jobs, which certainly would be affected.  But I think we need
        to sit back and imagine that there would be new jobs created
        by a newer industry, by an evolved industry to provide a
        better quality of life for people, at least as it has to do
        with respiratory disease.  And I would appeal to the EPA to
        enact consciously very black and white ground rules, and not
        be swayed by emotional matters that have nothing to do, or
        very little to do with the health of our community and our
        citizens.
                  MR. GRUNDLER:  Thank you very much, Doctor.  Ms.
        Purvis?
                  MS. PURVIS:  I would like to welcome you to Denver
        today.  I think it's a fairly clear day, without much haze,
        and it makes it very hard probably for a day like today to
        imagine the infamous Denver brown cloud.  That's a kind of
        environment where we've got heavy pollution.  It's typically
        on a week day.  There's thousands of commuters that are
        adding to the inversion layer.  And at the American Lung
        Association, the phone rings and lung disease patients call
        from all around the state to tell us what the eye can already
        see.  I can't breathe today.  Stay inside, they say.
                  In Colorado alone, we've got 25,000 adults with
        emphysema.  We have 140,000 adults with asthma.  And if you
        add to these numbers another 393,000 adults with acute and
        chronic bronchitis, you then begin to realize that breathing
        is a conscious struggle for over a half a million adults in
        Colorado alone.
                  If you want to take this in personal statistics,
        and then take into account the children of Colorado, there
        are 67,000 that have diagnosed asthma.  A child with lung
        disease can tell you the effects of poor air quality.  It
        hurts.  The tissues and the walls of the airways become
        irritated, inflamed and swollen.  Breathing capacity is
        diminished and the body shuts down in defense.
                  We need three things to live.  We need fuel, water
        and air.  The first two, we can go for days without.  But for
        air, just hold your breath and see what it is that we take
        for granted, and so lightly.
                  The industry will request minimum standards.  There
        will be an effort to push back time frames, and negotiated
        compromises will be sought.  But for the hidden half a
        million, for those who are on oxygen, asthma medications and
        suffering with chronic lung disease, there is no compromise
        for being able to breathe.
                  Thank you.
                  MR. GRUNDLER:  Thank you, Ms. Purvis.  Matthew
        Gill?
                  MR. GILL:  First, I want to thank those individuals
        who have afforded me the opportunity to speak today.  My name
        is Matthew Gill, and I am an asthmatic, an environmentalist,
        and have been personally affected by the fatal results of
        diesel fuel.
                  I'm asking you to adopt a common sense approach to
        cleaning up heavy trucks and buses.  Nationwide, 40,000
        people die prematurely each year from breathing soot
        pollution.  A study by state regulators has exposed that
        diesel soot emissions are responsible for 125,000 cancer
        cases alone, just here in the United States.  Here in
        Colorado, smog sends more than 150,000 people to emergency
        rooms and causes 6 million asthma attacks each year alone.
                  While I experience the difficulty of living with
        asthma, I've also been personally and fatally affected by the
        fact diesel can have upon an asthmatic individual.  A couple
        of years ago, my friend and I, who was--he was not aware that
        he had asthma, started out the day perfectly fine, and we
        actually went into downtown Denver.  As the day went on, we
        were constantly confronted with diesel trucks, cars, et
        cetera.  He started to become short of breath.  I didn't
        really think much of it, but he was saying that his chest
        hurt and that he felt very short of breath.  Eventually, he
        stopped breathing, and the result was that he died of an
        asthma attack.  He did not know he had asthma, and when you
        watch almost one of your best friends suffocate to death, you
        don't have much sympathy for special interests and for just
        simply wanting to make a buck.
                  I'm sorry, I just can't sympathize with that. 
        Maybe I'm not a businessman, or maybe I don't fully
        understand a businessman's mentality.  But all I can say is
        that I simply don't understand how someone could put profits
        above the everyday individual, the effects upon the
        environment, and especially those living with health effects
        that often result in death.
                  You have a choice and you can make it today.  I
        don't even understand why we're here.  The technology is
        available to clean up these trucks, to save lives, and to
        prevent the environment from having further destruction in
        the future.  Perhaps it's not going to--perhaps you're not
        going to make quite as many profits.  But when it comes to
        saving lives, saving the environment, I believe that you
        should make the appropriate choice, and look really into your
        heart and say what's more important to you.  
                  When you look back upon your life, are you going to
        want to say no, I wanted to protect my own special interest,
        and I wanted to see for the profits, or are you going to say
        no, I was courageous and I took a step forward and I decided
        to protect the lives of everyone, as well as the environment? 
        And so I don't even understand why we're here today.  It just
        seems so simple to me.
                  Thank you.
                  MR. GRUNDLER:  Thank you, Mr. Gill.  Ms. Porreco?
                  MS. PORRECO:  That's tough to follow.  A lot of
        what you've already heard today, I am going to repeat, but I
        think it's important to constantly repeat that dangerous
        health effect that diesel exhaust and heavy duty trucks and
        buses can cause.
                  My name is Gina Porreco.  I'm with the Clean Air
        Network.  We represent over 180 environmental and public
        health organizations throughout the nation, and we thank you
        for giving us the opportunity to speak here today.
                  Exhaust from heavy-duty engines contributes to
        smog-forming, particulate and toxic emissions, sending
        hundreds of thousands of Americans to the hospital each year. 
        We commend the EPA for proposing a stringent rule for heavy-
        duty engines and diesel fuel, but feel parts of the proposal
        need to be strengthened in order to fully protect public
        health in a timely manner.
                  Scientists, government officials and citizens have
        known for years that the thick black smoke spewing from
        tailpipes of trucks and buses is dangerous to human health,
        but little has been done to clean up diesel engines over the
        past 30 years.  Now EPA has an opportunity to set the
        tightest standards possible for diesel fuel and big dirty
        trucks and buses.
                  As you've heard before, there are over 40
        substances in diesel fuel that are listed as hazardous air
        pollutants, including potential and known carcinogenic
        substances, such as benzene, formaldehyde and arsenic.  Over
        30 scientific studies link diesel exhaust to cancer.  The
        U.S. Department of Health and Human Services has recently
        concluded for the first time particulate matter from diesel
        exhaust appears likely to cause cancer in humans.  Also, as
        you have heard, a study done by the State and Territorial Air
        Pollution Program Administrators and Association of Local Air
        Pollution Control Officials estimates that diesel particulate
        pollution is responsible for 125,000 cancers.
                  In addition, according to recent scientific
        studies, experts have estimated that particulate pollution
        may cause 1 per cent, or 10,000 heart disease deaths
        nationwide per year.  These particulates also aggravate
        asthma, they cause difficult and painful breathing.  In 1998,
        diesel exhaust contributed to over 68 per cent of the fine
        particulate pollution from mobile sources nationwide.
                  Another pollutant emitted from diesel tailpipes,
        nitrogen oxide, contributes to smog, also known as ground-
        level ozone.  Smog pollution is pervasive in the U.S.  It
        causes respiratory and pulmonary disease, increased
        susceptibility to bacterial infections, aggravation of
        asthma, shortness of breath and many other ailments.  In the
        eastern U.S., smog sends an estimated 53,000 people to the
        hospital, 159,000 to the emergency room, and triggers over 6
        million asthma attacks each summer.
                  Although trucks and buses are among the biggest
        pollution sources, the oil industry and engine manufacturers
        have done very little to curb diesel exhaust.  Therefore, we
        urge EPA to finalize the heavy-duty engine rule and diesel
        fuel largely as proposed, while strengthening key elements.  
                  Specifically, we urge EPA to reduce NOx and PM from
        heavy-duty trucks and buses.  Engine manufacturers have the
        technology to cut smog-forming pollution by 95 per cent and
        soot pollution by 90 per cent.  However, the EPA is proposing
        a phase-in period to clean up NOx from heavy-duty engines. 
        Waiting until 2010 to fully implement smog-forming pollution
        from these vehicles would continue to put Americans at risk
        for serious air pollution-related illnesses.  Due to slow
        fleet turnover and the lengthy seven year lead-in time to
        integrate new technologies, the engine manufacturers should
        not have to wait ten years to clean up these engines.  For
        these reasons, there should be no phase-in period for
        reductions of smog-forming pollution.  Clean technology for
        NOx and PM should be phased in completely by 2007.
                  Second, EPA needs to place a cap on sulfur in
        diesel fuel at 15 parts per million.  Current diesel
        technology that can produce low NOx and PM emitting engines
        depends on clean diesel fuel.  For this reason, EPA must
        require refiners to reduce levels to 15 parts per million
        nationwide.  As you've heard, in the same way that lead
        poisons a car's catalytic converter, sulfur in diesel fuel
        destroys advanced technology, thereby making emissions
        reductions nearly impossible.  There is no room to palter on
        this issue.  A cap of anything more than 15 parts per million
        will not be sufficient to run cleaner engines.
                  Third, require in-use and on-board testing for
        heavy-duty truck.  For years, trucks ran much dirtier on the
        road than when they were initially built.  Testing engine
        emissions in the lab does not necessarily ensure that the
        engine is meeting these standards throughout its lifetime. 
        In fact, engine makers have cheated on their emissions tests
        in the past, producing an extra 1.3 million tons of smog-
        forming pollution each year from trucks on the road.  EPA
        cannot continue letting the engine and oil industries cheat
        the American public out of clean air.  It is critical that
        EPA takes measures to ensure that trucks and buses meet the
        emission standards while in use.  Specifically, both in-use
        and on-board diagnostic equipment should be required for all
        heavy-duty trucks by 2007.
                  Finally, EPA should provide a provision in the
        heavy-duty rule that would provide incentives for clean,
        alternative heavy-duty trucks and buses.  Advanced
        technologies, including electric, hybrids and fuel cells,
        will pave the way for more energy efficient, zero-emitting
        trucks and buses.  As clean technology becomes available,
        there needs to be a commitment on the federal level to push
        for this advanced technology.  We should not continue relying
        on age-old, polluting engines in the 21st Century.
                  As smog-forming pollution from cars has decreased
        42 per cent in the past 30 years, pollution from heavy-duty
        trucks and buses has increased 60 per cent.  Likewise, as
        particulate matter from cars has decreased 75 per cent,
        coarse particulate matter, also known as PM-10, from diesel
        exhaust has increased 12 per cent.  This is a serious problem
        that needs to be addressed immediately.  Again, I urge EPA to
        provide the strongest standards for heavy-duty engines and
        diesel fuel.  We can no longer hold our breath waiting for
        cleaner air.
                  Thank you.
                  MR. GRUNDLER:  Thank you, Ms. Porreco.  And I want
        to thank the panel again for taking the time to participate
        in this very important public process, and in particular, Mr.
        Gill for having the courage to share your story. 
                  Thank you.
                  We're trying to accommodate a number of people's
        flight schedules, so we're making--trying to work people in. 
        I'd ask Ms. Douglas, Greg Dana, Jerry Faudel, Brian Whalen,
        Bob Elliott, John Bunyak, Bill Frick and Stanley DeVore to
        come up.  I'm not sure if we have enough chairs, but I know
        that Ms. Douglas and Mr. Dana will be departing right after
        their presentation.  So people can fill in.
                  I also want to remind people to fill out the name
        cards so people know who's speaking.
                  And we'll begin with Ms. Douglas as soon as you're
        ready, if she's still here.
                  I think we lost Jennifer Douglas, so Mr. Dana, if
        you'd like to begin?  You may begin, Mr. Dana.
                  MR. DANA:  Good afternoon.  My name is Gregory
        Dana.  I'm vice-president of Environmental Affairs at the
        Alliance of Automobile Manufacturers.  The Alliance is a
        coalition of 13 car and light-truck manufacturers.  We sell
        more than 90 per cent of the vehicles sold in this country. 
        The Alliance members are in the transportation business, and
        our interest in this rulemaking is to preserve diesel engines
        as a transportation option for the light-duty market.
                  As EPA recognizes, diesel engines have inherent
        advantages with higher fuel economy, lower greenhouse gas
        emissions and lower evaporative and CO emissions.  Diesel is
        one of the key technologies for our future.
                  Our members are working hard to advance the state
        of art and fuel efficient diesel engines so they'll meet the
        Tier 2 standards adopted last year.  But the most critical
        factor in this is the quality of the fuel.  That is why we
        applaud EPA for taking this crucial first step towards
        enabling the next generation of diesel technology.
                  We think there are a bunch of things right with
        this proposal.  First, EPA has treated the vehicle and fuel
        as a system for both the existing and future diesel fleet. 
        This perspective is essential for today's sophisticated
        vehicles.  Second, EPA proposed to dramatically reduce sulfur
        to enable the new after-treatment technology.  Numerous
        research programs are showing how clean diesel can be. 
        Recent bus demonstration programs have diesel buses with
        after-treatment control and clean diesel fuel as clean or
        cleaner than buses running on compressed natural gas.
                  Third, EPA proposed to introduce the new fuel on a
        nationwide basis with a common deadline and very limited
        exceptions.  This approach is necessary to prevent any high
        sulfur fuel from contaminating the sensitive new after-
        treatment systems that will be used.
                  Fourth, EPA proposed introducing the cleaner fuel
        before the new after-treatment technology must be used on
        heavy-duty vehicles, and prior to the interim light-duty--
        excuse me--prior to the light-duty Tier 2 standards expiring
        with the 2007 model year.
                  To accept the new cap leads to early introduction
        of near zero sulfur fuel will encourage auto makers and
        suppliers to continue investing in this light-duty option.
                  In some ways, the proposal hasn't gone far enough,
        in our view.  As much of a stretch as the Tier 2 standards
        will be for gasoline vehicle, they'll be even more so for
        diesel engines.  A fundamental problem, as EPA recognizes, is
        getting the vehicle systems to meet both NOx and PM emission
        standards at the same time.
                  Sulfur free is the level that will allow diesel
        vehicles to operate at their cleanest throughout their useful
        life.  That is why auto makers and engine manufacturers from
        around the world have endorsed this level and have recently
        updated a worldwide fuel charter which we have submitted for
        the record, and which is also available on our website.
                  The charter defines sulfur free as between 5 and 10
        ppm, to be defined further as more data become available. 
        But in this country, the stringent emission standards justify
        adopting the lower limit.  The Manufacturers of Emission
        Controls Association also continues to recommend 4 ppm, not
        withstanding its support for the 15 ppm cap.  Many people
        assume that the 15 ppm cap will lead to an average sulfur
        level of about 7 ppm, with most of the fuel having less than
        10 ppm due to expected refiner compliance margins.
                  We are not certain of this outcome.  Rather, we
        expect refiners to learn how to shrink their compliance
        margins.  A combination of these factors could lead to more
        fuel above 10 ppm, or even above 15 ppm, than expected.  And
        sulfur levels in this range will seriously poison the new
        after-treatment control devices.
                  In addition to sulfur, EPA should also adjust other
        fuel properties, as recommended in the charter, especially
        cetane, aromatics and distillation.  We will discuss these
        issues further in our written comments.
                  We think 5 ppm fuel is doable, and it's a goal that
        we should all strive for.  After all, refiners are making
        very low sulfur fuel today in Sweden and elsewhere.  Other
        countries are moving quickly to ultra low sulfur fuels.  Just
        last year, Germany adopted a tax initiative program to
        encourage fuels of less than 10 ppm sulfur by 2003.  In May,
        the EU announced its intention to pursue this course for all
        of Europe.
                  The key point is that refiners know how to make the
        clean diesel fuel.  Proper incentives and market demand will
        bring this fuel to market even faster than public estimates
        predict.  We urge EPA to focus on its incentive package to
        encourage the marketplace to make the new cleaner fuel widely
        available as soon as possible.
                  We have come a long way in the debate over sulfur. 
        Just two years ago, auto makers petitioned EPA to reduce
        sulfur in gasoline to California levels, or lower.  Today,
        everyone accepts the critical role that sulfur plays in our
        national environmental policy.  The issue is no longer
        whether to reduce sulfur.  It is not that even near zero
        sulfur fuels will eventually be needed.  Rather, it is when
        will they be available to enable the new technology.
                  For our part, Alliance members want to bring
        advanced technologies, such as a turbocharged direct
        injection engine and hybrid electric diesel vehicles, to the
        point where they can operate cleanly and meet consumer needs. 
        The proposed 15 ppm cap on diesel fuel sulfur is a very
        strong step toward providing the incentive to continue
        investing in diesel technology.  Diesel fuel quality on a par
        with the World-Wide Fuel Charter, however, will actually make
        this technology one of our key options for the future.
                  Thank you.
                  MR. GRUNDLER:  Thank you, Mr. Dana.  Mr. Faudel,
        welcome.
                  MR. FAUDEL:  Thank you.  Thank you very much.     
             Thank you for the opportunity for allowing me to provide
        these comments.  I don't think anyone can argue with the need
        to control, better control emissions from heavy-duty diesels. 
        I think we're all in agreement there.
                  I am vice-president of Corporate Relations for
        Frontier Oil Corporation.  We own and operate a small
        refinery in Cheyenne, Wyoming and another in eastern Kansas. 
        with only approximately 700 employees, Frontier Oil is one of
        the 22 small business refiners identified by the agency as
        subject to the provisions and protections of the Small
        Business Regulatory Enforcement and Fairness Act, or SBREFA.
                  Frontier is also the only small business refiner
        that supplies gasoline and diesel fuel to the Denver market
        and, consequently, competition to the majors.
                  These small refiners that we are group of very much
        appreciate your formal acknowledgement that complying with a
        dramatically reduced diesel sulfur standard will cost small
        business refiners such as Frontier as much as 50 per cent
        more on a per gallon basis than it will cost a large oil
        company.  We also very much appreciate your efforts, through
        the SBREFA process, to find possible ways to partially offset
        these disproportionate costs to our small businesses.  We
        have a long way to go and unless this rulemaking process can
        be extended, and I understand that may be difficult, a very
        short time to get there if the small business refiners are to
        survive and have a fighting chance to continue to provide
        some competition in the transportation fuels market.
                  The SBREFA Panel that was convened this last fall
        to find some flexibility for small business within this
        proposal met a much more difficult task than was encountered
        in the agency's recent successful Tier 2 gasoline sulfur
        regulatory development.  And, Paul, I sympathize with you. 
        It was a difficult process.  Unlike the passenger vehicle
        engine controls of Tier 2, the proposed heavy duty diesel
        engine emission control systems as endorsed by the agency
        seem to be paradoxically and impractically fragile, allowing
        for absolutely no flexibility in a diesel sulfur standard. 
        In addition, the affected small business refining community
        is more numerous and widespread and much more varied than it
        was in Tier 2.  
                  Small business refiners that will be adversely
        impacted by this rule include those small refiners in
        California who have already been driven out of the gasoline
        manufacturing business by the costly California gasoline
        regulations, but can still make and sell diesel fuel.
                  The small Native American-owned refiner in Alaska
        that is pioneering a unique biodesulfurization process for
        diesel fuel, and that process may not be able to meet such a
        very low standard on such a tight time frame.
                  Small business refiners that have historically made
        predominantly off-road diesel and who soon may face a
        disintegration of their prime market if off-spec on-road
        diesel is dumped to the off-road market by large oil
        companies.
                  We have a small business agricultural co-op
        refinery that uniquely serves the needs of the farmers in the
        Midwest, and a number of small business refiners like
        Frontier who still manufacture both gasoline and diesel fuel,
        and who may now fact the potentially debilitating costs of
        having to make simultaneous modifications of their facilities
        to meet these two expensive new gasoline and diesel sulfur
        standards at nearly the same time.
                  In the preamble to the proposed rule, you have
        asked for comments on a number of programs that may help
        small businesses comply with this regulation.  With the
        exception of the suggestion that small refiners enjoy a
        higher final on-road diesel standard than the rest of the
        industry, my approach to each of the programs suggested is
        yes, we need that and we need more.
                  If we must accept that the best the heavy-duty
        engine manufacturers can do to meet their emission limits is
        to design fragile emission control systems that suffer from
        nearly complete fuel sulfur intolerance, then the agency has
        correctly concluded that relief for small business refiners
        must be found not in the diesel sulfur standard itself, but
        in other related areas that may act to confound a small
        refiner's ability to comply or survive.  Frontier, therefore,
        believes that it is necessary to allow small business
        refiners to choose any or all of the potentially useful
        accommodations identified below so that all of us have the
        best possible chance of survival and to remain competitive.
                  We further do not believe that any of these small
        business refiner accommodations will in any way diminish the
        environmental benefits of an ultra low sulfur diesel rule. 
        And, unfortunately, neither can we guarantee that by
        promulgating these provisions, that all of us will remain in
        business.  These recommendations are as follows:
                  Number 1.  Small business refiners need the ability
        to continue to manufacture and sell on-road diesel meeting
        the current 500 part per million standard for as long as
        there is a market for that fuel, and without a commensurate
        requirement for small refiners to manufacture the new, ultra
        low sulfur diesel, or for their customer stations to carry
        it.  And all that means is as the new engines are phased in,
        the new controls are phased in, there will be a need, a
        market for that 500 part per million fuel.  We would like to
        have that market preserved for small refiners to the best
        extent possible.
                  The EPA must take some steps to protect the off-
        road diesel market from damage through the dumping of off-
        spec on-road diesel to the off-road market by large refiners. 
        What may very well happen is a lot of the diesel fuel that is
        currently going to on-road will not be cost effective to
        bring that fuel down to new on-road standard, and it will end
        up in the off-road market that is the bread and butter for a
        lot of the small refiners, and that market will be destroyed.
                  Small business refiners who manufacture both
        gasoline and diesel fuel must be granted an automatic four
        year extension of all Tier 2 gasoline sulfur requirements
        without suffering the uncertainty of a hardship provision
        application and approval process.  The costs associated with
        modification of a refiner for these two requirements, the
        gasoline and diesel fuel requirements, are astronomical.  We
        need to have those spread out a little bit.  The only rule
        that has any flexibility with it is the gasoline rule.  So
        what we're asking is for a little bit more flexibility on the
        gasoline side to allow us to comply with the diesel side.
                  Small business refiners need the EPA's help in
        endorsing and obtaining economic assistance, possibly through
        income or excise tax credits or loan guarantees, so that
        small businesses can better afford to absorb the 50 per cent
        greater costs of compliance the agency has estimated we will
        incur.  I was very heartened to hear the first speaker here
        talk about what's been done in Europe in the way of tax
        credits, tax incentives for the industry.  I think that's
        something that is very valuable and allows Europe to do that. 
        We haven't looked at that, I don't believe, enough here in
        the States.
                  It's unfortunate the agency was not given adequate
        time to ensure that this rule was technologically sound and
        economically practical when it was proposed.  And it's likely
        that due to the rush to promulgate before the end of this
        election year, much of this rulemaking will have to be
        revisited in future years in order to preserve the economic
        stability in the fuels marketplace.  But regardless of the
        outcome, and irrespective of the final diesel sulfur
        standard, small business refiners like Frontier must obtain
        the accommodations described above if we are to continue to
        play a competitive role in that marketplace.
                  Thank you again for consideration of these
        comments.  I would like to reserve the opportunity to
        supplement our presentation in writing before the end of the
        comment period.
                  MR. GRUNDLER:  Thank you, Mr. Faudel.  Mr. Whalen,
        welcome.
                  MR. WHALEN:  Thank you.  
                  My name is Brian Whalen.  I am vice-president of
        Public Affairs for International Truck and Engine
        Corporation, which as many of you know, was formerly known as
        Navistar.  I'm here today on behalf of Patrick Charbonneau,
        vice-president of Engine Engineering at International, to
        discuss EPA's proposed model year 2007 emission standards for
        heavy-duty engines, as well as the agency's proposed on-road
        diesel fuel quality requirements.
                  At the outset, International commends EPA for its
        landmark proposal to address heavy-duty engine emissions
        through a systems approach involving both fuel quality and
        engine technology.  There is no question that diesel engine
        technology is making dramatic strides in emissions control. 
        As we know, the availability of ultra low sulfur clean diesel
        fuel is a prerequisite towards meeting the challenging new
        emission standards beginning in 2007.  With clean diesel
        fuel, we can count on the advanced NOx and PM after-treatment
        technologies needed to achieve unprecedented emissions
        reductions.  For that reason, we are pleased that EPA is
        mandating fuel which will enable these advanced technologies
        to be used on all heavy-duty engines.
                  International is investing hundreds of millions of
        dollars in the development of new technologies for all the
        markets where our engines are sold.  We are reinventing all
        of our engine lines through revolutionary engine redesign and
        the development of advanced after-treatment technologies. 
        Our technological breakthroughs will allow us to achieve
        unparalleled emissions reductions.  Indeed, we are developing
        green diesel technology that with, with clean fuel, has
        already demonstrated the capabilities of particulate filter
        technology to reduce hydrocarbon and PM emissions to levels
        that are at or below EPA's proposed standards.
                  In that regard, it is important to note that
        progressive oil companies already are making 15 ppm diesel
        fuel commercially available.  These oil companies have earned
        recognition and our applause for their efforts to bring clean
        diesel fuel to the marketplace early.  With this ultra clean
        diesel fuel available so soon, International will
        commercialize its green diesel engine technology next year
        and, thus, achieve EPA's proposed model year 2007 hydrocarbon
        and PM emission standards six years ahead of schedule.  This
        is just one example of the impressive environmental benefits
        that accrue from a systems approach involving both clean fuel
        and clean engine technologies.
                  I also commend the Agency for its willingness to
        phase-in the proposed NOx standards.  We strongly support a
        NOx phase-in approach, which underscores the challenges
        facing industry in meeting NOx control targets.  EPA's
        proposal goes far in addressing these technological
        challenges, but we believe that even more can be done without
        compromising important environmental objectives.  In that
        regard, I am pleased to say that International, along with
        the Engine Manufacturers Association, soon will be presenting
        EPA a new NOx phase-in proposal.
                  Under this proposal, there would be a single NOx
        emission standard for all engines in 2007.  The NOx standard
        in 2007 would be significantly below the NOx standard
        applying to model year 2006 engines.  Then, in 2010, the NOx
        standard would be stepped down to a new and significantly
        tighter NOx standard.  Importantly, this proposal will meet,
        and perhaps exceed, the Agency's NOx reductions in this
        rulemaking, while at the same time, providing manufacturers
        with needed flexibility to meet those targets.  For these
        reasons, we believe that the Agency will find this proposal
        to be a win-win for consumers and the environment alike, and
        look forward to discussing it in greater detail.
                  In closing, I wish to reiterate International's
        strong support for EPA's proposal to reduce diesel fuel
        sulfur levels, which will enable the use of NOx and PM after-
        treatment technologies needed to achieve the Agency's
        emission reduction objectives.  We look forward to discussing
        in our written comments these and other technical details of
        EPA's proposed rule.  I thank you for giving me the
        opportunity to present International's views today, and would
        be happy to answer any questions you may have concerning my
        testimony.
                  MR. GRUNDLER:  Thank you very much, Mr. Whalen. 
        Mr. Elliott?
                  MR. ELLIOTT:  Thank you, Mr. Chairman, and members
        of this hearing.  My name is Bob Elliott, and I'm a third
        generation farmer from Alliance, Nebraska, and I am here
        today speaking as an elected director of Cenex Harvest States
        Cooperatives, our regional cooperative, and as a member of my
        local cooperative, and as an individual farmer.
                  Cenex Harvest States Cooperatives is one of only
        four cooperatives in petroleum refining.  We have a small
        refinery in Montana and majority ownership of a small
        refinery in Kansas.  Cooperatives are uniquely accountable in
        the petroleum business in that the customer is also the
        owner.  Farmers have invested heavily in the cooperative
        petroleum operations to help assure reliable and affordable
        fuel supplies.  Cooperatives supply about 40 per cent of on-
        farm fuel use, and are the only remaining suppliers in many
        rural communities.
                  Underlying concerns because of the seasonal spikes
        by agriculture to produce our food is one of the reasons in
        the 1930s we formed these cooperatives, and why we continue a
        significant investment in the petroleum industry, even though
        we're really wanting to use investment funds to improve
        prices on the farm.  These seasonal spikes at harvest and
        planting time, we feel like in remote rural locations,
        probably are not economically viable for the private
        companies to meet those demands, and that has been an
        underlying concern of the farm community.
                  I'm also a local co-op member, one of 1,000 local
        co-ops that own petroleum tankage and will have to bear the
        costs of any new tankage requirements.  I'm a family farmer,
        one of the 325,000 member-owners in the Cenex Harvest States
        system who could bear both the costs imposed on our regional
        and local cooperatives, and personal costs if increased
        tankage is required on the farm.
                  One might wonder why a farmer is here today to
        express concerns about EPA's proposed rule for on-road
        diesel.  Many, including key people in the federal agencies,
        believed until recently that agriculture would not be
        affected by this on-road standard.  The fact of the matter is
        that this on-road proposal adversely impacts agriculture in a
        number of ways.
                  First, we are concerned that the ultra low standard
        for sulfur in diesel fuel will increase the threat of supply
        disruptions in rural America.  Agriculture's fuel supply
        cannot be placed at risk.
