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3 HEARING ON CARB'S REQUEST FOR EPA AUTHORIZATION OF ITS

4 OFF-ROAD COMPRESSION IGNITION IN-USE FLEETS REGULATION

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7 Wednesday, April 14, 2010

8 10:16 a.m.

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16 UNITED STATES ENVIRONMENTAL PROTECTION AGENCY

17 1310 L Street, N.W.

18 Washington, D.C.

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1 PARTICIPANTS

2 JON CLOUD

3 WILLIAM DAVIS

4 DAVID DICKINSON

5 NICK GOLDSTEIN

6 MICHAEL HOROWITZ

7 MICHAEL KENNEDY

8 ANTHONY MICHAELS

9 TIMOTHY POHLE

10 GUY PRESCOTT

11 ANTONIO SANTOS

12 KARL SIMON

13 MICHAEL TERRIS

14 ERIK WHITE

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1 P R O C E E D I N G S

2 MR. SIMON: Good morning, and welcome.

3 On behalf of the EPA and the Office of

4 Transportation and Air Quality, I would like to welcome

5 you to this public hearing on the California Air 

6 Resources Board request for EPA authorization of its 

7 off-road compression ignition in-use fleets regulation,

8 otherwise known as the off-road fleets regulation.

9 My name is Karl Simon, the Director of the 

10 Compliance and Innovative Strategies Division within

11 EPA's Office of Transportation and Air Quality. I will

12 be the presiding officer for today's hearing.

13 On the panel today with me are David 

14 Dickinson, an attorney-adviser within this division, 

15 and Michael Horowitz, from the Office of General 

16 Counsel.

17 EPA previously held a public hearing in 

18 Washington on October 27, 2008, based on CARB's initial

19 authorization for its off-road fleets regulation. The 

20 written comment period for CARB's initial authorization

21 request remained open until December 19, 2008. On 

22 March 12th of this year, EPA published an additional 
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1 Federal Register notice announcing today's hearing.

2 That notice was based on CARB's February 11, 

3 2010, letter to EPA in which they requested that their

4 additional amendments to its off-road fleets regulation

5 be considered by EPA. As EPA noted in its March 12, 

6 2010, Federal Register notice, the new written comment 

7 period will close on May 18, 2010.

8 EPA plans to consider all comments received 

9 since it opened the comment period on October 7, 2008,

10 through to the close of the current comment period,

11 which again is May 18, 2010. All comments received 

12 either through EPA's two hearings or through written 

13 comment will be treated equally within the context of 

14 the agency's authorization criteria. This includes all

15 written comments received after the close of the first 

16 comment period and before the reopening of the current 

17 comment period.

18 We are conducting this hearing in accordance 

19 with Section 209(e) of the Clean Air Act under which 

20 EPA provides interested persons with the opportunity 

21 for oral presentation of views and arguments, as well 

22 as the opportunity to make written submissions relating
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1 to the determination to be made by the Administrator; 

2 in this case, on California's off-road compression 

3 ignition in-use fleets requirements. This hearing 

4 provides the forum for those oral presentations.

5 The Administrator's determination regarding 

6 the action to be taken with respect to California's

7 regulation will be based upon the testimony of this 

8 hearing and the testimony received at the prior EPA 

9 hearing, information submitted by California, relevant 

10 written submissions, and other information deemed 

11 relevant.

12 The hearing will be conducted informally, and 

13 formal rules of evidence do not apply. However, as 

14 presiding officer, I am authorized to strike from the 

15 record statements which are deemed irrelevant or 

16 needlessly repetitious and to enforce reasonable limits

17 on the duration of statements of any witness.

18 Witnesses will be allowed to make oral 

19 statements, which they may later expand in writing for

20 the record. Witnesses are requested to state their 

21 names and affiliation prior to making their oral

22 statements. And if you do have a written copy, we ask 
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1 that you provide it to the panel, but also to the court

2 reporter as well. When a witness has finished his or 

3 her presentation, members of the panel may ask the 

4 person questions regarding the issues raised in the 

5 testimony.

6 This morning, we have received requests to 

7 present oral testimony from the California Air 

8 Resources Board, the Associated General Contractors of 

9 America, and Local 3 of the International Union of

10 Operating Engineers, the Manufacturers of Emission

11 Controls Association, the Southern California

12 Contractors Association, the American Road and 

13 Transportation Builders Association, and the Air 

14 Transport Association of America.

15 If any other party in attendance wishes to 

16 present oral testimony at this hearing, let us know now

17 or when we get to the last presentation would be fine. 

18 At the conclusion of all oral presentations, CARB may 

19 respond briefly to the oral statements of other 

20 parties.

21 As you duly noted, we are having this hearing 

22 recorded, and the transcript will be available for 
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1 public inspection and copying in the EPA's Air and 

2 Radiation Docket at Docket Number EPA-HQ-OAR-2008-0691.

3 The transcript will also be available for Internet 

4 access on the Regulations.gov Web site. Anyone wishing

5 to purchase a copy of the transcript may do so directly

6 from the court reporter and should make individual 

7 arrangements with the court reporter.

8 The purpose of today's hearing is to hear 

9 comments on California's request for authorization of

10 its off-road compression ignition in-use fleets 

11 regulation. Interested parties are particularly 

12 requested to comment on California's request regarding 

13 the following issues.

14 With regard to California's off-road 

15 compression ignition in-use fleets regulations, we ask

16 whether, A, CARB's determination that its standards 

17 are, in the aggregate, at least as protective of public

18 health and welfare as applicable Federal standards is 

19 arbitrary and capricious; B, California needs separate 

20 standards to meet compelling and extraordinary 

21 conditions; and, C, California's standards and 

22 accompanying enforcement procedures are consistent with
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1 Section 209 of the Clean Air Act.

2 Are there any questions?

3 [No response.]

4 MR. SIMON: Okay. Let's get started then, 

5 and we'll start with the California Air Resources 

6 Board. Please.

7 MR. TERRIS: Good morning, panel. It's nice 

8 to be back in Washington.

9 I'm Michael Terris, and I'm here with Erik 

10 White. We're representing the California Air Resources

11 Board and the State of California in this hearing 

12 today.

13 I'll be discussing the criteria EPA is 

14 required to consider when reviewing a request for a 

15 nonroad engine authorization from California. I know 

16 that you all are very familiar with the issues, and I 

17 gave a similar presentation in October 2008.

18 I'll then describe California's in-use off19 road regulation as recently amended, followed by an 

20 evaluation of why the regulation meets the conditions 

21 for granting California's authorization request.

22 The in-use off-road regulation is the second 
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1 in-use nonroad authorization considered by EPA, the 

2 other being the Airborne Toxic Control Measure for 

3 Transport Refrigeration Units, otherwise known as the 

4 TRU ATCM. EPA's granting authorization of the TRU ATCM

5 to California was recently upheld by the Court of 

6 Appeals for the District of Columbia.

7 The regulation before you addresses emissions 

8 from in-use off-road diesel-fueled vehicles 25 

9 horsepower and greater. CARB adopted the in-use off10 road regulation under the authority granted to it by 

11 the California Health and Safety Code to adopt all 

12 feasible measures to address criteria pollutants 

13 affecting the State's health and welfare and to adopt 

14 airborne toxic control measures to address pollutants 

15 identified as toxic air contaminants.

16 CARB has found diesel particulate matter to 

17 be a toxic air contaminant. Under California law, CARB

18 is required to make every effort to achieve maximum 

19 possible reductions in public exposure to the 

20 identified air toxic using best available control 

21 technology.

22 Also, under California and Federal Clean Air 
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1 Acts, California is under a mandate to meet State 

2 emission standards and National Ambient Air Quality 

3 Standards. The in-use off-road regulation is intended 

4 to address these legal requirements.

5 CARB approved the regulation in July 2007, 

6 and after being formally adopted, the regulation was 

7 approved by the California Office of Administrative Law

8 on May 16, 2008. In January and July 2009, CARB 

9 approved amendments to the regulation intended to 

10 provide additional flexibility and relief during the 

11 recession to affected fleets. I will describe these 

12 amendments in more detail after I discuss the primary 

13 issues concerning authorization.

14 CARB submitted this request for authorization 

15 to EPA on August 12, 2008, and has filed supplemental 

16 comments on June 12th and December 29, 2009, and 

17 February 11, 2010. The authorization would allow CARB 

18 to begin to enforce the in-use performance standards 

19 and associated enforcement provisions of the 

20 regulation.

21 Section 209(e)(1) expressly preempts all 

22 States, including California, from adopting emission 
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1 standards for new locomotive and new locomotive engines

2 and new engines under 175 horsepower primarily used in 

3 farm and construction. Section 209(e)(2) establishes 

4 an implied preemption that further prohibits States 

5 other than California from adopting their own emission 

6 standards and other emission-related control 

7 requirements for other new and in-use nonroad engines.

8 California, however, has been vested by 

9 Congress with the right to adopt emission standards for

10 these other nonroad engines, but must obtain 

11 authorization from EPA. EPA must grant California's 

12 authorization request, unless it can make specific 

13 findings set forth in Section 209(e)(2).

14 First, California, in adopting the nonroad 

15 emission requirements, must make a finding of 

16 protectiveness that its standards are, in the 

17 aggregate, at least as stringent -- at least as 

18 protective of the public health and welfare as 

19 applicable Federal standards. Section 209(e)(2) 

20 directs the Administrator to grant the authorization 

21 request unless she finds that CARB, in making its 

22 protectiveness finding, acted arbitrarily and 
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1 capriciously.

2 The Administrator may also deny authorization 

3 if she finds that California does not need its emission

4 program to meet compelling and extraordinary 

5 conditions.

6 Finally, the Administrator may deny 

7 authorization if the California standards and 

8 accompanying enforcement procedures are inconsistent 

9 with Section 209. EPA has long held that consistent 

10 with 209 means the regulation does not conflict with 

11 Section 209(a), (b)(3), and (e)(1). The D.C. Circuit 

12 in the TRU ATCM decision recently confirmed that it 

13 also includes consistent with Section 209(e)(2)(B), the

14 right of States other than California to elect to adopt

15 California's nonroad emission standards after obtaining

16 authorization from EPA.

17 It is also well established that EPA may also 

18 consider -- may only consider the three aforementioned 

19 criteria set forth in Section 209(e)(2), that EPA shall

20 give substantial deference to California's policy 

21 judgments, and that the burden is on those who oppose 

22 the granting of the authorization to show why it should
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1 not be granted.

2 I would now like to briefly describe the in3 use off-road diesel-fueled vehicle regulation and its 

4 current status. As I stated earlier, the in-use off5 road regulation was originally approved in July 2007. 

6 In our presentation to EPA at the October 2008 hearing 

7 and in our written submittals, CARB described in detail

8 the specific provisions of the adopted regulation.

9 In brief, the regulation established in-use 

10 performance requirements for off-road diesel-fueled 

11 vehicles to achieve NOx and PM emission reductions from

12 off-road diesel vehicles. It applies to large fleets, 

13 fleets with more than 5,000 total horsepower, starting 

14 in 2010; medium fleets, those fleets with total 

15 combined horsepower greater than 2,500, but less than 

16 or equal to 5,000 horsepower, starting in 2013; and 

17 small fleets, those fleets having 2,500 or less 

18 combined horsepower, starting in 2015.

19 The fleet averages become increasingly 

20 stringent over a 10-year period, and the alternative 

21 BACT requirements require annual fixed actions by 

22 fleets to upgrade their vehicles to be cleaner 
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1 operating for NOx and PM.

2 The regulation provides a number of different 

3 options for fleets to meet the fleet average and BACT 

4 options and provide numerous other flexibility 

5 provisions, including various exemptions from having to

6 meet the in-use performance requirements.

7 The Surplus Off-Road Opt-In for NOx, 

8 otherwise known as the SOON program, is aimed at 

9 getting more NOx reductions in nonattainment air 

10 basins. For SOON to be effective in a region, an air 

11 district's governing board must opt in to the program 

12 and provide incentive funding to fleets that fall under

13 the program. To date, only the South Coast Air Quality

14 Management District has chosen to opt in.

15 CARB has amended the regulation twice since 

16 2007. The first changes were approved in January 2009 

17 and, most significantly, provide extended double 

18 credits for fleets that take early compliance action.

19 In July 2009, pursuant to California budget 

20 resolution AB 8 2X, CARB adopted emission amendments to

21 the regulation, which -- I'm sorry -- adopted 

22 amendments to the regulation, which provided economic 
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1 relief to fleets affected by the present economic 

2 recession. The amendments provide credits to fleets 

3 that have experienced drops in operational activity 

4 and/or that have reduced their fleet size by selling or

5 retiring vehicles.

6 Under the amendments, fleets can delay 

7 meeting the regulations in these performance 

8 requirements in 2010, 2011, and beyond. The amendments

9 also allow all fleets, regardless of whether they have 

10 reduced activity or vehicle retirements, the option of 

11 reducing their compliance obligations in 2011 and 2012.

12 The amendments are presently operative under 

13 California law.

14 In July 2009, CARB also approved additional 

15 amendments above and beyond AB 8 2X to provide fleets 

16 with credits that encourage them to take early action 

17 to install retrofits and repower vehicles with cleaner 

18 engines. These amendments have not yet completed 

19 California's administrative review process and will be 

20 submitted to EPA for consideration after final approval

21 by the California Office of Administrative Law.

22 Now I would like to walk through how the 
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1 regulation meets the criteria for authorization. The 

2 board made its protectiveness finding in Resolution 07-

3 19 at its July 2007 board hearing and has subsequently 

4 confirmed its findings in January and July 2009, 

5 finding that the adopted in-use standards for off-road 

6 diesel-fueled vehicles in the aggregate were at least 

7 as stringent as applicable Federal emission standards 

8 for comparable vehicles.

9 As recognized by the D.C. Circuit in its 1996 

10 decision in Engine Manufacturers Association v. EPA 

11 and, more recently, by the court in the TRU ATCM 

12 decision, Congress has not granted EPA authority to 

13 adopt emission standards for in-use nonroad engines. 

14 And by providing that California is the only State that

15 may obtain authorization from EPA to adopt standards 

16 for in-use nonroad engines, Congress has effectively 

17 provided that California is the only government agency 

18 with independent authority to adopt and enforce its own

19 emission standards and other requirements for these 

20 engines.

21 While other States may opt to adopt 

22 California standards, they may do so only after 
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1 California has received authorization, and the 

2 standards must be identical to those adopted by 

3 California.

4 EPA has long held that "compelling and 

5 extraordinary conditions" refers to the factors that 

6 tend to cause pollution, the unique geographical and 

7 climate conditions of the State, combined with the high

8 numbers and concentration of mobile sources. 

9 California continues to have the worst air quality of 

10 any of the 50 States. The D.C. Circuit in the TRU ATCM

11 reaffirmed past decisions that statutory language, as 

12 well as the detailed legislative history of the Clean 

13 Air Act, affords California broad discretion in 

14 assessing the State's regulatory needs.

15 The South Coast and San Joaquin Valley Air 

16 Basins continue, even in the midst of the present 

17 serious economic recession, to have numerous 

18 exceedances of the ozone and PM2.5 State and Federal

19 standards.

20 The regulation conflicts with neither Section 

21 209(a) nor Section 209(e)(1). It does not attempt to 

22 regulate new motor vehicles or engines, new locomotives
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1 or locomotive engines, or new off-road engines under 

2 175 horsepower used in farm and construction vehicles 

3 and equipment. As to the last group of engines, the 

4 regulation does not apply to agricultural vehicles and 

5 equipment. The regulation also does not adopt emission

6 standards for new off-road engines primarily used in 

7 construction vehicles and equipment.

8 To the extent that the regulation requires 

9 BACT for NOx, the regulation does not establish 

10 emission standards for new engines used in cleaner 

11 vehicles. These standards have been previously adopted

12 by EPA and CARB in other rules. Additionally, the in13 use off-road regulation does not require turnover of 

14 any vehicle less than 10 years old or any engine 

15 primarily used in construction vehicles or equipment be

16 retrofitted with a PM retrofit device until 5 years 

17 after the vehicle or piece of equipment has been 

18 manufactured.

19 Nothing in the regulation conflicts with 

20 Section 209(e)(2)(B). It does not force other States 

21 to adopt California's regulation, nor does California

22 seek to enforce the regulation against vehicles that do
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1 not operate in the State.

2 The regulation meets the first prong of the 

3 Section 202(a) test in that it is technically feasible 

4 and provides significant lead time and flexibility. 

5 CARB, in 2007, fully considered the costs of compliance

6 and found the requirements to be cost effective and 

7 affordable for most fleets. And in response to the 

8 severe economic recession, the amendments adopted in 

9 2009 only relaxed the regulation by providing 

10 compliance credits and delays.

11 As initially adopted, the regulation provided 

12 sufficient lead time and compliance flexibility. 

13 Pending authorization, the requirements commence in 

14 2010 for large fleets and are phased in over many 

15 years. For example, fleet averages are gradually 

16 phased in over a 10-year period. And for fleets that 

17 cannot meet the fleet average PM targets, they will be 

18 allowed to limit phase-in of retrofit devices over the 

19 first 5 years after implementation starts.

20 Those that cannot meet the NOx fleet average 

21 requirements may limit turnover to cleaner vehicles to 

22 just 8 percent of the fleet for the first 5 years and 
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1 10 percent thereafter.

2 Fleets may choose among many compliance 

3 options -- retrofitting their vehicles' exhaust systems

4 with verified diesel emission control devices, 

5 otherwise known as VDECS; replacing the engine in 

6 existing vehicles with cleaner engines, otherwise known

7 as repowering; replacing older higher-emitting vehicles

8 with newer vehicles equipped with cleaner engines; 

9 retiring higher-emitting vehicles; and/or designating 

10 the higher-emitting vehicles as low use, those that 

11 operate less than 100 hours per year.

12 Compliance with the regulation is possible 

13 using existing technology. For example, the PM fleet 

14 average is phased in gradually and does not require all

15 vehicles to be equipped with VDECs immediately. Fleet 

16 owners are only required to install the highest-level 

17 VDECs available for purposes of meeting the annual PM 

18 BACT requirements. If VDECs are not available or 

19 cannot be safely installed on certain vehicles, fleet 

20 owners are exempted from complying with those 

21 requirements.

22 The stringency of the NOx fleet average is 
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1 also phased in over time and requires that fleets meet 

2 the emission requirements only through the use of 

3 existing certified off-road engines. In the early 

4 years, the fleet average can be met by phasing out the 

5 use of Tier 0 and Tier 1 engines and upgrading the 

6 fleets with Tier 2 nonroad certified engines. Only in 

7 later years will Tier 3 and Tier 4 engines be needed to

8 meet the fleet average requirements. Fleets are not 

9 required to upgrade to Tier 3 or Tier 4 engines if the 

10 engines are not available.

11 The SOON program is also feasible. It 

12 affects few fleets and utilizes incentive monies. As 

13 stated, only the South Coast Air Quality Management 

14 District has chosen to participate in the program.

15 The regulation will push fleets to upgrade to 

16 newer engines and vehicles. In the Initial Statement 

17 of Reasons and Technical Support Document, CARB fully 

18 described the state of technology for compliance with 

19 both the NOx and PM requirements. The Tier 3 engines 

20 are available now, and interim Tier 4 engines started 

21 to become available in 2008 for some horsepower groups.

22 And final Tier 4 engines will begin to be available 
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1 for some horsepower groups in 2013.

2 There are currently 10 Level 3 PM retrofit 

3 devices verified for off-road use. Level 3 systems can

4 reduce PM emissions by up to 85 percent -- by at least 

5 85 percent. Since the regulation was adopted, the 

6 technology has been developing, and new choices are 

7 available for fleets that were not available in 2007.

8 When I last spoke to EPA regarding 

9 authorization in 2008, there were only six Level 3 

10 devices. Now there are 10. While there were no 

11 passive devices verified before the regulation was 

12 adopted, there are now five.

13 The regulation includes numerous provisions 

14 that provide fleets with flexibility in complying with 

15 the in-use performance requirements. For example, 

16 small fleets do not need to begin to reduce emissions 

17 until 2015 and are exempt from the NOx fleet average 

18 and BACT requirements. Similarly, fleets in counties 

19 that currently are in attainment with the National 

20 Ambient Air Quality Standards and public fleets that 

21 reside in rural counties with low populations do not 

22 have to comply with the regulation's NOx performance 
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1 requirements.

2 As a result of the AB 8 2X amendments, many 

3 large fleets have accumulated significant credits that 

4 will allow them to be in compliance through the 

5 regulation's first years. To date, approximately 50 

6 percent of large fleets have claimed fleet reduction 

7 credits and that fleets on average have downsized 

8 active vehicles by approximately 35 percent, which will

9 allow them to delay PM retrofitting of vehicles for 2 

10 years and upgrading of vehicles for NOx reductions for 

11 up to 4 years.

12 The regulation also exempts from in-use 

13 performance requirements low-use vehicles that operate 

14 less than 100 hours per year, emergency vehicles, 

15 vehicles engaged exclusively in agricultural 

16 operations, as well as other types of vehicles.

17 Finally, the regulation allows compliance 

18 extensions if there are manufacturer delays in making 

19 retrofits or new vehicles or engines available.

20 The regulation exempts the following vehicles 

21 from the NOx turnover requirements -- vehicles less 

22 than 10 years old, specialty vehicles for which no used
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1 equipment or repowers are available, and vehicles 

2 equipped with interim and final Tier 4 engines. The 

3 regulation, as adopted in 2007, does not require fleets

4 to turn over vehicles that have been retrofitted with 

5 the best available PM retrofit technology within the 

6 past 6 years.

7 And the board in July 2009 amended the 

8 regulation to provide a lifetime exemption from 

9 turnover for vehicles that install retrofits early. 

10 That amendment will be forwarded to EPA for 

11 consideration after final approval of the amendments in

12 California.

13 Similar exemptions from the PM retrofit 

14 requirements exist for the following engines -- engines

15 in vehicles less than 5 years old, engines for which 

16 there is no retrofit available or for which a retrofit 

17 cannot be safely installed, new engines that come with 

18 an original equipment manufacturer diesel particulate 

19 filter, and engines that have been previously 

20 retrofitted with the best available VDECS at the time 

21 of installation.

22 In summary, the regulation is technically 
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1 feasible and provides significant compliance 

2 flexibility.

3 As the regulation was being developed, 

4 stakeholders raised concerns that some exhaust 

5 retrofits could present safety hazards by impairing 

6 operator visibility. Therefore, the regulation 

7 provides an exemption for vehicles that cannot be 

8 retrofitted safely. The California Division of 

9 Occupational Safety and Health, Cal/OSHA, is currently 

10 in the process of developing more detailed standards 

11 for retrofit impacts on the operator's view to the 

12 front, rear, and sides of vehicles.

13 CARB and Cal/OSHA staff have been working 

14 together to quantify the extent to which the 

15 alterations to a vehicle may impair operator 

16 visibility. Cal/OSHA intends to incorporate this data 

17 as it updates standards for retrofit visibility, which 

18 plans -- and plans to present its proposals to its 

19 board later this year.

20 To avoid conflict with a future Cal/OSHA 

21 regulation, CARB has committed that while the final 

22 regulation is pending, it will not require fleets to 
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1 install retrofits that cannot be installed without 

2 impairing visibility. CARB has stated that it will 

3 accept safety determinations from State and Federal

4 agencies that have authority to interpret and apply 

5 vehicular or worksite safety laws, including the 

6 Federal Aviation Administration. At its July 2009 

7 hearing, the CARB board approved amendments to broaden 

8 the applicability of the regulation's safety exemption.

9 These amendments are also going through the California

10 regulatory process right now and will be submitted to 

11 EPA once that is completed.

12 As indicated in previous slides, sufficient 

13 lead time exists to permit manufacturers of engines and

14 retrofit devices to develop the technology necessary to

15 meet the standards and other requirements, giving 

16 appropriate consideration to the cost of compliance. 

17 The reference to "cost of compliance" in the Clean Air 

18 Act, Section 202(a), refers to the economic costs of 

19 motor vehicle emission standards and accompanying 

20 enforcement procedures and the timing of a particular 

21 emission control regulation rather than to its social 

22 implications.
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1 EPA has applied the same analysis to new and 

2 in-use nonroad engines. In the context of in-use 

3 regulations, the crux of the analysis is whether 

4 sufficient lead time exists for development of the 

5 technology by manufacturers that would allow fleet 

6 operators to comply with the regulation.

7 Thus, the costs passed on to purchasers by 

8 manufacturers have been largely subsumed in the initial

9 consideration of the costs to manufacturers when ARB 

10 and EPA adopted its new engine rules. EPA and CARB 

11 have respectively determined that manufacturers of off12 road engines will be able to comply within the time 

13 provided for compliance.

14 CARB has further considered as part of the 

15 regulation the costs of complying with the PM retrofit 

16 requirements and found that the requirements are 

17 technologically feasible for VDEC manufacturers to 

18 produce their products, given appropriate consideration

19 to costs. Additionally, CARB, in adopting the 

20 regulation in 2007, considered whether such costs could

21 then be passed on by fleet operators to their customers

22 and determined that fleets would largely be able to 
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1 absorb or pass on the costs.

2 As discussed below, to the extent that the 

3 recession has intervened since 2007, the California

4 legislature and CARB have addressed and will continue 

5 to address the compliance affordability of the 

6 regulation.

7 Cost was one of the issues that CARB 

8 carefully considered and analyzed during development 

9 and adoption of the in-use off-road regulation in 2007.

10 Staff conducted a 3-year-long public process 

11 discussing various proposals for the regulation in over

12 a dozen public workshops and held two specific 

13 workshops that focused solely on how the cost of the 

14 regulation was estimated and whether compliance was 

15 affordable.

16 Moreover, the January and July 2009 

17 amendments have provided fleets with significant 

18 compliance credits that will allow fleets to 

19 significantly reduce their compliance costs in the 

20 early years of the regulation.

21 When the regulation was adopted in 2007, CARB 

22 estimated that the total cost of the regulation to be 
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1 $3 billion to $3.4 billion, which we recognize is 

2 significant. But the regulation is expected to result 

3 in thousands of lives being saved and numerous other 

4 health benefits, as well as billions of dollars in 

5 health and premature death cost avoidance. We 

6 determined that most fleets would be able to comply 

7 without significantly impacting profitability.

8 There is no dispute that we are in the midst 

9 of the most serious economic recession since the Great 

10 Depression, but this should not change the analysis 

11 that EPA applies when considering CARB's authorization 

12 request. First, there is no dispute that the 

13 technology to comply presently exists in the timeframe 

14 provided for compliance.

15 Second, the objective compliance costs per 

16 vehicle and engine has not changed. What has changed 

17 is the financial wherewithal of some companies to 

18 afford the cost of compliance, the size of fleets that 

19 have responded to the recession by downsizing through 

20 retirement or parking of vehicles, and because of the 

21 smaller active vehicle inventory, fewer total emissions

22 from the off-road fleet as a whole.
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1 Questions of how best to address the impact 

2 of the recession on off-road fleets and how to 

3 delicately balance the health and welfare needs of the 

4 State against the financial costs of the regulation and

5 the ability of fleets to do business in California are 

6 best left for the State to decide.

7 The recession and its economic impacts raise 

8 social cost concerns as opposed to technological 

9 feasibility questions. The impact of the recession on 

10 the total costs of the regulation and its effect on the

11 emissions inventory are questions related to cost 

12 effectiveness, a question that EPA has long deferred to

13 California's judgment.

14 As previously stated, EPA has long deferred 

15 to California's economic policy judgments. Quoting 

16 from former Administrator Ruckelshaus, "The issue of 

17 whether a proposed California requirement is likely to 

18 result in only marginal improvement in California air 

19 quality not commensurate with its cost is otherwise an 

20 arguably unwise exercise of regulatory power -- or is 

21 otherwise an arguably unwise exercise of regulatory 

22 power is not legally pertinent to my decision under 
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1 Section 209."

2 In a similar vein, former Administrator Train 

3 stated, "The structure and history of the California

4 waiver provision clearly indicate both a congressional 

5 intent and an EPA practice of leaving the decision on 

6 ambiguous and controversial public policy to 

7 California's judgment."

8 Here, California has made a public policy 

9 determination that the State must achieve reductions in

10 the toxic air contaminant diesel PM as expeditiously as

11 possible in order to reduce the public health risk to 

12 its citizens. The State has also determined that it 

13 must come into compliance with the National Ambient Air

14 Quality Standards for PM2.5 and ozone in the timeframes

15 prescribed by the Federal Clean Air Act.

16 California has determined that compliance 

17 with these mandates and the costs associated with 

18 compliance are necessary and cost effective. EPA 

19 should defer to California's policy judgments and not 

20 disturb the findings.

21 The second prong of the EPA adopted test for 

22 consistency under Sections 209(b)(1)(C) and 202(a) 
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1 requires that Federal and State test procedures be able

2 to use the same test unit or engine. This test for 

3 consistency is satisfied because there is no issue as 

4 to whether the same in-use engine can meet both Federal

5 and State procedures since Federal regulations for in6 use nonroad engines do not exist.

7 To the extent that new engines are used to 

8 meet fleet average or BACT requirements, the State 

9 certification test procedures are set forth in a 

10 different regulation for which authorization has been 

11 granted and are in basic alignment with Federal new 

12 engine test procedures.

13 In summary, CARB firmly believes that the 

14 Administrator is required under Section 209(e)(2) to 

15 grant the authorization. There should be no dispute 

16 that the three guiding criteria for denial of an 

17 authorization cannot be met. Protectiveness has been 

18 clearly established. California's compelling and 

19 extraordinary need for its own in-use off-road 

20 emissions program is unquestionable. Finally, as 

21 discussed above, the regulation is consistent with 

22 Section 209 and is technically feasible.
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1 Accordingly, California requests that EPA act 

2 expeditiously to grant the authorization. Delay has 

3 caused uncertainty for stakeholders who would be 

4 required to comply with the regulation, as well as for 

5 retrofit manufacturers, both of which need certainty to

6 make business plans and decisions. I think that the 

7 D.C. Circuit's affirmance of the TRU ATCM authorization

8 this month was a big step forward toward providing 

9 certainty that California may adopt in-use regulations 

10 requiring retrofits and accelerated upgrading of 

11 engines and that EPA's quick action here would build on

12 that certainty to the benefit of all stakeholders.

13 That concludes our presentation, and we're 

14 more than happy to take questions.

15 MR. SIMON: Thank you, Mr. Terris.

16 I had one question. Earlier, about midway 

17 through your presentation, you talked about exemptions 

18 and flexibilities here, and you talked about emergency 

19 vehicles. Can you tell me how you define "emergency 

20 vehicle" in this context?

21 MR. TERRIS: Basically, it's defined in the 

22 California Vehicle Code, and we specifically apply that
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1 in this vehicle code. So it's for specific types of 

2 vehicles that are considered to be emergency.

3 MR. SIMON: Okay.

4 MR. DICKINSON: I have one question. You 

5 mentioned that there were a series of amendments in 

6 2009 to the regulation, including a set of amendments 

7 from July 2009 that have not yet been finalized by your

8 State Office of Administrative Law. And I think, just 

9 for the record, you stated that you would submit those 

10 to the EPA once they were approved. Is that correct?

11 MR. TERRIS: That's correct.

12 MR. DICKINSON: Similarly, I would assume 

13 that most people in the audience and I are aware that 

14 California is continuing to look at these regulations,

15 and any subsequent amendments that happen this year or 

16 any other future model years or calendar years would 

17 also be submitted to the EPA and that, therefore, you 

18 are really just taking the current law as it exists 

19 today and asking EPA to take action on it?

20 MR. TERRIS: Correct. We've issued a notice 

21 just the other day that there is going to be a hearing 

22 on April 22nd, and we are further going to be looking 
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1 at the question of the emissions inventory for off-road

2 engines. We're going to be looking at the question of 

3 on-road trucks, in-use on-road trucks and vehicles. 

4 We're looking at the question of where we stand with 

5 the State implementation plan.

6 And basically, it's not a rulemaking. The 

7 board is going to decide how it's going to proceed. 

8 We're anticipating that there will be a board hearing 

9 to address further needed amendments around the 

10 September timeframe. And yes, of course, what we 

11 believe, if there is any action that is going to be 

12 taken, it will be to provide additional relief and 

13 flexibility to both the on-road in-use trucks program 

14 and also the off-road in-use program.

15 And we believe that by providing relaxation 

16 and flexibility and not creating more stringent 

17 standards, that those changes, if EPA were to grant the

18 authorization before those amendments could be 

19 finalized, that they would be submitted to you for 

20 consideration.

21 MR. DICKINSON: Thank you.

22 MR. SIMON: Okay. Thank you.
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1 Why don't have -- let's see, we have Michael 

2 Kennedy and -- oh, Jon Cloud and Guy Prescott come on 

3 up from AGC and Local 3.

4 [Pause.]

5 MR. SIMON: When you're ready.

6 MR. PRESCOTT: Thank you.

7 My name is Guy Prescott. I'm currently the 

8 Executive Director for the Employee Assistance Program

9 for Operating Engineers Local Union Number 3. Prior to

10 that, I was the Director of Safety for Operating 

11 Engineers Local 3.

12 I'm a 25-plus year safety and health 

13 professional. I've worked with Sandia National 

14 Laboratories, part of the Department of Energy. I've 

15 owned my own consulting firm, Common Sense Safety,

16 Inc., working with numerous construction and general 

17 industry clients. And I've had the privilege of being 

18 an instructor with the University of California

19 Occupational Safety and Health facility, as well as 

20 with the University of Washington and the University of

21 Michigan.

22 I am here today on behalf of Operating 
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1 Engineers Local Union Number 3. I have recently been 

2 appointed by Governor Schwarzenegger to the Cal/OSHA 

3 Standards Board, which Mr. White mentioned earlier. 

4 But I am here today on Operating Engineers' behalf, not

5 on the standards board's behalf. I wanted to make that

6 clear.

7 Local 3 represents over 37,000 members. 

8 These are the men and women who operate this what is 

9 being called off-road heavy equipment every day. Not 

10 only do we represent the operators themselves, but the 

11 surveyors, the grade checkers, and the mechanics who 

12 work on the ground and on this equipment around it 

13 while it is operating.

14 The safety and health of these members is 

15 imperative to Operating Engineers. Every working man 

16 and woman has a right to go home to their families at 

17 the end of the day. That's the bottom line for 

18 occupational safety, and we are seeing major problems 

19 with that being capable of being done because of these 

20 filters.

21 According to the U.S. Department of Labor, 

22 over 500 construction workers lost their lives every 
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1 year to "struck-by" accidents. This has been since 

2 1992 when I've been looking at statistics. It has been

3 as high as 600 in one year in that timeframe. These 

4 accidents have also caused operators to suffer from 

5 post traumatic syndrome. We lose almost as many 

6 operators as we lose people on the ground.

7 When somebody has had the unfortunate ability 

8 of operating a piece of equipment when they have run 

9 over someone, the traumatic effects are such that 

10 rarely are we able to get that person back into the 

11 controls of that equipment again.

12 The obstruction of the operator's line of 

13 sight is almost always a contributing, if not a primary

14 cause of these fatalities. This is very large 

15 equipment. It has a lot of heavy metal on it, and it 

16 does, even though the manufacturers try their best to 

17 give us as much visibility as they can, structurally, 

18 this isn't always possible.

19 It isn't possible to have 100 percent 

20 visibility, but the manufacturers are working forward 

21 in maximizing visibility for the operator's seat. 

22 There has been a tremendous amount of effort put in by 
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1 the manufacturers over the years to improve our 

2 visibility, and we are very fortunate that our 

3 manufacturers are working with us in this area.

4 California's off-road rule threatens to take 

5 this away. It's going to send us in the opposite 

6 direction. This rule requires fleet owners to install 

7 PM filters on equipment that was never designed to have

8 these filters placed on it. It reduces the operator's 

9 visibility from the operator seat in the overwhelming 

10 majority of installations that we have seen.

11 These rules will create additional 

12 fatalities. It is not a matter of if it will happen. 

13 It is a matter of when it will happen. And gentlemen, 

14 I feel if it had not been for the downturn of the 

15 economy, I would probably have fatalities to show you 

16 today.

17 In late 2006 and early 2007, Local 3 sought 

18 to meet with the CARB staff to talk about the worksite 

19 hazards that its retrofit program would require. The 

20 staff canceled the first three meetings on us. The 

21 staff member showed up over 2 hours late to our fourth 

22 meeting. We were literally locking the doors when he 
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1 showed up.

2 The staff then proceeded to tell us that they 

3 had already completed the rule that they were going to 

4 present to their board, and they would not be making 

5 any additional changes to that time. Safety was never 

6 considered in this rule. You cannot consider 

7 feasibility without considering safety of the final 

8 application.

9 Local 3 then was forced to launch an all-out 

10 safety campaign. I brought in our safety -- I brought 

11 in our director from our political branch. I brought 

12 in all of our political power, and we started an all13 out I will call it a war to get safety brought to the 

14 front page of this issue.

15 CARB ultimately did agree that filter 

16 installation should not violate OSHA standards but 

17 refused to make any reference to visible and reserved 

18 the right to decide for itself what would be unsafe. 

19 CARB does not have safety professionals on its site. 

20 Yet they are the ones who are going to make, by their 

21 rule, the determination of what is and is not safe.

22 CARB also insisted that retrofits would 
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1 remain a centerpiece of its off-road rule and continues

2 to pressure fleet operators to err on the side of 

3 creating a hazard. Currently, they have extended the 

4 two-for-one credit on mounting these filters on 

5 equipment already. Buy one, get the second one free as

6 far as your emission standards. And in doing so, this 

7 continues to encourage employers who are under 

8 financial pressure to go forward with retrofits, even

9 though they may be unsafe.

10 CARB's approach falls way short, and the rule 

11 continues to threaten construction workers. CARB does 

12 not have either the expertise or the legal authority to

13 determine what is and is not a hazard to construction 

14 workers, and CARB is extremely biased in favor of 

15 retrofits and incapable of making a decision in regards

16 to the hazards presented to the working men and women.

17 This rule may exempt individual pieces of 

18 equipment from retrofits if they are unsafe. However, 

19 it continues to count that piece of equipment in the 

20 inventory. The horsepower and the emissions stay with 

21 that fleet. The standard for granting or denying a 

22 limited exemption for even an individual piece of 
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1 equipment has, to date, not been established. There is

2 no establishment within CARB that I can apply for an 

3 exemption to date. The policy does not exist. They 

4 haven't written it.

5 Even if they did exempt a piece of equipment, 

6 the owner still has to account for the horsepower and 

7 the emissions it does. This leaves them eventually a 

8 very small fleet to make very major changes with. It 

9 once again destroys the feasibility of getting to where

10 they want to be.

11 In August of 2008, Local 3 petitioned the 

12 Cal/OSHA Standards Board to clarify the Cal/OSHA 

13 standards and specifically address the hazards inherent

14 to retrofitting off-road equipment with PM filters. 

15 This petition was filed jointly with the AGC of 

16 California and Operating Engineers Local 3.

17 Gentlemen, I talked with the executive 

18 officer of the board, and she told me that when that 

19 petition hit the floor, that you could hear jaws drop, 

20 the fact that you saw Local 3 and the AGC's logos on 

21 the same piece of paper, requesting the same identical 

22 wording to be changed. Never before in history have 
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1 those two agencies joined in such an effort.

2 In November 2008, the Occupational Safety and 

3 Health Standards Board anonymously granted the petition

4 to move forward towards a new rulemaking. CARB was at 

5 that hearing. They opposed our petition. And since 

6 that standard board granted it, CARB has continuously 

7 interfered with the board's decision-making process, 

8 which has delayed and postponed this rulemaking. This 

9 rule still has not been yet made.