                  And I would add the cost in food safety by delaying
        any harvest of a wheat crop by just a few days and additional
        rainfall and mold that can grow on that crop are an
        additional health risk that we just don't consider when we
        don't look at the whole picture.
                  Second, most of the off-highway diesel fuel in
        rural America will be forced to the new highway standard
        because much of the diesel storage system, particularly in
        rural markets served by our cooperatives, is capable of
        adequately handling only one sulfur level per grade of diesel
        fuel, which will be determined by the new standard for
        highway diesel.  And any mandate or option for two on-
        highway, low sulfur diesel fuels would impose major and
        unacceptable costs on local cooperatives, or force locals to
        choose which customers to lose because they cannot afford the
        extra tankage.
                  Third, these limitations mean that our farmer-owned
        refineries will be forced to go to the ultra low, on-road
        standard even though most of our market is for farm uses. 
        This will be extremely costly and is based on technology not
        yet proven valid or reliable for the industry.
                  Fourth, diesel fuel costs for farmers and rural
        America will increase 10 cents or more per gallon, with
        higher price spikes in the event of tight supplies or
        disruptions.
                  And, fifth, cooperative investments involve
        farmers' money, and we don't know how we'll be able to afford
        it, especially during difficult times like the farmers are
        now experiencing.  Any costs incurred by co-ops, especially
        regulatory requirements, are borne by farmers as a heavy
        penalty.  
                  I have three examples.  It is extremely difficult
        for us to generate the necessary capital for large
        expenditures to meet the proposed requirements.  As co-ops
        are prohibited from issuing stock in equity markets, during
        these difficult times, it is particularly difficult for us to
        borrow funds.
                  Farmers will receive little return on these
        expenditures, and it will consume scarce funds desperately
        needed for investments in projects to improve farm income.
                  In the end, farmers bear the burden, both through
        higher diesel fuel costs as customers, and through reduced
        patronage from their co-ops as owners.
                  Agriculture's concern is widespread and growing, as
        demonstrated by the agriculture letter containing nearly 30
        organization signatures that I am submitting for the record,
        and it is attached to the back of my presentation.  I am also
        submitting the position statement of the National Council of
        Farmer Cooperatives, which we endorse.  Concern is widespread
        and growing throughout the United States, as evidenced by
        this list I am submitted of nearly 300 organizations
        nationwide that have signed this letter that will be sent to
        every member of Congress.
                  Farmer cooperative representatives have been
        working with EPA, and we appreciate the Agency's recognition
        of the unique structure and challenges of farmer-owned
        cooperative refineries, as well as possible compliance
        flexibility options.  However, we believe the proposal goes
        too far too fast, and has failed to consider the major real-
        world impacts on agriculture and rural America.  This is why
        Cenex Harvest States Cooperatives recommends that the rule be
        withdrawn and reconsidered.
                  We urge that EPA and USDA join together to study
        and address potential impacts of EPA's proposal on the
        availability and cost of diesel fuel for farmers and rural
        America, as well as the effects on performance of
        agricultural equipment, and to do so before any diesel rule
        is finalized.  In 1985, the EPA and USDA took similar action
        for unleaded gasoline because Congress directed them to do so
        by law.
                  I have a copy of the section of the law that could
        provide you guidance in moving forward on this issue.  We
        hope EPA and USDA will undertake similar actions without
        waiting for Congress.  It was important enough for gasoline
        in 1985, and it should be even more so for diesel in 2000. 
        Farmers are critically dependent on diesel fuel.
                  If EPA decides to go forward with this rule, Cenex
        Harvest States Cooperatives recommends that any final rule
        include the following basic elements: a sulfur cap of 50
        parts per million, no phase-in or requirement of two low
        sulfur diesel fuels, maximum compliance flexibility for
        cooperative refiners, and support for financial assistance to
        refiner cooperatives.
                  In closing and in fairness to farmers and rural
        America, I must ask these questions, and I hope you'll
        address them in the next published version of this rule.
                  Why can't this proposed rule be withdrawn and
        reconsidered?  Why is rural America paying so much to go to
        the 15 parts per million since air quality problems are in a
        few cities?  Why haven't EPA and USDA done another joint
        study like they did on leaded gasoline in 1985, and study the
        impact of ultra low sulfur diesel on agricultural machinery? 
        And why has EPA failed to release a cost benefit analysis for
        the proposal that would look at economic impacts on rural
        America?  
                  Thank you for consideration.
                  MR. GRUNDLER:  Thank you, Mr. Elliott.  Mr. Bunyak?
                  MR. BUNYAK:  Chair and member of the hearing panel,
        I am John Bunyak of the National Park Service Air Resources
        Division.  I'm grateful for the opportunity to speak to you
        today concerning your proposed regulations calling for
        reduced tailpipe emissions from heavy-duty engines and
        vehicles, as well as reduced sulfur content of diesel fuel.
                  The National Park system includes parks and
        historic sites in every state in both urban and rural
        locations.  I've attached a system-wide map to my written
        testimony.
                  We have the responsibility to protect and preserve
        the resources and values of these sites for future
        generations.  The need to reduce air pollution effects on
        these resources is why we support the EPA in its proposal.
                  Even considering the general trend towards
        improving air quality, many areas likely to include lands
        administered by the National Park Service will not attain the
        national ambient air quality standards in 2007, despite
        continued implementation of the national low emission vehicle
        program, Tier 2 requirements, regional transport programs,
        and other air pollution controls.
                  In addition, areas that are in attainment will need
        further programs to ensure that continued economic growth
        does not degrade air quality.  This is especially true to
        protect the extraordinary natural scenic and cultural
        resources found in our national park system.  Even at levels
        well below those established to protect human health, air
        pollutants degrade these resources.  Visibility impairment is
        the most ubiquitous air pollution related problem in our
        national parks.  Although visibility degradation is more
        severe in the East, significant visibility impairment also
        has been documented in Western national parks in relatively
        remote locations.
                  Even small amounts of fine particles in the air
        degrade our ability to see the spectacular panoramic scenery
        of Western national parks.  Because they are so effective at
        absorbing light, particles formed by diesel combustion are
        two to three times more effective at impairing visibility
        than particles formed by other pollution sources.  Steady and
        continuing reductions of all types of air pollutants will be
        needed to restore natural visibility conditions in our
        specially protected areas.
                  Researchers have also documented air pollution
        effects on biological and aquatic resources.  Ozone injures
        native hardwoods and coniferous trees in parks across the
        U.S.  This can lead to changes in plant community structure. 
                  Another concern is acidic deposition of nitrogen
        and sulfur compounds which affect water chemistry, which in
        turn affects algae, fish, submerged vegetation, amphibian and
        aquatic communities.  Acidic deposition and particulate
        matter are also a concern for effects on historic monuments. 
        Similar to ozone, acidic deposition effects on park resources
        occurs nationally, including areas of the Rocky Mountains,
        Cascade Range, the Sierra Nevada Range, Upland areas of the
        Eastern U.S., Eastern Coastal areas.
                  We have observed acidification of streams in both
        Shennandoah and Great Smokey Mountain National Parks. 
        National measures such as a correct proposed rule are needed
        to protect the natural wonders of our parks for future
        generations.  The emissions from motor vehicles include many
        pollutants, such as organic compounds, carbon monoxide,
        sulfur oxides, nitrogen oxides, and particulate matter.
                  In addition, through atmospheric processes, organic
        compounds and nitrogen oxides combine to form ozone, or smog. 
        Similar atmospheric processes turn gaseous sulfur oxides and
        nitrogen oxides and organic compounds into fine particulate
        matter.  This fine particulate matter is a health concern,
        and even in areas with low concentrations of particulate
        matters, can also contribute to visibility impairment.
                  The National Park Service has a long history of
        tracking air quality and visibility effects on the lands it
        administers.  While some areas are improving, others have had
        increases in pollution, such as ozone and nitrate deposition. 
        In addition, all areas monitored for visibility show frequent
        regional haze impairment.  Regional haze rules announced last
        year by EPA also call for states to establish programs to
        improve visibility in many of our parks, especially here in
        the West.
                  Emissions from heavy-duty motor vehicles, including
        sulfur related compounds, are part of the multi-source,
        multi-pollutant mix that impairs regional visibility.  The
        National Park Service endorses EPA's proposal to
        substantially reduce emissions from heavy-duty diesel
        engines.  Given the increase in sales and use of diesel
        vehicles, the proposed measures are cost effective and will
        be needed to help attain and maintain health standards in
        many areas, to make reasonable progress in addressing
        regional visibility impairment nationwide.
                  This national approach is important for visibility
        and other air quality related concerns, even in areas of the
        West where ambient measurements are generally below current
        national ambient air quality standards.  The National Park
        Service participated in the Grand Canyon Visibility Transport
        Commission from 1991 to 1996, and continues to work with the
        Western States and Tribes through their formation of the
        Western Regional Air Partnership to address visibility
        concerns across the region.
                  The Grand Canyon Visibility Transport Commission
        was composed of the governors of eight western states,
        Arizona, California, Colorado, New Mexico, Nevada, Oregon,
        Utah and Wyoming, and leaders of the Pueblo, Yakima, the Hopi
        Tribe, the Wallapi (phonetic) Tribe, the Navajo Nation, the
        Columbia River Inter-tribal Fish Commission, and
        representatives from the EPA, National Park Service, U.S.
        Fish and Wildlife Service, and the U.S. Forest Service.  The
        Commission was formed to guide EPA in developing strategies
        to improve visibility in the desert southwest.
                  The Commission's recommendations, which were
        endorsed by the majority of governors, highlighted the need
        to address mobile source emissions and the need for broader
        application of cleaner fuels as part of a multi-source
        regional strategy to improve impaired visibility.  The
        National Park Service still endorses the Commission's
        recommendations, and feels that EPA with this proposal is
        following through on the Commission's approach of addressing
        future regional mobile source concerns.
                  While the issues of current diesel engine emissions
        are the thrust of EPA's proposal, reduction of sulfur in
        diesel fuel is a key element to future air quality progress. 
        A national sulfur limit is desirable because lower sulfur
        fuels are needed to permit the future development of vehicle
        technology that will result in significant reduction in
        overall emissions and fuel consumption.  Such technology is
        now being developed, such as direct injection engines, may be
        more sensitive to sulfur than current vehicles.  These
        technologies can tolerate very little sulfur in order to
        limit the production of other unwanted pollutants.
                  Therefore, sulfur removal is not only important to
        maintain the emission control potential of current vehicles,
        but is being highlighted by many as an important new
        technology enabler for the future.  Reducing the sulfur
        content of diesel fuel would reduce the emissions from the
        current fleet of heavy duty vehicles, reduce sulfur dioxide
        and sulfate emissions from all new and old diesel vehicles,
        and potentially enable advanced low emissions and
        significantly more fuel efficient vehicles.
                  In summary, the National Park Service feels that
        with the time frame contemplated for the proposed standards,
        there will be an air quality need for emission reductions
        nationwide.  The control technology exists today to reduce
        diesel emissions.  The cost effectiveness of the technologies
        for addressing vehicle emissions and the reductions in diesel
        sulfur is within the range of other available control
        strategies.
                  We urge EPA to promulgate the proposed rule and
        require a national implementation of schedule.  We intend to
        provide written comments on this proposal highlighting more
        information on the air quality concerns of the National Park
        Service during the public comment period.
                  Thank you for this opportunity today to comment on
        your proposed rule.  This concludes my statement.
                  MR. GRUNDLER:  Thank you, Mr. Bunyak.  Mr. Frick?
                  MR. FRICK:  Good afternoon.  My name is Bill Frick. 
        I'm the vice-president for Industry Operations at the
        American Petroleum Institute.  I also serve as general
        counsel.  API represents the oil and gas industry, all
        facets.  We have over 400 members who participate in all
        segments of the industry, exploration, production, refining,
        marketing, distribution.
                  We appreciate the opportunity to participate in
        this hearing.  I hope that we can provide some industry
        perspective on the rulemaking and add some facts to this
        discussion.
                  I want to make several points.  We have a written
        submission, but I'd like to focus on five things this
        afternoon.  First of all, the industry is supporting sulfur
        reduction.  When EPA began talking about rulemaking, we
        looked at the issues and we came forward and proposed a 90
        per cent reduction, which EPA said they wanted to achieve,
        and we said we can do that.  So sulfur levels are coming
        down.
                  The issue we're grappling with here this morning
        and in this rulemaking is how far and how fast, which hinges
        on things like what is technologically feasible both in terms
        of the emissions devices on the vehicles, as well as what
        physically can be done at refineries, which gets to my second
        point.
                  One of the problems we have in dealing with this is
        in fact because we are working so hard, spending so much to
        actually clean up a lot of fuels, it is not just diesel that
        is on the table here.  In considering how far and how fast,
        you have to look at the fact and take into consideration that
        the industry is facing a serious daunting challenge at its
        refineries.  This rule cannot be viewed in isolation.  You've
        got to look at other changes in the fuel system.
                  Currently, we have already created, are
        reformulating gasoline one and two, which was just
        introduced.  We have rulemaking to reduce gasoline sulfur. 
        This would be diesel sulfur.  We have a number of boutique
        fuels that individual areas of the country have said they
        want on top of the basic reformulated.  MTBE reductions are
        probably coming down soon.  There are attendant costs and
        strains to the system.  If we use ethanol to replace MTBE,
        we're required to have the oxygenates.  There will be an air
        toxics rulemaking.  There are new source review challenges
        and other issues.
                  All of these affect the constituents of fuel, the
        amounts that can be produced at the refinery.  In the end, we
        still have to have fuels that work, so these are important
        issues.  A patchwork of fuels is particularly challenging. 
        It's not just three grades of gasoline, as I said.  We have
        at least ten different areas with different fuel
        formulations, which puts a strain on all parts of the chain,
        production, transportation and marketing.
                  In addition, making these changes that we are
        talking about doing soaks up capital in a segment with a very
        low return on capital.  It is a challenge even to find and
        deploy the resources to install the equipment to make these
        changes.  Those of you who go up 270 and see refineries, you
        know these are not simple facilities.  We simply can't turn a
        valve and make these changes.  It's going to take a lot of
        hard work and a lot of time.
                  Also, adding to these different fuels, it
        complicates the logistics to handle the more complex
        processing and the movement of multiple products.  An NPC
        study, the National Petroleum Council, which is a government
        organization which involves the oil industry, reports to the
        Secretary of Energy, DOE and EPA participated in it, just
        issued a report on refining capacity.  And it said, and I
        quote, "The NPC concludes that the refining and distribution
        industry will be significantly challenged to meet the
        increasing domestic light petroleum product demand with 
        substantial changes in fuel quality, specifications recently
        promulgated and currently being considered.  The timing and
        size of the necessary refinery and distribution investments
        to reduce sulfur in gasoline and diesel, eliminate MTBE and
        make other product specification changes, such as reducing
        toxic emissions from vehicles, are unprecedented in the
        petroleum industry."
                  And the effect of all this is to take out enormous
        flexibility out of the system, and we're beginning to see
        some of the effects now.  It was ironic that the day we had
        the LA hearings, USA Today had a report on the issues in the
        Midwest, talks about the oil industry has little margin for
        error.  That is one of the major concerns we have.  It's not
        resistance to removing it, but we do have issues to ensure
        that we continue to maintain supplies and can avoid problems
        like this.  I think EPA in executing its authority under the
        Clean Air Act needs to take into consideration these kinds of
        issues.
                  A third point which comes up is that this is not an
        issue that 15 ppm cannot be met.  It's been noted that
        individual companies are making it--whether we can provide
        the supplies that the consuming public needs.  Our cost
        figures are different from EPA's.  We think it's going to be
        closer to $8 billion on top of the cost of gasoline sulfur
        reductions.  This is twice what the industry proposal of 50
        ppm would make.
                  It is not a straight line investment.  It's going
        to have--to go between 50 and 15 has a substantially
        disproportionate higher cost.  There will simply be some
        companies that will choose not to make that.  Their return on
        investment will not allow them to do it.
                  Again, referring to the NPC study, they indicated
        in terms of the system that "there is a significant risk of
        inadequate supplies should on-highway diesel sulfur levels
        below 50 ppm be mandated." 
                  So, again, the effect may be that some refineries
        may be at the margin will choose not to make it, and that has
        to be taken into consideration.  There are already fewer
        refineries available to make these products, much fewer than
        in previous years.  They are larger.  They can make more
        product, but they are more distant from markets, which makes
        it very important that we take into consideration
        transportation and the additional logistics.
                  The fourth point I would like to make is that this
        particularly severe level that EPA has proposed is being
        imposed to accommodate unproven automotive technology.  At
        this point, we don't know it will work.  It's been talked
        about this morning.  There's a lot of people that commented
        about whether this information will work--whether some of the
        technology that's out there will work.  But I think we do not
        have in practice, as one major engine manufacturer has stated
        at a previous hearing of EPA, we have not seen in practice
        vehicles that are controlling both NOx and PM at the same
        time. 
                  They stated that this is a monumental challenge,
        and that the technology that EPA desires to use is still
        basically in the lab.  Any suggestion that it's available now
        is unfounded.  In fact, they stated that we have no proof of
        the reliability, durability, useful life, practicability or
        costs.  So this is not merely something we can wish would
        happen.  There's some serious and time consuming issues that
        have to be done.
                  Finally, to do this on the desire to make light-
        duty diesels available, when we don't know if there's even
        going to be a market for that, is a speculative change that
        we think is an enormous cost that would be imposed on the
        country without knowing that you really need to do that.
                  The final point is it really is not necessarily
        from an air pollution standpoint to reduce sulfur this low. 
        We will be getting down, as we've talked about, we will be
        reducing the levels with the emission control devices that
        are out there and available.  There will be very reduced
        levels from the vehicles.  And in the total emissions
        inventories, we're going to have made significant progress;
        that these extreme levels simply are not needed.
                  So, in summary, my points are we are prepared to
        implement a 90 per cent reduction.  That will be very
        difficult given all our other challenges.  This proposal
        presents a significant risk of shortfall in some areas if
        implemented to the levels EPA wants.  It really is not
        necessary from the technology standpoint, and the air quality
        benefits are virtually the same.
                  This industry has an excellent reputation and takes
        great pride in providing high quality products that are
        available and work.  We do not want to endanger that
        performance that the public expects and demands by
        unrealistic expectations in these regulations.
                  Thank you.
                  MR. GRUNDLER:  Thank you, Mr. Frick.  Mr.
        Bertelsen?
                  MR. BERTELSEN:  Good afternoon.  My name is Bruce
        Bertelsen, and I'm the Executive Director of the
        Manufacturers of Emission Controls Associations.  MECA is
        pleased to present testimony today in support of EPA's
        proposal.  
                  We believe an important opportunity exists to
        significantly further reduce emissions from highway heavy-
        duty diesel engines by utilizing an engineered systems
        approach that incorporates and combines advanced engine
        designs, advanced emission control technology, and very low
        sulfur diesel fuel.  EPA's regulatory initiative recognizes
        the importance of promoting this systems type approach, and
        the Agency's proposal constitutes a carefully crafted and
        balanced program.  If the program is finalized, it will
        result in substantial cost-effective emission reductions. 
        Indeed, EPA's initiative will bring about the age of the
        truly clean diesel engine.
                  MECA is a non-profit association made up of the
        world's leading manufacturers of motor vehicle emission
        controls.  MECA member companies have over 30 years of
        experience and a proven track record in developing and
        commercializing exhaust control technologies for motor
        vehicles.  
                  Today, I will briefly summarize MECA's position on
        EPA's proposal.  We plan to submit more detailed written
        comments before the close of the comment period.
                  I would like to focus on two items today.  First is
        the issue of the technological feasibility of the heavy-duty
        diesel standards, and secondly, the critical need for very
        low sulfur diesel fuel to meet those standards.
                  With regard to the technological feasibility, we
        believe the emission standards proposed for highway heavy-
        duty diesel powered engines can be achieved in a cost-
        effective manner within the lead time provided, if low sulfur
        diesel fuel is available.
                  EPA, in its proposal, identified two primary
        candidate technologies for meeting these proposed emission
        limits; catalyst based diesel particulate filters for PM
        control and NOx adsorber technology for NOx control. 
        Catalyst based diesel particulate filters are commercially
        available today.  The only remaining engineering effort is to
        optimize the filter system for the specific engine to which
        it will be applied.  Worldwide, over 20,000 PM filters have
        been equipped on diesel engines in a wide variety of
        applications.  The control performance efficiency and the
        durability of these filter systems has been demonstrated. 
        Catalyst based diesel particulate filters used on engines
        operated on low sulfur diesel fuel can achieve PM and toxic
        hydrocarbon reductions well in excess of 90 per cent.
                  In one of the earlier panels, a comment was made
        regarding the serious health consequences of ultra fine
        particulates.  Testing has shown that with the diesel
        particulate filter, 99 per cent plus of the carbon based
        ultra fine particles can be eliminated.
                  Indeed, when very low sulfur diesel fuel is
        utilized, the particulate emission levels are almost
        unmeasurable.  Where diesel fuel containing a less than 10
        ppm sulfur level have been used, filter technology has
        demonstrated impressive durability.  In some applications,
        filters have continued to provide excellent PM removal after
        up to 600,000 kilometers of vehicle operation.
                  Development and optimization of NOx adsorber
        technology is progressing at a very rapid rate, and our
        members fully except that with the availability of very low
        sulfur fuel, this technology will be commercialized in 2007
        for diesel engines.
                  Indeed, the prospect that EPA will require very low
        sulfur diesel fuel in the 2006 time frame has already
        stimulated an increased commitment to bring this technology
        forward in diesel engine applications.  Our members see no
        barriers to this technology, provided very low sulfur fuel is
        available.  Rather, the challenges are engineering in nature. 
        They are making the substantial financial investment in this
        technology because they believe it will be commercially
        available.
                  I had the opportunity to participate in several of
        the hearings over the course of the last two weeks, and we've
        heard terms like unproven technology, uncertain technology,
        we may not be able to meet the standards, we won't be able to
        meet the standards.  These types of descriptions are not new. 
        We've heard similar comments over the year with regard to
        other mobile source emission reduction initiatives.  When
        Congress adopted the original automobile standards in 1970,
        when EPA proposed and adopted the first set of standards for
        heavy-duty engines NOx and PM controls, when Congress adopted
        the Tier 1 standards for light-duty vehicles, when California
        adopted the LAV program.  But in every instance--in every
        instance, the technology was developed.  It was a cooperative
        effort between the emission control manufacturers and the
        vehicle and engine manufacturers, and the fuel industry
        played an important role in providing the necessary fuel. 
        But the target was met.  
                  And the reason it was met was because in each one
        of these situations, specific, firm standards were put in
        place, and an adequate lead time to develop the technology
        was provided.  And that's exactly what EPA has done with this
        proposal.
                  Indeed, I think we are in a stronger position today
        than we were with regard to some of the earlier initiatives
        that I mentioned, because we have a clear technological path
        to getting to a point where we can meet those standards. 
                  As I mentioned, filter technology is commercially
        available today.  You heard from a previous witness that that
        technology will be commercially offered next year, provided
        that 15 ppm sulfur fuel is used.  With regard to NOx adsorber
        technology, we know what the technology challenges are, and
        we will meet those challenges.
                  So I think there is a very clear justification for
        the very positive statements you've heard, not only from
        emission control manufacturers, but from a number of engine
        manufacturers as well.
                  With regard to the level of sulfur fuel that is
        needed to meet these standards, we continue to recommend that
        EPA adopt a sulfur cap of 5 ppm, but we also believe that
        with a 15 ppm cap, emission strategies can be developed to
        meet the proposed emission limits.  Specifically, with a 15
        ppm cap, our members are extremely confident that catalyst
        based filter technologies will be designed to help meet the
        PM levels of 0.01, and a NOx standard of .2.  At levels above
        15 ppm sulfur, we doubt these standards can be met.
                  We believe that the oil industry's proposal to
        provide a 50 ppm sulfur diesel fuel is sincere.  But
        unfortunately, it's not enough to get us to the ultimate goal
        of the truly clean diesel engine.  And I believe if we do not
        move forward with this initiative now, we're only postponing
        the inevitable, and we'll have to revisit the issue.
                  There's been some discussion about activities in
        Europe, and I think what we are seeing very clearly is
        increased interest in promoting and bringing about the
        utilization of fuel with a sulfur level no higher than 10
        ppm.  And I think that really is the direction for the
        future.
                  In closing, I want to thank the Agency again for
        the opportunity to provide testimony, and commend you on a
        truly remarkable proposal.  I also want to indicate for our
        industry that if these standards are adopted, and if the very
        low sulfur fuel, the 15 ppm sulfur fuel, is available, we're
        prepared to do our part to ensure that these standards are
        met, and the objective of a truly clean diesel is met.
                  Thank you very much.
                  MR. GRUNDLER:  Thank you, Mr. Bertelsen.  Our last
        witness, I'd like to welcome Mr. DeVore.
                  MR. DEVORE:  Thank you.  Good afternoon.  My name
        is Stan DeVore.  I'm a Freightliner Trucks dealer from
        Casper, Wyoming.  I'm here today as a Chairman of the
        American Truck Dealers Line Representative Committee.  And
        for those who don't know, American Truck Dealers is a
        division of the National Automobile Dealers Association, and
        it represents over 1,900 independent franchised truck dealers
        who sell new and used motor trucks, tractors, and trailers,
        and who also engage in the service, repair and parts sales
        for these same vehicles.  The majority of our dealers are
        small businesses, as defined by the Small Business
        Administration.
                  Now ATD absolutely endorses EPA's proposal to
        reduce by 90 per cent or more the smog and soot causing
        emissions generated by heavy-duty engines.  However, these
        new standards, appropriately enabled by a low sulfur diesel
        fuel, must first of all be achievable, and further, they must
        not negatively impact on powertrain performance or
        availability.
                  This proposal, however laudable as it may appear,
        raises several important issues for us truck dealers.  We
        dealers and our customers become very alert whenever new
        standards are proposed that may result in significant
        powertrain-related changes.  So to be successful, any new
        emissions reduction technologies must offer similar or
        improved powertrain performance characteristics at a
        reasonable, not lower, cost.
                  Engine manufacturers who fail to achieve these
        goals simply risk reduced sales because some customers will
        elect to operate their older vehicles longer.  So the longer
        the older trucks and engines are kept in service, the longer
        your new emission reduction benefits will be deferred.  So
        understand that any significant number of delayed purchases
        could be devastating to dealers as well as having devastating
        effects on the broader economy.
                  Simply put, if EPA's standards are too strict, they
        risk forcing technology before its time.  Such was the case
        in the last Seventies and early Eighties when EPA's
        technology-forcing regulations contributed to the
        introduction of a number of light-duty vehicles with
        substandard drivability, durability, reliability, fuel
        economy, and other performance-related characteristics. 
        Perhaps the "not to exceed" issue faced by diesel engine
        manufacturers striving to meet 2002-2204 standards is an
        example of the real life limitations that can arise if and
        when emission standards are imposed too strictly or in too
        soon a fashion.  Truck dealerships, the majority of whom are
        small individual or family owned businesses, will consider
        any new standards that would undermine the products we sell,
        lease, service or maintain to be unacceptable.
                  I imagine that the engine, emissions component, and
        chassis manufacturers have already let you know whenever they
        will be able to build compliant products within the
        proposal's time frames for the many varied engine and vehicle
        combinations we deliver to our customers.  No matter what
        reasonable standards and achievable timetables ultimately are
        agreed to, the final rule should include a careful, periodic
        technological progress report and review designed to ensure
        emission reduction goals are actually being achieved without
        compromising the engine drivability, reliability, durability
        or fuel economy performance attributes demanded by the
        marketplace.
                  EPA has stated that its proposal reflects an
        appropriate systems approach to heavy-duty diesel emissions. 
        Now, given that heavy-duty diesel engines will almost
        certainly need to be equipped with complex after-treatment
        technologies, such as adsorption catalysts and particulate
        traps, the simultaneous production and distribution of a
        single very low sulfur diesel fuel will be absolutely
        critical.  As with EPA's recently finalized Tier 2 emission
        standard for light-duty vehicles, low sulfur diesel fuel will
        be the essential enabler of these new emission control
        technologies.  ATD leaves it to others to suggest appropriate
        diesel fuel caps--correction--diesel sulfur caps and
        averages.  I ask only that when evaluating these suggestions,
        EPA carefully consider the significant customer satisfaction
        issues that are certain to be involved.
                  With the introduction of heavy-duty on-board
        diagnostic equipment and in-use emissions testing, truck
        operators will risk experiencing self-induced emission
        systems false-positive failures.  If this happens, the bottom
        line is our customers will be irate, even in situations where
        our technicians end up installing new catalysts at no charge
        under warrant.  Down time, Ladies and Gentlemen, can be very,
        very costly.
                  The low sulfur diesel fuel that is so essential to
        EPA's proposal must not be forced into the marketplace too
        soon or at too high a price.  In my neck of the woods, the
        truckers travel very long distances and fuel prices can make
        or break their business.  Moreover, our small refiners,
        particularly  in the mountain states, may be especially
        impacted by a low sulfur diesel fuel mandate.  Adequate lead
        time is essential given the fuel price sensitivity of the
        trucking industry and the economic burdens refineries may
        incur.  However, since this new fuel must be readily
        available before new powertrains are introduced, its
        realistic availability may well be the driving force of the
        final rule's deadlines and phase-ins.
                  All other things being equal, the sooner a single
        low sulfur diesel fuel is introduced, the better.  Please
        understand, I'm in no way suggesting a phase-in or any
        scenario involving more than one diesel fuel in the
        marketplace.  While it's not essential for existing 2004 on-
        highway heavy-duty engine emission standards, low sulfur
        diesel fuel will certainly result in major emissions benefits
        for those engines and for engines used in off-highway
        vehicles, construction equipment, and railroad locomotives.
                  Moreover, low sulfur diesel fuel will help enable
        the introduction of clean and efficient light-duty diesels,
        engines that could play an important role in the achievement
        of significant short-term fuel economy increases.  In other
        words, if we don't have the fuel, your program isn't going to
        work.  Perhaps an EPA devised credit scheme recognizing the
        extra air quality benefits of low sulfur diesel fuel would be
        an incentive for early introduction, and EPA should also
        support tax creditors or other monetary incentives designed
        to facilitate the introduction of this fuel.
                  EPA's (sic.) written comments will elaborate
        further on these issues, and for now, I thank you for the
        opportunity to testify at this hearing.
                  MR. GRUNDLER:  Thank you, Mr. DeVore.  Questions?
                  MR. FRANCE:  Mr. Frick, we've had a lot of
        testimony over the last couple of weeks from suppliers of the
        after-treatment equipment and from the manufacturers
        themselves that have reached much different conclusion in
        terms of their prognosis, the status of the development of
        the technology, especially PM traps, and also the prognosis
        given the lead time that we propose in our rule.
                  I'm curious if you have--how do we reconcile your
        statements with what we're hearing from the very folks that
        have to apply the--develop the technology and apply it?
                  MR. FRICK:  I think in the end, you're going to
        have to look at what the data that come in and how much you
        can believe that the actual testing that you have, the test
        data, shows that the statements can be backed up.  In the
        end, this rule has got to be based upon the record, not
        merely statements made in the hearings.
                  We think there is data out there that shows that
        some of these devices actually can work on higher sulfur fuel
        than they've been saying.  So we think it's partly there is
        availability of these.  They don't necessarily have to have
        5, 10 or 15 parts per million.
                  MR. FRANCE:  And what data is that?
                  MR. FRICK:  That's the--we will have this data in
        the record, but the data from Europe on the use of the SCR
        technology, the data on the particulate traps we think can
        show that it can function on the higher sulfurs.
                  MR. FRANCE:  And particulate traps on 50?  I was
        curious since we have the opportunity to have International
        and MECA, if they would respond to that?
                  MR. BERTELSEN:  When you're looking at applying
        filter technology across the board to every heavy-duty engine
        used in every conceivable application and operated in every
        conceivable ambient environment, you need to be sensitive to
        achieving the necessary regeneration temperatures to bring
        about the cleansing of the filter to ensure its durability. 
        And I'm not even going to get into the sulfate issue, which I
        think has been pretty clearly established that even at very
        low levels, sulfate formation from filters, from the sulfur
        in the fuel, quickly causes a filter to exceed the proposed
        standard.
                  But talking about the experience with filters
        operated at higher levels, yes, if you apply a technology,
        particularly an example of a retrofit where you have an
        opportunity to examine the engine temperature map of that
        technology, I hate to use the word cherry pick, but you can
        say yes, this is an appropriate environment, we can apply a
        filter technology because the temperature regime of that
        particular engine and that particular application is
        sufficient to bring about regeneration.  But that's a long
        way and a far different issue than saying you can apply this
        technology at a 50 ppm to all engines and all applications. 
        It just simply isn't the case.  And I think we should be
        very, very careful at pointing at one data point or another.
                  And with regard to the issue of data, we also
        intend to provide to EPA before the close of the comment
        period additional data to back up our testimony that we
        provided here.
                  MR. WHALEN:  Let me just add from International's
        standpoint that maintenance and durability factors are just
        critical to our customers, and that's why we made the
        decision when we announced the availability of a commercial
        rear engine school bus which will be available next year,
        achieving the hydrocarbon and PM targets that we're looking
        at here, that it would only be--we would only sell those in
        areas where the 15 ppm low sulfur fuel was commercially
        available.  And that at the moment is northern and southern
        California.
                  MR. GRUNDLER:  And do you have data that you can
        share with us for the record?
                  MR. WHALEN:  Well, yeah, there's been data entered
        earlier from the experience in Europe and others.  We have
        been testing.  We're working with ARCO in southern
        California.  So that's actually an EC-5 fuel, but that data
        is available for the record, I'm sure.  So we are doing field
        tests currently right now in California with some fleets. 
        We'll have about five or six different fleets in different
        parts of California.  I don't know whether the data would be
        available, frankly, in those before the close of this
        rulemaking.
                  MR. FRANCE:  Just one other.  Again, just to
        reinforce to Mr. Frick and to others, to the extent that you
        have data to support contentions that the technology is
        unproven, not feasible, we would like to see that information
        submitted in your written comments.
                  One other quick question, and this has come up
        before, with respect to your--again targeted at Mr. Frick--
        with respect to your 50 ppm proposal, my understanding in
        that proposal is that you're projecting reliance on SCR
        technology for NOx control.  Is that correct?
                  MR. FRICK:  We believe that is at least one
        technology.  There may be others.  There may be other efforts
        done by the manufacturers that can do it, but we do believe
        it has been proved in use in Europe that it does work.
                  MR. FRENCH:  And since we're dealing with a
        national rule here, we would be definitely interested--not
        interested, we'd request in your written comments that you
        provide your assessment on how your industry will supply urea
        on a national scale, and the cost of putting that infra-
        structure in place, and also the impacts on the trucker and
        the implication that has with respect to in-use performance
        of those systems.
                  MR. FRICK:  Very good.
                  MR. FRANCE:  Thank you.
                  MR. GRUNDLER:  I'd like to thank the panel for
        their time and their comments.  At this point, I'm going to
        call for a ten minute break, and we will convene with the
        next panel at 1:30.  
                  (Off the record.)
                  MR. GRUNDLER:  Dennis McLerran, Blake Early, Curt
        McIntosh, Angie Farleigh, Lynn Westfall, Justin Rodda and
        Richard Severance up for our next panel.  On deck, just so
        you know, I'm going to try to work in some of our unscheduled
        people, Charley Bittle, Fernando--actually, Charley was
        scheduled later, but he's got to go.  Charley Bittle,
        Fernando Martinez, Jennifer Douglas, if you're still here,
        and John Kowalczyk are all on deck following this panel.
                  Mr. Westfall, why don't you begin.
                  MR. WESTFALL:  All right.  Well, good afternoon. 
        My name is Lynn Westfall and I'm the vice-president of
        Strategy and Strategic Issues for the Ultramar Diamond
        Shamrock Corporation, or UDS.  UDS is one of the largest
        independent refiner/marketers in North America, with six
        refineries, totalling over 600,000 barrels per day of crude
        capacity, and approximately 6,000 branded retail outlets.  Of
        our almost 100,000 barrels per day of on-road diesel
        production, approximately 80 per cent is sold to over 900
        independent businesses.  So I feel that I speak for our
        customers today as well as for our company.
                  We, UDS, have always believed that an active,
        constructive involvement in the regulatory process produces a
        result that benefits all parties, so we certainly appreciate
        the opportunity to be here today to comment on the EPA's
        diesel sulfur rule.
                  In the past, we've been actively supportive of
        numerous clean air efforts, from being the first company to
        commercially produce the ultra clean California CARB Phase 2
        gasoline, to voluntarily supplying the San Antonio and Denver
        markets with cleaner than required gasoline.  We recognize
        and we fully support the need to lower the sulfur content of
        on-road diesel fuel as the next step in the ongoing process
        of providing cleaner fuels to the U.S. public.  We now find,
        however, that we cannot support the current EPA diesel sulfur
        rule because it requires a fuel that delivers little, if any,
        added benefit, but at a tremendous cost versus fuels with
        only slightly higher sulfur levels.
                  First, let's set aside the myth that the current
        proposal is a requirement for refineries to produce a diesel
        fuel with only 15 parts per million of sulfur.  By not
        allowing for testing allowances after the fuel leaves the
        refinery, this rule, by EPA's own admission, actually
        requires us to make a fuel between 7 and 10 ppm sulfur.  This
        is less than one-third the level required in the new Tier 2
        rule for gasoline.  Three primary issues arise from requiring
        a sulfur level that low.
                  Number 1.  Can such a fuel be produced in a
        refinery and at what cost?
                  Number 2.  Can the integrity of this fuel be
        maintained throughout the distribution system?
                  Number 3.  How soon could such a fuel be produced
        in quantities large enough to meet current demand?
                  As to the first issue, the producibility of the
        fuel, the answer is probably yes, but at a tremendous cost
        and risk.  At some point around 25 to 30 ppm sulfur levels,
        the sulfur removal technology changes dramatically.  Above
        that level, low pressure hydrotreating technology can
        accomplish the task.  According to a recently released study
        by the National Petroleum Council, which studied this issue
        for over a year, the industry price tag for a 90 per cent
        reduction in sulfur levels would amount to about $4 billion,
        or about $50 million average for each refinery currently
        producing  on-road diesel fuel.
                  For most refineries, this would involve primarily
        expanding the capability of existing units to remove more
        sulfur.  The current EPA proposal for a 98 per cent reduction
        to 7 to 10 ppm sulfur, on the other hand, shifts the removal
        technology to what is called high pressure hydrotreating. 
        This would require new, grassroots construction at most
        refineries.
                  Again, from the NPC study, the price tag for the
        industry for this lower sulfur level now doubles to about $8
        billion, or about $100 million for each affected refinery,
        tying it with the Tier 2 gasoline rule as the most expensive
        environmental rule to date.
                  Now, at our Wilmington, California refinery, we
        have a high pressure hydrotreating unit in gasoline service
        that cost almost $200 million, so we have some experience
        with this difficult process.  It requires a special
        compressor capable of producing pressures well over 1,000
        pounds, or half a ton, per square inch.  Next, you must have
        vessels and lines that can contain this high pressure. 
        Vessels must be over four inches thick and are such a
        specialty item that only one or two companies in the U.S. are
        capable of manufacturing them.  Is this extra cost then
        really justified by a mere 8 per cent increase in sulfur
        reduction?
                  On to my second issue, that of maintaining the
        integrity of such a low sulfur fuel as it moves through the
        distribution system.  Diesel fuel, heating oil, gasoline and
        jet fuel all move through the same pipeline networks in the
        U.S.  There are very few lines dedicated to only one product. 
        Currently, the sulfur ratio between high sulfur products and
        on-road diesel in the same distribution system is about 10 to
        1.  At this ratio, the amount of cross contamination between
        the products is very easily handled.  The current proposal by
        EPA, however, would increase this ratio to almost 1000 to 1. 
        That means that only small amounts of cross product
        contamination would be necessary to ruin an entire shipment
        of diesel fuel, requiring that it be returned to a refinery
        for reprocessing.  Processing the same diesel fuel twice
        lowers the production capacity of a refinery and the
        availability of diesel fuel to our customers.
                  Now, to my third issue, that of the timing of the
        new requirement.  In the current proposal, lower sulfur
        diesel is required by April 1, 2006, less than three months
        following the effective date of the Tier 2 gasoline
        regulations.  In essence, this means that the industry must
        accomplish these two programs in tandem.  Again referring to
        the NPC study, the Tier 2 gasoline program alone will
        severely tax the ability of the engineering and construction
        industry in the U.S.  Any additional investment requirements,
        even a higher sulfur level than that currently proposed, will
        push this part of our industry beyond its capacity, thereby
        jeopardizing compliance with both gasoline and diesel sulfur
        rules.  As the saying goes, we can do the improbably, but the
        impossible takes a little longer.
                  Having outlined what's wrong with the current
        proposal, what do we at UDS think would make it right?  We
        support the positions taken by both the API and the NPRA for
        a diesel sulfur limit of 50 ppm at the refinery gate.  We
        believe that this level provides virtually the same clean air
        benefits sought in the EPA proposal, but at a much lower cost
        to both the industry and the consumer.  Furthermore, the
        timing of the new requirement should be delayed to no sooner
        than mid 2007 to avoid straining the construction industry
        and jeopardizing our compliance with Tier 2 gasoline rules.
                  If there is a theme to my testimony today, it's one
        of cost effectiveness.  Recent price spikes in reformulated
        gasoline areas of the country have more than ever brought the
        issue of fuel costs to the forefront.  The debate and
        investigation into these particular incidents is going to go
        on for some time, but so far, I think an important point has
        been missed, although others mentioned it earlier today. 
        Refining companies don't have access to unlimited capital. 
        Regardless of how much money is required for environmental
        improvements, every dollar spent on these required projects
        is a dollar that's not available to expand the output of our
        refineries.
                  Historically, refinery expansions have been ahead
        of the demand curve to the point of excess capacity in our
        industry; capacity available for short-term disruptions in
        supply.  I don't think that pattern will continue.  At UDS,
        expansion projects now require a very high return rate to
        compete for the limited capital that we have left after
        making required environmental expenditures.  Many of the
        expansion projects that we would have considered in the past
        just don't make the cut any more.
                  If reduced supply and resulting price increases are
        an acceptable cost to the American public for a certain level
        of cleaner air, then so be it.  Rarely, however, has an
        environmental proposal such as the diesel sulfur rule
        presented such a distinct decision point on cost versus
        benefit.  You can have a 90 per cent reduction for $4
        billion, but it will cost you twice as much to get an
        additional 8 per cent.  This is certainly an issue warranting
        public debate, and we at UDS appreciate the opportunity to
        participate in that debate today, and I appreciate your kind
        attention to my remarks.
                  Thank you.
                  MR. GRUNDLER:  Thank you, Mr. Westfall.  Ms.
        Farleigh, why don't you go next.
                  MS. FARLEIGH:  Thank you.  My name is Angie
        Farleigh.  I'm with US Public Interest Research Group based
        in Washington, D.C.  Since I submitted testimony in the LA
        hearing, I'd like to take this time to read some excerpts
        from some of our members around Colorado who couldn't be here
        today, but wanted to be heard.  I have just a few to read.
                  Kelly McDonald from Loveland, Colorado writes, "I
        have several family members with some type of lung disease or
        breathing problems.  Honestly, I am very confused as to why
        there are such stringent laws governing our personal autos
        and regular gasoline manufacturers, but yet diesel fuel
        appears to be exempt."
                  Michael McNeill from Nederland, Colorado writes,
        "Diesel engines of all sizes represent a major health hazard
        to Americans.  Most of us get smog certificates on our
        passenger cars every years.  But it doesn't take a rocket
        scientist to know that the Ford F-350 or Dodge Ram diesel
        truck sitting next to you in traffic is a health hazard.  The
        fumes are overwhelming and the particulate emissions are
        visible.  The problem escalates with the size of the diesel
        engine in larger trucks and buses that are being represented
        here today."
                  Dr. Bess Brackett from Greeley, Colorado writes, "I
        was just on Trail Ridge Road today in the Rocky Mountain
        National Park in Colorado where one can view some of the most
        breathtaking scenery in the world.  Unfortunately, there were
        diesel buses also in attendance.  It would be a tragedy if
        diesel buses and trucks were allowed to continue as is and
        endanger not only the health of our nation, but also its
        beauty."
                  And, finally, James Lindahl from Nederland,
        Colorado writes, "As a sufferer of pulmonary hypertension, I
        am keenly aware of the effects that the particulate pollution
        from diesel powered vehicles has on those like myself who
        suffer from chronic lung disorders."  And then he, as well as
        all these other letters, so on to urge the EPA to adopt the
        toughest emission standards as soon as possible.
                  The first thing they all mention is to clean up
        sulfur levels in diesel fuel to no more than 15 parts per
        million by 2006.  The public understands that low sulfur
        diesel fuel is absolutely necessary to achieve the proposed
        pollution reduction.
                  They also understand that it is necessary to have
        low sulfur diesel fuel available nationwide by the time the
        emission standards go into effect.  They do not understand,
        however, why the EPA is considering weakening their proposed
        provisions on sulfur.
                  At a time when the oil industry is enjoying record
        profits, they can afford to clean up diesel pollution.  The
        public, however, cannot afford to continue breathing
        unhealthy air.  In order to protect the public health, US
        PIRG and their half a million members across the country urge
        you to adopt a sulfur cap of 15 parts per million by mid
        2006.
                  Thank you.
                  MR. GRUNDLER:  Thank you very much.  Mr. McIntosh?
                  MR. MCINTOSH:  Good afternoon.  My name is Curt
        McIntosh and I'm president of the independent Diesel Workers
        Union located in Columbus, Indiana.  We have 2,800 members
        working in three manufacturing plants located in Columbus,
        Seymour, and Walesboro, Indiana.
                  In 1993, the membership signed an unprecedented
        eleven year contract with Cummins Engine Company.  Out of
        that contract, a partnership was formed with Cummins to
        provide employment security for the community and to help
        Southern indiana attract new business.
                  Our members pride themselves on producing the best
        products on the market today, and then putting the Cummins
        name on every engine shift.  We're committed to reducing
        emissions in the products we help to produce, and to help
        guarantee a cleaner environment.
                  Our hourly employees have been involved in all
        aspects of our new Signature engine line, the industrial
        leader in emissions control.  Our goal at Cummins is to not
        only meet, but to exceed, the standards set by the EPA
        emissions control, and to produce the best, the highest
        quality diesel engine in the world.
                  The proposed changes represent the biggest
        emissions reductions ever required from heavy-duty engines. 
        These new standards will mark the first time Cummins cannot
        meet emissions standards using traditional in-cylinder
        methods, force us to work with outside suppliers of after-
        treatment devices and influence the fuel efficiency.
                  The use of after-treatment is a gray area.  It is
        still unknown if these devices can perform to the necessary
        levels to meet the proposed emission levels.  Cummins and
        other engine manufacturers need to examine the feasibility of
        exhaust after-treatment technology and their impact on the
        engine system.  Even with the ample time given in the
        proposed rule, it is still too early to make judgment on this
        technology.
                  If these new standards are implemented without a
        complete understanding of after-treatment performance levels,
        and we are unable to develop and build quality products that
        perform to customers' expectations, the result would be a
        decline in sales, leading to reduced environmental benefits
        and loss of jobs to many engine workers, including members of
        the Diesel Workers Union.
                  We ask the EPA to consider the long-term impact of
        this proposed rule on our economy.  By working with engine
        manufacturers, an appropriate standard can be developed that
        would produce reasonable, responsible emission reduction
        while ensuring security for our workers far beyond 2010.
                  In closing, Cummins Engine Company and the Diesel
        Workers Union will continue to work in a partnership to lead
        the way for a strong emissions control, and most of all, I'm
        proud to know that working together, we'll provide our
        grandchildren a safe and clean environment, along with job
        security.
                  MR. GRUNDLER:  Thank you very much, Mr. McIntosh. 
        Mr. Early?
                  MR. EARLY:  Good afternoon.  My name is Blakeman
        Early.  I'm an environmental consultant for the National
        American Lung Association.  You heard testimony earlier today
        from the American Lung Association of Colorado, with whom we
        are affiliated.
                  The American Lung Association is the oldest
        voluntary health agency in America, founded in 1904, and for
        four decades, we have helped lead the fight for clean air.
                  The American Lung Association is pleased to support
        the low sulfur diesel fuel and heavy-duty vehicle rulemaking. 
        We strongly support the low sulfur diesel provisions and view
        the cap of 15 parts per million on diesel sulfur as the
        critical element of the rule.  In my brief comments today, I
        want to highlight the urgent public health need to clean up
        diesel fuel and heavy-duty vehicles, and show the
        overwhelming public support for this program, as demonstrated
        by a recent poll.
                  As I just mentioned, the most critical element of
        this rule is the 97 per cent reduction of sulfur in diesel
        fuel.  We commend the EPA for proposing this level.  We must
        cap the sulfur in diesel fuel at no higher than 15 parts per
        million, and we must fully implement the sulfur rule
        nationwide by no later than June, 2006.
                  Cleaning up diesel fuel and heavy-duty vehicles is
        necessary because the air is dirty.  Diesel engines
        contribute considerable pollution to the US's continuing air
        quality problems.  Even with more stringent heavy-duty
        highway engine standards set to take effect in 2004, these
        engines will continue to emit large amounts of nitrogen
        oxides and particulate matter, both of which contribute to
        serious public health problems.
                  Diesel engine NOx contributes to unhealthy levels
        of smog.  Nitrogen oxides from diesels contribute to ozone,
        and ozone is a powerful respiratory irritant.  Symptoms of
        ozone exposure include shortness of breath, chest pain when
        inhaling deeply, wheezing and coughing.  Ozone can also
        trigger asthma attacks, and you've heard a lot of testimony
        about that today.
                  People with existing lung disease already suffer
        from reduced lung function and cannot tolerate an additional
        reduction in lung function due to ozone exposure, and they
        are especially at risk.
                  Smog is often viewed as a problem primarily
        plaguing urban areas in the northeast, California and Texas. 
        But recent monitoring data over the last three years finds
        that EPA's new eight hour standard for smog was violated in
        over 300 new counties in 15 states.  A rapid urbanization of
        western cities continues, and most recent air quality
        monitoring shows unhealthy levels of smog in Denver, Phoenix,
        Las Vegas and Salt Lake City.  Las Vegas and Phoenix appear
        to exceed EPA's new eight hour standard already.  And Denver
        and Salt Lake City are only .01 part per million, or 1 part
        per billion below the level to be considered a violation of
        the new eight hour standard.  Clearly, as far as breathers
        are concerned, this difference is insignificant.  Ozone is a
        public health threat in Denver and Salt Lake City, just as it
        is in Phoenix and Las Vegas.
                  EPA calculates that the rule will reduce diesel
        generated NOx emissions by 1.5 million tons annually, just
        five years after this rule is implemented.  This represents a
        more than 50 per cent reduction from the level of NOx diesels
        would generate without the benefit of this rule.
                  Diesel exhaust significantly increases particulate
        pollution.  Diesels are a large source of particulate
        pollution, especially small particles known as PM 2.5.  Fine
        particles are easily inhaled deeply into the lungs where they
        can be absorbed into the bloodstream or remain embedded for
        long periods of time.  A recent study showed a 17 per cent
        increase in mortality risk in areas with higher
        concentrations of small particles.
                  Diesel emissions contribute from 18 to 25 per cent
        of particulate pollution in many urban areas.  They
        contribute an even larger percentage of the fine particulate
        pollution in these areas, which is the most dangerous to
        human health.  EPA calculates that this rule would reduce
        diesel generated particulates by 60 tons annually just five
        years after the rule is implemented.  This represents a more
        than 60 per cent reduction from the level of particulates
        that would be generated without the benefit of this rule.
                  Particulate matter air pollution is especially
        harmful to people with lung disease such as asthma and
        chronic obstructive pulmonary disease, which includes chronic
        bronchitis and emphysema.  Exposure to particulate air
        pollution can trigger asthma attacks, cause wheezing,
        coughing and respiratory irritation as well, just like smog
        does.
                  Recent research has also linked exposure to
        relatively low concentrations of particulate matter with
        premature death.  Those at greatest risk are the elderly and
        those with pre-existing respiratory or heart disease.
                  The public strongly supports cleaning up diesel
        fuel, trucks and buses.  A nationwide public opinion survey
        conducted earlier in June, in that survey, nearly nine out of
        ten people believe that big diesel trucks and buses should be
        required to use the best available pollution control
        technology.  In addition, the survey found that nearly seven
        of ten believe that cleaner diesel fuel and stricter diesel
        vehicle standards should be required within less than five
        years.
                  On the critical question of diesel fuel, 85 per
        cent of the survey respondents believe that up to 4 cents a
        gallon is a reasonable price to pay for cleaner diesel fuel.
                  As I indicated earlier, the ALA strongly supports
        the EPA proposal.  In our written comments, we will address
        many of the specifics raised in the proposal.  I will
        highlight the most critical elements.  With respect to the
        emission standards, we strongly endorse the levels EPA has
        proposed.  We support the 90 per cent reduction of
        particulate matter to .01 grams per brake horsepower-hour,
        and a 95 per cent reduction of NOx to .2 grams per brake
        horsepower-hour.
                  We are pleased that EPA is calling for the
        particulate standard to be fully implemented in 2007.  But we
        believe that the four year phase-in period proposed for the
        NOx standard for diesel vehicles is unwarranted and will
        unnecessarily postpone needed air quality benefits.  We call
        on EPA to require 100 per cent of the new vehicles to meet
        the .2 grams per brake horsepower-hour standard, NOx
        standard, in 2007.
                  Again, we reiterate the critical element of this
        rule is the 97 per cent reduction of sulfur in diesel fuel. 
        EPA must cap that sulfur in diesel at no higher than 15 parts
        per million, and in order to meet the 2007 standard for the
        NOx that we are endorsing, it must be in place by June of
        2006.
                  The American Lung Association also supports the
        development of a Blue Sky performance standard for truly
        clean technologies, and we will further expand on this
        concept in our written comments.
                  In conclusion, some, especially in industry, will
        say the air is getting cleaner, so cleaning up diesel fuel
        and heavy-duty trucks is unnecessary.  Some data do show that
        air pollution levels in some cities are lower than they were
        a decade or two ago.  But this is not true of all areas of
        the country.  In some areas, air pollution is increasing.  We
        know much more about the health effects of air pollution
        today than we did in 1990 or 1980.  We know that exposure to
        ozone at much lower concentrations poses health risks,
        including exacerbation of asthma.  We know that particulate
        pollution has been linked to premature death.  We know that
        diesel exhaust has been linked to cancer.  With all we know
        about air pollution health effects, we do not need more
        delays.  The American Lung Association urges the immediate
        adoption of the low sulfur diesel/heavy-duty vehicle rule.
                  Thank you very much for letting me participate
        today.
                  MR. GRUNDLER:  Thank you, Mr. Early.  With your
        indulgence, Mr. Severance, I'd like to invite up Mayor
        Wellington Webb from the City of Denver.  Thank you for
        coming, Mr. Mayor.
                  MAYOR WEBB:  I appreciate the indulgence of the
        Committee in terms of letting me slip in.  But for whoever I
        just bumped, I apologize.
                  Good afternoon.  My name is Wellington Webb.  I'm
        the Mayor of the City and County of Denver.  I want to thank
        you for the opportunity to participate in today's public
        hearing on the EPA's proposed diesel fuel emissions
        standards.  I will share Denver's perspective with you to be
        included in your agency's official record.
                  It is common knowledge that diesel-powered vehicles
        pollute the air.  We see it every day.  Diesel emissions are
        a significant source of air pollution, especially in our
        urban areas, and studies show they are impacting the health
        of our residents.  According to a 1995 study done by the
        Denver Regional Council of Governments, there were 2.7
        million vehicle miles travelled daily in the Denver Metro
        area by diesel vehicles.
                  Almost 5,000 heavy-duty diesel trucks are based in
        neighborhoods within the 80216 zip code in North Denver.  In
        addition, Interstates 70 and 25 run through these
        neighborhoods that have many low-income as well as minority
        residents.
                  There are significant levels of pollutants,
        including particulates, sulfur dioxides, toxics and more,
        associated with diesel vehicles.  And, we know that these
        pollutants are related to health problems, from chest pain
        and shortness of breath to lung cancer and premature death. 
        And I would also add in as one that happens to be asthmatic,
        I'd concur with the testimony previously given by one of the
        speakers.  And I just lost my place.  There are obviously
        increased health care costs borne by all of us as a result.
                  In addition, it has been shown that nitrogen oxides
        from sources such a diesel-powered vehicles, is a major cause
        of the Denver area brown cloud.  Historically, we know that
        the brown cloud affects our quality of life and our region's
        economic vitality.
                  One way to reduce overall emissions from diesel
        vehicles is to reduce the sulfur in diesel fuel, in
        conjunction with tougher emission standards for diesel
        engines.  In fact, cleaner diesel engines cannot work unless
        there is also a significant reduction in sulfur in diesel
        fuel.
                  i believe that the EPA's proposal for cleaner
        engines using cleaner fuel is necessary and provides
        sufficient lead time for the affected industries.  I am a
        great believer in the ability of the American industry to
        efficiently and effectively meet such a challenge.
                  Last year, the South Coast Air Quality Management
        District in California concluded that 70 per cent of the
        total cancer risk in their area was attributable to diesel
        particulates.  If diesel emissions have even a fraction of
        that impact in Denver, EPA's proposal would have a
        significant positive impact on the health of our residents.
                  Thank you very much.
                  MR. GRUNDLER:  Thank you, Mr. Mayor, for sharing
        your time and your comments with us.  Mr. Severance?