10 After that hearing in November, one of CARB's

11 staff was upset about the board's decision, talking on 

12 her cell phone at the airport, ranting back and forth 

13 and said, while standing in front of Dr. Frisch, a 

14 seated member of the California Occupational Safety and

15 Health Standards Board, "We will not let this penny16 ante board stop us," referring to the Occupational 

17 Safety and Health Standards Board. A penny-ante board.

18 The constant belligerent denial of safety has 

19 been something we have been fighting for years. In 

20 October of '09, Governor Schwarzenegger was finally 

21 forced to step in between two bickering agencies and 

22 brought to a halt the retrofits that impair visibility 
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1 and directed CARB to do what it should have done long 

2 ago, which was undertake a study of the feasibility of 

3 the safe installation of PM filters on off-road

4 equipment that this rule covers.

5 CARB has yet to report the results of such a 

6 study. Indeed, it has yet to produce any evidence that

7 fleet owners can safely retrofit their equipment to 

8 anywhere near the extent that the rule contemplates. 

9 The Governor made a 6-month stay back in mid-October. 

10 That's up this month.

11 The other thing that was done by this that I 

12 don't have here is the Governor also, in doing this, 

13 told the Cal/OSHA Standards Board that we could not go 

14 forward with rulemaking for the 6-month period of time.

15 Local 3 remains extremely concerned in 

16 regards to the safety of our membership. As noted 

17 earlier, CARB has no expertise in construction safety 

18 or health, and it remains biased in favor of the 

19 retrofits that lie at the heart of its off-road rule. 

20 The very fact that CARB did not conduct such a study 

21 that they are now supposed to be conducting during the 

22 rulemaking processes raises enormous questions about 
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1 its understanding of construction work and the safety 

2 required in construction work.

3 Safety has always been and must continue to 

4 be a fundamental part of any discussion as to the 

5 technology and its feasibility and/or the lead time 

6 that the Clean Air Act requires EPA to consider. We 

7 cannot call something feasible when it is going to kill

8 people.

9 If California is not provided enough time for 

10 equipment manufacturers and/or others to develop the 

11 technology necessary to safely retrofit the off-road 

12 equipment in the construction industry, then EPA must 

13 deny California's request for Federal approval to 

14 enforce its rule. Retrofits must be safe. Otherwise, 

15 they are and should be unacceptable.

16 This regulated equipment ranges from as small 

17 as 25 horse to over 1,000 horsepower, from a few pounds

18 to several tons. It can travel from mere feet per 

19 minute to over 45 miles an hour. It is not an industry

20 that one shoe fits all will ever be appropriate 

21 technology. It is not for CARB to study a few pieces 

22 of equipment and say that this is typical of what the 
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1 industry has. Such limited research cannot begin to 

2 justify broad consideration of the feasibility of 

3 compliance with the off-road rule. We can't look at 

4 four or five different pieces of equipment. I can't 

5 even take the same exact piece of equipment, gentlemen,

6 and say that it will be operated in the same manner on 

7 five or six different jobs.

8 This equipment is very diverse, very 

9 specialized, and can be ultimately put to service in 

10 many different ways. CARB and the EPA also have to 

11 account for the many different applications that I'm 

12 talking about that this equipment has to go through. 

13 There is different attachments that can be put on or 

14 removed from the equipment. The list goes on and on.

15 I've brought some photographs, as a picture 

16 says 1,000 words, of some of the different equipment 

17 that we're talking about. These are 988 CATs. They 

18 are front loaders. On front and just outside of the 

19 picture there to the right is a large scoop, which will

20 pick up material.

21 This piece of equipment will then back up, 

22 turn, move forward to a dump truck or other conveyance,
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1 unload that material into it, back up again, turn, go 

2 back to the pile, and repeat this operation. It's used

3 for loading. You will see that the one on the right 

4 has been retrofitted with the CARB-required filters, 

5 while the one on the left is standard. From this 

6 distance and angle, it doesn't look like it's that big 

7 of a deal.

8 From the driver's seat, however, the retrofit 

9 on the right, you can barely see the individual through

10 the exhaust system who you can clearly see standing on 

11 the left. From going from this vehicle having about a 

12 50-foot blind spot behind it, which is a tremendous 

13 kill zone, it has gone to well over 120 feet because of

14 the filter installation. For a piece of equipment that

15 spends as much time in reverse as it does forward, this

16 will kill someone.

17 The current OSHA regulations in both Federal

18 and State require that you do not block visibility in 

19 any way, shape, or form to the forward or sides of the 

20 equipment. Neither the Federal OSHA or Cal/OSHA has 

21 ever considered the rear vision because nobody has ever

22 tried this before.
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1 This is a rubber-tired dozer. Once again, a 

2 vehicle that spends a fair amount of time in reverse, 

3 not probably as much as it does forward, but 

4 nevertheless, probably 25, 30 percent of its time in 

5 reverse. You can see the tremendous blockage that 

6 these filters have done once again to that rear 

7 visibility.

8 This is just absolutely unacceptable from 

9 safety and makes this absolutely unfeasible 

10 technically. Just because of the fact that they work 

11 on the workbench in a test laboratory does not make it 

12 feasible to put them to work in reality. This is not 

13 feasible, gentlemen.

14 If you notice -- let's see if this pointer 

15 works -- on this instrumentation here is the 

16 acknowledging system, the electronics for those 

17 filters. It has been placed right on top of the 

18 instrument panel, right in the operator's line of 

19 visibility, blocking visibility forward and to the side

20 as well as the filters out the side window there.

21 This is in current violation of both 

22 California and Federal OSHA. This would be cited as a 
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1 violation of OSHA. Yet, here again, with the early 

2 credits, the Moyer funding, et cetera, these are being 

3 installed.

4 This is a scraper. We have maintenance on 

5 this equipment, a lot of maintenance. This ladder 

6 access up here, as you see without the filters, is so 

7 that you can walk across this area to maintain all of 

8 this hydraulics. As you notice where the filters are 

9 now, my access is blocked to the maintenance area. If 

10 those filters are recycling at the time somebody does 

11 maintenance -- and when these filters cycle, the 

12 equipment is parked. It can't be run during this time.

13 I have personally measured the outside of those cans 

14 to hit over 1,200 degrees Fahrenheit during recycling.

15 You put it right in the middle of a walkway, 

16 when this thing is parked is when somebody is going to 

17 want to do maintenance on that. We can't have it sit 

18 to recycle, then sit to do maintenance later on. This 

19 equipment has to move, or it doesn't make money. And 

20 quite frankly, if it's not moving, our members don't 

21 have jobs.

22 Another issue not thought of by the 
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1 installers or CARB as a fact that this does destroy, 

2 making fall hazards, trip hazards, burn hazards, not 

3 only visible hazards. Here again, side vision being 

4 blocked. This violates current OSHA standards. 

5 However, once again, it is being done. You can see the

6 tremendous blockage there to the side.

7 This particular piece of equipment can travel 

8 up to 45 miles an hour and makes turns at those speeds.

9 This side blockage can be extremely dangerous as well.

10 Heat and high-pressure hydraulic lines is not 

11 something you want to mention. These hydraulic lines 

12 that you see in this photograph on the left here are in

13 the 3,000 to 5,000 psi range. A pinhole leak in one of

14 those is going to put a fine mist of highly aerated 

15 combustible material across a canister that can be up 

16 to 1,200 degrees Fahrenheit. We have completed the 

17 fire triangle. We will have ignition.

18 On the picture to the left, and I apologize

19 for the poor lighting here, this is part of the HUSS 

20 installation, which needs fuel to be taken to it for 

21 when it afterburns. They've used an automotive-grade 

22 T, and this particular pipe that's in the hand here is 
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1 actually a plastic, not a reinforced pipe to run that 

2 fuel line over. And this sits in the engine 

3 compartment of a large piece of equipment.

4 I seriously doubt under regular operation 

5 that T and pipe will last 18 months before you have 

6 fuel leakage in the engine compartment from this 

7 retrofit, another fire hazard to the people operating 

8 this equipment, people on the ground around it.

9 Just here again, people are working on this 

10 equipment who are not familiar with it, who have no 

11 idea what it takes to safely operate this equipment so 

12 that our members can go home to their families at the 

13 end of the day.

14 Additional installation hazards, here we've 

15 cut through the metal to make a groove to run the 

16 wiring for the instruction. This structural metal is 

17 part of this upper deck walking surface. It now 

18 fluctuates when you walk on it. Eventually, that will 

19 fatigue. It's not a big enough piece of structure 

20 that's going to cause the piece of equipment to break 

21 in half, but it will create maintenance problems, costs

22 that aren't associated for, and could be a safety 
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1 hazard down the road as well.

2 This installation was actually done by the 

3 filter manufacturer themselves. This is the hand rail 

4 used for when you're walking around servicing the piece

5 of equipment. They cut right through it and mounted 

6 the filters. If somebody, once again, is maintaining 

7 that piece of equipment while those are recycling, 

8 where my hand used to go, there is now 1,200 degrees 

9 Fahrenheit.

10 Even if those are cold, early morning, and 

11 I'm walking around that piece of equipment to do oil, 

12 equipment checks, I no longer have something to hold 

13 onto when my feet could be muddy, wet, covered in dirt,

14 whatever. A safety hazard once again because of lack 

15 of knowledge of what this equipment is required to do.

16 There is no evidence that it is feasible to 

17 safely install these PM filters on off-road 

18 construction equipment to the extent that the CARB off19 road rule is contemplating. CARB is predicting more 

20 than 100,000 of these retrofit filters out there. 

21 There is abundant and undeniable evidence existing that

22 retrofits can easily pose a grave risk of severe bodily
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1 harm and death to employees.

2 In addition to the risk that a piece of 

3 equipment will strike a construction worker from these 

4 retrofits blocking visibility, there is increased risk

5 of falls, burns, and may even risk the structural 

6 failure of a piece of equipment because of the way 

7 these retrofits are being installed.

8 Operating Engineers Local 3 urges the EPA to 

9 deny California's request for Federal authority to 

10 enforce its off-road rule. This is the only way to 

11 protect the men and women working in California's 

12 construction industry from a new and grave risk of 

13 injury and even death. Not even in the name of the 

14 environment and protecting the environment should EPA 

15 or anyone consider putting working men and women at 

16 risk to the nature that these filters will incorporate 

17 to our membership.

18 Once again, I thank you for your time, and on 

19 behalf of the 37,000 members of Operating Engineers and

20 their family, I hope that you do deny this so that they

21 can go home safely. This is not feasible.

22 Thank you.
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1 MR. SIMON: Thank you, Mr. Prescott.

2 It would be helpful maybe in your written 

3 comments, your supplemental comments, you talked about 

4 standards from both the Federal and California OSHA in 

5 terms of sight line and visibility, if you could 

6 provide those as well?

7 MR. PRESCOTT: I can do that, yes. As I 

8 said, the 6-month stay that the Governor gave is up 

9 this month. I do know the Cal/OSHA Standards Board is 

10 meeting tomorrow. I'm flying back this evening to be 

11 there, and I do know that this is going to come up as a

12 subject there tomorrow, too.

13 I do hope that they will press forward in 

14 making changes to this. But at this point in time, the

15 politics have been extremely difficult in moving 

16 forward and doing what is right, which is why we, once 

17 again, request that you deny this waiver so that we can

18 move on safely.

19 Thanks. Any other questions, gentlemen?

20 MR. SIMON: I think we're good.

21 MR. DICKINSON: Building on Karl's request, 

22 to the extent that it's not already in the record, if 
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1 you can submit any information relating back to your 

2 petition to California in August of 2008, as well as 

3 more of the background of the Governor's action in 

4 October of last year, it would probably be helpful.

5 MR. PRESCOTT: I would be glad to summarize 

6 that and send it to you.

7 MR. DICKINSON: As well as your presentation 

8 today.

9 MR. PRESCOTT: Yes. I think you have a copy 

10 of this already. Correct? No? I will get that to 

11 you.

12 MR. DICKINSON: I have a copy of --

13 MR. PRESCOTT: Okay. We will drop a copy 

14 off.

15 MR. SIMON: All right. Thank you.

16 Mr. Jon Cloud, come on down.

17 MR. CLOUD: Good morning, gentlemen. Thank 

18 you for the opportunity of being able to speak to you.

19 First, I've got to tell you, your city is 

20 absolutely beautiful. It's my first time to 

21 Washington, D.C., and just by a fluke, I happened to be

22 here this week with my daughter's eighth grade class on
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1 a civics tour that we did on the east coast. It 

2 started in Boston, New York, Philadelphia, and D.C.

3 She and her 75 classmates got put on the 

4 plane on Friday and -- or on Monday, and I stayed a 

5 couple of extra days to be able to do this hearing.

6 MR. SIMON: It would have been nice to have 

7 them here. We could have shown them civics in action.

8 [Laughter.]

9 MR. CLOUD: Maybe so. Sorry about that.

10 MALE SPEAKER: I hope they saw the cherry 

11 blossoms.

12 MR. CLOUD: All right. First off, good 

13 morning. My name is Jon Cloud. I'm treasurer of our 

14 family-owned business named J. Cloud -- called J. 

15 Cloud, Inc. We started the family business in 1993 

16 with my father, Joel; my brother Joel; my brother 

17 James, and myself, Jon. So it's J. Cloud, Inc.

18 We've been in business since 1993. My father 

19 has been in heavy construction in one way or another 

20 for over 50 years and at 71 years old is still the 

21 hardest-working man that I know.

22 Over the years, our company has become a 
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1 leading supplier of recycled concrete and asphalt. If 

2 there is a demolition job and someone tears down an 

3 office building, a parking lot, or some type of a 

4 structure, we take the broken asphalt and concrete and 

5 recycle it, and we make rock-based materials out of it 

6 that we sell to the community, to operators including 

7 AGC members, and we construct, as I said, road-based 

8 materials. We do a lot of water, sewer, and pipeline 

9 jobs and things of this sort.

10 Our company is a relatively small company. 

11 It has annual sales of approximately $3 million. We 

12 have 18 employees. It is, however, big enough to 

13 recycle approximately 200,000 tons of concrete and 

14 asphalt that would otherwise find itself in San Diego 

15 County's landfills. We are, indeed, a very green 

16 business, and we've been doing what we've been doing 

17 since '93, and we've got heavily into recycling about 8

18 years ago and actually have done a few innovations in 

19 southern California as far as recycling is concerned.

20 I am here today to speak on behalf of the 

21 Associated General Contractors, which has been and

22 remains strongly opposed to California's request for 
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1 Federal approval to enforce its off-road rule. Our 

2 firm is a member of the Associated General Contractors,

3 and I am pleased to tell you that I'm actually on the 

4 board of the San Diego Chapter.

5 AGC was founded in 1918 at the express 

6 request of President Woodrow Wilson. It currently 

7 represents more than 33,000 firms and has over 100 

8 chapters in the United States. Among the association's

9 members are approximately 7,500 of the Nation's leading

10 general contractors and more than 12,500 specialty 

11 contractors, and more than 13,000 material suppliers 

12 and service providers are members of the AGC.

13 These firms engage in the construction of 

14 both public and private works, from infrastructure 

15 including highways, roads, bridges, transit systems, 

16 airports, office buildings, your kids' schools, the 

17 hospitals you go to when you're sick. And more than 

18 likely, an AGC member more than likely built this 

19 building that we're sitting in. It's a pretty strong 

20 force. AGC members also prepare home sites for 

21 installation of utilities in housing developments where

22 basically people live.
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1 Like my firm, most AGC members, believe it or 

2 not, are family-owned businesses, and many of them 

3 across the Nation are vested heavily in off-road 

4 equipment. So this is a very, very big issue to us.

5 AGC has already provided the EPA with 

6 detailed comments on California's request for approval 

7 to enforce its off-road rule. AGC wrote two letters to

8 the EPA in October of 2008 and made an extremely 

9 detailed, 183-page report in December of the same year.

10 AGC wrote the EPA again in March and August of 2009, 

11 and in January of this year. Included in several of 

12 these submissions are sworn statements and other

13 evidence of fact that California requests the EPA to 

14 consider.

15 In advance of the May deadline, AGC will also 

16 provide written comments and additional evidence for 

17 the record of the current proceedings. AGC continues 

18 to research California's original emissions inventory 

19 and other underpinnings of the off-road rule. The CARB

20 board will entertain proposals for further amendments 

21 of that rule later this month. The results of both the

22 research and the board's next meeting are among the 
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1 many factors that EPA can and should consider.

2 Today, I will try to emphasize the AGC's 

3 central reasons for asking the EPA to delay or deny 

4 California's request for Federal authorization and then

5 try to provide some context of what these rules are 

6 going to do and show you that, indeed, they will affect

7 real people, real families, and businesses. And we 

8 counting, California is counting on the Federal EPA to 

9 make the right decision in this choice.

10 First, I would like to emphasize that the 

11 off-road rule is not yet ripe for Federal review, 

12 meaning it has been and remains a moving target. And 

13 this rule is a highly moving target. AGC has filed two

14 petitions to amend the rule, and as of today, the

15 California Air Resources Board has neither granted nor 

16 denied either of them.

17 Since August of 2008, when it had made its 

18 request for Federal approval to enforce the rule, 

19 California has revisited the rule on three separate 

20 occasions and has twice amended it . In apparent 

21 response to the petitions that AGC filed, the 

22 California Air Resources Board has also made it clear 
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1 that other amendments are on the way. Yet they still 

2 want the waiver.

3 Just over a month ago, the board held another 

4 public hearing on the rule, gathering additional facts 

5 for the better part of the day. Two experts and 

6 several construction contractors spoke on behalf of the

7 AGC. I happened to be one of them. Thirty-seven 

8 others also testified, including me.

9 The board and staff confirmed that they were 

10 already making plans to provide additional regulatory 

11 relief to the construction industry. The rule is not 

12 passed. Yet they are telling us, "Just trust us. 

13 We'll pass the rule. Then we'll fix it." This has 

14 been going on for the better part of 3 years.

15 In this regard, it is one thing to accept 

16 that California might amend a particular rule at some 

17 point in the future and quite another point to know 

18 that things, as I said, it's a moving target and they 

19 will make a change after the rule is in effect. Why 

20 don't we have the change before, and let's review the 

21 rule? That kind of information provides a clear and 

22 sound basis for EPA to defer any action on the 
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1 California request for Federal authorization and, 

2 indeed, would be imprudent for the EPA to disregard it.

3 Second, the State's emissions inventory, 

4 which served as the starting point for the off-road 

5 rule, there are some issues with it. The State 

6 emissions inventory has proven to be wide off the mark.

7 New and better data collected in 2009 and new research

8 into the emissions that California -- reveal that 

9 California simply does not need the rule in any form 

10 approaching -- in any way approaching its current form.

11 The new data reveals that the population of 

12 off-road equipment is both smaller -- and when I say 

13 "smaller," meaning the fleet is at least 45 percent 

14 smaller than was anticipated when CARB set up the rules

15 -- and is also newer. CARB anticipated that there was 

16 a lot more older fleet in the inventory, and it is 

17 certainly newer than the State believed at the time it 

18 developed the rule.

19 In addition, in a recently published article, 

20 two professors at UC-Berkeley have demonstrated that 

21 California's computer model is irreconcilable with the 

22 historical data on diesel fuel consumption -- maybe 
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1 later on, I'll touch on that in a bit, in a minute --

2 and therefore requires adjustment. While AGC is still 

3 waiting for final results of its own research, the 

4 association is already confident that the PM and NOx 

5 emissions from California's construction industry are 

6 well within and will remain under CARB's set targets 

7 for the emission rules.

8 Third, the cost of compliance is clearly 

9 excessive. And I've got a note here someplace. In 

10 CARB's report talking that -- stating that they believe

11 that companies can basically absorb the cost, to be 

12 honest with you, they haven't a clue as to what it is 

13 actually going to cost us, particularly in this market.

14 In April of 2007, when it issued the Initial 

15 Statement of Reasons, the State conceded that the cost 

16 had reached "the economic limit of what industry could 

17 bear." That statement was made in 2007 based off of 

18 historical information from the strength of our 

19 industry from 2005 and 2006, well before California's 

20 construction industry, quite frankly, is in a 

21 depression.

22 So, in 2007, the statement was made that they 
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1 had already reached the limit of which the industry 

2 could bear. When it comes to profits, when it comes to

3 volume, we are basically in a depression compared to 

4 those numbers.

5 At the same time, the California construction 

6 industry has gone into the worst depression in the 

7 memory of anyone still in business can remember. As I 

8 said, my father has been in heavy construction for over

9 50 years, and I know some people in San Diego County 

10 who have been in it over 65 years, and this is the 

11 worst they've seen it. Over the last 4 years, one12 third of California's construction industry has 

13 completely disappeared. Those who are still there are 

14 somewhat hanging on a thread. There are some areas in 

15 which people are doing well, but they are few and far 

16 between.

17 In the record at the hearing that California 

18 held on March 11th, the EPA will find abundant evidence

19 that the State's construction contractors cannot 

20 generate the earnings that they would need to self21 finance this. And as far as going to a bank and 

22 borrowing the money? Very, very thin options in doing 
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1 that. Basically, nonexistence.

2 California adopted the rule in April of 2007, 

3 and the first of several deadlines for compliance of 

4 that rule, the fleet average requirements, came and 

5 went in March of 2010. As the lead time expired, the 

6 technology necessary to comply with anything 

7 approaching an affordable cost has yet to be developed.

8 Retrofits, repowers, replacements remain economically 

9 infeasible.

10 For most contractors, the only option was to 

11 downsize their fleet and then limit their earning

12 capacity to basically working their way out of a hole.

13 Particularly when you have old equipment, like our 

14 company does, that's paid for, and you have to downsize

15 and get rid of it, and then you're going to get hit 

16 with the burden of retrofits in the future, you're 

17 going to do that with what money? You've already lost 

18 a large part of your capital because, in our instance, 

19 we had to downsize.

20 Fourth, the cost of compliance remains only 

21 one of several reasons for questioning the technology. 

22 When it adopted the rule, California acknowledged that
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1 the rule would ultimately require fleet owners to 

2 retrofit more than 100,000 pieces of equipment. By 

3 March of 2010, only 1,000 such units had been 

4 retrofitted. The goal was 100,000, and they basically 

5 got 1,000 March of this year.

6 To this day, the technical feasibility of 

7 installing verified devices, it hasn't been done, and 

8 the regulated equipment remains a great unknown. You 

9 saw the HUSS filters up there. Those that are able to 

10 be installed, there is all kinds of problems with them,

11 and I doubt that anyone from the CARB staff has ever 

12 run a 988.

13 We have pieces of equipment that run from 

14 skiploaders to that size of equipment, and I run them 

15 from time to time when I'm filling in for somebody. 

16 And I'm telling you, as pointed out, the sight distance

17 visibility, when it used to be 55 feet, and now you 

18 just -- it's out to the point of over 120 feet of a 

19 blind spot, someone is going to get hurt or killed in 

20 this industry based off of those filters.

21 Fifth, the fleet owners have to retrofit 

22 their off-road equipment far more carefully than CARB
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1 anticipated. As Cal/OSHA has discovered, the 

2 technology on which the rule so heavily depends can 

3 impair visibility and create other risks in the 

4 construction industry as you saw. AGC continues to 

5 support incentives for contractors to voluntarily 

6 retrofit their equipment or otherwise reduce their 

7 emissions.

8 The off-road rule is, however, so broad and 

9 aggressive that it is nearly certain to put 

10 construction workers at risk of injury or death. By 

11 CARB's own admission, appropriate safety standards 

12 would threaten the viability of major portions of the 

13 rule.

14 On a personal note, our own company -- I 

15 touched on this -- could not even begin to afford the 

16 retrofits on this, and at one point, we actually 

17 thought we were safe because we have a lot of Tier 0

18 equipment. And we thought we were safe within the 

19 limits that CARB set for the fleet sizes. And then in 

20 our equipment at Tier 0, there is not verified, 

21 certified T -- well, I still call them T backs, but the

22 diesel particulate filters that are certified for the 
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1 Tier 0 for the type of work that we do.

2 As the first deadline approached to register 

3 your equipment, our only option in dealing with the 

4 rule was to downsize our fleet. And when I say 

5 downsize it, it gets interesting in that rule Section 

6 209, the word was mentioned "arbitrary and capricious."

7 I was sitting in an audience wondering, what exactly 

8 does arbitrary and capricious mean when it comes to 

9 this rule? Because at one point in time, CARB had a 

10 large fleet set at 10,000 horsepower. When the fleet 

11 was 10,000 horsepower, I'm sitting in the audience 

12 going, wow, well, the crosshairs aren't on me. I'm 

13 kind of safe here. I'm doing all right.

14 And then overnight, I say overnight, about 4 

15 months later, there was another meeting in California

16 that I went to, and CARB staff, just like basically 

17 saying they're changing a light bulb from a 100-watt 

18 light bulb to a 75-watt light bulb, in that meeting 

19 said, oh, by the way, we reduced the fleet, large fleet

20 to 7,500 horsepower. Well, a whole bunch of people 

21 that weren't captured at 10,000 horsepower got captured

22 at 7,500 horsepower, and we started thinking, "What's
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1 going on here?" Why, it had been set at 10,000 for so 

2 long, and arbitrary and capricious.

3 A couple of months later, we're at another 

4 meeting, and CARB says, by the way, the new floor for a

5 large fleet is 5,000 horsepower. Well, that got my 

6 attention because we weren't 10,000 horsepower, and we 

7 weren't 7,500. But we were well over 5,000 horsepower.

8 So our fleet of equipment that a lot of it is

9 old. It's paid for. Well, it's not paid for. It's 

10 certainly not as expensive as the new equipment, I'll 

11 tell you that, but it is financed. Basically, we're a 

12 large fleet. So now we're subject to a rule that the 

13 Granite Constructions, the Vulcans, and the Hansons and

14 the big boys are subject to, so now the crosshairs are 

15 on us.

16 And I've got to tell you, it had been trying 

17 to figure out why CARB staff had dropped the cap from 

18 10,000 to 7,500 to 5,000, been trying to figure it out 

19 for a while. And just so happens to be last month, I'm

20 glad I went to the meeting in Sacramento because the 

21 answer came out.

22 It was pointed out that there was a study 
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1 written by a Professor Harley from UC-Berkeley. He 

2 actually did an update last year, but his first report 

3 was written in the year 2000. It's a 12-page report 

4 that basically goes through -- and he is from UC5 Berkeley, and I happened to talk to him Tuesday, 2 

6 weeks from yesterday. Put a call into him. He 

7 returned my call, and we talked for 47 minutes. We 

8 went over both of his reports.

9 You don't have to be a rocket scientist to 

10 figure out that his first report that was written in 

11 the year 2000, he has the implication box in the lower 

12 left-hand corner. His implication box states of CARB's

13 off-road regulations, "Implication: The contribution 

14 of off-road diesel equipment to the total emissions of 

15 NOx and PM may be lower than suggested by current 

16 emissions inventories. As a consequence, the control 

17 of these sources may not lead to the air quality 

18 benefits that are as large as expected."

19 Do you think maybe that's the reason they 

20 dropped the cap from 10,000 horsepower to 7,500 and to 

21 5,000? The reason why it was dropped is to actually 

22 capture more people to have more benefit. The problem 
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1 is, as Professor Harley points out in his report, our 

2 industry, where CARB had originally anticipated it 

3 being 25 percent of the problem, his calculations are 

4 that we're 10 percent of the problem.

5 Fact of the matter is, you can regulate us 

6 out of business, you're only going to fix 10 percent of

7 the NOx problem. That's a problem. So the question 

8 comes up, what percentage of the problem are we in our 

9 industry? Are we 10 percent of the problem? Are we 7 

10 percent of the problem?

11 And I would venture to say if we're 10 to 7 

12 percent of the problem, we're probably getting 40 

13 percent of the burden. Is that fair to our industry? 

14 I know fair has nothing to do with this.

15 One of you talked about bringing my daughter 

16 here for a civics lessons. It would be interesting to 

17 see, particularly since we just spent time in 

18 Philadelphia at Freedom Hall.

19 Our company -- keep in mind "arbitrary and 

20 capricious." I would like to know if those changes 

21 actually touch on that. We have absolutely no reason 

22 to believe that the technology necessary to come into 
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1 compliance will be anything approaching affordable cost

2 or is going to be developed in the little time 

3 remaining. And as I stated earlier, CARB hadn't a clue

4 as to what this is really going to cost us.

5 I am reminded at a meeting -- I don't need a 

6 script for this. I was reminded at a meeting the first

7 time that I was blessed with Mr. Erik White's presence 

8 at a meeting in San Diego County. It's about 2 and 1/2

9 years ago, maybe 3. We were talking about the cost of 

10 compliance, and I mentioned at that meeting in front of

11 somewhere between 275 and 300 angry operators and 

12 business owners that the cost of compliance was going 

13 to be excessive to us.

14 Mr. White looked at me, looked at the 

15 audience, and said, "Some of you will just have to go 

16 out of business and find something else to do." I find

17 that comment abhorrent. I find it callous. And I find

18 it rather flippant.

19 Many people, including me, have a dream in 

20 this country to do things, to build things. My dad 

21 built a company that he wanted his sons to join. We 

22 did so. And to have a regulator be so callous as to 
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1 look at people like me who have an investment of my 

2 life in this and say some of you will have to go out of

3 business and find something else to do, Erik, I'll ask 

4 you again, and do what? Become a State regulator and 

5 find another industry to run out of California? That 

6 was a callous comment, and I will remember it forever.

7 In closing, let me join AGC in urging the EPA 

8 also to hold hearings in California. The vast majority

9 of the affected construction suppliers simply cannot 

10 come here to testify. I told you guys I just happened 

11 to be here on a fluke because of my daughter's trip, 

12 and it was quite a lesson.

13 At some point, maybe I put a little bit of a 

14 face to this, you will see the need and the fear of 

15 those of us and the frustration in this industry that 

16 this is really going to cost real people a lot of time,

17 a lot of money, and a lot of energy. And the cost of 

18 compliance, I will say once again the State of 

19 California hadn't a clue as to what it would be.

20 And we would look at the Federal EPA in 

21 helping the State of California. We know you can't 

22 protect them from themselves. But there are some of us
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1 out there asking for protection from them. And before 

2 I close, I just want to make a couple of comments off 

3 my written ones.

4 When we were in Philadelphia, we were walking 

5 through where the Liberty Bell is, and we walked 

6 through the Freedom Hall, signing of the Declaration of

7 Independence and the Constitution. And it was very 

8 interesting in looking at what was there, and the kids 

9 -- I mean, I'm somewhat of a history buff and have 

10 never been out here to the east coast. But I wondered 

11 what the Founders were thinking when they wrote, "We 

12 the people of the United States, in order to form a 

13 more perfect union, establish justice, ensure domestic 

14 tranquility, provide for the common defense, promote 

15 the general welfare, and secure the blessings of 

16 liberty to ourselves and our posterity, do ordain and

17 establish this Constitution."

18 It made me think "to secure the blessings of 

19 liberty to ourselves and our posterity." Did liberty 

20 include my right to use the equipment that we've paid 

21 for? Does it include my right to a dream of building 

22 the dream for my family that my kids can join?
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1 Because I'll tell you what, my children and 

2 my nephews, they're not going to come to the 

3 construction industry. They're going to have to find 

4 something else to do because it's basically unbearable 

5 to be able to do it.

6 And I also wondered if the Founders would 

7 think "to secure the blessings of liberty to ourselves 

8 and our posterity," would they consider a statement 

9 from a regulator like Mr. White, "Some of you will just

10 have to go out of business and find something else to 

11 do," would they consider that a taking? But I have

12 protection from that. It's an interesting thought.

13 Before I close up, to this bill, to me, their 

14 regulations are a dream killer because they're 

15 basically killing not only my family's American dream, 

16 but many other people in California's American dream. 

17 It's going down the tubes with this.

18 One other thing. Cost of compliance. Not 

19 sure if someone is going to bring this up again, but it

20 was stated by CARB that the cost of compliance was a $3

21 billion to $3.4 billion problem. Interesting thing is 

22 since I've been involved in this for over 3 years, the 
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1 industry has been telling the State that this isn't a 

2 $3 billion problem. It's a $9 billion to $12 billion 

3 problem.

4 And the State puts out a number, and at one 

5 of the meetings, it was the second meeting that we had 

6 in San Diego that was in Mission Valley, and they came 

7 up with a $3 billion problem. And they said your 

8 industry kills 1,300 -- diesel emissions kill 1,300 

9 people a year. What's a life worth to you guys?

10 Now I just find that statement incredulous. 

11 What's a life worth to you guys? And the reason why 

12 they balance the $3 billion number against the State 

13 for 1,000 or 1,300 people's death, they balance it at 

14 $3 billion as opposed to taking a more realistic number

15 at $9 billion to $12 billion is because they can say 

16 it's not costing you guys that much.

17 But if they took the real number of $9 

18 billion to $12 billion, at some point in time, you've 

19 got to start weighing things out. And, quite frankly, 

20 they haven't a clue as to how many people die from 

21 diesel emissions. As far as I'm concerned, it's a 

22 made-up number, and in closed rooms, they would 
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1 probably say so.

2 Let me just close with this, I will say this. 

3 As far as them not knowing what it is, and I'm not 

4 sure if Mr. Kennedy is going to touch on this, but I 

5 hope I don't steal any of his thunder. California

6 Department of Transportation, CALTRANS, has its own 

7 fleet of equipment. CARB told CALTRANS that that fleet

8 of equipment was going to cost $60 million to retrofit.

9 When CALTRANS got the report and went through 

10 their inventory of equipment, the actual calculation 

11 that CALTRANS came up with is not $60 million. It's 

12 $260 million. Now take $60 million to $260 million, 

13 and then you take them telling us that it's a $3 

14 billion problem, and we have been saying it's a $9 

15 billion to $12 billion problem, the ratios are about 

16 the same. Their cost is off by probably a factor of

17 four, if not greater.

18 And I've said "lastly" twice, and I apologize 

19 for this, but let me tell you guys this. I would hope 

20 that someone on this board would take the time to 

21 Google his name, like I did 2 weeks ago, and put a 

22 phone call into Professor Harley from UC-Berkeley.
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1 The gentleman was gracious enough to call me 

2 back, and we ended up having a 45-minute conversation, 

3 47 minutes actually. And at the end of a 47-minute 

4 conversation, we wrapped it up as following. He said, 

5 "Jon, I can tell you this. The way I did the reports I

6 can't tell you it's the only way to do it, and I can't 

7 tell you that it's the best way to do it. But it's far

8 more accurate than the way CARB has done the reports."

9 And I brought up the issue, well, I think 

10 CARB is just far more comfortable with having an on11 staff, mail-order guy with a Ph.D. to review the 

12 reports than actually having a real scientist like you.

13 And he said, "Well, I don't really want to get into 

14 the politics of that, but it would seem to be the 

15 case."

16 But I would ask you or how he finished our 

17 conversation in a nutshell, he said the problem with 

18 CARB's reports are this. I actually use real numbers. 

19 CARB has a black box for their model, and within that 

20 black box, their black box, there is at least four 

21 factors in that black box that are wrong. One of them 

22 is the inventory of the fleet that we know is over
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1 exaggerated by at least 45 percent.

2 The other is the actual fuel that's burned in 

3 the State of California that Dr. Harley anticipates is 

4 overestimated by at least 360 percent. The number 

5 might be 270, depending on how you base it, but it's 

6 2.7 times to 3.6 times over exaggerated.

7 The engine use rate when it comes to load 

8 factor is overestimated by at least 80 percent, and the

9 hours of operations are overestimated by at least 40 

10 percent. So Dr. Harley wrapped up and he said, "Jon, 

11 do you know what happens when you multiply an 

12 exaggerated number by an exaggerated number by an 

13 exaggerated by an exaggerated number? You come out 

14 with an exponentially wrong answer."

15 He said, "I can't tell you the way I did my 

16 calculation is the only way or the best way, but it's 

17 certainly better than the way that CARB did them." And

18 I would ask you guys from the EPA to pick up the phone 

19 and call the man. It would be greatly appreciated.

20 Thank you for your time.

21 MR. SIMON: Thank you, Mr. Cloud, for your 

22 testimony, and I can assure you we will be looking at 
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1 all the record on the ground.

2 MR. CLOUD: Thank you, gentlemen.

3 MR. SIMON: Thank you very much.

4 And I will note for the record we do 

5 understand and appreciate the emotion that's involved 

6 in this particular authorization. So we'd like to 

7 focus in on the record that you all are presenting to 

8 us today.

9 Thank you.

10 Mike, are you going to speak?

11 MR. KENNEDY: I'm not.

12 MR. SIMON: You're not going to speak. Okay.

13 Tim Pohle and Anthony Michaels, you guys are 

14 up next.

15 MR. POHLE: Good morning.

16 I'm Tim Pohle from the Air Transport 

17 Association of America. With me is Anthony Michaels, 

18 Tony, from Beveridge & Diamond. They are our outside 

19 counsel on this issue.

20 The Air Transport Association, ATA, is the 

21 principal trade and service organization representing 

22 the country's major airlines. Together, our members 
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1 account for about 90 percent of passenger and cargo 

2 carried in the United States. ATA represents our 

3 members on types of issues before you today on a 

4 regular basis, and we're glad to be able to do it 

5 today.

6 Our interest in the rule is that it regulates 

7 airport ground service equipment, or GSE, and that's 

8 basically all the stuff you see running around the 

9 tarmac to service aircraft as they are coming in --

10 after they've come in, as they're preparing to go out. 

11 They are catering trucks, drinking water trucks, 

12 fueling trucks, baggage tows, cargo loaders, all of 

13 those types of equipment.

14 These pieces of equipment are really critical 

15 to air travel. You just think of air travel as coming 

16 in on an aircraft, getting off the aircraft, and don't 

17 really notice what else is going on. But coming in, 

18 getting out in a timely, efficient way is really 

19 critical to our business.

20 You read about delays all the time. You read 

21 about some of the problems the air transport system 

22 incurs from time to time. A lot of that is the result 
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1 of delays rippling through the system. So being able 

2 to get aircraft in, get them out, and serviced properly

3 is very important to the smooth operation of the 

4 system.

5 GSE is incredibly specialized. I think that 

6 if my numbers are correct, we account for about 1 

7 percent of the population of vehicles that are 

8 regulated under this rule. So ARB's estimate, I 

9 believe, is that we've got about 1,400 pieces of 

10 equipment out there.

11 Within that, we've got about 30 different 

12 types of equipment, highly specialized equipment, as 

13 I've already gone through. So we've got a very small 

14 market. It's really a niche within a niche for each 

15 type of equipment to try to get the retrofits and try 

16 to get all the things that we would need to comply with

17 this rule.

18 I want to emphasize from the beginning that 

19 ATA has always supported the emissions reductions 

20 targets at issue here. We do not believe that CARB has

21 the authority under law to regulate us in the manner 

22 that it is regulating us. But we've always supported 
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1 the targets. We've worked with them cooperatively, and

2 the thing that we've really taken issue with is the 

3 mechanisms that they've chosen to deploy to try to 

4 reach these targeted reductions.

5 So my role today, I'm just going to go 

6 through some introductory remarks and general 

7 observations, and then Tony really is the guy who 

8 really understands the Clean Air Act. He actually was 

9 counsel to the other ATA there, the American Trucking 

10 Association in the TRU case that you heard about 

11 somewhat today. So he's the real expert.