                  MR. SEVERANCE:  Good afternoon.  I'm Richard
        Severance, president of Conoco's Refining and Marketing,
        North America.  Conoco markets motor fuels in 21 states in
        the Northern Rockies, Mid-continent areas, and Gulf Coast
        regions of the United States.  Our four U.S. refineries are
        located in Colorado, Montana, Oklahoma and Louisiana and
        supply our 5,000 retail networks.  
                  Thank you for the opportunity to speak before the
        EPA and present Conoco's views on the proposed rules to
        establish new heavy-duty engine and diesel fuel standards.
                  The EPA faces the daunting task of setting
        standards that protect the public's health and the
        environment.  This task is especially challenging if the
        standards are to be achieved in a cost effective manner using
        sound, proven technology.
                  Conoco is supportive of the objective to reduce
        emissions from heavy-duty trucks and buses and we agree that
        reductions in diesel sulfur levels will benefit this effort.
                  However, I must say in all candor that Conoco is
        concerned about the practicality and benefits of the proposal
        the EPA has put forward.
                  In the interest of time, I will only speak to those
        concerns we find most troubling, the extreme level of
        desulfurization required, the timing of the changeover, and
        lack of information on future off-road diesel standards.
                  The desulfurization level.  The EPA's proposal for
        a 97 per cent reduction in diesel sulfur is commonly referred
        to as the 15 ppm standard.  However, to ensure the 15 ppm
        level is not exceeded anywhere throughout the distribution
        system, refiners would need to produce diesel at an even
        lower sulfur level.
                  The actual level required is a guess at this time
        because of uncertainties with regard to how to protect
        product integrity through the distribution system, and the
        repeatability of the test methods.
                  However, EPA and others have guesstimated the
        sulfur content of the diesel would have to be in the 7 to 10
        ppm range when it leaves the refinery.
                  There are many unknowns in trying to determine how
        to configure a refinery to produce a product that meets such
        a stringent standard.  EPA has indicated it expects its
        expert refiners will be able to meet the new standard by
        revamping existing units.  Conoco engineering and technical
        experts are not convinced that this will be possible in all
        cases.
                  It is probable that a more extensive study and
        evaluation of existing units might determine that revamping
        these units will not meet the expectations, or they could be
        so extensive or expensive so that constructing new units is a
        more viable option.
                  Product balances and potential for supply shortages
        must be examined in the context of the proposed regulation. 
        There are several factors that will work to reduce on-road
        diesel product volumes if refiners are required to
        desulfurize to the 7 ppm level.
                  First, refiners must decide how to handle the
        diesel streams that are the most difficult and, therefore,
        the most costly to desulfurize, such as light cycle oil.  A
        refiner may opt to remove some or all of these streams from
        the on-road diesel pool rather than invest in treating them. 
        This would reduce production of on-road diesel fuel.
                  Unfortunately, reductions in supply of any product,
        whether it be gasoline or diesel fuel, generate production
        shortages resulting in price volatility in the marketplace.
                  Secondly, in order to meet these low sulfur levels,
        hydrotreating operations would need to be more severe,
        resulting in more frequent unit shut-downs for necessary
        catalyst changeouts.  During these unit outages, a refinery's
        on-road diesel production capacity will be reduced and likely
        the refinery would be unable to produce any on-road diesel
        during this time.
                  Third, regardless of whether revamped or new units
        are the more viable option, the proposed standard is so
        restrictive the refinery will have to run perfectly day in
        and day out, in order to make a 7 ppm sulfur standard.  Even
        a simple crude slate change, something many of us do many
        times a month, could result in a product that does not meet
        the 7 ppm level.
                  And, fourth, maintaining the integrity of the ultra
        low sulfur diesel throughout the distribution system presents
        a challenge.  Should the diesel product exceed the 15 ppm
        standard after delivery into the product terminal or retail
        station, there will be limited options to remediate that
        product.  Off-spec product at the terminal or retail station
        will result in product outages until the off-spec material
        can be remediated.
                  When stringent fuel standards are established, any
        disturbance in a refinery distribution system results in an
        impact to supply availability.  
                  In light of these questions and concerns, Conoco
        would encourage EPA to adopt the API proposed standard of 90
        per cent reduction in diesel sulfur content.
                  Achieving the API proposed 30 ppm average/50 ppm
        maximum diesel sulfur content would still require significant
        refining modifications and capital investments.  Although not
        easy, we believe the plan is achievable by the industry while
        gaining nearly the same health and environmental benefits.
                  In summary, as far as sulfur levels are concerned,
        the EPA is faced with adopting either a standard that
        refining experts believe can be maintained on a constant and
        consistent basis, or one with inherent questions on its
        ability to provide product at a consistent quality and
        maintainable rates.
                  On the issue of timing, a little over a year ago, a
        Conoco representative spoke before the EPA in Denver on
        another low sulfur issue, low sulfur gasoline.  After hearing
        all of the testimony, the agency set forth an aggressive
        implementation plan requiring the phase-in of low sulfur
        gasoline between 2004 and 2007.
                  The oil industry is currently employing significant
        resources to study, design and implement refining
        modifications to meet those gasoline standards within the
        time allotted.
                  The simultaneous introduction of low sulfur diesel,
        regardless of whether it's the 90 or 97 per cent reduction,
        will require the industry to implement two distinct and
        separate clean fuels projects, each requiring unique
        modifications to existing refineries or new units.
                  This would not only severely tax each company's
        internal resources, but would certainly strain or even
        overload the refining industry's engineering, unit
        fabrication and construction infra-structure.
                  For example, there are more than 150 refineries in
        the U.S. today.  Even if you believe that only one reactor
        would be needed for each refinery, and it's more probable
        that many refineries would require at least two, the
        fabrication industry would need to complete these units at
        the rate of one every other day for a year.  There are real
        questions as to whether there is enough fabrication capacity
        to manufacture all the reactors and associated equipment at
        the same time.
                  Similar questions exist whether there is an
        adequate skilled and qualified labor force that would be
        needed to install the reactors when they were built.
                  Conoco has estimated that if this project coincides
        with the peak industry demand on the gasoline projects, some
        project costs could increase by as much as 25 per cent.
                  The timing for the introduction of low sulfur
        diesel fuel is driven by the planned phase-in of new diesel
        engines.  A number of benefits could be gained by delaying
        the introduction of the new engines by two years, but
        compressing the phase-in over a shorter period of time, two
        years versus four years.
                  Under the current EPA proposal, only 1 to 2 per
        cent of the total U.S. trucking fleet would require the low
        sulfur diesel in the first year, 2007.  The remaining 98 per
        cent of the trucking community would be forced to pay for the
        new, higher priced fuel for a minimum environmental benefit.
                  With the delay, the trucking industry would be
        spared from paying a higher price for a fuel they didn't
        need, and this industry, which has many independent truckers,
        is already feeling the impact of higher fuel prices because
        of rising crude costs.
                  Finally, delay and compressing the engine phase-in
        would give the agency time to complete the rulemaking process
        for off-road diesel requirements.  
                  I cannot stress the importance of a full
        understanding of the total distillate picture.  The refining
        synergies between on-road and off-road diesel are too
        intertwined to be treated as separate entities.  The off-road
        diesel information is critical to be able to evaluate all the
        refinery blendstock streams and the optimum disposition of
        these streams.  This allows refineries to implement the
        necessary modifications to achieve both on-road and off-road
        diesel standards in a way that is most likely to preserve the
        supply balance between the two.  Without a complete picture
        of the agency's expectations for the total distillate pool,
        the refining industry cannot adequately be prepared to meet
        the future needs of the transportation industry.
                  In conclusion, I want to emphasize Conoco's concern
        with the practicality  of the proposed EPA rule and believe
        the industry proposal is a more reasonable course of action. 
        Conoco believes the industry's approach would significantly
        reduce emissions, generate nearly the same health and
        environmental benefits, and result in a cost effective and
        stable supply of low sulfur diesel for this nation's
        transportation sector.
                  When you look at the incremental emissions benefit
        versus the incremental cost, one has to question whether it
        is cost beneficial to go to the extreme levels proposed by
        the EPA.
                  I hope the EPA is open to continue discussing
        alternatives, such as the one proposed by our industry, and
        we will continue this dialogue with all those who have a
        vested interest in producing a diesel standard that properly
        balances air quality and health concerns with cost benefits.
                  I appreciate the opportunity to comment on this
        issue which will impact not only our industry, but others as
        well.  We look forward to working with the EPA to hopefully
        resolve our differences and implement a program that will
        benefit everyone.
                  Thank you.
                  MR. GRUNDLER:  Thank you, Mr. Severance.  
                  Mr. Westfall, in your statement, you say that you
        believe that a 50 ppm sulfur level would provide virtually
        the same clean air benefits sought in the EPA proposal, but
        at a much lower cost to both the industry and to the
        consumer.  Can you explain that a little bit more for me?
                  MR. WESTFALL:  I think I have two points to make on
        that.  Number one is that there is a requirement for a 50 ppm
        level of sulfur, or something above 30, so our industry does
        not have to go to high pressure hydrotreating.  There's $4
        billion left over of the price tag that can be applied
        towards after-treatment technology, to develop a technology
        that can work on a 50 ppm fuel.  And if we can do that for
        $3.9 billion, then we as a society have gained a cost benefit
        of $100 million.
                  We're trying in the current proposal to put all of
        the technology changes into the refining industry, and as I
        say, if you'll allow us to go to a higher sulfur level,
        slightly higher, around 30 or so, then again there's $4
        billion that can be applied to other technologies to see if
        we can in fact develop one that can run on a fuel like that
        and give the same benefits as you're asking in the current
        proposal.
                  MR. GRUNDLER:  So if I'm hearing you correctly,
        it's not based on any particular analysis about a different
        type of technology.
                  MR. WESTFALL:  Not at all.
                  MR. GRUNDLER:  I see.  Okay.  I want to thank the
        panel for your time and your comments.
                  Is Mr. McLerran and Mr. Rodda in the room?  If so,
        I'll invite you up, along with Jennifer Douglas, if she has
        returned, Fernando Martinez, charlie Bittle and John
        Kowalczyk.  Welcome to the hearing, and we look forward to
        your comments.
                  I remind you to fill out the cards so we can, and
        the audience can see your name.
                  So, Mr. Kowalczyk is not up there all by himself,
        I'm also going to invite Kelly Nordini, Marie Valentine, John
        Stern, David Bartlett, Ronald Hagmeyer to join him.
                  Mr. Kowalczyk, you have the honor, since you were
        the first at the table.
                  MR. KOWALCZYK:  My name is John Kowalczyk, and I'm
        here to speak on behalf of Langdon Marsh, the Director of the
        Oregon Department of Environmental Quality, and I'd just like
        to note that I believe I'm the only representative of a state
        environmental agency to speak today.  That seems kind of
        unusual.
                  I'm going to read a brief statement from Mr. Marsh. 
        There are many compelling reasons why the State of Oregon is
        very pleased with and highly supportive of the timely and
        substantial air quality benefits that can be achieved and
        realized from EPA's proposed rules.  This proposal is another
        giant step that addresses the prime source of air pollution
        in Oregon and the nation, and that is motor vehicles.
                  Designing the proposed rules to motivate
        application of the best available NOx after-treatment devices
        on new heavy-duty diesel trucks and buses, as EPA has done,
        will help us address continuing ground level ozone issues in
        the Portland area.  The proposed particulate emission
        standards for new heavy-duty diesel engines will necessitate
        application of state of the art particulate control devices
        that will greatly help our efforts and our partners' efforts
        through the Western Regional Air Partnership, to address
        regional haze problems and protect visibility in pristine
        areas of Oregon and other locations in the west.  
                  Our citizens and we are also greatly interested in
        addressing the control of air toxic emissions.  Achieving the
        maximum particulate emission reductions through
        technologically feasible means, such as being proposed, can
        accomplish possibly and address the greatest health hazard
        that we're hearing of, and that is the cancer causing
        emissions of particulate that have been identified in studies
        in other urban areas of other states.
                  And last, but not least, we expect EPA's proposal
        to once and for all effectively address the noxious smoke and
        odors from on-road diesel engines over their useful life, and
        this has been an issue, long-standing issue, and major
        concern of the public.
                  We do realize that in order to achieve the huge
        emission reductions from on-road diesel engines that EPA has
        projected, it will require application of ultra low sulfur
        diesel fuel.  This challenging requirement comes on the heels
        of EPA's recent rules to require low sulfur gasoline to
        enable state of the art emission control technology on
        gasoline powered passenger vehicles.  We remain sensitive to
        the possible adverse impacts of new fuel regulations on small
        Rocky Mountain refineries that supply fuel to portions of
        Oregon.
                  We participated in and are pleased with the results
        of the efforts of the Western Regional Air Partnership to
        seek EPA action to help prevent refinery closures and
        unnecessary fuel shortages and fuel price increases in the
        west as a result of EPA's gasoline sulfur rules.  We commend
        EPA for including special provisions for Rocky Mountain
        refineries in their gasoline sulfur rules that they recently
        adopted.
                  We are pleased to see that EPA seeks comments on
        ways to ease the impact that the proposed diesel sulfur rules
        may have on small refineries.  We urge EPA to consider
        reasonable ways to do so, and I would underline this, without
        compromising the timeliness or the effectiveness of the
        proposed program in improving air quality.  We encourage EPA
        to support incentive type programs for these refineries that
        may help to mitigate economic impacts of the fuel
        desulfurization requirements, and perhaps even stimulate
        early compliance.
                  And, finally, while EPA has recently adopted a
        program for light-duty gasoline vehicles that promises to
        motivate manufacture of near pollution free vehicles by the
        end of this decade, and while EPA now proposes to virtually
        do the same for on-road heavy-duty diesel vehicles, we are
        disappointed that EPA has not concurrently proposed a similar
        program for the last remaining significant category of mobile
        sources, and that is non-road or off-road heavy-duty diesel
        engines.
                  These engines used in construction equipment,
        trains, ships, farming vehicles and mining equipment, are
        projected to emit about the same total amount of pollution in
        the future as does on-road heavy-duty vehicles and, thus,
        they are of virtually equal concern in terms of impact on
        ground level ozone, carcinogen particulates, regional haze
        and nuisance visible smoke and odors.
                  Non-road heavy-duty diesel engines should be
        controlled to a similar degree as proposed for on-road heavy-
        duty diesel engines.  We understand that this will also
        require very similar low sulfur non-road diesel fuel to
        enable application of appropriate after-treatment devices. 
        Just moderate reductions in the sulfur content of non-road
        diesel fuel will not provide very much air quality benefits.
                  To address the issues of controlling off-road
        diesel fuel, we hope that EPA will move as expeditiously as
        possible to regulate non-heavy duty diesel engines and fuels,
        and we suggest that EPA give as clear and timely notice as
        possible, such as issuing a specific advanced notice of
        proposed rulemaking for this source category, concurrent with
        the adoption of the on-road heavy-duty diesel rules, that
        indicates what EPA's inclination is towards specific non-road
        heavy-duty engines and fuel standards, and then aim at
        adopting those proposals in the year 2001.
                  I believe we've heard the refining industry and the
        engine manufacturers and others all wanting to know what EPA
        is projecting and doing in this area.  So I think there's
        just a lot of good support for giving people advanced notice
        on this issue.
                  So, again, I thank you for this opportunity to
        come, and I hope these remarks are useful to you.
                  MR. GRUNDLER:  Thank you, Mr. Kowalczyk.  We move
        from the left to the right.  Mr. Hagmeyer, welcome.
                  MR. HAGMEYER:  Good afternoon.  My name is Ron
        Hagmeyer, and I'm president of Venta, Incorporated of
        Lakewood, Colorado.  Our company either operates or supplies
        motor fuel to 85 convenience stores in Colorado, Arizona,
        Wyoming and Nebraska.  We sell about 70 million gallons of
        motor fuel each year at these retail outlets, mostly under
        the Texaco brand.  I appreciate the opportunity to appear
        today to comment on the EPA's proposed diesel fuel sulfur
        standard.
                  I am appearing today on behalf of the National
        Association of Convenience Stores, a national trade
        association consisting of more than 2,300 member companies. 
        The convenience store industry employs 1.3 million people and
        operates over 119,000 retail outlets across the country. 
        Convenience stores last year had total sales of $234 billion,
        which included motor fuel sales of $134 billion.  Motor fuel
        brings in over 57 per cent of the total sales revenue of our
        industry.  Over 75 per cent of NACs member companies sell
        motor fuels, and 40 per cent of our companies sell diesel
        fuel.
                  NACS is deeply concerned about the potential impact
        of the EPA proposal on our nation's diesel fuel distribution
        system.  EPA has proposed a 15 ppm diesel sulfur cap, and
        most of the refining industry supports a 50 ppm cap.  For
        diesel fuel retailers, like us, each approach presents the
        same serious problem.  Simply stated, if either standard is
        finalized, our existing distribution system will be incapable
        of meeting the standard on a regular basis because of product
        commingling and contamination as low sulfur diesel fuel moves
        through pipelines, barges, bulk storage terminals, and tank
        trucks.  Unless each of these facilities is cleaned
        immediately prior to the introduction of ultra low sulfur
        diesel fuel, residual sulfur clinging to the walls of the
        pipeline or tank will contaminate the product.
                  If EPA intends to mandate the complete segregation
        of ultra low sulfur diesel fuel from all other products, then
        our nation's distribution system will surely collapse.  There
        are not enough dedicated pipelines, storage tanks, and cargo
        tanks to meet this separation requirement.  If it is not
        EPA's intent to require segregation, then EPA should
        thoroughly assess how its proposal will work in the real
        world without significant product contamination.
                  A second issue of serious concern to NACS is the
        possibility that EPA will rely on a phase-in approach in
        implementing the diesel sulfur standard.  EPA has suggested
        an option that would permit 15 ppm diesel to coexist with the
        current 500 ppm diesel during a four year period from 2006
        through 2009.  NACS strongly opposes this dual fuel option. 
        Such an approach would be unworkable for the vast majority of
        our members, especially the smaller companies with limited
        financial resources.  The cost of installing additional
        tankage would be impossible to justify for the limited phase-
        in period.  I would add that in the preamble, EPA did not
        include an estimate of the potential cost to diesel fuel
        retailers of a dual fuel approach.
                  Another basic flaw in this approach I believe is
        the simple fact that a large number of retailers would be
        likely to choose to offer only one grade of diesel fuel. 
        Many smaller retailers would be inclined to sell only the
        higher sulfur diesel, thus saving money by continuing
        business as usual.  They would be selling a lower priced fuel
        to a broader market consisting of trucks with the older
        engines.  Sales of the more expensive, low sulfur fuel
        generally would be limited to interstate truck stops supplied
        by major oil companies.  Some of the larger retailers may
        choose to offer only the cleaner 15 ppm diesel because it
        will be correctly viewed as the higher quality product.  But
        the fuel would be used only in the newer trucks, comprising a
        small percentage of the market in 2006.  The higher price of
        the new fuel would ensure that it would be used in very few
        of the older trucks.
                  The result most certainly would be chaos in the
        market.  Supplies of diesel fuel at the retail level would
        probably be erratic and unreliable in most regions of the
        country, because refiners in any one region would be unable
        to produce the correct balance of the two grades.  Supply
        uncertainty would be compounded by the unavailability of one
        grade or the other at individual retail sites.  Supply
        problems, of course, would then invariably trigger severe
        price volatility.
                  As everyone knows, today we are already
        experiencing price volatility and severe supply disruptions
        in our distribution system from prior mandates and
        regulations imposed upon the industry.  My company obtains
        motor fuel from eight different terminals or refineries in
        our marketing area.  In 1999, we suffered partial or complete
        shortages of various products from our major supplier for a
        total of 196 days.  This year, through five months to date,
        we have suffered product shortages for 90 days, and we are
        just entering the peak driving season in our markets.
                  What this has caused and what it causes today is
        increased transportation costs from our fleet of trucks from
        additional mileage, repairs and maintenance, and driver man
        hours resulting in higher pass through of costs to the
        consumer.  If we think prices are high now, I believe that
        they will be nothing compared to those we will experience if
        this proposed regulation is mandated to the industry.
                  I would agree that with our industry, that 50 parts
        per million is far more reasonable than 15 ppm.  I believe
        that 15 ppm does not significantly increase the air quality
        from 50 ppm.  I've been in Europe.  They have good air
        quality.  I don't see any black smoke coming from trucks over
        there.  And I think today, our air is cleaner than ever. 
        I've lived in Denver for 24 years.  I was born in 1934, an
        asthmatic, allergic to 65 different foods.  I wasn't supposed
        to survive.
                  On top of that, from high school until about 15
        years ago, I smoked two to three packages of cigarettes. 
        Today, I walk five to ten miles a day, and I think Denver's
        air is cleaner than ever, and I haven't had an asthmatic
        attack for over 35 years.
                  I truly appreciate, and our industry truly
        appreciates what EPA is trying to do.  We want clean air,
        too.  We just want it at a reasonable cost and at a level
        that's efficient and not over kill.  
                  We appreciate very much the opportunity to testify
        before you today.  Thank you for your time and your
        consideration.
                  MR. GRUNDLER:  Thank you, Mr. Hagmeyer.  Ms.
        Valentine?
                  MS. VALENTINE:  Good afternoon.  My name is Marie
        Valentine.  I'm here to speak on behalf of DaimlerChrysler on
        the subject of EPA's proposal to modify heavy-duty vehicle
        emission control regulations and on-highway diesel fuel
        requirements.
                  DaimlerChrysler is a vehicle manufacturer of light-
        duty and heavy-duty vehicles that operate on gasoline and
        diesel fuels.  DaimlerChrysler is a demonstrated leader in
        the development of environmentally sound vehicle
        technologies.  This is evidenced by our commitment to support
        the pursuit of tough emission performance goals.
                  Reducing heavy-duty emissions will aid in achieving
        the Nation's air quality goals, and we stand ready to do our
        part.  This is a logical follow-up to the Tier 2 light-duty
        vehicle emission regulation adopted last December.  We agree
        that EPA needs to look at all pollution sources when
        determining a comprehensive emission reduction plan.
                  In our opinion, the combination of a low sulfur on-
        highway diesel fuel program with feasible, stringent new
        emission standards for heavy-duty engines and vehicles will
        assist in improving air quality nationwide.  We congratulate
        EPA for continuing to link vehicles and fuels, as was
        recently done in the Tier 2 regulations.  This system
        approach is the only way to achieve the emission reductions
        envisioned.
                  We commend EPA's initiative to propose a 15 ppm
        sulfur cap for the on-highway diesel fuel.  This critical
        first step will enable the continued development and
        advancement of diesel emission control technology that is
        necessary if the heavy-duty industry is to meet the new
        proposed standards which reflect a 90 per cent reduction in
        NOx and PM.
                  Sulfur is a poison that blocks the use of after-
        treatment technology by rendering the hardware inoperable at
        today's 500 ppm level.  The developers of the after-treatment
        technologies have indicated that a very low level of sulfur
        in diesel fuel is critical for the future development of
        these devices.  The lower level will permit catalyst-based
        control strategies to be optimized for maximum emission
        reduction efficiencies.
                  Recent data indicate that sulfur free diesel fuel
        is the enabling requirement for the use of NOx adsorbers,
        Continuously Regenerating Technology systems, and Selective
        Reduction Catalysts due to their sensitivity to sulfur. 
        Further information on this will be included in our written
        comments.
                  The world's engine manufacturers have defined
        sulfur free diesel fuel, as specified by the World-Wide Fuel
        Charter, as the correct fuel to enable the use of NOx and PM
        after-treatment technologies where stringent emission
        standards are required.  Therefore, the sulfur level in
        diesel fuel must be reduced to allow the use of after-
        treatment technology as an emission control strategy for
        diesel vehicles as has been so successful for gasoline
        vehicles.
                  Let me emphasize that the proposed sulfur cap is
        only the first step needed for diesel fuel.  A sulfur free
        diesel fuel with a minimum cetane of 55 and a maximum 15 per
        cent aromatic limit is ultimately necessary.  This fuel
        composition would support the use of diesel fuel in the
        light-duty vehicle market and provide the benefits of reduced
        emissions, and increased fuel economy, another goal of the
        current Administration, while also maintaining customer
        satisfaction.
                  A diesel powertrain is an important option for
        passenger vehicles.  Diesel vehicles could have a significant
        role in the reduction of fuel consumption by offering a 40
        per cent fuel economy advantage over gasoline vehicles on a
        miles per gallon basis.  The sophisticated diesel vehicles
        currently in the European market have higher endurance,
        reliability, and torque, which is a desirable performance
        attribute.  On the emission side, diesel vehicles have
        inherently low hydrocarbon and carbon monoxide emissions, no
        evaporative emissions, and have long-term stability of
        emissions, which will be further reduced with after-
        treatment, but the enabling fuel is necessary.
                  We applaud the initiatives by some oil companies to
        deliver clean diesel fuel to some localized markets in
        advance of the regulations.  The lesson learned is that
        cleaner fuel can be made available and is being done at an
        affordable price.
                  Should a phase-in of clean on-highway diesel fuel
        be found necessary, we encourage EPA to have it start in
        2004.  The oil industry has previously challenged EPA to make
        all known changes in one step, not two separate steps, so
        capital investment strategies can be optimized.  Therefore,
        the 2004 suggested start date would link diesel with the
        gasoline sulfur control required by Tier 2, and allow light-
        duty clean diesel as a viable powertrain.
                  In conclusion, let me restate the key points of our
        message.  First, EPA's proposal of a reduced sulfur diesel
        fuel for on-highway is a great first step.  Second, clean
        fuel packaged with feasible emission standards is the correct
        path to ensure and enable further reduction in emissions.
                  DaimlerChrysler believes the diesel fuel as
        specified in the World-Wide Fuel Charter is necessary to
        enable low emissions and fuel efficient technology.
                  DaimlerChrysler is continuing to review the
        proposal and plans to submit written comments addressing
        other issues in the NPRM, and expand further on our diesel
        fuel position.
                  Thank you for the opportunity to speak to you.
                  MR. GRUNDLER:  Thank you, Ms. Valentine.  Ms.
        Nordini?
                  MS. NORDINI:  Thank you.  My name is Kelly Nordini. 
        I'm the transportation program director for the Colorado
        Public Interest Research Group, CoPIRG.
                  If it's appropriate, I'd like to defer CoPIRG's
        comments to Robin Hubbard, who will speak later this
        afternoon on your schedule. 
                  Instead, Mayor Joe Rice of the City of Glendale was
        not able to be with us today, and he asked, if it's
        appropriate, if I could deliver some brief comments on his
        behalf.
                  MR. GRUNDLER:  That will be fine.
                  MS. NORDINI:  Thank you.
                  Mayor Rice is with the City of Glendale, and
        Glendale is a small city in the heart of the Denver Metro
        area that is situated right along Colorado Boulevard. 
        Colorado Boulevard is one of the busiest state highway
        corridors.  It faces tremendous traffic every single day and
        on the weekends.  This means that Glendale experiences the
        disproportionate impacts of diesel exhaust, and while
        Glendale has taken many steps as a community to help reduce
        automobile air pollution, including establishing a local
        shuttle program that runs along Colorado Boulevard and
        supporting transit throughout the region, including the I-25
        light rail line that's planned, Glendale believes that we
        need diesel vehicles to do their part if we are to achieve
        our clean air goals in the region--rather, I should say Mayor
        Rice believes.
                  Mayor Rice was, therefore, disappointed to learn
        that the EPA has proposed waiting until 2010 to fully clean
        up smog-forming pollution from trucks and buses. 
                  In addition, because high sulfur fuel will poison
        the new diesel clean-up technologies, we must ensure that all
        diesel fuel is fully cleaned up and readily available before
        the trucks are required to clean up.
                  Mayor Rice applauds EPA's efforts to clean up
        diesel vehicles to help make all our communities cleaner and
        more livable, and he thanks you for the opportunity to
        comment today, and for your consideration.
                  MR. GRUNDLER:  Thank you for sharing his comments. 
                  Next, I'd like to hear from Mr. Bartlett.
                  MR. BARTLETT:  Good afternoon.  My name is Dave
        Bartlett, and I'm here on behalf of the Diesel Technology
        Forum.  The Forum is a new group working to enhance public
        dialogue with a wide range of stakeholders, including the
        EPA, other government agencies, and other interested parties,
        to explore a wide range of opportunities to reduce emissions
        from both existing and new diesel engines, while recognizing
        the inherent benefits of diesel technology.
                  Diesel power systems, that is, engines, fuels and
        after-treatment systems, that are the subject of today's
        hearing power the economy, from the familiar package delivery
        trucks to tractor trailers.  They're the very centerpiece of
        our nation's supply and distribution network.  But they're
        also much more.  In the age of the Internet and e-commerce,
        diesel power systems have taken on an even more important
        role facilitating the greatest economic expansion this
        country has ever seen, doing more work, moving more goods,
        and helping more businesses and more people than ever before.