12 I want to give you a little bit of background 

13 on the commercial aviation industry and talk about our 

14 emissions record, and our emissions record to just give

15 you some context of our contribution to the economy 

16 vis-a-vis the contribution to the emissions 

17 inventories. Keep in mind that this is really -- most 

18 of our emissions, obviously, come from aircraft. But 

19 on the national stage, the recent greenhouse gas 

20 inventory from EPA shows that our emissions are 10 

21 percent below 1990 levels already, and it's less than 2

22 percent of those emissions.
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1 And obviously, emissions are -- greenhouse 

2 gas emissions are a function of fuel burn. So, and NOx

3 is a very, very, very small portion of what is produced

4 by aircraft engines. So we're below 1990 levels. 

5 We're less than 2 percent of the greenhouse gas 

6 emissions, and we drive about 5.6 percent of GDP in the

7 United States, generating about $1.3 trillion, about 12

8 million jobs. And we carry about 27 percent of the 

9 value of mercantile trade in this country, exports and 

10 imports.

11 The trends are also consistent with what's 

12 happening in California. Our emissions are actually 

13 below 1990 levels when you include interstate, 

14 intrastate, and international operations out of 

15 California. We're 11 percent below the 1990 levels 

16 according to California's own inventory. And we there 

17 drive about 4.6 percent of the GDP, account for about 1

18 million jobs, and about 50 percent of the value of the 

19 State's export trade.

20 So it's just the juxtaposition between our 

21 lowering emissions and the contribution between -- to 

22 the economy and the fact that certainly from 1990, 
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1 we're carrying far more passengers, far more cargo, and

2 at the same time have experienced an absolute reduction

3 in emissions. I think it's a rather impressive record 

4 and one that I've wanted to highlight here.

5 And I just want to also say that we haven't -

6 - we're not planning on resting on those laurels. 

7 We've made a lot of aggressive, have a lot of 

8 aggressive targets for further improving our emissions 

9 profile. But as I said, the focus here is on GSE, and 

10 we've been proactive on the GSE front as well, 

11 investing in a lot of new equipment, particularly 

12 electric. There's a lot of penetration of electric 

13 equipment, GSE in the south coast where California I 

14 know needs it the most.

15 And you should also know that we are very 

16 proactive early on, entering a memorandum of 

17 understanding with ARB to voluntarily reduce emissions 

18 before the regulations started coming out of ARB, which

19 when that happened, the MOU just went by the wayside. 

20 We've been actively involved with CARB throughout this 

21 process, working with them, and CARB has made a number 

22 of improvements to the rule throughout this process, 
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1 which they've gone through, and we've been appreciative

2 of their willingness to listen to us in certain 

3 respects.

4 And we appreciate that, but we still have 

5 some major concerns about the rule. I think they've 

6 really boiled down to two major concerns, and one is 

7 that the emissions, every indication is that the 

8 emissions are really far below the projected levels 

9 that are put out in justification of this rule. The 

10 recent Berkeley study has been alluded to. I don't 

11 want to run through the results of that. But it 

12 suggests that the models are overstating the emissions.

13 I'd also point out that CARB projected growth 

14 in our GSE from 2000 to 2009 that it would be about 21 

15 percent, that our fleet would grow by that much. We 

16 don't have specific figures on the GSE equipment as 

17 yet, and we hope to develop that for not only this 

18 proceeding, but for the further proceedings at CARB. 

19 But juxtaposed with that 21 percent projection of 

20 growth, and I'm not denigrating CARB here because, in 

21 that time period, people would have thought there would

22 be growth. But there's a projection of 21 percent 
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1 growth. Our analysis shows that our emissions have or 

2 our operations have actually declined in that period.

3 At LAX, for instance, from LAX's own data 

4 shows that, and it's obviously one of the largest 

5 airports in the country, the largest in California. 

6 Certainly, it dwarfs operations in the south coast. 

7 But it declined 29 percent operations from 2000 to 

8 2009. Cargo -- passengers are down 19 percent. Cargo

9 is down 25 percent from 2000.

10 So it's just juxtaposed with the growth that 

11 was projected and the reality that we're facing today. 

12 I think this is especially true in the areas that are 

13 most in need of the reductions, and I think everybody 

14 knows that the south coast is one of the most affected 

15 areas in the country, and we understand that.

16 Here, I've got a little bit of a different 

17 figure because we've got data from 2000 to 2008. And 

18 over that period, CARB projected that our growth would 

19 be about 19 percent from 2000 to 2008, but the south 

20 coast or -- I'm sorry, the Southern California 

21 Association of Governments data shows that our aircraft

22 movements are down about 15 percent in the south coast 
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1 in the airports that are part of the south coast, and 

2 our passenger levels are down 8 percent and cargo down 

3 18 percent, respectively.

4 So this is, again, juxtaposing the projected 

5 growth with the reality on the ground. I think it's 

6 particularly important when you look at the SOON 

7 program that was mentioned, and that component which, 

8 again, the south coast has opted into is the only 

9 place, the only air district that has opted into that 

10 program. We don't believe that the SOON program is 

11 necessary, at least as to our equipment because our 

12 emissions not only are nowhere near where they were 

13 projected to be, they're below -- they've probably 

14 actually contracted.

15 So the bottom line is that juxtaposition 

16 between the projected growth and the actual contraction

17 of the industry. And keep in mind that even as we've 

18 been contracting, our fleet has gotten cleaner. We 

19 have gotten more electric equipment into the State, and

20 we've been investing in cleaner equipment over this 

21 period. Just the natural progression of replacing 

22 equipment over that time would have reduced or cleaned 
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1 up the fleet.

2 So the apart from the emissions just being 

3 much lower than were projected, our main concern and 

4 the concern that is a second main concern and one that 

5 we've been talking about for a very long time is that 

6 ARB's approach to this rule, it just remains flawed. 

7 Here, we just think it's unnecessarily complicated. 

8 There are these ever-changing targets, and the rule is 

9 very intrusive in the way that it goes about trying to 

10 achieve the reductions.

11 And you've heard a lot about retrofits, we 

12 have many of the same concerns. I am not aware of 

13 retrofits being used on ground support equipment in 

14 California for purposes of complying with this rule. I

15 know on the much larger pieces of equipment, it is 

16 extremely difficult for us to find manufacturers 

17 willing to invest the time and the effort to look at 

18 the niches within the niches to make the retrofits work

19 with our particular pieces of equipment.

20 You've heard references to the huge 

21 temperatures that are generated by this equipment. We 

22 have hydraulic lines, too. We also have aviation fuel 
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1 around the area as well, and visibility is an issue for

2 us as well. So we have many of the same concerns, and 

3 I don't want to over emphasize that, but to kind of 

4 build on what the construction folks were talking about

5 before.

6 There is this other issue about the shifting 

7 annual requirements. It's a function not only of the 

8 fleet that you have and the changes that might be made 

9 to accommodate the various vagaries of the airline 

10 industry, but also the manufacturers of the engines 

11 that we use to comply with the rule, we're not always 

12 sure exactly what the horsepower is going to be for a 

13 particular application. So it's difficult to plan and 

14 deploy equipment in a manner that makes compliance with

15 the fleet averages a realistic option.

16 Another big problem that we face is what we 

17 call "double control," the idea that we've got to 

18 retrofit equipment or buy the best equipment that's 

19 available at a certain stage of the rule only to be 

20 told that within long before the useful life of that 

21 piece of equipment is gone -- is over that we've got to

22 reinvest and deploy new equipment to reach the various 
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1 requirements.

2 In terms of the retrofits, I did want to 

3 mention that CARB, they talked about that the rule does

4 not require deployment of technology that does not 

5 already exist. Well, these retrofits may exist on a 

6 shelf, but for us, it means being able to take that off

7 the shelf and put it on our specific types of 

8 equipment, finding folks that are willing to make the 

9 investments to help us do that, and it's just not 

10 happening, to be honest with you. It's just that 

11 existing technology on the shelf is not being deployed,

12 does not exist in the reality that my members operate 

13 in.

14 Turning to this proceeding and our main 

15 concern about this proceeding, I think it's that we 

16 feel that it is premature for you all to really be 

17 considering whether to grant authorization of this 

18 rule. I think the principal issue here is the need, 

19 the supposed need for this rule at this time.

20 Again, we've supported the emissions 

21 reductions, but that's in a context of actually needing

22 the emissions reductions. ARB itself is undergoing --
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1 is reviewing what the emissions levels are and, as you 

2 heard, in the coming months will be considering again 

3 essentially whether this rule is needed because it 

4 relates to the level of emissions that actually exist.

5 And as we understand it, that is an issue 

6 that's still in question and that ARB is still 

7 questioning. So we question the need or we question 

8 whether, as it was put earlier, that issue is ripe for 

9 your consideration, to use a lawyer's word.

10 So, in conclusion for me, we're going to 

11 continue working with CARB, and we're looking forward 

12 to understanding what they might envision for further 

13 modifications to this rule. We'll continue doing what 

14 we've been doing, which is showing up, providing the 

15 information that they ask for, trying to help out as 

16 much as we can while trying to ensure that this is a 

17 reasonable approach.

18 As of now, as you've heard from me, we don't 

19 think that this is a reasonable approach. We think the

20 targets were reasonable. We don't think the approach 

21 is reasonable. The other major point is that we just 

22 don't think it's appropriate for you all to be making 
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1 this decision at this time, given the flux on the 

2 emissions issue that I talked about.

3 My colleague Tony is going to take over now 

4 and really run through some of the more, shall we say, 

5 nitty-gritty issues around the three compliance or the 

6 three criteria that you're here to consider today.

7 MR. MICHAELS: Thanks, Tim.

8 As Tim mentioned, I'm Tony Michaels of 

9 Beveridge & Diamond, outside counsel to the Air 

10 Transport Association.

11 Picking up on something that Tim just 

12 mentioned, one of the reasons why I think the errors in

13 the emissions model and the emissions projections that 

14 CARB had made may be very relevant to what EPA is doing

15 in its role as deciding whether to authorize the rule 

16 is that it does seem that CARB is starting to come 

17 around to recognizing that their model is very wrong 

18 and also starting to come around to the reductions in 

19 emissions that have occurred through the recession and 

20 some other issues.

21 And so, when they say they're planning some 

22 changes, they may relax or make the rule more flexible.
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1 So I understand that CARB has said this, and I don't 

2 think it's changed, that they're opening the thing up 

3 completely to any kind of change in the approach. It's

4 not, as far as I understand it, limited to, well, let's

5 see if we delay the thing by a few months or something 

6 like that.

7 So as you're considering the record and the 

8 comments today, there are some very serious 

9 authorization issues that be raised by the rule as 

10 currently written. It may be that the rule that's 

11 final doesn't pose those issues at all. And so, from 

12 EPA's perspective, it may very well not make sense at 

13 all to at this point, a couple of years after the 

14 initial request, delve in and make its determination 

15 and wade through all these issues, when 4 months from 

16 now, in August, CARB has said they plan to be done. 

17 They plan to go through workshops over the next couple 

18 of months and propose a revision for August.

19 If that's changed and if CARB is not -- is no 

20 longer planning to do that or is no longer considering 

21 any options that may be out there, it would be 

22 incumbent on CARB to tell us that, but that's not my 
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1 understanding is that's what's going to happen. And 

2 we're looking forward to -- ATA is looking forward to 

3 hopefully meeting with staff and coming up with ways to

4 achieve the same emission reductions from GSE, but in a

5 way that's a bit more efficient and more compatible 

6 with the industry. And I'm sure the construction 

7 industry and other industries affected are, too.

8 So turning to the rule as it's written that's 

9 before you now. ATA submitted very detailed written 

10 comments in December of 2008. We plan to submit 

11 supplemental comments next month in writing, and those 

12 will go into much more detail.

13 Today, I wanted to touch upon just a few of 

14 the issues, particularly technical feasibility, useful 

15 life, which is part of the consistency with Section 

16 202(a), and need. So that's two of the three criteria,

17 the need and the consistency.

18 With respect to technical feasibility, I 

19 think it's very critical not to lose sight -- and from 

20 CARB's presentation today, they've clearly lost sight -

21 - of the fact that technical feasibility includes 

22 installation of the technology, as Tim alluded to, and 
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1 it's in the statute. 202(a) refers to the technical 

2 feasibility needed for the "the development and 

3 application of the requisite technology and 

4 application."

5 It's not enough that a retrofit maker has 

6 developed a nice filter. It needs to be integrated 

7 into the vehicle. And not only has CARB not made any 

8 determinations on that with respect to the real cost 

9 burden, lead time needed, particularly for GSE, but 

10 they've conceded that. And the rule doesn't --

11 provides really no consideration of that either, and 

12 CARB has said it expects the end-user to figure that 

13 out. To figure out whether or not it's technically 

14 feasible to install the retrofits upon which this rule 

15 depends. And that's a real issue.

16 In terms of the experience recently, as 

17 others have alluded to, there are about 180,000 

18 vehicles projected to be subject to this rule. GSE is 

19 probably less than 1 percent of that, but that's the 

20 State-wide total. About 100,000 of those were soon to 

21 be retrofit by CARB in adopting this rule that that's 

22 how they would achieve compliance and that by this 
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1 year, 35,000 would be successfully retrofit. As we 

2 understand it from CARB, the number is 1,000 to date 

3 that have been successfully retrofit. Many through 

4 demonstration projects. None of those are GSE.

5 No GSE, to our knowledge, has ever been 

6 successfully retrofit with a Level 3 filter of the kind

7 that CARB is requiring. And airlines have tried. 

8 They've tried in the past, and they've tried leading up

9 to this rule, and it's simply not been found to be 

10 possible or feasible.

11 We understand that at least two of those 

12 installations have already caused fires that destroyed 

13 the equipment. That's 2 out of 1,000. And as you can 

14 appreciate, nobody wants that equipment under their 

15 fully fueled aircraft when they're sitting on the 

16 tarmac. It's just not -- it's not going to work for 

17 any industry, if that's the case, but certainly for 

18 aviation that's not feasible. And I completely agree 

19 with Mr. Prescott's point that feasibility has to 

20 include safety. It's not feasible if it catches on 

21 fire. That's got to be part of the technical 

22 feasibility criteria.
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1 And as I mentioned, CARB has said that 

2 verification, this is a quote, verification "does not 

3 address the feasibility of installation." And CARB has

4 identified a number of the issues that would have to be

5 addressed. They've identified them and left it for the

6 end-user to try to address them. CARB hasn't made any 

7 attempt to address them.

8 The rules does, as CARB mentioned, there are 

9 10 now, 10 Level 3 verified filters, 5 of which are 

10 passive. The active ones require you to pull over and 

11 maybe take the filter out and put it in the oven or do 

12 something else where you actively burn out the soot 

13 that builds up. The passive ones burn it out 

14 installed, which is what I think Mr. Prescott again was

15 referring to the 1,200-degree temperature that these 

16 can reach. That's because they burn off the soot as 

17 installed on the vehicle. They don't have to be taken 

18 off. Those are the passive ones.

19 But the CARB verification doesn't mean 

20 anything about whether that unit is technically 

21 feasible to be installed on any particular vehicle at 

22 all. That's just they have admitted that as well. The
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1 verification process has nothing to do with that. It's

2 mounted on a test engine, and what they test is 

3 durability and whether the exhaust emissions are 

4 removed or not to the level specified.

5 But the rule requires installation based on 

6 what's verified, subject then to this after the fact 

7 potential for exemption, which is problematic in many 

8 respects, and we've addressed some in the written 

9 comments and others have addressed some of the issues 

10 with it. But I would say, and there are a number of 

11 legal problems with that approach.

12 One is that the exemption is limited to where 

13 the retrofit cannot be safely installed or operated. 

14 It's an impossibility standard, which is not the same 

15 as the technical feasibility with consideration of cost

16 that the agency must consider. It's technical 

17 feasibility within economic parameters is the test 

18 under -- for authorization.

19 But another problem with that, obviously, is 

20 it assigns to CARB that determination. That's your 

21 determination. That's EPA's assignment under the 

22 statute. You have to determine is this rule consistent
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1 with Section 209, which incorporates the technical 

2 feasibility criteria. CARB can't reserve that to 

3 itself, and it certainly can't reserve it to itself to 

4 do later on a case-by-case basis.

5 In addition, as others have pointed out, CARB 

6 does not have safety expertise, and certainly not on an

7 airport environment. And they've again attempted to 

8 give themselves the authority to determine is that safe

9 or not? What does that mean? Zero risk? We don't 

10 know what CARB would think safety means.

11 Others have mentioned the visibility issue. 

12 That's one issue that came up after the rule was 

13 finalized and that CARB has tried to -- spent a year 

14 trying to deal with. And as a policy matter, they've -

15 - for the time being, they have, I guess, exempted in 

16 the sense of they've said they're not going to enforce 

17 against, as a matter of enforcement discretion, people 

18 who if the retrofit would cause any visibility 

19 impairment. So it's sort of a zero standard.

20 But that's not necessarily going to be the 

21 final standard, and that's not in the rule that you're 

22 being asked to review. You've got to review this rule 
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1 as it's written, and there's no visibility provisions 

2 in there at all. I mean, we don't know what the final 

3 provisions are going to be, and Cal/OSHA doesn't 

4 necessarily have jurisdiction over GSE even if it does 

5 over construction equipment.

6 Moreover, the exemption, as others have 

7 mentioned, it doesn't really do anything. It exempts 

8 that unit and that VDECS. The end-user is expected to 

9 go through what has been characterized I believe 

10 previously as an engineering application exercise for 

11 each one. It's going to take some time. And 

12 obviously, it could have costs associated with it even 

13 if it fails, and we would expect it to fail for GSE.

14 But even if you get to the end of that and 

15 you can have the documentation you might need to get 

16 the exemption from CARB, and they're limited, limits on

17 that as well, what does that get you? It just means 

18 you don't have to retrofit that unit. Well, you didn't

19 have to anyway. You have to retrofit 20 percent. It's

20 up to you to pick. So now you just have to go to the 

21 next one. You don't get any extra time.

22 CARB's verifying units on an ongoing basis 
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1 are going to continue to do that. If there is a new 

2 one that comes out, you have 10 months you have to 

3 install it, and that's it. That's the lead time. CARB

4 hasn't taken into account this trial and error 

5 approach, how much time that's going to take, and it 

6 certainly hasn't taken into account the cost of that.

7 The exemption doesn't take into account any 

8 other operational deficiencies that could result. For 

9 example, you mentioned for the retrofits the need to 

10 regenerate them. For passive, it does require the 

11 vehicle to stop in the middle of its job. And for some

12 applications, that may be okay. But at an airport, 

13 they've got to be ready when the plane lands, and it 

14 doesn't always land exactly on time.

15 And particularly for, just as an example, the 

16 cargo loaders that load and unload the cargo planes, if

17 you're talking about an overnight delivery, absolutely 

18 positively has to be there overnight. They've got to 

19 be ready immediately. They've got to work through the 

20 3-hour cycle of loading and unloading this heavy cargo.

21 They can't hold up the whole operation to wait for 

22 that, and it does have safety implications for the 
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1 national air space system if there is a wait.

2 As Tim alluded to, it's a key cornerstone of 

3 the system is to make sure -- is to try to avoid 

4 wherever possible compressing the schedule. You don't 

5 want to have an instance where you need to bring in for

6 a landing a larger number of planes in a shorter period

7 of time. It's pushing the risk envelope. FAA doesn't 

8 want that to happen.

9 And if there is GSE that has to sit there and 

10 regenerate and all the planes have to wait or the plane

11 has to wait, that means that it delays the planes all 

12 down the queue, and it can cause real issues for the 

13 system. So --

14 MR. POHLE: Just to be clear, those are 

15 generally -- those are economic and efficiency issues. 

16 I can assure you that we'd never operate unsafely. 

17 The one that is our core mission, to provide safe air 

18 transportation. So I can tell you we are not going to 

19 deploy anything on our GSE that's going to compromise 

20 safety, and we're not going to do anything that would 

21 lead to any kind of unsafe operation of any sort.

22 MR. MICHAELS: Certainly. And that's --
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1 safety does have to be part of technical feasibility. 

2 These are the reasons why it's not technically feasible

3 to install these units, particularly for GSE, and 

4 that's our focus.

5 I also wanted to make the point that in our 

6 view that the Clean Air Act doesn't allow imposing 

7 technology-forcing regulations on the end-user, and 

8 this is a technology-forcing regulation because the 

9 installation has not been done. It's not been proven, 

10 demonstrated how it's going to be done. It's yet to be

11 figured out.

12 There are a number of technical issues that 

13 will exist that would have to be addressed in doing 

14 that. And so, while the filter exists, what the end 

15 product is is a filter successfully installed into a 

16 vehicle, and that technology doesn't exist yet. And 

17 the end-user is expected to do that under this rule.

18 In our view, that runs counter to the 

19 statutory scheme as a whole. And when you are applying

20 a technical feasibility standard to this rule, you've 

21 got to interpret in the context of the statute as a 

22 whole as to what that means. In the Sierra Club v. EPA
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1 case, the court made clear that Title II, which is the 

2 whole mobile source scheme, is directed towards having 

3 technology-forcing standards imposed on vehicle 

4 manufacturers, not owners.

5 Interestingly, CARB elected in 2003 not to 

6 adopt a Tier 3 particulate matter standard for these 

7 engines, apparently because it found it not technically

8 feasible to make the OEMs do that, the original engine 

9 manufacturers. They've not come out with any formal 

10 public explanation for that decision. We've tried to 

11 get documents related to it, and they've said they're

12 confidential.

13 But if that's the case, it's not clear how 

14 CARB can say it's technically feasible now to ask 

15 someone who happens to own a piece of equipment to do 

16 what the engine maker couldn't do in designing it into 

17 the new equipment, which is what the statute really 

18 contemplates. We're seeing the results of a lot of 

19 these issues now with very few successful retrofits.

20 Briefly, two other quick --

21 MR. SIMON: Tony, I would ask you to kind of 

22 --
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1 MR. MICHAELS: Okay. The useful life 

2 requirement of 202(a), which is also part of the 

3 consistency criteria. It's the same section that has 

4 technical feasibility in it, requires that standards be

5 applicable to vehicles and engines for their useful 

6 life. The useful life of these -- the equipment 

7 subject to the rule is 10 years or 7 years depending on

8 horsepower. The rule requires changes well before that

9 and violates that useful life requirement.

10 Tim alluded to the need criteria, and I do 

11 think it's -- CARB is reassessing the need for this 

12 rule right now. To me, it doesn't really make sense 

13 for EPA to even try to make that determination right 

14 now. But if it were to try to do it, it's unclear how 

15 they could reach that conclusion if CARB isn't sure.

16 So, basically, given the serious issues that 

17 are presented by the rule as it's written, it seems to 

18 make sense to focus on the rule as it is going to 

19 actually be and, in fact, to notice and comment and 

20 have a hearing about the rule as it's going to actually

21 be in place. Now, EPA can legally act on this rule, 

22 but it just may not end up being relevant, considering 
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1 if the rule changes, then you've wasted your time.

2 If there are any questions, I'm happy to --

3 MR. SIMON: Gentlemen, thank you both for 

4 your testimony. I look forward to your written 

5 comments.

6 MALE SPEAKER: Thank you. Appreciate it.

7 MR. SIMON: Next up is William Davis from the 

8 Southern California Contractors Association.

9 MR. DAVIS: This must be the short person's 

10 microphone.

11 [Laughter.]

12 MR. DAVIS: I had written "good morning," but 

13 good afternoon. And thanks for the time to talk with 

14 you fellows.

15 I am Bill Davis. I'm the executive vice 

16 president of the Southern California Contractors 

17 Association, which represents the interests of union18 signatory heavy construction contractors in the 12

19 counties of southern California. It's served by Local 

20 12 of the Operating Engineers, and their members are 

21 also concerned about the visibility and safety issues 

22 that were presented so ably by Mr. Prescott.
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1 Our trade area is a land area that's larger 

2 than all the New England States combined, and our 

3 contractors serve the highway, road, bridge, and other 

4 infrastructure needs of about 18 million citizens in 

5 our area.

6 I am also a member of the Board of Directors 

7 of the Construction Industry Air Quality Coalition, 

8 which SCCA helped to form in 1989 to promote the 

9 adoption and implementation of emission reduction 

10 measures which are cost effective and efficient while 

11 minimizing unacceptable impacts on its construction and

12 building industry members.

13 This coalition is comprised of several major

14 construction and building industry groups in 

15 California. In addition to SCCA, CIAQC's membership 

16 includes the Associated General Contractors of 

17 California and of San Diego, the Building Industry 

18 Association of Southern California, the General 

19 Engineering Contractors Association, the Engineering

20 and General Contractors Association, Engineering and 

21 Utility Contractors Association, Construction and 

22 Industrial Materials Association, the California Rental
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1 Association, and the California Dump Truck Owners 

2 Association. In all, CIAQC represents several thousand

3 construction and home-building companies that perform 

4 work, operate equipment in California.

5 SCCA requests that the U.S. Environmental 

6 Protection Agency postpone any action on the State of 

7 California's request for waiver of Federal preemption 

8 of standards for off-road diesel emission in in-use 

9 fleets -- whew, what a bunch -- submitted by the 

10 California Air Resources Board until several conditions

11 are met, including you guys having hearings in our 

12 State, CARB producing a final and feasible version of 

13 the regulation, and the underlying science and public 

14 health questions related to the regulation are 

15 revisited.

16 SCCA and the construction industry has been 

17 disappointed that EPA has yet to schedule a hearing on 

18 a waiver for the off-road rule in California. We've 

19 requested it since your first waiver hearing notice 

20 came out. This CARB rule affects only contractors in 

21 California and working fleet operators in California

22 like the airline folks, which are actually less than 
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1 0.1 percent of the total fleet.

2 For most of those businesses, it is 

3 impossible or burdensome to travel the 3,000 miles from

4 California to Washington -- my arms are still sore from

5 the flight yesterday -- and to discuss a strictly 

6 California rule. We find it more than ironic that EPA 

7 staff was able to schedule a hearing in California on

8 the proposed new nationwide ozone standard this 

9 February in Sacramento but remains insistent that 

10 California contractors travel here.

11 We hope if it's a question of finance, we can 

12 work out some arrangement to pay your airfare. But is 

13 there any other reason why you guys won't come to our 

14 State and hold a hearing? That's a question.

15 MR. SIMON: Keep going.

16 MR. DAVIS: Okay. That's an answer.

17 California contractors and fleet owners 

18 recognize the impact that the CARB off-road regulation 

19 will have on the construction industry and its ability 

20 to remain viable in the future. In fact, it's calling 

21 into question our ability to remain viable in the 

22 present.
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1 This point has been repeatedly demonstrated 

2 at each of the three CARB hearings where the off-road 

3 regulation was before the board where several hundred 

4 contractors and equipment owners attended the meetings 

5 and provided testimony. If EPA truly wishes to fully 

6 hear from those that will be impacted by this 

7 regulation, it should schedule at least three waiver

8 hearings in California -- we're a large State -- north,

9 central, and south.

10 We find this particularly important, given

11 the special nature of the California regulation as a 

12 possible solution for other nonattainment areas in the 

13 United States under the Clean Air Act. We do 

14 understand this rule has impact beyond our borders. So

15 it's important you really understand the rule from on 

16 the ground from the real people involved.

17 There are many other problems inherent with 

18 this rule. We'd like to focus on a few that we believe

19 are relevant to your consideration of the waiver. 

20 First, the rule is in flux, as we have heard. There is

21 going to be a hearing next Thursday that we're going to

22 get to hear from Erik and his compatriots on the 
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1 investigation that they've done about the impact that 

2 the economy has had on California's diesel fleets, both

3 on-road and off-road.

4 Even the portable rule, which is still 

5 pending a waiver from you guys is still in flux and has

6 been amended again and will be amended probably an 

7 additional time before it's ready for prime time. It 

8 will be several months before CARB completes the review

9 of this. We think, what, August, September, maybe 

10 you'll be back? You've talked about workshops this 

11 summer. You've talked about going to a special board 

12 meeting in August to consider additional changes to the

13 regulation.

14 Our friends at AGC brought petitions forward 

15 to the agency twice. Their most recent petition has 

16 made the very significant points concerning the 

17 emissions modeling and the actual emissions of the 

18 industry that would require severe changes in this 

19 regulation. And we think it's inappropriate for you 

20 guys or, hopefully, you'll find yourselves unwilling to

21 grant a waiver to a rule that's still not ready for 

22 prime time. We would recommend that you not grant a 
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1 waiver until the rule is final and complete once and 

2 for all.

3 Second, there is insufficient technology 

4 available for contractors to comply with this rule. 

5 CARB has argued that if a device is not available to 

6 install on a specific equipment, the rule does not 

7 require it. However, it does require the owner of that

8 equipment to keep going through his fleet until he 

9 finds out either there is something available, there is

10 nothing available for their entire unit.

11 The logic forces every contractor into what's 

12 called the best available control technology compliance

13 path. It eliminates other compliance options that are 

14 available under the rule. It is a circular argument at

15 best. It's very cleverly written to force retrofitting

16 in the shortest time possible.

17 CARB has failed in their promise to have an 

18 adequate number of particulate filters or traps

19 verified and available to provide retrofit options for 

20 contractors. One only needs to look at the results of 

21 the CARB-sponsored Diesel Retrofit Showcase program in 

22 which contractors have volunteered 177 pieces of 
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1 equipment for retrofits. Any device may be used 

2 whether or not it is verified under the CARB standards.

3 Millions of dollars are available for the 

4 installation. In nearly 3 years, only 35 vehicles have

5 been retrofitted in this program.

6 The rule calls for, well, I think on the 20 

7 percent rule on 180,000 pieces of equipment, about 

8 32,000 units were supposed to be retrofit every year 

9 over the next 5 years. As you've heard already, that 

10 number is at 1,000 for the first year and is unlikely 

11 to gain any traction with the variety of relief 

12 measures that are already in place.

13 The safety issues that are well before you, 

14 and the fact that the equipment, while verified, has to

15 be specifically engineered for every single piece of 

16 equipment that it's put on. It's not like a car, where

17 you've got one size filter fits one model of car. 

18 Construction equipment is almost universally unique in 

19 its operation.

20 In previous comments to EPA, SCCA and CIAQC 

21 have outlined several challenges to contractors facing 

22 compliance with the regulation. These also include 
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1 issues surrounding the requirement to install retrofit 

2 devices that were not originally designed to

3 accommodate them. And since October 20, 2008, our 

4 letter, that last letter to you, these concerns have 

5 not been resolved, still represent a significant 

6 barrier.

7 And to reiterate the concerns, we ask that 

8 you consider this. The dramatic downturn in 

9 California's construction sector has affected the

10 revenue required to pay for retrofits and equipment 

11 upgrades necessary to comply with the regulation. 

12 People have just called it a construction depression. 

13 People have called it the "great recession."

14 Here is the reality in our industry right 

15 now. Construction activity is down 50 percent from 

16 where it was in 2005, mostly because of the housing 

17 bubble. In 2005, we built 155,000 housing units in the

18 State of California. This past year, we built fewer 

19 than 40,000. That is a horrendous drop.

20 And what has happened is that it's forced all 

21 the contractors that were involved in the residential 

22 construction industry into the only other segment 
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1 that's still active, and that's public works 

2 construction, the building of highways and bridges and 

3 roads, the money that came from the stimulus and that 

4 sort of thing. Instead of having 2 to 5 bidders on a 

5 highway project in California, we now have 20 to 30. 

6 Instead of those projects coming in or near what are 

7 known as engineer's estimates of cost, which CALTRANS, 

8 the Transportation Department, provides, they're coming

9 in between 25 and 40 percent below engineer's 

10 estimates.

11 And CALTRANS every quarter backs their 

12 engineer's estimates down. They're still coming in 20 

13 to 40 percent below those engineer's estimates. Our 

14 industry is literally on its knees. Unemployment, in 

15 the construction industry in California in 2005, there 

16 were 942,000 construction workers. Good jobs, too. 

17 You know, the union jobs like the operating engineers, 

18 when you're in good times, they make $100,000, $125,000

19 a year.

20 Currently, the unemployment level or the 

21 employment level in California's construction industry 

22 is 613,000. That means we've lost a full third of the 
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1 industry. That also means that those employers have 

2 lost the ability to keep those workers gainfully 

3 employed and, consequently, don't have the money to 

4 operate their businesses and to meet the requirements 

5 of this regulation.

6 In addition, even if they are an active and 

7 effective contractor, this rule will require the 

8 purchase of new equipment to meet the standards. Tier 

9 3 equipment that's available now. Tier 4 equipment, 

10 from your standards, which will not truly be available 

11 until 2014, '15, and later, they'll have to borrow the 

12 money.

13 Have any of you been to a bank lately? 

14 They're not loaning money for construction equipment. 

15 They are, in fact, one of the almost prohibited loans 

16 has been for these diesel retrofit devices because they

17 are not something -- they're an add-on product. 

18 They're an after-market product. They're not 

19 collateral that the banks will recognize for financing 

20 purposes.

21 The diesel emission control strategies 

22 technology is much more expensive to purchase and 
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1 install than the agencies anticipated, and the 

2 availability of these products is irregular at best. 

3 We actually had an experience where a salesman for one 

4 of the diesel retrofit companies appeared before the 

5 Air Resources Board at the meeting in I think it was in

6 July of 2007. The meeting where they adopted this 

7 rule? And promised them that they had fully available 

8 equipment for any product in our marketplace.

9 That was very good of him to do so. However, 

10 we found out later that he was operating out of a 

11 garage in Palm Springs, and he had no equipment 

12 available for our industry. And this was one of the 

13 world's largest manufacturers of this equipment. And 

14 they plain-out lied to the agency about the 

15 availability of these products.

16 It brings up a piece, and that is that I 

17 don't consider Erik or -- I'm sorry?

18 MR. TERRIS: Mike.

19 MR. DAVIS: Mike. We've met, but I couldn't 

20 remember -- to be evil or even arrogant, except Erik's 

21 way too cute for most people's taste. But they were 

22 misinformed about these products. They bought the idea
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1 that these products would provide solutions, and we 

2 have demonstrated over the last 2 years that these 

3 things are simply not what they were advertised to be.

4 I've worked with the agency as a member of a 

5 thing called their off-road implementation advisory 

6 group. This discussion about VDECS has been a part of 

7 virtually every single meeting that that organization 

8 has had with CARB staff. I think you guys are much 

9 better informed about the nature of these products and,

10 hopefully, when in the measure of fullness of time, the

11 technology catches up with the promises, it will be 

12 something that will benefit us all, agency and 

13 industry.

14 We also believe that the State-wide fleet has 

15 shrunk to meet the compliance requirements and that the

16 device manufacturers will continue to abandon the off17 road equipment marketplace as more equipment becomes 

18 available on OEM solutions, original equipment 

19 manufacturer solutions. I know from personal 

20 experience. I talked with the vice president of 

21 Caterpillar this last fall. They're spending 60 

22 percent of their R&D money on developing Tier 4 engines
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1 for their heavy equipment. They haven't got it solved 

2 yet.

3 And until mighty Caterpillar gets this issue 

4 solved and meets your standards, it's impossible to 

5 expect our industry to -- our owners of this equipment,

6 the people that will ultimately have to purchase this 

7 equipment, to meet a compliance standard which isn't 

8 resolvable until people can find a way to make 

9 emissions of both NOx and PM lower than they are today 

10 with the Tier 3 machines.

11 Finally, we need to bring to your attention 

12 some serious flaws in the science underlying this rule.

13 I know that you guys essentially are almost prohibited

14 from considering cost in relation to public health 

15 benefit. We've discovered that the lead author of the 

16 CARB science review, one Hien Tran, deliberately 

17 falsified his credentials to perform the work required,

18 claiming a doctorate from UC-Davis when, in fact, he 

19 could only produce a mail-order Ph.D. from a UPS store 

20 in New York City.

21 "Dr." Tran's report was used as the 

22 scientific justification for public health reasons on 
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1 both the off-road and on-road diesel regulations in 

2 California. Then, on February 26th at a CARB-sponsored

3 scientific symposium, we discovered that the health 

4 effects claimed for particulate matter has no 

5 scientifically provable consequences in California, 

6 based on three different studies from two different 

7 scientists -- one paid by the agency -- with real 

8 credentials, real Ph.D.s. Clearly, more effort needs 

9 to be made before ordering the replacement of the 

10 entire California construction equipment fleet.

11 For these reasons, SCCA believes the EPA 

12 should not approve the CARB request for a waiver on the

13 off-road regulation or the portable regulation at this 

14 time. EPA should also provide the opportunity for 

15 interested parties to orally comment on the off-road 

16 regulation by scheduling public hearings in southern,

17 central, and northern California. And to provide for 

18 this, if the May 18th comment deadlines need to be 

19 extended, SCCA would make that recommendation as well.

20 Now there were a few statements during the 

21 CARB presentation that I took note of that are not part

22 of my formal remarks. But the question of worst air 
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1 quality in America came up. And as you all know, from 

2 your own studies, that's only because we keep 

3 tightening down the air quality standards.

4 Actually, California's air quality is 85 

5 percent better than it was when the Clean Air Act was 

6 enacted under the Nixon administration. Only 2 of the 

7 State's 58 counties, or 2 areas involving the State's 

8 58 counties are severe nonattainment areas in 

9 California.

10 That's the San Joaquin Valley, which is a 

11 prisoner of its geography. It's surrounded by 

12 mountains. It's a bowl filled up with the pollution 

13 from Sacramento and San Francisco and L.A. Poor 

14 farmers there and their cows are about the only 

15 activity that could generate any kind of emissions in 

16 San Joaquin.

17 And the other is the massive South Coast Air 

18 Quality Management District, which includes Los Angeles

19 and Orange and Riverside and San Bernardino Counties, 

20 where those 18 million people we talked about live. 

21 Even there, even there, our air quality is much better 

22 today than it was when the Clean Air Act was originally
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1 envisioned, passed, and is continuing to get better on 

2 an ongoing basis.

3 The second piece, and this has been one 

4 that's been ongoing on every rule that CARB has adopted

5 in the last several years, is their cost 

6 considerations. They are simply laughable. The 

7 industry estimates of cost, as Jon pointed out, are 

8 around -- well, it's actually $12.9 billion.

9 This agency has no concept of the economics 

10 of operating businesses, and that $12.9 billion doesn't

11 come out of the bid that a contractor makes on a 

12 project. It comes out of the profit that's left after 

13 the project is done. And that's in an industry like 

14 ours right now where there is virtually no margin, 

15 there is no ability to financially address these 

16 requirements of this regulation. It is not financially

17 feasible.

18 We honestly think that, and we said this, 

19 I've been involved in this thing since 2003. We have 

20 told the agency during that period of time and continue

21 to make this case that our industry will, in fact, and 

22 does and is, in fact, cleaning up its emissions at a 
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1 rapid pace, but it's entirely dependent on the OEM 

2 manufacturers who have to meet your standards.

3 And we think that the Tier 4 machines, if 

4 they can be officially developed, and you guys would 

5 know better than we are where they are on that, but we 

6 see an announcement every day or so about Komatsu has a

7 Tier 4 interim, and John Deere has a Tier 4 for one 

8 tiny segment of their engine families. When those are 

9 fully available, we think that this agency and our 

10 industry can cooperatively demonstrate that the 

11 emissions from our equipment will be reduced to the 

12 levels required by this rule within a period that's 

13 maybe 5 years beyond what the current rule standard is.

14 We've said that all along. We still believe 

15 2025 to be the deadline for our industry to meet these 

16 requirements, and we think it's doable. We don't think

17 this depression is going to continue forever, but we do

18 know that the housing industry is not going to engage 

19 in another bubble. And so, it will be a long, slow 

20 climb out of this hole.