                  This proposal to reduce emissions and require
        cleaner fuels in new diesel trucks and buses starting in 2007
        marks yet another milestone in the continuing improvement of
        diesel technology.  New diesel engines powered with today's
        fuels emit less than one-eighth the emissions of engines
        built just over a dozen years ago.  And if adopted, the
        proposal currently under consideration here could result in
        as much as a 90 per cent reduction in emissions beginning in
        2007, and that's on top of improvements already on-line for
        the period 2002 to 2004.
                  We support the direction of the EPA's proposed rule
        that will result in lower diesel emissions and cleaner diesel
        fuel in 2007.  We're especially pleased that for the first
        time, EPA has used a systems approach in setting future fuel
        and engine standards, an approach that recognizes that
        engines and fuels are both part of an integrated diesel power
        system.
                  This systems approach is even more important than
        ever, since for the first time, engine manufacturers, the
        companies that manufacture exhaust and after-treatment
        equipment, and fuel refiners will all have important roles to
        play in order to achieve the significant reductions in
        emissions that EPA is proposing.
                  Whatever the outcome of the debate over how much
        sulfur should be allowed in diesel fuel, everyone agrees I
        think that lowering sulfur content, coupled with advances in
        diesel engine technology, will help improve air quality.
                  And while this hearing is focused on future
        reductions in air pollution, we shouldn't lose sight of the
        tremendous progress that's been made in the past right here
        in Colorado and across the nation.
                  For example, in Colorado, air quality continues to
        improve.  In the Denver area, the number of exceedances of
        any of the federal air quality standards has declined by over
        83 per cent from the period 1986 to 1990, only 25 days. 
        That's compared to 1991 to 1995, 4.2 days.  Quite a
        reduction.  Most encouraging is that in the last four years,
        Colorado has had not one single violation of any National
        Ambient Air Quality Standard.  During this time, Colorado has
        also experienced explosive growth in construction and
        population.  This also means an increasing use of diesel
        engines in the trucking industry, serving more people and
        delivering more goods than ever before.
                  On a national basis, overall criteria pollutant
        emissions have declined by 34 per cent from 1970 to 1997. 
        This reduction has taken place at the same time that the U.S.
        population has increased by 31 per cent.  The economy has
        more than doubled in size over that same period of time.  The
        Gross Domestic Product has increased 114 per cent in that
        time period.  
                  Now, how has pollution declined at the same time
        that we've seen massive increases in manufacturing,
        construction, transportation, agriculture and all the other
        activities that constitute economic growth?  The answer is
        simply that all these activities have become cleaner at the
        same time that Americans have demanded more and more of them.
                  We see the future of diesel power systems in both
        these trends.  Diesel power systems have become much cleaner,
        and through continuous improvements, they will become much
        cleaner still.
                  This proves that we can have economic growth,
        increasing the use of diesel technology, and cleaner air. 
        These are consistent goals.
                  Diesel power systems are an essential part of the
        quality of life that we enjoy today.  They provide the most
        efficient, economical and reliable power for whatever the
        need.  And diesel is a technology that is defined by
        innovation and continuous improvement, meeting the ever
        increasing needs of the customer, whatever the application
        and whatever the need.
                  Now, make no mistake about it.  This proposal
        represents a significant technological challenge for the
        engine manufacturers, the exhaust after-treatment suppliers
        and the fuel refiners, all of whom are members of the Diesel
        Technology Forum.  But we're confident that together we can
        build on our past progress and produce the cleanest, most
        economical and most reliable diesel power systems ever.
                  While this proposal deals with new technology going
        forward, there are many opportunities we think to address
        some important issues concerning the existing diesel fleet.
                  Let me say just a word about excessive smoke from
        diesel trucks and buses.  When properly maintained, diesel
        engines don't smoke.  Fortunately, Colorado has had a
        successful diesel smoke emissions inspection program for
        several years, a program that has virtually eliminated
        excessive smoke from diesel trucks and buses.  And, frankly,
        we wonder why only 13 states have such programs today.  We
        challenge the other states around the country to consider
        adoption of smoke testing programs.  We have the tools and
        resources available to assist in that effort.
                  This March, the EPA issued a challenge to retrofit
        10,000 engines over the next two years.  The Forum is pleased
        to be working alongside the EPA in that effort.  We are
        bringing together resources or identify engines of all types
        in a wide variety of applications to determine the
        feasibility of lowering emissions by adding exhaust after-
        treatment systems, modifying engine emission controls, and/or
        using cleaner diesel fuels.  We're encouraged by the
        possibilities for success with this program, which will
        include engines in a full range of applications from marine
        vessels to highway trucks.
                  In conclusion, the members of the diesel Technology
        Forum, while not taking a position on the specific fuel
        sulfur levels or the other issues that are under debate
        today, support the EPA's decision to take a systems approach
        to reducing diesel emissions.  However, the specifics of this
        debate are resolved, diesel power systems are poised to
        deliver more of the efficient, reliable and economical power
        demanded by the American people.
                  As leaders in technology and innovation, the
        members of the Forum are committed to working with the EPA,
        with state governments, and with other interested parties to
        continue the improvement in diesel emissions, and to take
        meaningful steps now to address the problems in the existing
        fleet.
                  Thank you very much.
                  MR. GRUNDLER:  Thank you, Mr. Bartlett.  Mr. Stern?
                  MR. STERN:  I'm John H. Stern, and I'm vice-
        president of Petroleum Affairs and general counsel for
        Countrymark Cooperative, Inc.  We're located in Indianapolis
        and we own and operate a 24,000 barrel refinery at Mt.
        Vernon, Indiana.
                  Countrymark is owned by 188 local cooperatives in
        Indiana, Ohio, Michigan and Kentucky.  And those local
        cooperatives are owned by 200,000 farmers in that same
        general geographic area.  Countrymark presently is a small
        refiner under the definitions of the SBA and the EPA.  We
        have 315 employees currently.
                  We basically produce fuels for the agricultural
        area and for the small communities in the Midwest, and those
        fuels are predominantly a high quality diesel fuel for the
        farm, gasoline, other diesel fuels and heating oils for the
        rural communities and small businesses.  We basically
        distribute our products through a pipeline that runs up
        through the center of Indiana and through truck and barges on
        the Ohio River.
                  We are constantly attempting to upgrade our
        refinery and to comply with all of the EPA regulations and
        other regulations that exist, and we are a clean air and
        clean water company.  However, we are concerned about these
        regulations and the impact that they have upon us, our owners
        and our customers.
                  Most of the time when people think of the petroleum
        industry, they think of the international oil companies, the
        major oil companies, and OPEC.  However, there is a segment
        of the petroleum industry which is unknown to many, and
        insignificant to most, and that's the small refiner and the
        cooperative refiner.  However, in the areas where we operate
        and serve, we are a factor in the community, in that we
        provide fuels to niche markets and we provide employment and
        we serve and have served for many, many years.
                  However, in my 50 years, and I hate to admit that
        I'm that age, this is the most severe time I have ever seen
        for small refiners and cooperative refiners.  The impact of
        regulations, both the Tier 2 gasoline and the present
        proposed regulations, are just more than most small refiners
        can bear that burden.
                  I'm not going to replow the same ground that
        everybody else has today.  We support the industry and the 50
        ppm.  We are also concerned about the distribution system and
        about the technology that's necessary.  We also know that it
        will be difficult for us to obtain engineering, construction
        and the processes along with all the major oil companies who
        will be vying for those services at the same time.
                  I've heard it said that putting the gasoline
        regulations and the diesel regulations together would be
        helpful to refiners.  I don't know where that started, but I
        can't find any justification for that, nor can I find that
        among any other refiners.  It's two different things, and the
        costs will be the same, and you're trying to do two things
        that at a refinery at the same time.  It makes for safety
        problems, operational problems, and frankly, the cost of
        money is a very big factor here.
                  EPA has asked for comments concerning the various
        suggestions in the regulations as it relates to small
        refiners and to cooperative refiners.  I might mention we are
        one of a kind.  We are a small refiner, and we're a
        cooperative refiner.  I don't know whether that's good or
        bad, but at least we have gained some notoriety by being an
        individually distinct refiner in this country.
                  But the big thing for us, and I think most small
        refiners, because we are a part of the coalition of--not a
        coalition, it's a group of 25 refiners.  We've met in the
        SBREFA process, both on gasoline and on the diesel fuel
        regulations.  And by the way, we are very appreciative of
        that process, both on the Tier 2 gasoline, and what has
        transpired here to date.  We realize that it's been difficult
        for those involved in SBREFA to come up with anything that
        will take care of the small refiner, and I think that's the
        uniqueness of the small refiner and why we've managed to
        stick around all these years, is because we are unique.  And
        when it comes to the various comments that were made in the
        proposed regulations, I can't find one that will fit all.
                  As a matter of fact, I don't think all fit all.  So
        I would implore EPA to try to incorporate in the regulations
        as many of the alternatives that were proposed, or at least
        commented on, in the final regulations, because I think small
        refiners are going to need all the help that they can get if
        they are to survive.
                  I know our refinery, to do both the gasoline and
        the diesel fuel, will be spending somewhere between $25 and
        $30 million.  Now, as a farmer owned cooperative, and as
        other small refiners, we don't own crude, so we're not
        reaping any benefits from the present high price of crude. 
        We pay just what everybody else would have to pay for crude. 
        So when we take it into the refinery, we're paying that $33 a
        barrel.  So our profits come from the refining.  We don't own
        a lot of service stations and outlets and C stores, so we
        don't have that end of the business to make money from.  And
        most of our refiners are in that same position.
                  When it comes right down to it, whether you end up
        at 50 ppm, which we think is where it should be, or 15, what
        small refiners need is financial help.
                  Earlier today, as it was referred to by several,
        that in Europe there were incentives for small refiners,
        programs to bring them down to the level that is required by
        these regulations.  I suggest that that is something that
        EPA, while I know you don't have the authority to do it,
        could recommend to the administration and to congress some
        sort of tax relief, investment tax credit, excise tax
        rebates, or a loan program, guaranteed loan program which
        would allow small refiners to remain in business.
                  I know you've heard a lot of people yell from time
        to time, wolf, we'll go out of business if you do this to us. 
        And from time to time, that has just been crying wolf.  But
        also from time to time, and I think we've seen it in
        California recently, there are refiners who have gone out of
        business.  And I have to tell you I find the sincerity of the
        small refiner group that I'm working for at such a level, and
        I know them well and I know what their plight is, that they
        are sincere when they say that their ability to remain viable
        and to provide the services and the quality products to the
        communities which they serve is in jeopardy.
                  Now, I have not gone into the various things which
        were proposed by EPA.  I will cover those in our comments
        between now and August the 15th.  I did incorporate a couple
        of statements in my statement.  One was Mr. Ron Williams'
        statement in New York.  The other was Mr. Gerry Faudel's
        statement.  Mr. Williams is with Gary-Williams Energy, and
        Mr. Faudel is with Frontier.
                  I think both of their statements set out very
        clearly the problems that face small refiners and what we
        will need to survive and continue to be a viable part of the
        refining industry in the years to come.
                  I thank you for the time.
                  MR. GRUNDLER:  Thank you, Mr. Stern.  Any
        questions?
                  MR. FRANCE:  This is directed at Mr. Ron Hagmeyer. 
        Just a couple clarification issues.  You had mentioned--I'm
        interested in your perspective, given that you represent
        convenience stores.  You mentioned you supported the 50 ppm
        proposal, and you've heard earlier that, if you were here,
        that one of the ways of achieving the benefits is the
        suggestion that SCR technology would be used on diesels. 
        And, of course, SCR needs urea, which has in itself, among
        other issues, distribution challenges.  Your member companies
        could very well be on the hook for distributing urea under
        that proposal.  I was curious what your perspective is on
        that, and also whether you have thought about how it would be
        distributed and what the cost impacts would be on your member
        companies.
                  MR. HAGMEYER:  My forte is not technology.  It's
        marketing.  And my comments on 50 parts per million compared
        to 15 parts per million, there's going to be problems in the
        supply and distribution system whichever way we go, 50 or 15. 
        My comments were solely based on cost.  The convenience store
        industry provides fuel at a cost--at a retail price to the
        consumer, and I think it's pretty common knowledge that for
        refineries to arrive at a 15 ppm product, as Mr. Westfall
        said earlier today, that's twice as much money, $8 billion
        compared to $4 billion.
                  The cost to retailers is going to be higher at the
        lower level.  Pass-through cost to the consumer is going to
        be a great deal higher.  And that's the basis of my
        testimony.  The convenience store industry is based on retail
        prices to the consumer, whether it's gasoline, diesel fuel,
        twinkies, coffee, soda.  And the technology, I can't get
        into.  I'm not competent to get into that.  But I do feel
        that I'm competent to talk about the price to the retailer,
        the price to the consumer, and the effect on the motoring
        public.
                  MR. FRANCE:  Okay.  Thank you very much for your
        perspective.  I would encourage you in your written comments
        to at least think about and address along with the 50, in
        order for that to work, if it were to work, it depends upon a
        technology that would have major impacts on your member
        companies.  So we'd be interested in your perspective on
        that.  Okay?
                  MR. HAGMEYER:  Thank you.  We'll do that.
                  MR. GRUNDLER:  I want to thank the panel.  Thank
        you very much.
                  I'd like to invite the next panel up.  Greg Fulton,
        Susan LeFever, Sally Allen, Lucinda Smith, Charley Bittle,
        Jeffrey Kramer and Chris Arend.
                  Mr. Fulton, I'll invite you to lead off.
                  (Pause.)
                  MR. GRUNDLER:  Mr. Fulton is not here.  We will
        disregard the order on the list and go from my left to my
        right.  Ms. LeFever, go ahead.
                  MS. LEFEVER:  Thank you.  My name is Susan LeFever
        and I'm director of the sierra Club Rocky Mountain Chapter,
        which represents 16,000 members in the State of Colorado. 
        I'm here to speak in support of your proposal to reduce the
        sulfur content in diesel fuel and require the use of advanced
        pollution control devices in new trucks and buses.
                  For 25 years, automobiles have been subject to
        engine emission controls, and it's clearly made a difference
        in the quality of our nation's air.  Now it's time for diesel
        engines to take advantage of new technologies and reduce
        their emissions of smog-causing nitrogen oxides and
        particulates.  Diesel vehicles account for nearly a third of
        smog-causing pollution, and two-thirds of the soot produced
        by all the nation's vehicles.
                  In the Denver area, we're growing too accustomed to
        bad air days, and those days when the brown cloud hides our
        famous mountain peaks.  We see the effects directly on our
        morning and afternoon commutes.  And exposure to increased
        air pollution is causing respiratory problems and lung
        disease, putting especially children, the elderly and those
        with impaired immune systems at risk.  Even Colorado's wild
        places are impacted by air pollution, as the pollution from
        vehicles fills the skies in our parks, open space and
        wilderness areas.
                  We're a fast growing state, and along with the
        urban sprawl that we're seeing here in Colorado, we're seeing
        a corresponding increase in traffic, which is spreading the
        air pollution problems out into outlying parts of the state.
                  Are there costs to this?  Yes, of course there are. 
        But according to the EPA, for every dollar spent on the Clean
        Air Act from 1970 to 1990, we received a $20 return on our
        investment.  In fact, the EPA estimates that Americans have
        realized benefits 70 times greater than the costs of
        implementing the program.  In 1990 alone, tailpipe and
        smokestack controls saved an estimated 79,000 lives and
        resulted in an estimated 15 million fewer respiratory
        illnesses.  We believe that we can see similar benefits when
        these rules are enacted.
                  We urge you to make low sulfur diesel fuel
        available nationwide so that every cleaner truck will have
        access to them.
                  We urge you to clean up big trucks and buses as
        soon as possible.  We should not have to wait until 2010
        before all the new trucks are cleaned up.  There should not
        be a phase-in period for reduction in smog-forming pollution.
                  We'd urge you to ensure that big trucks are meeting
        the emission standards on the roads, and not just during
        engine tests, and to increase the use of advanced technology
        vehicles.
                  Thank you for this opportunity to speak on this
        very important issue.
                  MR. GRUNDLER:  Thank you, Ms. LeFever.  Ms. Allen,
        welcome.
                  MS. ALLEN:  My name is Sally Allen.  I'm vice-
        president of Administration and Governmental Affairs of Gary-
        Williams Energy Corporation, a Denver based independent oil
        and gas company.  Our primary asset is a 50,000 barrel per
        day crude oil refinery in Wynnewood, Oklahoma.  Company-wide,
        we have about 275 employees and fall within the definition of
        small business refiner used for the proposed diesel sulfur
        regulations.
                  Ron Williams, president and CEO, testified on this
        rulemaking at the EPA hearing in New York City on June 19th. 
        His testimony has been submitted for the record and I won't
        repeat all of it here.  As he pointed out, in our case, the
        proposal is devastating and could force us to shut down the
        refinery.  That's not crying wolf.
                  We participated in the SBREFA process for this
        rulemaking.  Panel representatives, including Paul, visited
        our small Oklahoma refinery.  Small business refiners worked
        diligently to outline the complex range of problems and
        circumstances facing us, and to underline as strongly as
        possible that there is no one solution that will enable all
        small refiners to survive.
                  We greatly appreciate EPA's discussion of small
        refiner issues in the preamble to the rulemaking, but we were
        extremely disappointed that the proposed rule includes no
        accommodation that would allow a company like ours to
        continue to operate.
                  We can see only three possible avenues that might
        enable us to remain in business.  First, we ask the
        Administration to address the extraordinary financial burden
        that these regulations place on small business refiners by
        publicly endorsing efforts to obtain economic assistance. 
        Our greatest priority is access to the capital required for
        desulfurization equipment through tax credits, loan
        guarantees and other incentives.  We estimate that our
        capital costs to reach 15 ppm diesel sulfur will total
        approximately $46 million.  That's more than twice what we
        paid for the facility in 1995.  In addition, our operating
        and maintenance costs will increase $5 to $6 million a year. 
        We don't have that kind of money and we don't know where we
        can get it without government help.
                  Secondly, small business refiners who produce both
        gasoline and diesel fuel must be granted an automatic four
        year delay of all Tier 2 requirements.  The coincidence of
        required expenditure for gasoline and diesel desulfurization
        will be disastrous.  We know of no possible financing sources
        willing to provide the needed capital to our small business,
        particularly in the face of additional diesel costs.
                  The EPA proposal for temporary hardship waivers on
        a case by case basis will, we believe, create a potentially
        arbitrary and uncertain situation which will further endanger
        small business refiners.  We need clarification of the EPA's
        assessment of our hardship situation immediately.
                  At the very least, clear, straightforward and easy
        to administer hardship criteria must be delineated
        immediately with small business refiner concurrence so that
        our companies will be able to determine their eligibility.
                  Thirdly, we feel that small business refiners must
        retain access to the off-road market.  We must know as soon
        as possible EPA's intentions for the regulation of off-road
        diesel fuel.  It is imperative that small business refiners
        be given an exemption from any new off-road standard and be
        allowed to continue to sell their higher sulfur fuel into the
        off-road market.  Some measures must be adopted to conserve
        the off-road market for small businesses and prevent larger
        companies from dumping higher sulfur diesel and diluting the
        off-road market.  
                  EPA asked for comments on options for small refiner
        flexibility that would allow small refiners to continue
        selling 500 ppm highway diesel and/or continue to produce at
        a 50 ppm diesel cap.  We don't oppose these ideas because
        they may benefit some other small business refiners.  We
        would vehemently oppose them if they are offered as small
        refiner flexibility provisions without the other options we
        consider essential.
                  Thank you for the opportunity to address the
        hearing.
                  MR. GRUNDLER:  Thank you, Ms. Allen.  Mr. Kramer,
        welcome.
                  MR. KRAMER:  Thank you.  Good afternoon.  My name
        is Jeff Kramer.  I'm president of Prima Marketing, LLC, a
        private motor fuels and convenience store company
        headquartered here in Denver, Colorado.  Thank you for
        calling this hearing today to solicit public comment on the
        EPA's proposed regulations to control the sulfur content of
        diesel fuel.
                  Prima is an independent marketer of motor fuels. 
        We own and operate 55 motor fuel outlets and supply an
        additional 60 dealer accounts in four states, West Virginia,
        Pennsylvania, Ohio and Kentucky.  Our company employs about
        500 workers and markets approximately 80 million gallons of
        motor fuel each year.  In addition, before becoming an
        independent marketer, I was CEO of Frontier Refining Company,
        a Rocky Mountain area refiner, and also served as vice-
        president of Supply and Transportation at Total Petroleum. 
        Because of my background, I feel I have a unique perspective
        on the refining industry and the impact of this proposed
        rule.
                  I appear today on behalf of the Society of
        Independent Gasoline Marketers of America.  I'm privileged to
        serve as a director of SIGMA.  It is an association of
        approximately 260 motor fuels marketers in all 50 states. 
        Together, SIGMA members supply over 28,000 motor fuel outlets
        and sell over 48 billion gallons of gasoline and diesel fuel
        annually, or approximately 30 per cent of all of the motor
        fuel sold in the nation last year.  Collectively, SIGMA
        members sold over 13 billion gallons of on-road diesel fuel
        last year, and 89 per cent of our members sell diesel fuel.
                  My own personal experience with Prima and
        representation of SIGMA members at this hearing today combine
        to make me qualified to speak about the EPA's rule proposal,
        not just from the diesel fuel marketers' perspective, but
        also from the perspective of diesel fuel consumers as well. 
        From the point of view of diesel fuel marketers and our
        customers, EPA's proposal will have dire consequences on our
        business, our customers, and potentially, the national
        economy.
                  SIGMA strongly opposes EPA's diesel fuel proposal
        for one fundamental reason.  It will reduce, and perhaps
        substantially, the supplies of on-road diesel fuel and, as a
        result, has the potential to create serious market
        disruptions as have occurred in the Northeast last winter and
        in the Midwest this summer.
                  Diverse and plentiful sources of supply are the
        life's blood of independent petroleum marketers like Prima. 
        Without adequate supplies of diesel, independent marketers,
        who have been the most competitive segment of the motor fuels
        industry, will cease to exist as a force in diesel fuel
        retaining.  Already, as a result of industry consolidations
        and refiners exiting the motor fuels business, the number of
        sources of diesel fuel on which an independent marketer can
        look for supply has been greatly reduced.  When independent
        refiners are aware that an independent marketer has many
        other sources of supply, then the integrated refiners are
        forced to be competitive.  When sources of supply narrow,
        however, there are no such forces acting on the integrated
        refiners.
                  EPA's diesel sulfur proposal will result in a
        substantial decrease in the overall supplies of on-road
        diesel in this country.  As EPA admits in its proposal, some
        refiners will not be able to make the capital investments
        necessary to produce ultra low sulfur diesel, resulting in
        reduced supply.  EPA also admits that the desulfurization
        technology does not exist to remove sufficient sulfur from
        diesel fuel blendstocks, again reducing supply.  An
        additional admission is that our nation's diesel fuel
        distribution system, pipelines, bulk storage facilities,
        tanker trucks, will be forced to often downgrade a certain
        portion of the nation's diesel fuel production because it
        will be contaminated with higher sulfur products during
        distribution, again, reducing supply.  And the EPA highlights
        the fact that, under the proposal, domestic diesel fuel will
        have a substantially lower sulfur level than diesel fuel
        produced in other industrialized countries, which will
        prevent foreign supplies of diesel fuel from alleviating any
        shortage that might occur in domestic production.
                  Independent marketers of diesel fuel will not be
        the only ones to suffer under EPA's proposal.  Consumers of
        diesel fuel, including our nation's trucking and agricultural
        industries, will pay for EPA's program at the pump.  EPA
        predicts in its proposal that diesel sulfur reductions will
        cost approximately four and a half cents per gallon.  That
        estimate is woefully low.  As we witnessed this past winter
        and spring in the Northeast and currently are witnessing in
        the Midwest, even small supply shortages of motor fuels can
        cause drastic increases in retail prices.  If overall diesel
        supplies are reduced by 10 per cent as a result of EPA's
        proposal, which I believe is probably not unrealistic given
        conversations I've had with other refiners, then $2 a gallon
        diesel fuel prices we saw in the Northeast may become the
        norm, if not a bargain in the eyes of consumers.
                  Given the extent to which our nation relies on
        diesel fuel to power our on-road commercial transportation
        network, the ultimate impact of these price increases and
        diesel fuel shortages will be felt by the economy as a whole
        through increased transportation costs and inflation.  While
        the current staff at EPA may not be as concerned about this
        proposal and its impact on the economy because they will
        probably be long gone after this Administration has left
        office, most of us will still be suffering the consequences
        and repercussions from this proposal, as will be felt by
        consumers and in our economy.
                  While consumers generally have responded to public
        polling that they are willing to pay more for gasoline and
        diesel fuel to have cleaner air, the recent supply crises and
        price spikes, and the resulting howls from consumers and
        elected officials, in the Midwest give rise to significant
        questions regarding the public's support for an environmental
        program that could harm the continued expansion.
                  SIGMA raises a specific objection to the dual fuel
        option discussed in the preamble to the proposal, including
        the ill-conceived notion that a dual fuel program should be
        limited to large diesel fuel marketers.  In the preamble, EPA
        requests comments on adopting a regulatory scheme that would
        permit two on-road diesel fuels to exist for a short period
        of time.  EPA envisions that refiners would make some ultra
        low sulfur diesel fuel for several years and continue also to
        supply the current low sulfur on-road diesel during this
        transition period.  EPA also solicits comments on a retailer
        mandate for offering both on-road diesels, or a mandate that
        only large marketers do so.
                  These ideas should be roundly criticized and
        discarded.  I'm afraid they have many flaws to them.  In
        particular, in its attempt to make its proposals on diesel
        sulfur reductions seem reasonable, this idea of the dual
        fuels has got many problems with it.  It could be potentially
        disastrous for our industry and the nation's motor fuel
        distribution system.  In the case of marketers specifically
        first, it would force Prima and other fuel marketers to
        decide one of the two following scenarios: either add an
        additional underground or above ground storage tank and
        dispenser system to pump and hold the second grade of on-road
        diesel, or retail only ultra low sulfur diesel fuel at a time
        when only a small percentage of our customers would require
        it, and risk losing customers to competitors that choose to
        sell cheaper, low sulfur diesel fuel.
                  Further complications arise in the distribution
        system for products.  The general fungibility of petroleum
        products in the U.S. provides an extremely efficient pipeline
        transportation system.  For example, it costs only about 2
        cents a gallon to transport a gallon of gasoline or diesel
        fuel from the Gulf Coast refineries to, say, the Chicago
        market.  The introduction of multiple product specifications
        makes gasoline and diesel fuel more similar to specialized
        chemicals, which are more frequently shipped by more costly
        truck or rail.  
                  The system breaks down because of so many different
        products that have to be supplied to the marketplace, and
        bottlenecks occur.  You will also have the situation where
        even where we're marketing in West Virginia, which requires
        conventional fuel, we had product outages at various
        terminals because the supply would get oriented towards the
        other areas that needed that product more greatly.  So you
        actually have a major market distortion that winds up
        creating trucks that have to go very far distances, actually
        making the environmental situation work, and ultimately you
        could have a problem with ultimately promoting misfueling in
        the marketplace because of the tremendous market dislocations
        that can happen.
                  A friend of mine recently said that when we were
        talking about it, said that this is probably the way it will
        be, and that we probably more than anything should be used to
        it, get used to it because this is probably going to be more
        of the norm as more and more regulations come into play.
                  I would like to summarize that I do have--SIGMA
        does have a recommendation, a recommended program, one that
        might allow a little more time until it takes effect, so that
        all of the refiners can be ready for it, that the cap be set
        at 50 ppm rather than 15, because we feel that would be
        extremely important and help significant, and the other
        portion being that the dual fuel recommendation is definitely
        faulty.
                  Thank you very much.  I appreciate the opportunity
        to present SIGMA's views on the EPA proposal.
                  MR. GRUNDLER:  Thank you, Mr. Kramer.  
                  Once again, I'd like to ask the panel's indulgence
        and I'd like to invite up the Honorable Ken Gordon. 
        Representative Gordon is the minority leader of the Colorado
        House of Representatives.  Welcome.
                  REPRESENTATIVE GORDON:  Thank you.  I appreciate
        the opportunity to testify out of order.  My name is Ken
        Gordon.  I'm the minority leader in the Colorado House of
        Representatives.  I've been in the Legislature since 1992,
        and I've lived in Colorado for 25 years.
                  One thing about Colorado, and especially the Denver
        basin, is that we don't have as much air as they do in other
        parts of the country, and that it is more subject to
        degradation because of the altitude, because we're in a
        basin, because of the sunlight that we get here.
                  My mother has emphysema and she can't come to
        Denver to visit her grandchildren, my children.  Colorado,
        though, does have a long history of resource extraction. 
        Places like Minnesota and Wisconsin were developed by people
        who would get together on the weekend and help the neighbor
        put up their neighbor's farm.  Colorado was developed by
        people who said if you step foot on my mining claim, I'm
        going to blow your head off.