21 Any questions, guys?

22 MR. SIMON: A couple of comments maybe.
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1 MR. DAVIS: Sure.

2 MR. SIMON: And maybe a question. Thank you 

3 for your testimony, Mr. Davis.

4 In response to your first question on the 

5 hearings in California, we did note -- I just want to 

6 note, and I don't know if you've got a copy through 

7 CIAQC or not, but we did send a letter back last week 

8 to CIAQC and I think a number of other companies that 

9 are represented --- organizations that were looking for

10 a hearing in California.

11 Really don't think it's practical or needed. 

12 So I think our decision right now currently is that 

13 this will be the hearing for the waiver. So you should

14 get a copy of that letter, and we're happy to talk 

15 about that. But as of right now, we're having this 

16 here. So we did -- I didn't want to leave you hanging 

17 on that one.

18 MR. DAVIS: Larry, did you get a copy of 

19 that?

20 MALE SPEAKER: Yes.

21 MR. DAVIS: Okay. We'll talk later then.

22 MR. SIMON: And then, secondly, on the Tier 4 
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1 status, I note that that is coming, and it is coming. 

2 I mean, we certainly think it's --

3 MR. DAVIS: We firmly believe that it's 

4 coming. We just think it's going to -- as with many of

5 your regulations, they do compel the manufacturers to 

6 meet the standards. It's just unfortunate that the 

7 burden for compliance in the California case is not 

8 placed on the manufacturers, but placed on the end9 users. And those end-users do not have the capability 

10 of meeting the requirements on their own. They 

11 absolutely depend on the manufacturers to supply the 

12 products.

13 MR. SIMON: Thank you.

14 MR. DAVIS: Thank you.

15 MR. DICKINSON: Mr. Davis, you made a comment 

16 about EPA's consideration of the portable equipment?

17 MR. DAVIS: Yes.

18 MR. DICKINSON: I would invite you to submit 

19 separate comment on that.

20 MR. DAVIS: We'll be happy to.

21 MR. DICKINSON: So we can keep the record 

22 straight on each.
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1 MR. DAVIS: Right.

2 MR. DICKINSON: Also, with regard to the cost 

3 estimates of compliance with the rule overall, whether 

4 it's $3 billion or $12 billion, and this comment goes 

5 to the other people that have testified today. It 

6 would be helpful to understand how that cost --

7 MR. DAVIS: The financial underpinnings?

8 MR. DICKINSON: Well, whether that -- the 

9 financial underpinnings, thank you.

10 MR. DAVIS: We can supply that data.

11 MR. DICKINSON: Whether that's the economic 

12 burden or whether that's a cost per unit or whatever 

13 the underpinnings are of that.

14 MR. DAVIS: We can absolutely supply that 

15 data. We actually hired a real Ph.D. from UC-Davis,

16 who developed that information, and we'll be glad to 

17 provide it to you.

18 MR. DICKINSON: Thank you. Great.

19 MR. DAVIS: A card or some person that I can 

20 address things to?

21 MR. SIMON: Thanks. While we're doing this, 

22 next up is Antonio Santos from MECA.
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1 [Pause.]

2 MR. SANTOS: My name is Antonio Santos. Once 

3 again, Director of Special Projects at the 

4 Manufacturers of Emission Controls Association, based 

5 here in Washington, D.C.

6 Just wanted to extend apologies from Joe 

7 Kubsh, Executive Director of MECA, who wanted to be 

8 here but is traveling in Detroit this week, meeting 

9 with the EPA actually as it is.

10 The presentation today will cover, once 

11 again, from the technical perspective generally 

12 retrofit emission controls for off-road diesel engines.

13 MECA in the past has provided comments to ARB 

14 regarding their off-road rulemaking, both early on, 

15 before 2007, as well as comments last year when they 

16 did the amendment process. Once again, the summary 

17 here basically is that MECA supports ARB in its waiver 

18 request, and hopefully, after this presentation, you 

19 get a better sense of the technologies that are 

20 available and that they are feasible and safe.

21 Just a quick who we are. Many of you 

22 probably already know about MECA and its member 
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1 companies. MECA does represent the world's leading 

2 manufacturers of emission control technology. So we're

3 talking, of course, here about Level 3 verified 

4 devices, encompasses many of the MECA members. They 

5 represent catalyst manufacturers, substrate 

6 manufacturers which the catalyst goes on, other exhaust

7 component manufacturers, as well as the integrators 

8 that bring all of these technologies together.

9 MECA members have extensive experience, both 

10 technical and manufacturing and installation wise, for 

11 the application of emission control technologies for 

12 both on- and off-road vehicles and equipment. And MECA

13 members have verified many of the on-road and off-road 

14 technologies listed by EPA, ARB, and also in Europe, 

15 the VERT process in Switzerland.

16 Just a quick comment, too, about ARB. I 

17 mentioned earlier about the number of verified devices 

18 that are available and the change over the past couple 

19 of years. Obviously, one of the concerns is about the 

20 number of available off-road technologies. As I will 

21 note in the presentation, there are currently 10 

22 available retrofit technologies, which is an increase 
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1 from when the rule was first proposed of about 6 back 

2 in 2007. And that number, although it seems small, is 

3 not insignificant. The process and the cost that's 

4 involved with verifying technologies or, in some cases,

5 re-verifying technologies is not a small number. We're

6 talking upwards of some $500,000 to $1 million, 

7 depending on the type of technology that you're going 

8 after.

9 So in the same way that the other industries 

10 have been affected by the current economic climate, in 

11 the same way, MECA members have as well. And as ARB 

12 pointed out in their presentation, MECA does look for 

13 in its members that regulatory certainty that comes 

14 from establishing a rulemaking with definitive 

15 timelines. And in turn, of course, the MECA members 

16 have jobs, as well as economic benefits, as well as the

17 health benefits that come from promulgating the 

18 rulemaking.

19 So the next couple of slides we're just going 

20 to quickly go through. Obviously, we've talked about 

21 this stuff in a broad brush from other presentations 

22 about the nature of the different technologies that are
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1 available, the Level 3 technologies that are available 

2 for off-road. This slide just points out that wall3 flow diesel particulate filters offer the highest PM 

4 reduction efficiency. These are ARB Level 3 devices, 

5 meaning greater than 85 percent PM reduction.

6 They also get large reduction in air toxics 

7 from the catalyzed DPFs in the same way that DOCs also 

8 get high reductions in toxics, the catalyzing action 

9 gets the large reduction in toxics as well, in addition

10 to PM. Greater than 250,000 retrofits already 

11 worldwide. Greater than 6 million OE applications, and

12 as we've noted, this is the same technology that's 

13 currently on on-road model year 2007 and newer trucks.

14 So a large experience base here with the effectiveness

15 of DPFs.

16 In this case, specifically for this slide, 

17 talking about passive DPFs, which use catalysts and the

18 available heat coming out of the engine to burn the 

19 captured soot. Of course, in order for that to work, 

20 you need these specified exhaust temperature 

21 requirements coming out of the engine, a certain duty, 

22 a certain time, and temperature in order to burn off 
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1 that soot. And as we noted earlier, the number of 

2 verified technologies. Currently, there are five 

3 passive DPFs verified by ARB for off-road.

4 Just the next few slides just have a couple 

5 of pictures of some passive DPF installations. 

6 Obviously, we saw earlier some similar installations 

7 that had safety issues, which I'll talk a little bit 

8 more in detail later. But this just points out at 

9 least pictures of successful installations that have 

10 been done.

11 Here you have an excavator, a drill, two 

12 drills. I think all of these were in New York for --

13 we'll talk a little bit about this Croton water 

14 treatment project. But once again, pointing out that 

15 we're well aware of the policy currently going on in 

16 California in terms of their interim policy for safety 

17 with Cal/OSHA.

18 Obviously, some of these, given the current 

19 interim policy, may not actually be allowable now 

20 because of the zero masking that's being allowed 

21 currently. But the point here is showing that in the 

22 past, all of these technologies were installed and were
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1 done safely and successfully over a certain defined 

2 period of time for these retrofit projects.

3 Same here, more passive DPF installations –

4 rubber-tired loader, a Caterpillar excavator, and a 

5 wheel loader as well.

6 Besides passive DPFs, there are also active 

7 DPFs, typically suited for off-road applications or on8 road as well with low exhaust temperatures or very high

9 PM out. There are typically two kinds right now that 

10 are available out there. There is catalyzed wall-flow 

11 filter with electrical regeneration and uncatalyzed 

12 wall-flow filters with fuel burners for regeneration.

13 The catalyzed wall-flow with electrical 

14 regeneration is one of the newer ones that just got 

15 verified within the past few months. Once again, there

16 are five DPFs, active DPFs currently verified by ARB 

17 for off-road engines.

18 And just some installations here as well. 

19 This is forklifts, cranes, bulldozers, a cherrypicker20 type piece of construction equipment, all installed 

21 with the active DPFs. Go ahead. Sorry.

22 MR. HOROWITZ: I'm just wondering, can you 
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1 point that -- do you have a pointer? Can you point 

2 them out?

3 MR. DICKINSON: Yes, just point at the screen 

4 with it.

5 MR. SANTOS: Oh, here. You have one here. 

6 Here, down in here. Typically, these are -- the 

7 original muffler may have been in there, the 

8 replacements.

9 Also, you have NOx and PM combined integrated 

10 solutions emerging as well. One currently verified by 

11 ARB, the DPF Lean NOx Catalyst by one of the MECA 

12 members was verified in the past year for at least 25 

13 percent NOx reduction. Nothing yet for DPF plus SCR, 

14 which would get greater than 70 percent NOx reduction, 

15 but there are MECA members currently in the process of 

16 looking to verify technologies, off-road devices, 

17 integrated devices for DPF and urea SCR.

18 Here are a couple here as well. Here. 

19 There. Here. Here, these three here are all lean NOx 

20 catalysts plus DPFs. This here is an SCR plus DPF. 

21 All as part of demonstration projects.

22 Once again, the issue of safety and 
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1 visibility is something here that would need to be 

2 discussed. Obviously, MECA believes as part of what's 

3 going on in the current process, the Cal/OSHA and ARB 

4 and MECA is also involved in that, that some level of 

5 masking should be allowed. In fact, some international

6 standards like ISO 5006 allows for the use of mirrors 

7 and/or cameras to consider to be safe.

8 So, at the end of the day, of course, MECA 

9 will have to adhere to whatever comes out of that 

10 process. And as it stands right now, any level of 

11 masking is not currently acceptable, and we understand 

12 that. But it's part of the discussions that are going 

13 on and the measurements that are going on, we believe 

14 that some level of masking is still considered to be 

15 safe.

16 The next slide just touches on some of the

17 construction retrofit experience that is out there. 

18 MECA member companies have extensive experience with 

19 the construction retrofit project. Really just put 

20 this one up here to show that these two projects, the 

21 Boston "big dig" project demonstration and NESCAUM/MECA

22 off-road were done in the late '90s. So the Boston big
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1 dig only used DOCs. The NESCAUM/MECA one did do DOCs, 

2 active DPFs, and passive DPFs. But the point being 

3 that this was done in the late '90s. So the volume of 

4 experience that has been accumulated by MECA members in

5 terms of retrofitting construction equipment.

6 More currently, the New York City local law, 

7 which requires use of low-sulfur diesel and best 

8 available control technology for off-road equipment 

9 used in all city construction projects. This New York 

10 City Croton construction project, which some of those 

11 pictures showed, falls under this.

12 It's a $1.5 billion water treatment plant in 

13 the north Bronx. Twenty-five to 30 off-road pieces of 

14 equipment were retrofitted, mostly Tier 2 and Tier 3 

15 engines, all with ARB or EPA verified retrofits --

16 passive, active DPFs, as well as the DPF plus SCR 

17 system. As well as overall some of these projects in 

18 Manhattan down at Ground Zero, as well as around 

19 Manhattan in general is another 118 Tier 1 and Tier 2 

20 engines have been retrofit with DPFs.

21 As talked about earlier, sort of in a 

22 negative context, but the off-road showcase program. 
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1 There are a number of vehicles that were planned to be 

2 retrofit. Currently, they have not retrofit all of 

3 them. But once again, it is yet another piece of a 

4 target for retrofit experience. As well as LAX, 73 

5 vehicles retrofitted with Level 3 devices, both passive

6 and active DPFs.

7 Texas, new technology research development 

8 funding, just to point out that there are other 

9 construction retrofit experience, things going on that 

10 are not directly tied to PM, which is what's driving 

11 the California rule. Three manufacturers were funded 

12 to demonstrate retrofit PM plus SCR systems for on- and

13 off-road applications.

14 And in Europe as well, as we noted a MECA 

15 member as having verified technology in Europe. There 

16 is an online database of over 7,000 pieces of 

17 construction equipment that have been fitted with DPFs 

18 showing little to no safety or other issues.

19 This slide basically talks about the 

20 challenges for off-road retrofits. Obviously, what's 

21 been brought up today talks a lot about the comparison 

22 of retrofit technologies both for on-road versus off-
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1 road, and it's an obviously conclusion that off-road 

2 retrofits pose more challenges for retrofit vendors 

3 when it comes to installing them on pieces of 

4 equipment. First and foremost, obviously, if you're 

5 talking about some of these Tier 0 pieces of equipment,

6 higher emissions for off-road engines -- off-road 

7 engines especially before 1996, when the Tier 1 

8 standards kicked in -- higher engine PM out obviously 

9 will cause more issues.

10 More diverse equipment and equipment 

11 applications than on-road, yet another clear and 

12 obvious point about the nature of construction 

13 equipment. More older equipment. You get wide 

14 horsepower ranges. As small as 50 horsepower, up to 

15 greater than 1,000 horsepower. Obviously, the bigger 

16 the horsepower, the bigger the engine. You might need 

17 multiple filters. So that, obviously, will increase 

18 the cost.

19 Obviously, by putting on some of these pieces 

20 of equipment, you do run into issues of equipment 

21 stability. Emissions profile can change with the 

22 application. Obviously, on a given project, you might 
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1 data log a vehicle and it has a certain emissions 

2 profile for that application or for that project, and 

3 then that same piece of equipment has a different duty 

4 cycle for a different project, it can change the 

5 emissions profile. And that's another issue that has 

6 to be taken into account. So that DPF that might have 

7 been appropriate for that current project might not be 

8 appropriate for a different project.

9 Just in general, of course, more rigorous 

10 operating environment. I don't know if anybody's ever 

11 been on a construction site -- vibrations, dust, uneven

12 surfaces. Obviously are going to require use of high13 grade vibration isolators, especially with track drive 

14 equipment like bulldozers, which obviously could 

15 increase the cost as well.

16 And then packaging constraints, which is 

17 probably the number-one thing that's been brought up 

18 today in terms of maintaining driver visibility and 

19 safety, and I have a couple of slides after this that 

20 will touch on that more specifically.

21 And then equipment operators can vary by day. 

22 This sort of just ties into the whole potential 
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1 training issue. So you have one piece of equipment 

2 that on one given day or a given week or a given 

3 project might be one person operating that piece of 

4 equipment who understands that there is a control 

5 technology installed, but then somebody else on another

6 project or another week or another day comes on and 

7 does not quite understand that.

8 So there has to be a level of understanding 

9 and training and for every end-user about how the 

10 emission control technology works on the piece of 

11 equipment.

12 So retrofits can be installed safely. 

13 Obviously, once again, as we've talked about many times

14 already today for many of the speakers, as well as from

15 ARB, safety is a big issue when it comes to retrofit 

16 technology and even more so when we're talking about 

17 off-road.

18 Just wanted to point out clearly that, to 

19 date, we've talked specifically about off-road 

20 retrofits, to date that there has been an excellent 

21 safety record. The pictures that I have showed you 

22 earlier or even the ones that you saw earlier from 
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1 other presentations, there have been no record of any 

2 specific death or fatality or injury due to a poor 

3 installation for off-roads, for off-road technologies.

4 And retrofit manufacturers, our members, the 

5 installers, the companies that are under MECA member 

6 companies who actually install the technologies, of 

7 course, are using best engineering judgment, 

8 installation practice to ensure the safe installation 

9 of devices. Most of these things listed out here are 

10 pretty common that you would find on any instruction, 

11 per instruction manual when installing a retrofit on an

12 off-road piece of equipment.

13 Number one obviously a big one. Do not 

14 obstruct operator line of sight. Do not obstruct the 

15 equipment operation, operator access, mounting on 

16 safety cages. I think that was potentially considered 

17 as a way to potentially install a retrofit as to 

18 elevate it above so that the line of sight of the 

19 driver could see straight through, and you elevate it 

20 high enough, you could see through. Obviously, if 

21 you're going to do something like that, that the mount 

22 can actually support the weight of the emission control
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1 device.

2 Heat shields, that was also brought up as 

3 well. Obviously, heat is a very important issue when 

4 it comes to installation of these new technologies. A 

5 lot of the studies that have been done by MECA not just

6 for diesel vehicles and DPFs, but other emission

7 control technologies have shown that the heat that 

8 comes from the emission control device is the same, if 

9 not lower, than the original muffler that it replaced.

10 And if not, obviously, you would want to 

11 measure this in advance. You can use proper heat 

12 shields to help with diminishing the heat exposure.

13 And of course, last, inspect per 

14 manufacturer's instructions on a regular basis. So 

15 after you've installed the piece of equipment, on a 

16 regular basis you're going out into the field and 

17 checking that the retrofit is operating as it was 

18 installed.

19 And once again, ARB's current regulation 

20 provides for this process for retrofit safety 

21 oversight, and as we're all well aware now that ARB is 

22 currently in the midst of discussions with Cal/OSHA to 
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1 come up with some sort of amendments that will address 

2 what is considered to be safe. Once again, MECA 

3 believes that some level of masking should be allowed

4 when we're talking about the sides or the front or the 

5 back and that mirrors could be used to help address 

6 this. But at the end of the day, of course, whatever 

7 comes out of that process MECA will abide by.

8 And this is just my last slide. Retrofits 

9 have been proven for off-road applications. I think 

10 partly what we're talking here today a lot about, are 

11 these retrofits technically feasible in some sort of 

12 theoretical. I think we're trying to state here that 

13 not just in California, but outside of California and 

14 the U.S. where retrofits are not mandated, that there 

15 has been experience installing retrofits on off-road 

16 pieces of equipment.

17 These technical considerations for successful 

18 off-road retrofit projects basically applies to all 

19 retrofits. But just as important, if not more 

20 important on the off-road side, the application 

21 engineering up front, matching the right technology to 

22 the specific vehicle or piece of equipment. This is 
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1 the data logging that's done up in advance to ensure 

2 that when you look at this piece of equipment, does it 

3 run hot enough to allow for you to use that passive 

4 DPF, or does it require an active DPF?

5 A lot of the times when you see a lot of 

6 these or hear about stories about failures, whether it 

7 be in the off-road or on-road arena, it's not due to 

8 the technology itself, which is sound, it's more about 

9 the installation of it itself. Was there -- did 

10 somebody not do the work up front to know that the duty

11 cycle of this vehicle did not allow it to get hot 

12 enough to be able to burn off the soot so that DPF 

13 would work properly?

14 So application engineering very important up 

15 front to determine whether or not what retrofit device 

16 can go on or even if one should be put on that vehicle.

17 And then, of course, having that proper professional 

18 installation. A lot of the MECA member companies 

19 themselves manufacture the devices, but there are other

20 companies out there who actually do the installation. 

21 So, obviously, having not a fly-by-night type of person

22 to go out there to install these devices, but somebody 
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1 who's certified and does it correctly.

2 On-vehicle monitors as well. So after the 

3 device has been installed, any Level 3 device will come

4 with a monitoring kit for both back pressure and 

5 temperature. So it's very important that those are 

6 installed correctly. They provide important user 

7 feedback on performance.

8 And then maintenance. This is not like DOCs 

9 in the past, where you install it and forget about it. 

10 You cannot forget it. Once you decide to go down this

11 route of installing a Level 3 device, a diesel 

12 particulate filter, active or even a Level 2, there is 

13 some level of maintenance that needs to be done and 

14 followed through with. So all of these vehicle

15 equipment and retrofit devices require some level of 

16 frequent inspection and maintenance.

17 And then just last, the successful retrofits 

18 require a cooperative effort between fleet owners, 

19 operators, and technology providers. At the end of the

20 day, it's not just about the device itself. You have 

21 to get understanding and cooperation between the fleet 

22 owner, the end-user and operator themselves, and the 
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1 technology providers. Up front, you have to have the 

2 discussions to understand what your fleet looks like 

3 and what emission control devices are appropriate.

4 And just last, MECA strongly supports ARB's 

5 waiver request. We in the past, like I said, have 

6 supported ARB in its other ATCMs, in-use ATCMS, not 

7 just for off-road, and we'll be providing more written 

8 and detailed comments by the May 18th deadline.

9 MR. SIMON: Thank you, Mr. Santos. 

10 Appreciate your testimony, and we look forward to your 

11 written comments as well.

12 Nick Goldstein?

13 MR. GOLDSTEIN: Good afternoon. I am Nick 

14 Goldstein, the assistant general counsel for the 

15 American Road and Transportation Builders Association, 

16 or ARTBA. ARTBA represents more than 5,000 members 

17 nationwide involved in all sectors of the U.S. 

18 transportation design and the construction industry.

19 I'd like to begin my statement by thanking 

20 the U.S. Environmental Protection Agency for the 

21 opportunity to speak at today's public hearing 

22 regarding the consideration of the California Air 
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1 Resources Board's request for a Federal waiver from the

2 EPA allowing the implementation of ARB's regulations 

3 for in-use off-road diesel vehicles.

4 ARTBA's many California members rely heavily 

5 on off-road construction equipment to perform core 

6 business functions and would be directly impacted by 

7 ARB's in-use off-road diesel equipment regulation. 

8 Similarly, if ARB's regulation is eventually adopted by

9 other States, ARTBA's members nationwide would also be 

10 impacted.

11 The Clean Air Act grants special status to 

12 California due to the State's unique air quality 

13 problems, allowing California to set its own air 

14 quality standards in many areas, subject to Federal 

15 approval. If approved, this Clean Air Act then gives 

16 other States the choice to either stay with existing 

17 Federal standards or opt in to those passed by 

18 California.

19 Transportation improvement projects often, by 

20 necessity, involve moving construction equipment across

21 State lines. A patchwork approach to State regulation 

22 could lead to a scenario where equipment becomes usable
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1 on one portion of a project, but prohibited in another.

2 The Clean Air Act does not give California complete 

3 authority to enact its own standards. There are

4 limitations.

5 Among these limitations, California may not 

6 set its own standards or impose other emission-related 

7 requirements for new engines which are used in 

8 construction equipment or vehicles or used in farm 

9 equipment or vehicles which are smaller than 175 

10 horsepower. This preemption lasts throughout the 

11 useful life of the equipment.

12 The ARB regulations would apply to apply to 

13 all in-use off-road diesel construction equipment with 

14 a rating of 24 horsepower or more and are thus not 

15 allowed by the Clean Air Act. Further, the Clean Air 

16 Act states that any proposed California standards must 

17 be "at least as protective of the public health" as 

18 those on the Federal level.

19 Protecting the public health is a commendable

20 objective and one shared by ARTBA. EPA, however, must 

21 be cognizant of the impact that ARB's proposed 

22 standards would have on public health both within 
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1 California, as well as any other States that chose to 

2 opt in to the standards if they are enacted. Due to 

3 the enormous expense of replacing the affected in-use 

4 off-road construction equipment -- in some cases, more 

5 than $1 million for each machine -- the cost of sorely 

6 needed transportation and infrastructure improvement 

7 projects will likely increase. This means that either 

8 fewer roads, schools, housing, and levees will be built

9 or project owners will have to spend more.

10 For those projects that go forward, the pace 

11 at which they can be completed could be significantly 

12 slowed because the pool of construction equipment -- of

13 construction firms, I'm sorry, with the proper 

14 equipment to do the jobs will likely be diminished.

15 Further, nearly 36,000 people die each year 

16 on the U.S. highways, and many federally funded highway

17 improvements in these States are designed specifically 

18 to address safety issues. As such, allowing ARB's rule

19 to go forward could lead to highway improvements being 

20 denied and, in turn, delaying needed safety 

21 enhancements that would improve the public health.

22 Also, the Clean Air Act states that 
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1 California's standards should not be adopted if 

2 California's public health protectiveness determination

3 for the ARB rule is "arbitrary and capricious" or if 

4 "California does not need such standards to meet 

5 compelling and extraordinary conditions."

6 In considering whether or not ARB's rule is 

7 arbitrary and capricious, ARTBA respectfully submits 

8 that ARB's failure to consider collateral negative 

9 public health impacts of the off-road diesel rule make

10 the public health protectiveness determination 

11 arbitrary and capricious. While ARTBA is very 

12 supportive of both the EPA and ARB's goal of reducing 

13 particulate matter and NOx emissions, ARTBA does not 

14 believe that ARB has considered fully some of the air 

15 quality improvements already occurring in California 

16 and the Nation. These improvements in air quality

17 undercut the need for a measure as severe as the ARB 

18 proposal.

19 EPA should recognize that reductions in PM 

20 and NOx levels will occur as a direct result of 

21 existing Federal regulations. Dramatic improvements in

22 emissions levels will come from implementation of 
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1 regulations on sulfur levels in gasoline, as well as 

2 measures affecting heavy-duty diesel engines and 

3 highway vehicles.

4 In fact, regulations took effect in 2006 

5 requiring refiners to meet a 30 parts per million 

6 average sulfur level for gasoline with a cap of 80 

7 parts per million. This fuel will enable vehicles to 

8 use emissions controls which are projected to reduce 

9 tailpipe emissions of NOx by 77 percent from passenger 

10 cars and as much as 95 percent from pickup trucks,

11 vans, and sports utility vehicles. When fully 

12 implemented, these regulations will have the effect of 

13 removing 164 million cars from our Nation's roadways.

14 In addition, the EPA will continue 

15 implementation of its rule to make heavy-duty trucks 

16 and buses run cleaner. Pollution from heavy-duty 

17 highway vehicles will be reduced more than 90 percent, 

18 resulting in an additional reduction in NOx levels of 

19 2.6 million tons per year, while PM will be reduced by 

20 110,000 tons per year.

21 EPA has also begun implementation of its rule 

22 to regulate emissions from nonroad diesel engines by 
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1 integrating engine and fuel controls as a system to 

2 gain the greatest emission reductions. This is 

3 estimated to result in an additional reduction of

4 738,000 tons of NOx per year.

5 All of these reductions, coupled with EPA's 

6 own findings that between 1980 and 2008, gross domestic

7 production increased 126 percent, vehicle miles 

8 traveled increased 91 percent, energy consumption 

9 increased 34 percent, population increased 29 percent, 

10 while at the same time, emissions of all 6 principle 

11 air pollutants, including NOx and particulate matter, 

12 decreased by 54 percent, show that the air quality is 

13 significantly improving across the Nation and in 

14 California without the ARB rule.

15 Finally, the Clean Air Act requires that 

16 California standards comply with the "feasibility 

17 constraints" when implementing its rule. ARTBA has 

18 serious concerns, many of which have been gone over 

19 already today, regarding the specifics and feasibility

20 of ARB's off-road diesel rule.

21 ARB's regulation requires the use of 

22 technology which, in some cases, may not available for 
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1 purchase until 2014. Further, where technology is 

2 available, the sudden increase in demand caused by the 

3 ARB rule could cause supplies to be exhausted. 

4 Contractors simply may not be able to purchase the 

5 necessary equipment and could be barred from continuing

6 their work.

7 If ARB's rule is fully implemented, there 

8 could be profound, negative impacts on California's 

9 infrastructure rebuilding efforts, the health of the 

10 State's construction industry, and its overall economy.

11 Instead, ARB must allow technology to catch up to its 

12 regulatory goals by allowing industry more time to 

13 develop equipment clean enough and available enough to 

14 meet the standards mandated by the demand created by 

15 its regulation.

16 Many of California's larger construction 

17 companies have already begun the process of repowering 

18 or retrofitting their fleets in anticipation of these 

19 regulations. However, smaller companies with less than

20 five employees, which make up 55 percent of 

21 California's industry, will be severely hampered by the

22 costs of repowering and retrofitting equipment that, in
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1 some cases, are the sole assets of their family-owned 

2 businesses.

3 Additionally, many of these smaller companies 

4 simply do not have the resources or access to capital 

5 to repower or retrofit their engines and may be forced 

6 to park the equipment, ultimately costing jobs and 

7 revenue to the State's economy.

8 Under the annual emission reduction targets 

9 required in the ARB regulation, many contractors will

10 be required to first repower or retrofit an engine, 

11 only to have to turn around a few years later and 

12 replace the entire piece of equipment when the 

13 technology to do the job right finally hits the

14 marketplace.

15 In conclusion, ARB's rule does not satisfy 

16 the requirements of the Clean Air Act because it 

17 attempts to regulate equipment below 175 horsepower, 

18 could lead to public health concerns, and is arbitrary 

19 and capricious. EPA should recognize this and deny 

20 ARB's request for a Federal waiver.

21 ARTBA looks forward to continuing to work 

22 with both the EPA and ARB in encouraging voluntary 
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1 diesel retrofitting at an attainable pace, rather than 

2 maintaining retrofits at a pace many companies will not

3 be able to meet.

4 Thank you very much.

5 MR. SIMON: Thank you, Mr. Goldstein, for 

6 your testimony. Appreciate it. Thank you.

7 Anyone else wishing to testify? We've heard 

8 from pretty much everybody in the room.

9 Given that California is -- as we have in 

10 previous waiver practice, California is given the 

11 opportunity, if they so choose, to make any closing 

12 remarks or --

13 I'm saying California is given a chance to, 

14 if they would choose, they have a chance to come and 

15 make any closing remarks, and it's completely optional.

16 MR. WHITE: Yes. We would like to make a 

17 couple responses.

18 MR. SIMON: Okay. Please, come on up.

19 MR. TERRIS: Again, this is Michael Terris 

20 and Erik White, representing CARB.

21 We'd like to just make a couple responses to 

22 some of the comments that were made today. First, with
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1 regard to Mr. Prescott's comments and his statement 

2 that CARB has no experience in dealing with the 

3 construction industry and safety and that it shouldn't 

4 be making determinations regarding safety. The way the

5 regulation is drafted, the decisions, basically CARB 

6 will have a review process, but will accept statements 

7 and comments from, first, the installers and the 

8 retrofit manufacturers as to whether the equipment can 

9 be safely installed on a specific application.

10 Second, the end-user, the contractor, can 

11 submit other documentation to the executive officer to 

12 consider in making his determination after evaluating 

13 all the facts from comments, documentation from engine 

14 manufacturers, from equipment manufacturers, from 

15 independent laboratories. All of that will be 

16 evaluated by the executive officer. And if there is 

17 disagreement with the executive officer's decision, 

18 there is an entire appeals process that can be gone 

19 through to make a final determination.

20 And third, CARB has made it very clear that 

21 it will accept any determination by any Federal or 

22 State agency that is responsible for making safety 
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1 determinations, including the Federal Aviation 

2 Administration and as well as Cal/OSHA, the Mining 

3 Administrations, and any determination by them that the

4 retrofit installation would violate their rules or 

5 regulations CARB would accept.

6 Second thing with regard to Mr. Prescott made 

7 the point that present Cal/OSHA rules do not consider 

8 rear visibility issues. CARB has basically agreed with

9 Cal/OSHA that rear visibility should be a factor and 

10 considered, and in CARB's interim period where it's 

11 looking at visibility impairment and whether or not a 

12 retrofit should be installed is taking that into 

13 consideration. And if rear visibility is impaired, 

14 there is no requirement that it be installed at this 

15 point.

16 With regard to Mr. Cloud's statement and the 

17 AGC petitions, I just wanted to clarify that AGC did 

18 file a petition in December 2008 basically asking for 

19 CARB to review the rule and to repeal it. At AGC's 

20 suggestion, the petition was put into abeyance. It's 

21 an agreement between the parties and that neither party

22 to date has exercised the condition of the abeyance 
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1 agreement to give 2 weeks' notice to sort of revive the

2 petition and have it addressed.

3 Regarding the January 2009 petition, AGC 

4 requested that there be a 2-year delay in implementing 

5 the fleet average requirements of the regulation. CARB

6 did respond to that petition, granting it in part, 

7 denying it in part. The granting of it basically said 

8 that CARB would review its regulations and hold an 

9 executive officer fact-finding hearing, which it did 

10 hold in March of this year, and that it would present 

11 its findings to the board at the April hearing.

12 One of the big issues that was raised by just 

13 about all the commenters is the technical feasibility 

14 of VDECS, and we want to make it -- it was basically 

15 set forth in our previous submittals to EPA and it was 

16 restated today. The regulation provides for an 

17 exemption. When a VDEC is unavailable, then there is 

18 no requirement that it be installed. The same is true 

19 for Tier 3 and Tier 4 engines and vehicles. If they 

20 are not available, they do not have to be installed.

21 The ATA --- I'm sorry, yes, ATA basically 

22 indicated that that is not -- should not be considered 
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1 by EPA in granting, making its tech feasibility 

2 considerations. And I just want to basically state 

3 that in the International Harvester, the court 

4 recognized that a regulation can be extremely stringent

5 so long as there is an escape clause, escape hatch 

6 available to the industry.

7 We believe that an exemption, which is one of 

8 the examples given by the court in that case, is such 

9 an escape hatch and that a second escape hatch would be

10 that CARB's continuing review of the regulation. And 

11 that CARB will be able to address issues that if they 

12 come up in appropriate amount of time to allow the 

13 industry to fully comply with the regulation, without 

14 being in violation of it.

15 And basically, another point that I want to 

16 mention lastly is the mention of the recession. The 

17 recession, as we stated today in our initial opening 

18 presentation, is real. We don't deny that, and we are 

19 continuing to look at it. We just believe that for 

20 decisions that deal with how best to address the 

21 business in California that EPA should defer to the 

22 policy judgments of the State.
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1 And lastly, with regard to the recession, I 

2 just in the flight out here yesterday, I was reading 

3 about the recession and impact on CSX railroad company,

4 and basically, they mention that they had a significant

5 downturn over the last several years. But in the past 

6 quarter, their business is up 6 percent. So although 

7 this is a severe economic recession, things do rebound,

8 and that's a consideration that the CARB will be 

9 considering.

10 Erik?

11 MR. WHITE: I think Mike hit on -- this is 

12 Erik White with the Air Resources Board. Mike hit on, 

13 I think, many of the issues that were raised today 

14 regarding the technical feasibility surrounding 

15 retrofits, and I think that as you look at that, I 

16 think we've seen many examples of successful retrofits,

17 not only in California, but nationwide and around the 

18 world, particularly in Europe.

19 And one of the things that wasn't mentioned 

20 here is there was a lot of focus about retrofits that 

21 necessarily need to happen on the outside of the 

22 vehicle. What wasn't mentioned is one of the things 
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1 we're seeing is that as issues with safety have been 

2 raised by the regulated industry and as the retrofit 

3 industry has looked to respond to our regulatory 

4 requirements, what we've seen is a significant amount 

5 of innovation in terms of where those devices can be 

6 mounted.

7 And what we're beginning to see is a 

8 significant number of those being installed under the 

9 hood, where there are no visibility impacts, issues 

10 around heat exposure to workers are eliminated because 

11 they are under the cowling. So I think, as we've 

12 looked at the technical feasibility of our rule, what 

13 we have seen is that not only have the number of 

14 retrofits that have been verified greatly expanded from

15 what was available when the rule was first approved by 

16 our board, is that you're seeing a greater variety in 

17 terms of the ability to retrofit these vehicles.

18 And in fact, the OEMs are involved, whether 

19 it's the Caterpillars, whether it's the John Deeres who

20 have taken and looked at this rule and seen an 

21 opportunity to upgrade older equipment to provide more 

22 useful life to that for the end-user and are working 
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1 with the retrofit industry to provide workable, safe 

2 retrofit solutions for their products.

3 I just wanted to add that to Mike's comments.

4 The other comment I wanted to make is in 

5 regards to cost because I think we've heard a lot about

6 the significant costs associated with this regulation. 

7 And throughout its development and throughout the 

8 board's consideration of this, there was a clear 

9 recognition that this is a very expensive regulation.

10 In fact, as the board debated and evaluated 

11 the need for this, cost was certainly one of the most 

12 important considerations, along with the air quality 

13 needs or benefits that it provided, as it looked for 

14 and ultimately made that policy decision. That while 

15 an expensive regulation was clearly a needed regulation

16 -- and during the development, certainly there was a 

17 great deal of evaluation of ARB's cost numbers. And in

18 fact, ARB did look at many of the cost numbers that 

19 were developed, including the one that was cited today 

20 about a $12.9 billion cost and held a special workshop 

21 specifically to look at and address that matter.

22 And as we looked at those cost estimates, 
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1 what we found is that they were significantly biased to

2 the high side and that they presumed activities that 

3 were not required under the regulation or they looked 

4 at not necessarily the least cost compliance option 

5 available to fleets and not taking advantage of the 

6 full amount of flexibility that the regulation 

7 required.

8 So, again, even after doing that, ARB 

9 presented to the board and the board accepted the 

10 numbers that Mike talked about earlier, the $3 billion 

11 to $3.6 billion as, in fact, the direct regulatory 

12 costs associated with this regulation.

13 Now, clearly, I think we all recognize the 

14 world has changed since 2007. And I think the 

15 California Air Resources Board has shown a clear 

16 willingness to relook at the requirements and the 

17 economic impacts on that, whether that's through direct

18 action of the Air Resources Board or through direct 

19 action of the California legislature, to look at 

20 opportunities to still meet our clean air goals, but do

21 it in a way that provides greater flexibility, 

22 additional time, lower cost to end-users. And in fact,
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1 that work continues to go on.

2 But because of that, I think it's very clear 

3 that California feels very strongly that those types of

4 decisions should -- are best left to California to make

5 and working directly with affected stakeholders in 

6 California to understand how what relief is appropriate

7 to balance the economic impacts of the regulation 

8 relative to the environmental benefits that the 

9 regulation provides.

10 While we spent a lot of time today talking 

11 about the needs to meet National Ambient Air Quality 

12 Standards, what we haven't discussed a lot is the need 

13 to meet State Ambient Air Quality Standards as well, as

14 well as to address the needs to meet California's 

15 diesel risk reduction plan, which targets significant 

16 and early emission reductions of directly emitted 

17 diesel PM.

18 So as we look at the benefits of the rule, I 

19 think we need to remain mindful that we need to look 

20 broadly in that while National Ambient Air Quality 

21 Standards are certainly one important aspect and goal 

22 of the environmental benefits that the regulation will 
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1 provide, they are not the only environmental benefit 

2 that California is looking to achieve with this 

3 regulation.

4 So, with that, we will close our comments.

5 MR. SIMON: Great. Thank you.

6 Given that, then I will declare this hearing 

7 closed.

8 As we noted at the outset, the public comment

9 period will remain open until May 18,2010. All 

10 interested parties are encouraged to provide their 

11 written comments on CARB's authorization request and 

12 any comments, information, data, and evidence presented

13 by persons who testify at today's hearing, these

14 written comments should be submitted in accordance with

15 the March 12, 2010, Federal Register notice.

16 And I thank everyone for coming, and your 

17 testimony today I think has been very helpful from our 

18 perspective.

19 Thank you, and good day.

20 [Whereupon, at 1:34 p.m., the meeting was 

21 concluded.]

22