                  It's only in the last part of this last century
        that we've seen air to be a finite resource.  The automobile
        industry, the trucking industry, and other industries that
        create air particulates and gases, use the air as a sink to
        discard their waste, and they do that, it helps them, it's an
        inexpensive way to get rid of their waste, and they don't
        have to pay for it, and the cost is borne by the whole
        population of the state or the basin or wherever the air shed
        is.
                  I'm not an expert on the technical proposal, but I
        do feel very protective of the air quality here in Colorado,
        and we do have days when the air quality is very degraded. 
        We have a burgeoning population, increasing vehicle miles
        travelled.  Because of the population, we have a great deal
        of sprawl.  People are living further and further away from
        where they work.  And as the Lung Association says, if you
        can't breathe, nothing else matters.
                  So I would just come down here on behalf of the
        environmental community and the people that live in
        especially the Denver basin, and support the proposal and ask
        that we give as much credence as possible to trying to
        protect the air quality, although as a Coloradan and having
        been on the Natural Resources Committee in the Colorado
        Legislature for many years, I have found that I have been
        infected by the desire to have as few unnecessary federal
        regulations as possible, even though I support protecting the
        environment.  So I would tailor the proposal narrowly for the
        purpose, and I appreciate the time that I had to testify.
                  MR. GRUNDLER:  Thank you very much, Representative
        Gordon.  If I could ask further indulgence of the panel, and
        I'd like to invite up Mr. Young, who's representing
        Congressman Udall's testimony.  Mr. Young needs to leave by
        3:30, so if you don't mind, I'd like to ask Mr. Young to
        represent Congressman Udall's comments.
                  MR. YOUNG:  Thank you very much for indulging me. 
        I apologize for my time constraint.  What I have done is
        brought with me a letter from Congressman Mark Udall who
        represents the Second Congressional District here in
        Colorado.  He's written a letter commenting to Carol Browner
        on these proposed regulations that are before you today that
        you're discussing.
                  It's a lengthy letter.  I brought a number of
        copies, which I think you have.  I don't intend to read the
        whole letter, but I thought what I would do is highlight just
        a couple of provisions in it.  It is addressed to Carol
        Browner, and the operative sentence, or section, of this
        letter is the opening one which says, "I am writing to
        express my support for the U.S. Environmental Protection
        Agency's proposed air quality regulations concerning reduced
        sulfur content in diesel fuel and heavy-duty engine
        standards," which were published in the Federal Register on
        June 2nd.
                  "EPA's proposal to cut a variety of harmful air
        pollutants from large diesel trucks and buses would have
        important public health and environmental benefits for
        communities in Colorado.  Cleaner, low sulfur diesel fuel is
        a critical ingredient of EPA's initiative, enabling state-of-
        the-art control technology that will reduce millions of tons
        of air pollution from neighborhoods and communities across
        the country."
                  He then goes on to talk a little bit about his
        support for the Tier 2 regulations, which were similar in the
        sense of removing sulfur from gasoline, and for standards for
        sport utility vehicles and like type vehicles.  So I'll skip
        that.  
                  But I will continue on with the rest of the letter,
        saying that, "Many studies have proven that diesel emissions
        produce pollution that can be breathed deeply into the lungs
        causing very serious respiratory effects, especially to the
        very young and the elderly.  It is estimated that over
        470,000 children and 226,000 elderly in Colorado are at risk
        for lung disease or respiratory distress because of unhealthy
        levels of air pollution.  Moreover, national, state and
        international health agencies have determined that diesel
        exhaust is a probable human carcinogen, and related to
        increased incidences of lung cancer.  We must do all that we
        can to reduce the air pollution from large diesel trucks and
        buses in our communities.
                  In so doing, smog air pollution in Denver could be
        cut, toxic air pollution in our communities could be curbed,
        Denver's brown cloud could be reduced, acid rain in our
        forests and watersheds could be mitigated, visibility
        throughout Colorado could be improved, and health impacts
        from soot could be reduced, thus improving quality of life." 
        I'll end it there, saying that he finishes by concluding,
        saying, "I commend the EPA for keeping at this issue and in
        developing standards that will help improve the quality of
        life in our communities for years to come."  Sincerely,
        Congressman Mark Udall.
                  Thank you for giving me the opportunity to present
        these remarks from the Congressman.
                  MR. GRUNDLER:  Thank you very much.  And while
        we're hearing from members of Congress, Mr. Arend, why don't
        you present your member's views.
                  MR. AREND:  My name is Chris Arend and I'm an aide
        with Congresswoman Diana DeGette, who represents the First
        Congressional District here in Colorado, and she regrets that
        she was not able to be here today.  She's back in Washington
        trying to get our budget passed through.  But she has asked
        me to read a statement into the record that I would like to
        give right now.
                  "As a member of Congress representing the City of
        Denver, Commerce City, and parts of Aurora, Colorado, I am
        greatly concerned about our metro area's air quality.  In the
        early years of Denver, many people moved to our City to take
        in our fresh dry air, to find some respite from devastating
        diseases such as tuberculosis.  Today, our once fresh dry air
        is often infected with an ominous brown cloud over our city
        obscuring views of white capped mountains only miles to the
        west.
                  While the air quality over the Denver metro area
        has greatly improved since the red alert days 20 years ago,
        it seems we still have work left to do before we can breathe
        the fresh dry air so coveted by our ancestors.  While it may
        be technically safe to be outside again, it is obvious we
        continue to face challenges towards cleaning our air.
                  To move towards cleaner air, I support the
        Environmental Protection Agency's proposed Heavy-Duty Engine
        and Vehicle Standards and Highway Diesel Fuel Sulfur
        Requirements.  This initiative will help to modernize our
        diesel fleet and bring controls to diesel fuel and diesel
        engines comparable to regulations which already apply to
        individual cars and trucks.
                  I understand there will be added costs for trucking
        companies and for fuel refineries to produce lower sulfur
        gas.  However, there are refineries currently cost
        effectively producing lower sulfur diesel fuel.  Also, the
        Department of Energy and industry are now working together to
        bring about highly efficient clean diesel engines to power a
        new generation of diesel trucks and vehicles.
                  Overall, I feel the long-term benefits of these
        rules will outweigh the short-term inconvenience these
        industries may feel.  It is shocking to hear that according
        to the American Lung Association of Colorado air pollution
        places 400,000 children and 226,000 elderly at risk in
        Colorado for lung disease, while diesel particulates may be
        responsible for 1,220 cancers in Colorado.  It's also
        concerning to hear that nationally, the Health Effects
        Institute of Cambridge, Massachusetts, found a 1 per cent
        increase in the death rate for each small increase of tiny
        particulates in the air, and a 2 per cent to 4 per cent
        increase in hospitalization of the elderly.
                  Anyone behind a bus or a semi-truck can tell that
        diesel vehicles spew a tremendous amount of particulates in
        the air.  These new regulations proposed by the EPA not only
        will reduce the problem of diesel particulates, but will
        improve diesel engines and diesel fuel overall to allow for
        immediate pollution reductions.
                  by the time these regulations are fully
        implemented, nitrogen oxide emissions, a major contributor of
        smog from highway diesels, will be reduced by 95 per cent,
        and particulate emissions will be reduced by 90 per cent. 
        the gains and potential health benefits from these
        regulations are so great that I would encourage the EPA to
        implement these rules even earlier than the 2010 targeted
        phase-in date.  As far as I'm concerned, it is never too late
        to have cleaner air to improve the quality of life for our
        children and elderly citizens.
                  Thank you for the opportunity to submit these
        comments to you today.  I hope in the near future, after
        these regulations are implemented, we all will be able to
        take deep breaths of our historical fresh clean dry air and
        continually gaze upon the beautiful mountain vistas of
        Colorado's Front Range."
                  Thank you.
                  MR. FRANCE:  Thank you.  The next testifier,
        Lucinda Smith.
                  MS. SMITH:  Thank you.  My name is Lucinda Smith,
        and I'm a Senior Environmental Planner with the City of Fort
        Collins in Air Quality.  But today, I'd like to share with
        you comments prepared by our Mayor, Ray Martinez.  He sends
        his apologies that he couldn't be here today.  Prior
        commitments prevented him from being here.  If it's
        acceptable, I'd like to just read his letter.
                  "Dear Sir or Madam.  I am providing comments on
        behalf of the City Council and the 110,000 plus residents of
        the City of Fort Collins, Colorado.  I would like to start by
        thanking EPA for the progressive work they have done to
        protect air quality, first by promoting tighter Tier 2
        standards, and now by proposing more stringent diesel
        emission standards and fuel controls.  I also thank you for
        the opportunity to make comments on this important issue.
                  As a member government of ALAPCO, Association of
        Local Air Pollution Control Officials, I should say that Fort
        Collins heartily endorses the comments provided recently by
        STAPPA and ALAPCO on this proposed rulemaking.  By making
        these comments, I can offer you the perspective of one local
        community in the north Front Range of Colorado.
                  Fort Collins is a community interested in improving
        local air quality, protecting the health of our citizens, and
        preserving our good quality of life.  As such, we urge you to
        adopt more stringent emission standards for heavy-duty diesel
        trucks and buses as soon as possible.  We also urge you to
        adopt the 15 part per million cap on sulfur in diesel fuel
        proposed for the year 2006.  There's several reasons we urge
        you to do this.
                  First, the proposed standards will help us achieve
        local as well as federal air quality goals.  The city's own
        air quality goal is to continually improve air quality as the
        city grows.  We put a lot of effort into programs such as
        reducing traffic growth, improving traffic flow, enhancements
        to the state's inspection and maintenance program, smoking
        vehicle enforcement, and buying alternative fueled vehicles. 
        However, nothing has been more effective in reducing per mile
        emissions historically than tighter federal emission
        standards.
                  Second, the proposed standards would help reduce
        ozone, which is a pollutant of growing concern along the
        Front Range.  In 1998, Fort Collins came close to violating
        the ozone standard.  The diesel control program proposed by
        EPA would result in significant reductions in NOx and
        hydrocarbon emissions, both important ozone precursors.
                  Third, the proposal would help improve visual air
        quality.  When we survey Fort Collins residents, they tell us
        that pollution affects them most by creating the brown cloud
        and obscuring mountain views.  Our current air quality is
        worse than the state's visibility standard about one in three
        days.  By reducing fine carbon particles, NOx and hydrocarbon
        emissions, the proposed diesel program would have a positive
        impact on air quality.  Local data collected in 1997 as part
        of the north Front Range air quality study indicates that
        nitrate aerosols account for 29 per cent of wintertime
        visibility impairment from fine particles, and elemental
        carbon accounts for another 24 per cent.  NFRAX also reports
        that it is NOx, not ammonia, that limits the formation of
        nitrate aerosols in Northern Colorado.  Therefore, the
        proposed reduction in NOx emissions, as well as fine
        particulates, should lead to improvements in visibility.
                  And, finally, an increasing number of scientific
        studies have linked diesel emissions with cancer.  Both the
        South Coast Air Quality Management District study and the
        STAPPA/ALAPCO study provide evidence of a significant cancer
        threat from diesel particulates.  These studies provide a
        compelling reason for EPA to act aggressively to address
        emissions in diesel engines.
                  For all these reasons, the City of Fort Collins
        supports adoption of the rules.  We also urge EPA to take the
        following additional steps.  One, ensure that heavy-duty
        diesel vehicles meet the emission standards while in use, not
        just during engine tests.  Two, step up the development of
        rulemaking for non-road diesel equipment.  And, three, ensure
        that the diesel rules provide incentives to promote the use
        of advanced technologies, such as electric buses or fuel
        cells as they become available for the heavy-duty fleet.
                  Thank you once again for the opportunity to comment
        on behalf of Fort Collins citizens and City Council. 
        Sincerely, Ray Martinez, Mayor."
                  Thank you.
                  MR. FRANCE:  Thank you.  And thank you to the
        entire panel for sharing your views with us.
                  We'll take exactly a five minute break and we'll
        reconvene promptly.
                  (Off the record.)
                  MR. FRANCE:  Okay, the next panel, Dominica Ottero,
        ken Toltz, Robin Hubbard, Clark Wilson, Anna Brower.  And why
        don't we call up a few more from the next panel.  Paul
        Argyropoulos, Jim Stevenson.  
                  Mr. Toltz, when you're ready?
                  MR. TOLTZ:  I'm ready.  
                  Well, good afternoon.  My name is Ken Toltz.  I'm
        the president of Dependable Cleaners, a 70 year old family
        owned and operated chain of dry cleaners in the Denver metro
        area.  And in the interest of full disclosure, I'll also let
        you know that I'm the Democratic candidate for United States
        Congress here in Colorado's Sixth Congressional District.
                  I want to thank you for the opportunity today to
        comment on EPA's proposed emission standards for large diesel
        trucks and buses, and the corresponding requirement for
        cleaner diesel fuel.
                  As a native Coloradan, I have personally witnessed
        the decline in Denver metro area's air quality over the past
        43 years.  And it's no surprise that the visible pollution
        emitted by large diesel burning vehicles has made a strong
        impact on public opinion.  I applaud the EPA for recognizing
        that improving our quality of life and health requires
        vigilance and action to ensure that our natural environment 
        can be enjoyed by generations to come.
                  There is enough scientific evidence supporting the
        fact that pollution from diesel vehicles is a contributor to
        air pollution, and has a wide range of health impacts,
        including increased asthma attacks, cardiopulmonary ailments,
        and even premature death, and we can no longer turn a blind
        eye.  I myself do not claim to understand all of the
        intricacies and chemical reactions which contribute to the
        causes and manifestations of pollution.  I'm not here today
        to discuss these facts or how scientists have arrived at
        them.  However, it doesn't take a science degree to see the
        brown cloud which looms over Denver and recognize that its
        very existence is evidence of pollution's threat to the
        ongoing health of our community.
                  As a businessman, I understand that interstate
        commerce depends upon moving products quickly and efficiently
        from point of origin to destination.  America's fleets of
        diesel long-haul carriers, which are largely independently
        owned and operated small businesses, must be able to move
        products cost effectively and environmentally responsibly. 
        Mass transportation in America's cities which depend upon
        diesel powered buses is under a similar cost pressure.  Large
        construction vehicles, usually powered by diesel engines, are
        also in use daily, as are many business delivery vehicles.
                  In short, the scope of this problem is huge.
                  the EPA is acting in the best interests of our
        nation's health in proposing strict new standards for diesel
        engines to reduce the emissions of particulate matter and
        NOx.
                  And while I support the EPA's proposed emission
        reduction guidelines, I am very concerned about the proposed
        delay in its implementation.  EPA has proposed a phase-in of
        the NOx emission standards to take effect between 2007 and
        2010.  This is an unacceptable compromise.  Not only should
        EPA require strict new emission standards, it must also
        include strict enforcement provisions.
                  We must also recognize that these proposed changes
        come at a cost to thousands of businesses and potentially
        millions of American consumers.  I believe that the federal
        government should consider implementing specific tax
        incentives to encourage businesses to make these changes well
        ahead of the 2007 deadline.
                  When the public health is at stake, it's in all of
        our interests to recognize that the costs of compliance are a
        public interest.  If tax incentives encourage the conversion
        of thousands of diesel engines sooner than seven to ten
        years, the nation benefits and the costs of conversion are
        not unfairly borne by the transporters.
                  Ultimately, the goal is to clean up our air by
        having businesses comply with the standards as soon as
        possible, not as late as possible.
                  This is an opportunity to rethink how our
        governmental agencies interact with businesses.  I believe
        the federal government should help businesses facilitate the
        compliance process, and I'm here today to encourage a focus
        on providing needed and meaningful incentives to businesses
        to encourage compliance with the new standards long before
        the 2010 final deadline.
                  Over the past several years, I have been personally
        involved as a representative of Colorado's small businesses
        in the effort to improve Denver metro area's air quality.  As
        a member of the board of the Corporate Alliance for Better
        Air, part of the Regional Air Quality Council, and a member
        of the Colorado Department of Public Health and the
        Environment's Compliance Advisory Panel, a position mandated
        by the Clean Air Act, I have focused on increasing business
        involvement in pursuit of clean air and stronger
        environmental standards by working to enhance and streamline
        the communications between EPA, the Colorado Department of
        Health, and local businesses.
                  As an environmentally conscious business owner, I
        recognize the challenges independently owned and operated
        businesses face when attempting to both run a business and
        operate in an environmentally responsible manner.  However,
        governmental policy which focuses on punitive measures in
        enforcing compliance of existing and new environmental
        standards, creates an adversarial relationship which often
        results in delays and legal challenges.  When public health
        is at stake, it's in all of our interests to recognize that
        the costs of compliance and the timing of implementation are
        a public interest.
                  If tax incentives encourage the conversion of
        thousands of diesel engines sooner than seven to ten years,
        we benefit, our children benefit and our nation benefits.
                  Thank you.
                  MR. FRANCE:  Thank you, Mr. Toltz.  Robin Hubbard?
                  MS. HUBBARD:  Welcome to Denver and thank you for
        the opportunity to speak.  My name is Robin Hubbard and I'm
        the field director for CoPIRG, the Colorado Public Interest
        Research Group.  We have 14,000 citizen members across this
        state, and we're going to host public interest issues ranging
        from protecting the environment to trying to stop consumer
        rip offs and promoting good government.
                  So just to preface my comments, I'd like to welcome
        you to Colorado and talk a little bit about it.  We're
        actually one of the fastest growing states in the country. 
        Of the five fastest growing counties across the nation, four
        are here.  So we're faced with an incredible amount of
        sprawling development, and the unfortunate negative impacts
        that come with that.  It includes loss of open space,
        battling traffic congestion, and key to the issue at hand
        today, lower air quality.
                  So Colorado citizens have our work cut out for us
        at the state level to stop sprawl and improve air quality,
        and unfortunately the picture won't be complete unless we
        clean up diesel.  Big trucks and buses contribute more than
        their fair share to the air pollution problem.  Heavy-duty
        vehicles are responsible for 36 per cent of the smog-forming
        pollution, and 59 per cent of the soot pollution emitted by
        all vehicles on the road in Colorado today.
                  Although big trucks and buses are among the biggest
        pollution sources, the oil industry and engine manufacturers
        have done very little to curb this pollution.  In fact,
        they've cheated on their emissions tests in the past,
        resulting in an extra 1.3 million tons of smog-forming
        pollution each year.  So in order to protect the public
        health, we must require drastic reductions in pollution from
        these large trucks and buses.
                  However, because high sulfur fuel will poison the
        new diesel clean-up technologies, we must ensure that all
        diesel fuel is fully cleaned up and ready and available
        before the trucks are required to clean up.
                  So, therefore, in order to ensure that all cleaner
        trucks will have access to the clean fuel necessary to run
        them, CoPIRG urges the EPA to require diesel sulfur fuel
        levels for both on and off-road vehicles, with a cap of no
        more than 15 parts per million sulfur nationwide by 2006.
                  Cleaning up diesel fuel by 97 per cent will allow
        the EPA to cut smog-forming pollution by 95 per cent in 2007
        and soot pollution by 90 per cent in that same year. 
        However, the EPA is proposing to wait until 2010 to fully
        clean up smog-forming pollution from these vehicles.  So this
        means that Coloradans will have to wait ten years before all
        new trucks are cleaned up.  There should be no phase-in
        period for reductions in smog-forming pollution.
                  In addition, the EPA should take measures to ensure
        that big trucks are meeting the emission standards on the
        roads, not just during the engine tests.  Specifically, both
        in-use and on-board diagnostic equipment should be required
        for all heavy-duty trucks by 2007.
                  Finally, the EPA should increase the use of
        advanced technology vehicles, such as electric buses or fuel
        cell trucks.  The EPA should include a provision in the
        heavy-duty rule that would provide incentives to introduce
        more of these cleaner efficient diesel alternatives into the
        heavy-duty fleet.  And this we believe is the direction that
        we should be heading long-term.
                  So these provisions are necessary to protect the
        public health, and we ask that you include them in your final
        rulemaking.  And, again, we appreciate the opportunity to
        comment today.
                  MR. FRANCE:  Thank you.  Clark Wilson?
                  MR. WILSON:  My name is Clark Wilson.  I work at
        the Colorado Department of Health and Environment as a food
        inspector.  My personal stake in stricter diesel emission
        control is that I am an avid recreational and commuting
        bicyclist, riding approximately 3,000 miles a year.  I want
        to maintain a healthy lifestyle and breathe clean air. 
        Improving diesel emission through readily available
        technology, as has been demonstrated in Europe and Asia, will
        increase air quality in urban areas for both cyclists like
        myself and for all citizens interested in outdoor recreation.
                  I encourage EPA to enact diesel emission standards
        that will decrease sulfur emissions by 97 per cent, decrease
        particulate emissions by 90 per cent, and decrease NOx
        emissions by 95 per cent.  
                  I want to also encourage EPA to apply the standards
        to working engines rather than idling engines set up under
        ideal conditions.  Increased costs of a few cents per gallon
        and approximately $1,500 per engine are far outweighed by
        benefits for air quality and lung disease.
                  Thank you.
                  MR. FRANCE:  Thank you.  Anna Brower?
                  MS. BROWER:  Thank you.  I am here today as a
        representative of COPEEN, the Colorado People's Environmental
        and Economic Network.  We're a statewide organization, an
        environmental justice organization based in Northeast Denver
        here, and I am here to testify on behalf of these
        communities, mainly low income and largely comprised of
        people of color, the populations that are most impacted by
        most forms of environmental irresponsibility about the EPA's
        proposed standards for diesel trucking emissions.
                  I so apologize, it is an organization of people of
        color.  We were not able to send a person of color today,
        because I can see that diversity is a little lacking this
        afternoon.  
                  The communities in which COPEEN works are inundated
        with pollution from myriad sources, but diesel trucks have
        been a particularly persistent problem since the state laid
        the interstate right through our neighborhoods.  Nearly 5,000
        diesel trucks make up the 38 fleets registered in our zip
        code, 80216, and this number does not even reflect all the
        fleets located in those communities.  Motor vehicles in our
        neighborhoods, of which diesel trucks are the most numerous,
        contribute a vast majority of the carbon monoxide that
        poisons the air, and nearly half of the particulate matter
        that darkens and dirties it.  And if it weren't for the
        numerous refineries and factories also located in our
        neighborhoods which release nearly 20,000 tons of sulfur
        dioxide a year, motor sources would be largely responsible
        and accountable for that pollutant, too.
                  Higher standards for diesel truck emissions and
        fuel will not solve all of our problems with diesel trucks in
        Northeast Denver.  The shear volume of diesel truck traffic
        through our communities has led to innumerable problems. 
        Pedestrians and motorists are hit and killed by speeding
        trucks.  The weight of wandering trucks tears up our roads
        and creates an unacceptable level of noise.  Obviously, poor
        air quality is only one of many consequences our
        neighborhoods are forced to bear for the rest of the city. 
        But these newer higher standards, we feel that they will not
        be stringent enough or imposed quickly enough, as the
        incidence of childhood asthma is on the rise in these
        communities and chronic fatigue, particularly in the winter
        months is endemic for those who live and work in our area.  
                  We feel that the new standards are a step in the
        right direction, and we ask that the government do the
        responsible thing and approve the higher standards,
        recognizing that this action will only be a foundation for
        more future progressive action.  And in doing so, the
        government will help our industries and trucking fleets, who
        are our neighbors, make the improvements they should already
        be making on behalf of the residents to whom they purport to
        be reaching out.
                  Thank you very much.
                  MR. FRANCE:  Thank you.  Paul Argyropoulos?
                  MR. ARGYROPOULOS:  Thank you, Chet.
                  First, I want to commend everybody for those of you
        who are still in the room, especially those who stayed
        throughout the day who are not speakers at the end of the
        day.  So I appreciate that.
                  Good afternoon.  My name is Paul Argyropoulos and
        I'm here to testify on behalf of Douglas Durante, who's the
        executive director of the Clean Fuels Development Coalition. 
        Clean Fuels Development Coalition is a not for profit
        organization representing a diverse set of interests in the
        associated industries interested in furthering the
        development, production and use of cleaner fuels for the
        transportation industry.
                  By combining the efforts of a variety of these
        industry interests, the coalition provides a conduit to help
        further the development of national energy strategy and clean
        air strategies to foster the development of new fuel
        technology and manufacturing processes.
                  The diversity of CFDC members and interests include
        automotive, refining, agricultural, design and engineering,
        and others interested in the development of clean fuels. 
        CFDC and its members would like to thank the U.S. EPA for the
        opportunity to testify at today's hearings, and offers the
        following general comments to the agency's proposed rule.
                  While today's comments are primarily directed at
        the diesel sulfur control portion of the proposal, CFDC
        recognizes that these proposed revisions are integrally
        linked to the vehicle and engine standards and that both
        engine technology and fuel quality regulations must be
        addressed as a system and not as a separate process.
                  EPA's proposed rule offers a pathway that will
        reduce current diesel sulfur levels from the current
        regulatory standard of 500 parts per million for on-highway
        fuels, down to 15 parts per million by mid 2006.  This
        significant sulfur reduction is proposed to enable the new
        2007 and beyond engine and vehicle after-treatment
        technologies for application on the heavy-duty engines and
        vehicles to achieve the proposed emission standards.
                  The application of these emission reduction
        technologies will be required in both heavy-duty and several
        weight classes of heavy-duty vehicles beginning with the 8500
        pound gross vehicle weight category, up to the 14,000 pound
        category.  While these fuel quality changes are being
        proposed to enable the on-highway heavy-duty vehicle engines,
        this will also be available for use in the on-highway light-
        duty sector at the point that the fuel is required, and those
        vehicles ultimately will be able to assist in meeting the
        Tier 2 standards.
                  In the United States, diesel powered trucks, vans,
        sport utilities are capturing larger percentages of the
        transportation market, and overall, the demand for diesel in
        the United States is growing three times faster than
        gasoline.  The conversion from gasoline to diesel engines
        grew 44 per cent rate from 1997 to 1998.  And while it is not
        yet clear what role diesel will play in the light-duty
        market, there are factors that could push this sector toward
        production of light-duty diesel vehicles.  Efficiency and
        global climate change issues may all play a role in shaping
        the transportation demand in the future.
                  Another very important factor is the changes in the
        way consumers purchase their products and goods.  Online or
        e-commerce is already shifting the distribution avenues of
        products and goods.  These new patterns will influence how
        goods and products are ordered and delivered, and it is
        highly probable that compression ignition technology will be
        selected to power these delivery fleets supported by the
        technologies, energy efficiency, and the durability
        advantages that it holds.
                  Even in consideration of these unknowns, the
        Department of Energy estimates that Americans will consume
        1.93 billion barrels per day of diesel in 2000, and 2 million
        barrels per day in 2010.  A large portion of this distillate
        fuel is for the transportation sector.  And if demand
        continues, 100,000 per day of incremental diesel will be
        needed to keep pace.
                  With the air quality and public health issues
        surrounding diesel emissions, it is expected that the
        additional emission controls are necessary.  While the
        projected growth in diesel industry and the potential shift
        in purchasing and distribution of goods, the need for
        additional air quality safeguards must be carefully
        considered.
                  There are also questions of how this rule may
        affect the availability of supply in the West.  Refiners will
        be required to meet increased diesel production demands
        driven by continued growth in the diesel market, while also
        being further constrained by the additional improvements in
        fuel quality standards.
                  Supply shifts, product distribution, availability
        and other issues and impacts are not truly known at this
        time.  These issues will likely be exacerbated by the fuel
        quality improvements also being required internationally in
        the European Union and elsewhere around the globe.
                  With more challenges placed on regional refineries
        and less opportunity for exportation of the refined products
        due to local demands, demand in the U.S. must keep pace with
        both volume and product quality specifications.  As currently
        proposed, these fuel quality emission standards would also
        advance the agency's goals and the public's interest of
        improving our nation's air quality and protecting the
        environment and public health.
                  While this rule challenges the refining and
        automotive industries and the related product industries, and
        these challenges must not be taken lightly, it may also
        create new opportunities for these industries.  In addition,
        if viewed from a conventional perspective, the challenges the
        industries face in achieving these new standards can appear
        burdensome.  If less conventional thinking is applied, there
        may be alternatives available that can reduce the burden and
        create new opportunities for cleaner and cost effective fuels
        or fuel blending components that will allow for further
        advances in emission control technologies.
                  One example of such an opportunity resides with
        synthetic diesel fuels.  Knowledge of production of clean
        sulfur free high cetane synthetic diesel has been around for
        over 50 years.  Gas to liquid, or GTL technologies have and
        continue to rapidly advance.  There are multiple companies
        with process technologies currently available today,
        including Exxon, Shell, Sassel, several CFDC member
        companies, such as Centroleum Corporation of Tulsa, Oklahoma
        and Rentec.
                  Centroleum Corporation has developed a commercial
        process to convert natural gas into ultra clean fuels.  This
        process results in fuel which meets or exceeds the properties
        specified in ESTMD-975, which is a fuel highly suitable for
        the advanced compression ignition engines.  Synthetic diesel
        is physically similar to petroleum based diesel, but it has
        superior combustion capabilities, contains no detectable
        sulfur, aromatics, olefins or metals, and has a low density
        and high hydrogen content.
                  The fuel also has a cetane number that exceeds 74. 
        While all of these fuel quality characteristics are highly
        desirable, what does this really mean with respect to
        environmental benefits and the benefits of having this
        technology available to the industry to help comply with new
        rules?  Independent tests conducted as part of the EPAC
        petition process compared engine technologies of the EPA on-
        highway diesel and conventional diesel fuels, and with that
        of Centroleum synthetic diesel.  These tests revealed that
        emissions were significantly lower than that of the other
        conventional fuels tested.  I will not go through what the
        specific reductions were, but they were significant in both
        nitrogen oxides and in particulates, as well as in air toxic
        emissions, when compared to both EPA and diesel.
                  There are also some very basic important advantages
        beyond emission characteristics.  These advantages include
        the increased need for cleaner sources of energy, the strong
        favorable environmental characteristics of synthetic diesel
        fraction, and the ability to use GTL product in the
        conventional refining and petrochemical scheme, and the
        simple logistics of using existing infra-structure in
        production and distribution.
                  Additionally, GTL technology potential to convert
        vast unutilized natural gas reserves to the high value
        product such as ultra clean diesel is immense, creating the
        potential to make synthetic diesel one of the examples with
        better stated opportunities available to assist the industry
        in complying with producing a clean quality fuel that can be
        used directly as a fuel product, or used as a quality fuel
        blending component to enhance the existing quality of the
        product streams.
                  As the agency reviews the comments and the proposed
        rule, it must carefully weigh not only the impact on the
        conventional industries, including the fuel product refining
        and distribution sectors, the engine and vehicle
        manufacturers and related product sectors, but also the other
        currently less conventional industries.  Consideration of
        alternative process production and technologies must be
        assessed and factored into how the agency moves forward and
        what opportunities exist to achieve the air quality and
        public goals.  These important environmental and public
        policy objectives should also factor in the cost effective
        pathway for the introduction of cleaner burning fuels or fuel
        components, such as synthetic diesel.
                  Consideration of how the goals of EPAC and the
        Clean Air Act can align conventional and less conventional
        products and markets are vital to further progress in fuel
        and emission technology, and the intended benefits of cleaner
        air.  What started out as a niche market in the early 1900s
        with the motor car and petroleum based fuels has grown into
        two of the most diverse and technologically advanced
        industries of today.  
                  Today's alternative products, both fuel and vehicle
        technologies, may be the niche market of tomorrow, and vastly
        become tomorrow's conventional products.  Recognizing the
        potential benefits and how they can play a role either
        direct, niche or supported, is vital to both today's and
        tomorrow's consumer, and the vitality of the industries.
                  CFDC thanks EPA for the opportunity to testify
        today, and looks forward to providing additional comments
        throughout the proposed public process.
                  Thank you.
                  MR. FRANCE:  Thank you.  Jim Stevenson?
                  MR. STEVENSON:  Thank you for letting me appear
        here today.
                  My name is Jim Stevenson.  I'm the Quality Control
        Lab Manager for CENEX Harvest States Refinery located in
        Laurel, Montana.  I was raised on a small farm in Kansas, and
        have always been very closely associated with rural America.
                  Today, I want to address several issues dealing
        with the proposed sulfur in diesel fuel rule.
                  First, farmers have specific times of need.  As a
        refinery working for a rural American farmer owned
        cooperative, we want to strive to provide a clean quality
        fuel for the environment, yet still be able to compete in a
        very tight and costly marketplace to provide our owners a
        secure product supply, one that is always available when the
        plowing or harvest needs to be done, at a fair market value. 
        Our 325,000 farmer owners need both on-road and off-road
        diesel at these very specific times of the year.  Their
        petroleum supplies should never be put at risk.  The
        likelihood of putting them and rural America's needs at risk
        will be greater at a 15 ppm standard level than at a 50 ppm
        standard, because many refineries will delay upgrades longer
        or opt not to convert to the very costly 15 ppm standard.
                  Second, desulfurization units are costly.  We
        believe that a 15 ppm sulfur standard which equates to a 5 to
        10 ppm production standard would require high pressure two
        stage desulfurization units.  This requires new equipment
        design, and would force us to build a very expensive totally
        new unit due to plot space limitations at our refinery.  A
        standard of 50 ppm could probably be achieved with modifying
        existing units, although still at considerable cost.  CENEX
        Refinery has historically used crude oils with very high
        sulfur.  Besides having more environmental and maintenance
        issues associated with the process of high sulfur crude oils,
        we will experience even more difficulty in that our diesel
        fuel stock will contain much harder to treat sulfur
        compounds.  This will put our refinery at risk being able to
        treat diesel fuel to the ultra low level of 15 or less
        without extremely high pressure units, given the utilization
        of unproven technology for our type of sulfur mix we will
        experience.
                  Third, possible diesel fuel production loss.  Even
        with a state of the art unit, hard to treat components may be
        diverted or have to be diverted to other uses.  This would
        result in lost diesel production and higher diesel costs.
                  Fourth, betting on unproven technology.  An issue
        we feel weighs heavily against going with the proposed 15 ppm
        limit is the 15 ppm limit is utilizing some unproven state of
        the art designs which surely cannot be operated at 100 per
        cent unit reliability.  These new designs are not yet proven
        or reliable for industry-wide use.  Therefore, the new units
        must be designed with excess capacity for rerun capability
        including additional intermediate storage.  
                  If we do not build extra storage capacity and we
        have any problems that arise during normal operations, the
        total refinery production could be lost, including gasoline,
        diesel fuel, and propane, along with our other products from
        the facility.  Gasoline and propane are also very important
        components to rural America in harvesting and drying grain. 
        Any disruptions in the supply will result in price spikes at
        a time when the farmer has no choice but to buy at an
        elevated price.  Contrary to the farmer, an SUV owner has a
        choice not to buy at the higher price level.
                  Our farmers should already be on the endangered
        species list.  Let's not eliminate them entirely with these
        proposed rules by putting our food chain at risk of not
        getting fuel supplies at very critical times in the farming
        operation.
                  Fifth, possible pipeline restraints.  Our
        cooperative owned refinery is located in Montana, and we
        depend greatly on common carrier pipelines to move our
        product to the farmer.  No pipelines currently carry a higher
        off-road sulfur diesel fuel/heating oil.  They carry only low
        sulfur number one heating oil and low sulfur number two
        diesel fuel/heating oil that is utilized for both on-road and
        off-road diesel fuel/heating oil.  Lowering the sulfur to 15
        ppm would both force a very excessive processing cost, along
        with a very expensive supply distribution system to start
        providing two additional grades of diesel fuel/heating oil,
        which would be high sulfur number one diesel and high sulfur
        off-road diesel.  We'd have to start doing that.
                  With a 50 ppm standard, the off-road diesel
        fuel/heating oil could continue to be produced at the same
        low levels as the on-road diesel fuel, at least for some off-
        road engines.  If the nation went to a 50 ppm total
        distillate sulfur standard, on-road/off-road/heating oil, the
        effect would be far greater total reduction in sulfur
        compounds, therefore, making large air pollution improvement,
        at least in sulfur reduction.
                  As you can see, in a relative small supply market
        region such as the Rocky Mountain region, PADD IV, the
        addition of two more grades of diesel fuel, along with the
        excessive cost to make an ultra low level sulfur diesel, will
        not only provide a larger cost burden to be borne by our
        farmers, but will put their supply at risk during these
        critical usage periods.
                  Sixth, we need another reference test method.  As a
        chemist for a small refinery, I want to address the issue of
        EPA not yet approving a method of analysis such as ASTM D-
        5453 as an approved method of analysis.  Under the gasoline
        rule and under the proposed diesel fuel rule, the only
        approved method is the ASTM D-2622, modified for diesel fuel,
        that can be used for compliance issues.  We don't have
        laboratory room or large capital dollars to purchase two
        expensive analyzers and the D-2622 will not provide a level
        of accuracy at a low 1 to 10 ppm level that will be required
        to determine credits for gasoline sulfur levels.
                  I suggest EPA approve an additional method such as
        ASTM d-5453, so that we would not have to purchase and
        maintain two expensive analyzers when a single method should
        be sufficient.
                  In conclusion, we recommend the EPA rescind and
        reconsider the proposed sulfur in diesel fuel rule.  We feel
        strongly a study should first be conducted to see if a 15 ppm
        is even feasible, or will this standard put the nation into a
        total fuel supply chaos.
                  Any new rulemaking should include the following: a
        50 ppm cap sulfur standard, no phase-in, no dual highway low
        sulfur diesel fuel specifications.  And we would want to know
        what the off-road diesel fuel standard is going to be at the
        same time.
                  Thank you.
                  MR. FRANCE:  Thank you, and thank you to the entire
        panel.
                  The next panel, Jody Kennedy, Tom Byers, Dale Hill,
        Daryn McBeth, Dr. Maury Albertson.  
                  Ms. Kennedy, when you're ready?
                  MS. KENNEDY:  Hi.  Thank you for letting me speak
        on this important issue.  My name is Jody Kennedy, and I'm a
        membership director for the Colorado Environmental Coalition.
                  Born 35 years ago, the Colorado Environmental
        Coalition represents thousands of individual members across
        Colorado, and over 50 citizen organizations.  The coalition
        is a grassroots action arm of Colorado's environmental
        movement, mobilizing citizen campaigns to assure that
        Coloradans have a voice on decisions that impact their
        environment.
                  On behalf of the coalition and our membership, I
        urge you to adopt tough new emission standards for heavy-duty
        trucks and buses as soon as possible.  Colorado suffers from
        the worst smog pollution in the United States.  Our infamous
        brown cloud hovers over the Front Range blocking our view of
        the mountains and causing significant health problems for
        many state residents.
                  Among those affected are Colorado's children.  In
        the last ten years, Colorado's asthma rate among children has
        increased two times the national rate.  Two members of the
        Colorado Environmental Coalition have developed respiratory
        problems associated with traffic pollution.  Neither has
        prior family history of respiratory disease.  One is a young
        25 year old male who developed bad asthma.  He lives a
        stone's throw away from a major truck route in Colorado
        Springs.  The other member is an elderly woman, age 76, who
        developed emphysema.  She lives right on Sixth Avenue West in
        Lakewood.
                  Heavy-duty trucks and buses emit large amounts of
        the smog-forming oxides and particular pollution that's
        causing the cloud and sickness in Colorado.  Even though it's
        common knowledge that big trucks and buses are among the
        biggest pollution sources, the oil industry and engine
        manufacturers have done very little to curb this pollution. 
        In fact, industry has cheated on their emissions tests in the
        past, allowing us to breathe an extra 1.3 million tons of
        smog-forming pollution each year.
                  In order to protect the public health, we must
        require drastic reductions in pollution from large trucks and
        buses.  The Colorado Environmental Coalition strongly urges
        the EPA to first make low sulfur fuel available nationwide. 
        In order to reduce current emission levels, engines must run
        on cleaner fuels.  The EPA should require diesel sulfur
        levels with a cap of no more than 15 parts per million sulfur
        nationwide.
                  Second, we ask the EPA to clean up big trucks and
        buses as soon as possible.  Cleaning up diesel fuel today by
        97 per cent will allow the EPA to cut smog-forming pollution
        by 95 per cent, and soot pollution by 90 per cent by 2007. 
        Unfortunately, the EPA is proposing to wait another ten years
        to fully clean up these big polluting vehicles, and in the
        meantime, Colorado's brown cloud will go from brown to black. 
        The Coalition strongly requests that there is no phase-in
        period of smog-forming pollution.  Coloradans should not have
        to wait for clean air.
                  Third, the EPA should take measures to ensure that
        big trucks are meeting current emission standards while on
        the road, not just during engine tests, by requiring in-use
        and on-board diagnostic equipment for all heavy-duty trucks.
                  Finally, the Coalition asks that the EPA take
        advantage of new technologies.  They're creating clean
        alternatives for transportation.  Vehicles such as electric
        buses and fuel cell trucks are fast becoming reliable and
        economic replacements for big polluting diesels.  The EPA
        should include a provision in the heavy-duty rule that would
        provide incentives to introduce more of these cleaner
        efficient diesel alternatives.
                  These provisions I've stated are necessary to
        protect the public health and the well being of Coloradans,
        and I ask that you strongly consider them in your final
        rulemaking decision.
                  Thank you.
                  MR. FRANCE:  Thank you.  Tom Byers?
                  MR. BYERS:  Good afternoon.  My name is Tom Byers. 
        I'm a Senior Government Affairs Representative with Williams
        Energy Services, an operating unit of Williams headquartered
        in Tulsa, Oklahoma.  Although Williams is involved in nearly
        every phase of the energy industry, our presence here today
        relates primarily to our ownership of two refineries, one in
        Memphis, Tennessee, the other in North Pole, Alaska, as well
        as a petroleum products pipeline and product terminals.
                  I appreciate the opportunity to present our views
        today on the impact of EPA's proposed ultra low sulfur diesel
        standard rule.  And rather than reiterate some of the points
        that you have already heard from trade associations and other
        interested parties, I will concentrate on the particular
        problems that the rule will create for Williams' operations.
                  Williams appreciates EPA's recognition of the
        unusual circumstances with which we are confronted at our
        north Pole refinery, and we applaud EPA's insight in
        proposing a transitional implementation plan.  Williams is
        pleased that EPA has proposed a process that will allow us to
        participate in developing a regulatory framework that may
        allow us to continue manufacturing diesel fuel for highway
        use.  While there may be differences among the various
        parties involved, we look forward to being a fully active
        participant and to working with the State of Alaska and other
        interested stakeholders toward an acceptable solution.
                  Although manufacturing and distributing fuel in any
        setting is a complex and demanding process, refineries and
        distribution systems in the State of Alaska are presented
        with some particularly difficult challenges.  In the preamble
        to the proposed diesel sulfur rule, and on several previous
        occasions, EPA acknowledged the existence of those unique
        circumstances.  In 1994, EPA, pursuant to authority under the
        Clean Air Act, exempted the state from compliance with the
        500 ppm sulfur standard for highway diesel because of the
        geographical, meteorological, air quality, economic and other
        factors that are found there.  In an August 19, 1996 Notice
        of Final Decision, EPA made the following statement
        explaining its decision to extend the Alaskan exemption for
        highway diesel fuel.
                  "The basis for this decision is that compliance
        with this requirement is unreasonable during such time period
        because, at this time, it would continue to create a severe
        economic burden for refiners, distributors and consumers of
        diesel fuel in the State of Alaska.  This economic burden is
        created by unique meteorological conditions in alaska and a
        set of unique distillate product demands in the state."
                  Those unique conditions did exist in 1996, and they
        continue to exist in Alaska today.
                  In addition, there are insufficient environmental
        and human health concerns in Alaska to justify the cost of
        mandating low sulfur diesel fuel.  
                  In fact, EPA recognized the limited environmental
        benefits in that August 19th Federal Register notice when it
        said, "The Agency recognizes that granting this extension to
        the temporary exemption means alaska will forego the
        potential benefits to its air quality resulting from the use
        of low sulfur diesel fuel.  However, the Agency believes that
        the potential benefits to Alaska's air quality are minimal
        and far outweighed by the increased costs resulting from
        factors unique to Alaska, at this time, to communities served
        by the Federal Aid Highway System."
                  Williams requests that EPA continue to recognize
        this fact as it moves forward in drafting these diesel sulfur
        regulations.
                  An argument has been made that low sulfur diesel
        should be required in Alaska because of the potential
        liability associated with engines that fail due to the use of
        high sulfur fuel.  According to the American Trucking
        Association, however, the new engine technology may not reach
        Alaska in significant numbers for up to ten years. 
        Therefore, implementing a plan that takes into consideration
        the needs of the marketplace to determine when and where low
        sulfur fuel is needed is clearly in the best interests of the
        state.
                  In any event, requirements for low sulfur diesel
        fuel should be postponed until at least 2007 in order to
        coincide with Alaska's Tier 2 gasoline requirements.  If
        Williams can economically justify constructing
        desulfurization capacity for both gasoline and diesel, it
        would be most efficient to build them at the same time.
                  Another fact that sets Alaska apart is that highway
        diesel fuel accounts for only 5 per cent of the total diesel
        fuel sales in the state.  In 1999, Williams sold
        approximately 300 barrels per day of highway diesel fuel,
        which was less than 4 per cent of our total diesel sales. 
        While this in itself is a small amount, it is important to
        understand that the rule would have far-reaching impacts on
        every part of Alaska, including the rural bush area.  
                  Because of a limited transportation and storage
        infra-structure, and the prohibitive costs associated with
        constructing additional facilities, refiners will be forced
        to refine down to the lowest common denominator and make all
        diesel fuel in compliance with the 15 ppm standard.  This
        will require residents of the bush area to pay for more
        expensive fuel that they are not required to use.  However,
        they will have no alternatives because in many of the rural
        areas, for example, a single storage facility is available
        for diesel fuel.  
                  They will also be forced to bear other additional
        expenses such as higher electricity costs from the Alaska
        rural electric cooperatives.  Interestingly, this situation
        is not dissimilar to the problems faced by the farm
        cooperatives in the lower 48 states.
                  Williams has estimated that it would cost in excess
        of $100 million to be able to make diesel fuel with 50 ppm at
        our Alaska refinery.  We have not yet determined the
        additional cost that would be required to make the ultra low
        fuel proposed by EPA.  We are not even certain if a
        commercially viable technology is available for a harsh
        arctic environment like that found at North Pole, Alaska.
                  Assuming for the moment that such technology is
        available, Williams will face two unattractive options: spend
        over $100 million in order to produce a relatively minuscule
        amount of highway diesel fuel, or stop manufacturing highway
        diesel fuel altogether.  Although Williams has not decided if
        it will build a desulfurization facility, there is no
        incentive for us to invest in such a project given the
        limited demand and a projected zero return on our investment.
                  While importation of the fuel might be a possible
        alternative, we do not know what supply sources would be
        available.  Costs to consumers would certainly go up, and
        supply disruptions would likely occur.  Any such disruption
        would have severe consequences, since the 95 per cent of the
        fuel consumed in non-highway uses would be disrupted along
        with the supply of highway fuel.
                  In the event that EPA's proposal were to allow more
        than one grade of highway diesel fuel, Williams' Memphis
        refinery and pipeline and terminal operations would also be
        faced with substantial logistical issues associated with
        limited storage facilities and cross-contamination.
                  Again, we thank the EPA for the opportunity to
        voice our concerns today, and we hope that you will take
        these comments into consideration as you finalize the diesel
        sulfur rules.
                  MR. FRANCE:  Thank you for your testimony.  Dale
        Hill?
                  MR. HILL:  My name is Dale Hill, and I'm president
        of Transportation Techniques, which is a Denver based
        manufacturer of hybrid electric vehicles.  And I guess I'm
        here to put a little different spin on the solution to some
        of the problems we've been talking about today.
                  I'd like to start out by saying that we at Trans.
        Tech. wholeheartedly support the EPA's proposal for diesel
        engines and fuel requirements.  But I'm here also to state
        that there are emerging technologies that solve a number of
        the pollution issues that have been mentioned here today. 
        And since serious hybrid electric drivetrains have been the
        major concentration of our efforts, I'd like to speak to that
        issue for a few minutes.
                  We're currently manufacturing 36 45-foot, 116
        passenger buses for the Denver RTD for use on the Denver 16th
        Street Mall.  Unfortunately for this meeting, these buses are
        fueled by compressed natural gas, and they pollute less
        carrying 117 passengers than a brand new car carrying one
        passenger.  And so that gives you an idea of the direction
        the technology is headed.
                  The technology is applicable, however, to diesel,
        and in that light, I'll address that issue.  In hybrid
        electric technology, you use electric motors to drive the
        drive wheels of the vehicle.  The motors are powered by a
        bank of batteries.  Those batteries are then charged
        continuously by constant RPM Genset.  And in doing that,
        we're able to reduce the size of the required engine for the
        application 50 to 75 per cent.  A much smaller engine, run at
        a constant RPM with no acceleration and deceleration then
        produces for a comparable fuel, approximately a 50 per cent
        reduction in the emissions of that vehicle.
                  If you go from a diesel vehicle to an alternative
        fuel vehicle, you reduce the emissions by up to 80 per cent
        or more.  So I think that this technology provides some
        significant reductions in emissions.
                  And the issue comes up then you're not only
        reducing the emissions for a specific engine, but you're
        greatly reducing the emissions for a specific vehicle,
        because the vehicle carrying the same load is using a much
        smaller engine and running at a constant RPM.
                  Although many dollars have been spent to date to
        bring a marketable product to the industry, there's still
        many areas of this technology that need improvement, and this
        costs money and it's dollars that the public sector finds
        very difficult to bear many times.
                  In addition, these vehicles, because of the low
        production numbers that are being produced, have a much
        higher per unit expense, somewhere in the neighborhood of 30
        to 40 per cent over a diesel vehicle.  
                  As I've travelled around the country, there are
        many, many transit agencies and airports that would very much
        like to implement the technology because of the greatly
        reduced emissions, however, they don't have the necessary
        dollars to pay the incremental cost between diesel and the
        evolving technologies.
                  I'd also like to say that at least in the bus
        industry, for which I'm most familiar, the greatest gains in
        technology have been made by small entrepreneurial companies,
        and they've done that in light of the fact that most of the
        grant money from agencies such as EPA or DOE have gone to
        Fortune 500 companies, and those dollars have produced
        minimal results in comparison to some of the advancement I've
        seen, not only in our company, but other small companies that
        are working in this industry.
                  So based on these two issues, I'd like to make
        three recommendations.  First of all, that significant
        incentives or credits be supported in this bill that the EPA
        is proposing for purchases of evolving technologies whose
        emissions meet or exceed these proposed guidelines that you
        have here.
                  Number two, that there are indeed grants or funds
        in some form be made available to small businesses with a
        proven track record as leaders in the development of evolving
        technologies.
                  And, thirdly, I would like to see that you consider
        that emissions be evaluated for alternative technologies on a
        vehicle mile basis instead of a brake horsepower-hour basis,
        because we're playing on a different playing field here,
        because we're using smaller engines which get better fuel
        mileage.  And, therefore, I would suggest that some
        consideration be given to a per vehicle mile basis versus a
        brake horsepower-hour basis.
                  Thank you.
                  MR. FRANCE:  Thank you.  Daryn McBeth?
                  MR. MCBETH:  Thank you.  My name is Daryn McBeth
        and I'm here representing the National Biodiesel Board, a
        501(c)(6) organization dedicated to promoting, developing and
        educating the public on a renewable alternative diesel fuel-
        substitute or additive called biodiesel.
                  Some may ask why would someone from the National
        Biodiesel board be interested in the EPA field hearing
        concerning diesel engine and vehicle standards and proposed
        diesel fuel sulfur requirements.  The short answer to that
        question is the proposed EPA rule and diesel sulfur standard
        have many goals and benefits in common with the
        characteristics and attributes of biodiesel.  For a longer
        answer, please allow me to explain a little bit about
        biodiesel, its low sulfur characteristics and the role it can
        play in helping meet the intent of the proposed rule.
                  Biodiesel is the name of a clean burning mono-alkyl
        ester-based oxygenated diesel fuel.  Biodiesel is made from
        renewable agricultural resources, primarily soybean oil. 
        Biodiesel contains no petroleum, but it can be blended at any
        level with petroleum diesel to create a biodiesel blend.  
                  In fact, 20 per cent pure "neat biodiesel" blended
        with 80 per cent diesel fuel, or B20, as we call it, has
        demonstrated significant environmental benefits with a
        minimum cost increase for fleet operations and other
        consumers.  Biodiesel is non-toxic, it's biodegradable, and
        is used in conventional diesel engines with little or no
        modifications.
                  Biodiesel is registered as a fuel and fuel additive
        with the EPA and meets clean diesel fuel standards
        established by the California Air Resources Board.  Neat
        biodiesel or B100, 100 per cent biodiesel, has been
        designated as an alternative fuel by the Department of Energy
        and U.S. Department of Transportation.  Covered fleets under
        the Energy Policy Act of 1992 can receive alternative fuel
        vehicle or AFV acquisition credits for biodiesel use, under
        legislation passed by Congress just in 1998.
                  Last month, biodiesel became the first and only
        alternative fuel to successfully complete the entire Health
        Effects testing requirements of Section 211(b) of the Clean
        Air Act Amendments of 1990.  The results of the Tier 1 and 2
        tests showed that biodiesel not only poses no threat to human
        health, including sub-chronic inhalation, but that its use
        results in a 90 per cent reduction in air toxins.
                  A 1998 biodiesel life cycle study, jointly
        sponsored by the Department of Agriculture and Department of
        Energy, concluded that biodiesel reduces net CO-2 emissions
        by 78 per cent compared to petroleum diesel.  
                  For regulated emissions, compared to conventional
        diesel fuel, B20 reduces unburned hydrocarbons 93 per cent,
        carbon monoxide 50 per cent, and particulate matter up to 50
        per cent.  
                  for the presently unregulated emissions, B100
        reduces sulfates 100 per cent, PAH 80 per cent and nitrated
        PAH 90 per cent, and ozone potential of speciated HC 50 per
        cent. 
                  Exhaust from an engine using biodiesel consists of
        fewer harmful emissions, and includes virtually no sulfur as
        compared to conventional petroleum diesel.
                  But the attribute most relevant to this hearing is
        the lubricity characteristics of biodiesel.  Biodiesel
        significantly enhances engine lubricity, even at very low
        blends, such as one-half to 2 per cent.  Under the dual-
        system approach in the EPA proposed rule, catalytic devices
        modifying diesel engine exhaust would be dependent on low
        sulfur diesel fuel to capture the desired emissions
        reductions.  Conversely, as the proposed rule correctly
        states, higher sulfur levels in conventional diesel fuel
        would harm the proposed emission technology devices and also
        cause failure to reduce particulate matter and NOx emissions.
                  Incidentally, the proposed rule also correctly
        points out that a low sulfur diesel standard would likely
        create a reduction in diesel fuel's lubricity properties,
        something necessary for a diesel engine's moving parts,
        injection systems, and rotary and distributor type pumps. 
        The proposed rule's discussion partially addresses this
        lubricity concern through advocating a voluntary approach
        toward maintaining lubricity on a case by case basis.
                  Biodiesel produces significant lubricity
        improvement, with blends even below 1 per cent, providing up
        to a 30 per cent increase in lubricity.  After completing
        lubricity testing of biodiesel, Stanadyne Automotive
        Corporation, the leading independent U.S. manufacturer of
        diesel fuel injection equipment, found that the inclusion of
        2 per cent biodiesel into any conventional diesel fuel will
        be sufficient to address the lubricity concerns that we have
        in these existing diesel fuels.
                  I've included a copy of that letter with further
        comments for your review.
                  Before I conclude, I would like to address two more
        areas of discussion from the proposed rule where comment is
        requested.
                  The first is on the topic of who would be required
        to meet the proposed new diesel sulfur standard.  EPA
        discussion suggests the proposed sulfur standard should apply
        to the diesel fuel at the point of sale to the ultimate
        consumer, but goes on to confuse the issue, in my opinion, by
        discussing blending of additives and the likely requirement
        that all parties in the distribution system could be
        prohibited from selling, storing, transporting, dispensing,
        introducing or causing or allowing the introduction of
        highway diesel fuel whose sulfur content exceeds the proposed
        cap.  That was from the rule discussion.
                  The characteristics of B100 allow biodiesel to be
        splash-blended into any type of conventional diesel fuel. 
        Some choose to blend biodiesel with conventional diesel fuel
        to gain AFV acquisition credits, as previously mention. 
        Others choose to run engines on a blend of diesel fuel and
        biodiesel for the healthy environmental and emissions
        properties.
                  For the new EPA low sulfur diesel fuel standard, to
        foreclose on the opportunity of a fuel manufacturer, refiner
        or end user to simply blend no-sulfur biodiesel with
        conventional diesel fuel, whether to reduce sulfur content in
        the fuel or to gain other emissions or economic benefits,
        would effectively take away useful flexibility currently
        exhibited by biodiesel as a renewable alternative fuel.
                  The second and final topic that I would like to
        discuss is in response to the proposed rule's solicitation
        for comments concerning encouragement of the early
        introduction of low sulfur diesel fuel.  Whether through
        voluntary emission credit programs, or other market-based
        incentives to encourage the early introduction of low sulfur
        diesel fuel, the National Biodiesel Board agrees that early
        introduction of low sulfur fuels would, as pointed out by the
        rule, allow advance emissions testing, lower the cost of
        emission control equipment, and possibly allow the
        distribution system a chance to develop experience in
        handling different fuel, all while presumably reducing toxic
        emissions.
                  Toward this end, biodiesel is available today.  You
        don't need to wait until 2006 to get an ultra low sulfur fuel
        for diesel engines.  It's here now.  It's been proven in over
        30 million miles of on-road use, given a clean bill of health
        by the Health Effects testing under the supervision of the
        EPA, needs no capital investments or separate distribution
        systems, and adds lubricity to engine wear.
                  In summary, the National Biodiesel Board is pleased
        that so many of the attributes and properties of biodiesel
        are nearly synonymous with the goals of the proposed EPA rule
        dealing with emissions reductions and a new low sulfur diesel
        fuel standard.  In addition to the emissions characteristics
        and ultra low sulfur levels, the lubricity improvements
        biodiesel adds to engine wear is something NBB looks forward
        to promoting within the context of the final rule and within
        the private and public marketplace.
                  That concludes my statement.  The National
        Biodiesel Board appreciates the time and effort of the EPA in
        holding this field hearing.
                  Thank you.
                  MR. FRANCE:  Thank you.  Dr. Maury Albertson?
                  DR. ALBERTSON:  We all know that hydrogen is the
        fuel of the future.  The thing is that we now have the
        technology to convert to hydrogen, but we're not going to
        convert overnight.  We're going to have transitions.  
                  I think what Dale just got through telling you is a
        part of the transition.  That's for new vehicles.  Our
        trouble is that we have about 7 million big trucks in the
        United States that we're not going to dump just because we
        want to go to hydrogen.  We're going to have to convert those
        trucks to hydrogen.  But that in itself needs to be a
        transition.  
                  But if we get even as much as 10 per cent hydrogen
        in with the diesel, we clean up the diesel.  We eliminate the
        nitrous oxides.  We do not eliminate the sulfur.  We have to
        get the sulfur out ahead of time.  But the nitrogen comes
        from the air.  80 per cent of what we're breathing is
        nitrogen.  We can do it.  All that would be coming out--I
        should say we control the nitrogen oxide by the temperature
        of combustion.  If we don't get the temperature up too high,
        the oxygen will not combine with the nitrogen.  So that the
        nitrogen simply goes out as nitrogen, and not as NOx.
                  So this I prepared for automobiles, but it also
        applies to a very large extent to trucks.  But if we go to
        CNG, we've already gone to CNG.  We have, if you look at the
        map of Denver, we have about 20 stations where you can pick
        up CNG today.  And I was visiting one of these stations this
        morning, and the U.S. West telephone vehicle came up,
        reloaded, he says he has to fill up every day.  He can't run
        on anything else but CNG.
                  CNG can be a transition, but the ultimate of course
        is the hydrogen, but we can go to hydrogen immediately.  We
        can control the--and convert our present diesel engines.  We
        can convert these 7 million trucks that are on diesel now, we
        can convert them to a combination of hydrogen and diesel, and
        ultimately 100 per cent hydrogen.  We'd have to develop the
        infra-structure in order to be able to refuel, but it can be
        done.  It takes about the same pressure, 3000 psi, as it does
        for CNG.  We have all these refueling stations.  They were
        built here in Denver in just very recently, and there's no
        doubt going to be a big increase in this number of stations,
        and they'll be all over the state.
                  So we can put hydrogen refueling stations set up in
        the same way, 3000 psi.  We can use the CNG tanks.  We have
        already refitted buses, diesel buses, with tanks to run on
        hydrogen.  But by an adjustment in the cab, we can convert to
        zero hydrogen or up to a very high percentage of hydrogen. 
        With diesel, we can't go to 100 per cent.  We have to have a
        certain percentage of diesel remaining.
                  So until we get engines converted like Dale's
        engines in the Denver buses on 16th Street, until we get
        those engines coming out of new trucks, we're going to have
        to go ahead and use the 7 million trucks we now have on the
        highways.
                  So this is a system that is actually working. 
        We've demonstrated it.  It will work.  We have the tanks.  We
        have all the harness, as we call it, that we put on the
        engine.  We have the control system all worked out, and it
        can be done.
                  So if anything, if there is such a thing as a
        panacea, this is about it.
                  So if you have any questions, you can see me
        afterwards.  I'll be back behind.  I do have this handout
        that has this information in it.
                  Oh, I meant to mention we can make the--right now,
        hydrogen is made of natural gas primarily, but also quite a
        bit with crude oil, and to some extent, with coal.  We can go
        ahead and use these fossil fuels to make hydrogen as long as
        they last, but we know that there's a limit to how long it
        will last.  Fortunately, natural gas has--we have reserves on
        it for many more years than we do for petroleum.  But we can
        also get methane, which is natural gas, by digesting organic
        solids, and we could turn off our natural gas wells today if
        we were anaerobically digesting all of our organic material
        that is wasted in the United States today.  That's how much
        there is.
                  So we have many options for renewable energy to
        replace fossil fuels at the same time that we get rid of the
        pollution.
                  MR. FRANCE:  Thank you.  Thank you to the rest of
        the panel.  We appreciate your testimony today.
                  We're running a little ahead of schedule.  Let me
        go ahead and move into the next panel if they're here. 
        Justin Wettstein, Richard Bridenbach, David Orr.  Is there
        anyone else in the audience that has signed up to testify and
        has not been called.  Come on up.
                  (Pause.)
                  MR. FRANCE:  Okay, Mr. Orr?
                  MR. ORR:  Thank you.  Throughout all history,
        mankind has relied on certain absolute and inalienable laws
        of nature as the basis of his material well being.  Such laws
        do not depend on majority opinion or on what political party
        is in office.  They are, rather, the very principles on which
        the entire material universe depends on for its very
        existence.  To deny them would be no different than if you
        were to close your eyes while you were driving to work in the
        morning.
                  What would you do if you were to wake up one
        morning to find that it was against the law to rely on your
        sense of vision while driving your car to work?  I hope you
        find this question to be absolutely absurd.  Clearly, no one
        in their right mind would ever obey such a preposterous law,
        nor would any lawmaker ever entertain the notion of
        legislating such a law.
                  But sadly, enough, I'm here to inform you that the
        proposed sulfur regulations are no different than the example
        I just gave you.  I will do this by addressing six points.
                  Number one, that by eliminating sulfur from our
        gasoline and diesel, scientific evidence demonstrates a
        substantial increase in the rate at which global warming
        occurs.
                  Number two, that there is a distinct difference
        between solid visible particulates known as air pollution and
        sulfur dioxide, which is a transparent gas known for its
        cooling qualities.
                  Number three, that through the use of inexpensive
        and efficient fuel additive technologies, noxious emissions
        can be eliminated without requiring the reduction of sulfur
        dioxide.
                  Number four, that EPA regulatory decisions are made
        by non-scientists.
                  Number five, that the scientific methodology used
        by the EPA to assess the reversibility of Tier 2 emissions,
        an earlier regulatory decision to eliminate sulfur in
        gasoline, was faulty.
                  Number six, that one of the principal causes behind
        the recent increase in gas prices in the Midwest is due to
        the incorrect presupposition on the part of the EPA that all
        evaporative emissions are the same.
                  Sulfur dioxide directly and indirectly tends to
        cool atmospheric pressures.  Some scientists suggest that the
        cooling effect of SO2 is modest, however, others, including
        representatives of the National Academy of the Sciences and
        the National Center for Atmospheric Research, believe that
        the cooling effect of SO2 occurs at the same rate of that of
        carbon dioxide.
                  A detailed bibliography, as well as subsequent
        graphs and charts, can be found on the NAFA websit at
        www.altfuels.net.  Under the section entitled Focus on
        Climate change, please pay particular attention to Figures 5
        and 6, which can also be found on Page 9 of the report.  The
        correlation presented in these two figures demonstrably shows
        that when atmospheric sulfur levels peak and begin to
        decrease, increases in global temperatures generally follow,
        and vice versa.
                  Based on this evidence, it is our position that
        increased quantities of SO2 put into the atmosphere by fossil
        fuels has caused a large negative force, which has
        substantially offset the effect of CO2 by at least negative
        one watts per meter squared.  For those of you who don't
        know, SO2 has been a part of the earths biogenetic process
        since the planet's beginning, acting as both a solar
        reflector and a natural precursor to cloud formation.  That
        is to say that without SO2, cloud formation would not be
        possible.
                  As of late, the generation of SO2 has been subject
        to confusion and misunderstanding.  Much of the literature
        the EPA promotes suggests that all aerosols are pollutants,
        i.e. solid visible particles known by us as smog and haze. 
        This is simply not correct.  SO2 is an invisible gas.  Solid
        particulates on the other hand, many of which are carbon
        bases, are what causes smog and visible pollution, not SO2.
                  The confusion lies in the fact that both carbon
        based solid particulates and SO2 are products of fossil fuel
        combustion.  It is, however, the incomplete and less
        efficient combustion that generates the visible carbon based
        particulates, NOx and other harmful pollutants.  The presence
        of sulfur in fossil fuels can increase the generation of such
        pollution because based on the current gasoline that we are
        using, sulfur tends to interfere with clean combustion.
                  However, with the use of inexpensive and efficient
        fuel additive technologies that the National Alternative
        Fuels Association advocates, the most noxious emissions which
        sulfur would otherwise tend to increase can all but be
        eliminated.
                  These technologies allow sulfur to remain in fossil
        fuels absent the generation of the noxious particles that the
        EPA is all too vigorous to eliminate, and for good reason.
                  I might mention that the technology that NAFA
        advocates will not only eliminate noxious particles, but it
        will also decrease the costs of refining gasoline and diesel,
        while simultaneously increasing both performance and
        mileages, absent any engine modification whatsoever.  Let me
        repeat that.
                  The technology that NAFA advocates will not only
        eliminate noxious particulates, but it will also decrease the
        cost of refining gasoline and diesel, while simultaneously
        increasing both performance and mileages, absent any engine
        modification whatsoever.
                  The proposed sulfur regulations that the EPA is
        currently proposing for diesel fuel is justified on the basis
        of NOx, particulate, hydrocarbons, toxic emissions, and acid
        rain concerns.  With the exception of the high concentration
        of sulfuric emissions caused by the power generation
        facilities and volcanic eruptions which cause acid rain, SO2
        attributes to none of the above concerns.
                  The proposed sulfur regulations are, therefore,
        based on the false presupposition that in order to eliminate
        noxious particulates, it is also necessary to eliminate SO2,
        which I might mention constitutes 90 per cent of the sulfur
        in fossil fuel combustion.
                  We believe that the unilateral phase-out of SO2
        without any investigation into alternative fuel technologies
        is unacceptable environmental policy.  There are too many
        unanswered questions, especially those related to global
        warming, that must be addressed before mandating a long-term
        environmental public policy.
                  According to the June 16, 2000 testimony of Senator
        Merculsky made on the Senate floor, and by the way, the
        Senator is a chairman of the Energy and Natural Resources
        Committee, and I quote, he says, "We are only just now
        beginning to conduct the kind of scientific research that
        will allow us to determine the impacts on climate change." 
        See Congressional Record Consequences of Climate Change.
                  In short, absent requisite scientific resolution of
        these most basic questions, there is a very real potential of
        both environmental and economic tragedy of unfathomable
        proportion.  It is no surprise that EPA science is based more
        on fiction than fact.  According to the latest report
        released by the National Academy of the Sciences, which is
        currently assessing the quality of science conducted by the
        EPA, and I quote, "The agency has never had an official below
        the level of administrator with overall responsibility for
        the scientific and technical foundations of agency decisions. 
        This is a particular problem because the administrator has
        typically a legal and not a scientific background." 
        Washington Post, June 15, Page A-31.
                  Not only are such individuals unaccountable to
        representative government, but they lack the competency to
        propose viable environmental solutions grounded in objective
        science.
                  I might take this time to mention that the emission
        data conducted by the EPA, which was used to justify recent
        Tier 2 vehicle emission standards in gasoline sulfur control
        requirements, came from only four vehicles.  The four
        vehicles were an SUV, a pickup and two mini vans, hardly
        representative of the model distribution in the passenger
        vehicle fleet.  Two-thirds of the final estimate of the Tier
        2 emissions reversibility was based on the SUV.  The SUV was
        a Ford Expedition modified by the EPA prior to testing at the
        EPA lab in Ann Arbor.  It was not a production vehicle, and
        manufacturer's requirements for drivability and durability
        had not been assessed.  See Southwestern Research Institute
        Report at www.altfuels.com.
                  To create a permanent regulation that would
        increase the price of gasoline by at least 5 cents a gallon
        and the manufacturing cost of vehicles based entirely on the
        emissions of one modified vehicle is profoundly unjust.
                  An additional example of the overall incompetency
        of EPA science and the devastating impact that it can also be
        attributed to impart is the high price of gasoline in the
        Midwest.  Under its mass based VOC definition, the EPA fails
        to consider the smog ozone forming quality of VOC emissions
        known as reactivity.  Rather, the EPA weighed all evaporative
        VOC emissions as the same.  Thus, the EPA weighted benign
        evaporative VOC emissions in the same category as the most
        harmful smog and ozone causing evaporative emissions.  
                  This faulty definition had the effect of
        discriminating against alcohol, including ethanol, because
        alcohol typically increases vapor pressure and, hence,
        evaporative VOC emissions.  Thus, in order to meet the EPA's
        mass based VOC requirement, the gasoline RVP has to be
        manufactured at an artificially low vapor pressure to offset
        the RVP increase of alcohol.  This was extremely expensive
        and significantly adds to the cost of refining gasoline,
        which is in part why people in the Midwest must now pay more
        than $2 a gallon for gasoline.
                  Had the EPA practiced the proper science mandating
        reformulated gasoline as NAFA advised them to do back in
        1993, the price hike in gasoline would have been less
        drastic, if at all.
                  In closing, I would like to thank each of you for
        your time and serious consideration.  There's no doubt in my
        mind that the EPA does not have the best of intentions.  
                  Please realize that my harsh criticism is not to be
        taken personally.  Rather, it should be taken as a healthy
        reminder that regardless of the whims of partisan politics or
        the lobbying efforts from various industries, there are
        certain objective scientific principles which cannot be
        denied if we are to remain a healthy and prosperous nation.
                  Thank you very much.  And I will submit all that
        evidence required in the testimony I just gave.
                  MR. FRANCE:  Thank you very much.
                  MR. ORR:  www.altfuels.net.  Thank you very much.
                  MR. FRANCE:  Thank you.  We appreciate hearing from
        you.  Mr. Martinez, do accept our apology.  We did call you
        earlier, but you might have been out of the room.  I noticed
        you were sitting here for a long period of time.  So, again,
        accept our apologies.
                  MR. MARTINEZ:  Well, thank you very much.
                  First of all, I was very impressed by the comments
        made by young Mr. Gill this morning, his statement saying
        what are we doing here now.  This is really way down late on
        the road.  We should have been ahead of this 30 years ago. 
        So I was very impressed.  Also, with the Dr. Feeley, I
        believe, concerned about children. 
                  Well, Gentlemen, I live--I exist, I don't really
        live over there, but I exist there west of Commerce City, an
        industrial city that just likes the coffers that the
        companies bring in.  There's a refinery there.  They have
        allowed a truck terminal to come in within 100 yards of our
        properties, and I have addressed the city council,
        commissioners of the county.  I've gone to the state.  These
        people are not doing a thing about this.
                  What happened is they moved in there in '93.  In
        '96--well, back up a little bit.  Shortly thereafter, we had
        to rush my daughter, who was asthmatic, to the hospital.  We
        almost lost her.  She stayed there over a week.  And they put
        her on medication and that does help.  But I had three heart
        attacks three years later.  I notified all the concerned
        officials.  Nobody does anything about it.
                  My wife and I are on thyroid medication now as we
        progress along the road.  There's low energy.  Like I said, I
        exist.  It's a terrible situation.  So I really welcome the
        EPA to forcibly aid people in my situation to assist us in
        having cities being more concerned about the health of the
        average citizen instead of special interests.
                  And I would like to--oh, by the way, I'm also on an
        inhaler, too, Albuterol.  But I would like to see the EPA
        require producers of fuels like this, and the users of the
        fuels like this to reside in the areas where they do create
        this problem for the other people.
                  Thank you very much.
                  MR. FRANCE:  Thank you.  We appreciate you taking
        the time and share your views with us.
                  Is there anyone else in the audience that wants to
        testify?
                  We are here until 6:30, as I expect you all will
        be, too.  We'll take about a ten minute break, ten or fifteen
        minute break and see who shows up.
                  (Off the record.)
                  MR. FRANCE:  You can go ahead whenever you're
        ready.  The court reporter is ready, and you have our ear.
                  (Pause.)
                  MR. WETTSTEIN:  I guess before I start, I'm sure
        that there's a number of groups today that talked about the
        emissions for the rules, what effect that might have on
        emissions, and also the effects of those emissions on both
        the public at large and then on individual corporations who
        are involved in refining or producing fuel, or that sort of
        thing.
                  I chose kind of a different--my background is in
        environmental engineering and economics, and so I kind of
        took a different spin on what I thought was important,
        because I figured everyone else covered kind of the NOx and
        some of the other particulate matter issues.  So I decided to
        focus primarily on ozone concentrations, and I actually took
        this from the report that is associated with these meetings,
        I guess, and with reporting from the EPA.
                  Basically, this is a map of the U.S. obviously by
        counties showing which counties in the United States don't
        meet the federal--or what will be the new federal ozone
        standards.  And basically everything orange or higher means
        counties that do not meet what will be the new ozone
        standard.  Of course, these are not going to start being
        reported until this year, but I thought this was a pretty
        good graphic.  
                  I think kind of one of the big things to notice is
        that if you draw a line starting at the orange, which is
        going to be non-attainment areas for the new ozone standard,
        you can see approximately, you know, kind of eyeballing it,
        that maybe three-quarters of the population of the United
        States lives in non-attainment areas of ozone.
                  And then I actually wanted to spend a couple of
        minutes talking about, and I'm sure this has maybe already
        been covered, but just a couple of minutes talking about the
        formation of ozone and why I decided to pick on ozone, even
        though that's not one of the primary pollutants that we're
        concerned about with the new proposed rules.
                  This graph I stole from one of my textbooks for
        graduate school, and basically the first thing to notice is
        that there's three areas to this graph.  The first area is up
        in the upper left, which is the area of the graph which is
        VOC limited, means there's plenty of NOx.  Basically, you
        notice in this graph, if you cut down--I should explain the
        axis since you can't really see them very well.
                  The bottom axis is volatile organic carbon, which
        represents non-methane hydrocarbons in the atmosphere, and
        then the vertical axis represents NOx, which is obviously of
        critical importance to the new rule.  But you notice in this
        region, if you cut down on your NOx concentration, you
        actually see, as you'll see, that you're going through more
        and more of these lines.  And actually these lines represent
        ozone concentration potential.  So as you go from bottom left
        to upper right, you have an increase in the potential to form
        ozone. 
                  So actually, for areas within this region, reducing
        just nitrogen oxides increases the ozone potential in
        general.
                  The second region is kind of bounded by the line I
        drew already, kind of the center part of the graph, and this
        is called the bended knee region, where there's an interplay
        between NOx concentration and volatile organic carbon.  And
        this is going to become important in a second, so I'll ask
        you to kind of remember that.
                  Then the third region is obviously the one that's
        left out, and that's where the horizontal lines kind of
        dictate what ozone concentrations do.  And you see that
        basically if you, in this region, if you decrease your
        volatile organic carbon concentration in the atmosphere,
        you're not really affecting your ozone concentration that
        much.  It stays pretty stable.
                  The reason why all of this is important is that to
        efficiently reduce ozone concentrations, since most urban and
        suburban areas are up generally in the area of the bended
        knee region where you have to consider an interplay between
        both nitrogen oxides and volatile organic carbon, you have to
        reduce both nitrogen oxides and volatile organic carbon,
        which was represented by the same axis on this graph as it
        was on the previous.
                  The next graph that I wanted to show was that over
        the last decade or so--and this is also from EPA, or from a
        different EPA report, but this shows that volatile organic
        carbon emissions over the last decade have been decreasing,
        and that's part of a longer term trend, I believe.
                  And so basically, if we kind of think back to this
        graph, since most of our cities and suburban areas lie within
        this bended knee region, we're seeing a decrease in this
        axis, so we're going to the left in this diagram, but we're
        not seeing as much of a decrease in the NOx.  So we're not
        really affecting our ability to reduce the ozone
        concentrations in the urban and suburban areas.
                  So basically, this is why I decided to kind of come
        and talk about ozone today instead of NOx or one of the other
        primary pollutants that we're talking about in the proposed
        rules.  And I kind of wanted to shift gears here, because
        this is kind of what I do, is the trade-offs between science
        and policy, and this doesn't quite fit on there, but just as
        an example, I took a report from Cal. Tech. and basically the
        goal of any emissions reduction strategy should be to try and
        produce the most cost effective solution that we can develop,
        and basically don't worry about all the details of these
        different policy options, but basically the vertical side of
        the graph shows micrograms per cubic meter of a contaminant,
        so this is concentration of a contaminant.  
                  And then this is the actual cost that it's taking
        to remove that amount of contaminant.  So you see up at these
        points that are first up on the graph, you're getting--
        basically, you're getting a reduction in your concentration,
        which is on your vertical axis, at virtually no cost.  So
        these are no cost alternatives that you would want to do
        anyway for other reasons.  And you see as you go kind of down
        the graph, you're still seeing more and more and more
        reduction in the contaminant, but you're also seeing
        increasing costs.
                  So the goal, of course, in any policy option is to
        try and meet your emission standards at the most--in the most
        cost effective manner.
                  I'm almost done.  But basically what I wanted to
        show is that, and this is also from proposed--or from some of
        the material developed along with proposed regulation--or
        proposed rule change.  Basically, I wanted to say that the
        proposed rules do meet the cost effectiveness kind of
        guidelines that we have in terms of these--these are all the
        programs that are--the policy options in red bars on this
        diagram have already been enacted.  And so what this shows is
        cost effectiveness and dollars per ton, so how much we have
        to spend per ton of, in this case, NOx or non-methane
        hydrocarbon removal.
                  And you can see that this is, first of all, within
        the range of what we have already spent on programs to remove
        NOx and non-methane hydrocarbons.  And also another key point
        is that we've already--you can tell from this graph that
        we've already exhausted some of the more cost effective
        policy options already.
                  So basically, in order to try and meet the
        standards that will come into effect this year, we've already
        exhausted some of the cheaper options, so we have to consider
        the next most expensive--or the next cheapest option, which
        is represented in this case by the proposed rule.  
                  And then kind of the analogous graph is for the
        particulate matter.  And the reason why there's two on this
        is one considers the cost effectiveness.  The top one is much
        cheaper obviously, and it considers the effect of a sulfur
        credit.  In other words, the reduction--this policy option
        considers that the reduction in sulfur emissions which
        contribute to particulate matter would be given back to the
        people who are having to pay for it, so in other words,
        they're getting money back from what they had to spend to
        enact the--or to comply with the new regulation.  And then
        the other bar is without.
                  So you can see again this is within the range of
        different policy options that have already been enacted.  And
        one thing to note is that some of these other--some of the
        ones that are quite expensive is that they may have been
        enacted for a variety of different reasons.  In other words,
        this is probably not their primary goal in enacting the more
        expensive legislation.
                  So kind of to sum up, I guess there's a number of
        health reasons, and I'm hoping anyway that some of the other
        testifiers today--I'm sure they did--touched on the reasons
        why ozone and NOx and particulate matter are important
        pollutants and why they're on the NAAQS list for the EPA. 
        And I think basically the summary of my little speel here is
        that in order to meet the regulations that are going to come
        about, and to try and improve human welfare and human health,
        that the proposed regulations make sense in terms of cost
        effectiveness and also in terms of our technical
        understanding of how ozone is formed.
                  And that's it.
                  MR. FRANCE:  Thank you.  
                  MR. WETTSTEIN:  And then there's no time for
        questions or anything like that?
                  MR. FRANCE:  We'll let you off easy.  Okay?
                  The next guy we won't.  Stan Dempsey.
                  MR. DEMPSEY:  Thank you very much.  My name is Stan
        Dempsey.  I'm president of the Colorado Petroleum
        Association, probably the last person today to welcome you to
        Colorado, but welcome.
                  MR. FRANCE:  You may have the honor of being the
        last person testifying in a series of five hearings we've
        had.
                  MR. DEMPSEY:  Well, I appreciate that, and I was
        able to attend much of today's hearing, but I had other
        activities outside, and I appreciate you being willing to
        stick around and take our perspective.
                  We're a trade association that represents both
        upstream and downstream aspects of the oil and gas community
        in Colorado, and this rulemaking is of vital importance to
        our members from both the upstream and the downstream
        perspective, and I'd like to just take a minute to talk about
        that.
                  Just for some information, our members supported
        and are implementing at this point a voluntary revapor
        pressure measure.  We cut revapor pressure by half a pound to
        help with the ozone--meet the ozone standard here in the
        Denver area.  And our association supports the comments made
        by Ultramar Diamond Shamrock, Conoco, API and NPRA.  But I'd
        like to kind of throw a little bit of a Colorado spin to some
        of those comments.
                  Our association is very concerned about the health
        of the two Denver refineries as well as the other refineries
        in the Rocky Mountain area.  And I really have to compliment
        EPA with regards to the deliberations and the activity it
        took with regards to the gasoline sulfur rulemaking and the
        solution that you came up with for the Rocky Mountain
        refineries, not only addressing the concerns of the very
        smallest refineries, the SBREFA refineries, but the
        refineries which are slightly larger and that serve both
        Colorado and the Rocky Mountain areas, but even the
        refineries that were outside the PADD IV area, and treating
        them fairly competitively.
                  And I guess we would urge you, without creating a
        carve-out, because we don't believe that it's appropriate,
        but to find a way in your general approach to this rule, to
        treat those refineries that are I think at significant risk
        of closure, to deal with this rulemaking in a sense so that
        those refineries have a legitimate shot at surviving, the
        competition for capital, limited capital expenditure is
        there.
                  And I want to emphasize that, you know, we're aware
        of the fact that there are multiple initiatives from the
        regulatory perspective with regards to gasoline and diesel
        sulfur reductions, the regional haze.  The rule contemplates
        some significant reductions in SO2, and there are a host of
        other initiatives that will play an impact upon those
        refineries' health.
                  We would like EPA to take note of that, because
        what I do not want to see happen in Colorado is the Colorado
        consumer be really kind of held hostage if there's just one
        or two refineries, or three that will supply the Colorado
        market.  And, you know, there probably can be supply brought
        into this state from other sources, but we think it's a
        healthy business climate to have product come into the state
        from both inside Colorado and outside Colorado, and we'd very
        much like to see that preserved.
                  As a trade association representative, I not only
        have to answer to my own members directly, but I get called
        at 6:30 in the morning by radio stations asking me why the
        price of gasoline or diesel is going up.  And while I enjoy
        answering those questions, I will tell you that, you know, it
        gets old after awhile, and we would like to be able to say we
        continue to have a healthy refining climate.
                  So we would just ask you to continue to work with
        the refiners so that a solution can be developed that helps
        the smaller refiners, not just the SBREFA refiners, but the
        refiners from this Rocky Mountain area.
                  And I guess that leads me to the other segment of
        our industry, and I don't think it's probably been discussed,
        although I haven't been here the whole day.  As an
        organization that represents crude oil producers, the
        refineries were built in this area, both Colorado, Wyoming
        and other states, because we do have a good crude oil supply. 
        And we would like to see the EPA recognize the fact that the
        crude oil industry is important to this segment of the
        country, and that without having the Rocky Mountain refining
        capacity, that crude oil industry could be threatened, and
        there are a number of jobs associated with that, and we'd
        still like to see that industry exist in Colorado and the
        Rocky Mountain area.
                  We appreciate once again your willingness to stick
        around and to listen to us as the last witness.  I would
        mention that Bob Laudermilk is still in the audience.  He is
        an air quality control commission member here.
                  MR. FRANCE:  We made him stay.
                  MR. DEMPSEY:  But I want to thank him as well.  He
        sat through almost all of this.  But those are really the two
        points I wanted to come and make, and thank you for your
        consideration of those points.
                  MR. FRANCE:  Yeah, and we--I mean, the situation is
        a little bit different with the interaction between the
        technology and the fuel as compared--and diesel fuel compared
        to Tier 2 where we, in designing that program, I think we
        had--well, I know we had more options.  But we stand ready
        and intend to have intense dialogue with all the refineries
        that are affected, especially the ones out here in the Rocky
        Mountain states, and the small ones in particular, to try to
        find--you know, we made an attempt to try to lay out options,
        they aren't perfect, but, you know, I think it's in
        everyone's best interest to find a way of recognizing the
        effects on the technology, but do it in a way that makes the
        most sense for everybody concerned.
                  MR. DEMPSEY:  We appreciate that.
                  MR. MACHIELE:  I guess in that regard, I don't know
        if you're planning on submitting written testimony during
        the--or comments during the comment period, but if you had
        any of your own specific ideas for how to do the exact things
        that you're looking for, please elaborate on that in your
        written comments.
                  MR. DEMPSEY:  We would be pleased to, and thank you
        for the opportunity.
                  MR. FRANCE:  Thank you.  The record is officially
        closed.
                  (Whereupon, at 6:00 p.m., the proceedings were
        concluded.)