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1 ENVIRONMENTAL PROTECTION AGENCY 

2

3 PUBLIC COMMENT HEARING REGARDING CALIFORNIA'S REQUESTS FOR 

4 AUTHORIZATION FOR: 

5 IN-USE OFF-ROAD DIESEL-FUELED VEHICLE REGULATIONS, 

6 DOCKET NO. EPA-HQ-OAR-2008-0691; 

7 and 

8 YARD TRUCKS POWERED BY OFF-ROAD ENGINES AND AUXILIARY 

9 ENGINES ON TWO-ENGINE SWEEPERS REGULATIONS, 

10 DOCKET NO. EPA-HQ-OAR-2012-0335 

11

12 Room 603 

13 1310 L Street, NW 

14 Washington, D.C. 

15 Thursday, September 20, 2012 

16

17 The meeting was convened, pursuant to notice, at 

18 10:04 a.m., JANET COHEN presiding. 

19 PANEL MEMBERS: 

20 JANET COHEN, Presiding Officer 

21 DAVID DICKINSON 

22 MICHAEL HOROWITZ 
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1 P R O C E E D I N G S 

2 (10:04 a.m.) 

3 PRESIDING OFFICER COHEN: Good morning. I would 

4 like to welcome you to this public hearing on the 

5 California Air Resources Board's, or CARB's, request for 

6 EPA authorization of its off-road compression-ignition in7 use fleets regulation, which is otherwise known as the 

8 off-road fleets regulation, and CARB's request for 

9 authorization of its yard trucks powered by off-road 

10 engines and auxiliary engines on two-engine sweepers, or 

11 yard sweepers, regulation. 

12 EPA announced in two separate Federal Register 

13 notices issued on August 21, 2012, that it would be 

14 offering an opportunity for hearing for each of these two 

15 regulations. Today's single hearing is designed to offer 

16 an opportunity for oral comment at each of the Federal 

17 Register notices. 

18 My name is Janet Cohen. I'm Associate Director 

19 of the Compliance Division within EPA's Office of 

20 Transportation and Air Quality. I will be Presiding 

21 Officer for today's hearing. On the panel today with 

22 me are: David Dickinson, an Attorney Adviser within the 
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1 Compliance Division; and Michael Horowitz from our Office 

2 of General Counsel. 

3 EPA previously held a public hearing in 

4 Washington, D.C., on October 27, 2008, based on CARB's 

5 initial authorization for its off-road fleets regulation. 

6 The written comment period for CARB's initial 

7 authorization request remained open until December 19, 

8 2008. 

9 On April 14, 2010, EPA held an additional public 

10 hearing in Washington based on CARB's February 11, 2010, 

11 letter to EPA in which CARB requested that its additional 

12 amendments to its off-road fleets regulation be considered 

13 by EPA. The written comment period on CARB's amended 

14 request closed on May 18, 2010. 

15 On March 1, 2012, CARB again amended its request 

16 to EPA by including amendments passed by the Board in 

17 December 2010. Today's hearing is in response to CARB's 

18 latest off-road fleets regulation request and the written 

19 comment period will close on October 22, 2012. 

20 Today's hearing is also in response to CARB's 

21 yard sweepers authorization request and the written 

22 comment period on that request will also close on October 
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1 22, 2012. 

2 We are conducting this hearing in accordance 

3 with Section 202(e) of the Clean Air Act, under which EPA 

4 provides interested persons with the opportunity for oral 

5 presentation of views and arguments, as well as the 

6 opportunity to make written submissions relating to the 

7 determinations to be made by the Administrator. This 

8 hearing provides the forum for those oral presentations. 

9 Section 209(e)(2) of the Clean Air Act sets 

10 forth specific criteria by which EPA evaluates CARB's 

11 authorization request. We ask that those providing oral 

12 and written comments direct their statements towards those 

13 criteria. 

14 The Administrator's determination regarding the 

15 action to be taken with respect to California's 

16 regulations will be based upon the testimony of this 

17 hearing, information submitted by California, relevant 

18 written submissions, and other information deemed 

19 relevant. 

20 The hearing will be conducted informally and 

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

22 Presiding Officer I'm authorized to strike from the record 
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1 statements which are deemed irrelevant or needlessly 

2 repetitious and to enforce reasonable limits on the 

3 duration of statements of any witness. 

4 Witnesses will be allowed to make oral 

5 statements, which they may later expand in writing for the 

6 record. Witnesses are requested to state their name and 

7 affiliation prior to making their oral statements. When a 

8 witness has finished his or her presentation, members of 

9 this panel may ask the person questions regarding the 

10 issues raised in the testimony. 

11 We have received requests to present oral 

12 testimony from the California Air Resources Board, Pacific 

13 Legal Foundation, the American Road and Transportation 

14 Builders Association, the Manufacturers of Emission 

15 Control Association, the Associated General Contractors 

16 Association, the Construction Industry Air Quality 

17 Coalition, and the California Trucking Association, and 

18 independent consultant Steven Milloy. If any other party 

19 in attendance wishes to present oral testimony at this 

20 hearing, please inform us now. 

21 At the conclusion of all oral presentations, 

22 CARB may respond briefly to the oral statements of other 
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1 parties. 

2 We are having this hearing recorded and the 

3 transcript will be available for public inspection and 

4 copying in EPA's Air and Radiation Docket at Docket No. 

5 EPA-HQ-OAR-2008-0691. The transcript will be available 

6 for Internet access on the Regulations.gov web site. 

7 With that, we invite the representatives of the 

8 California Air Resources Board to present their testimony. 

9 (Screen.) 

10 PRESENTATION OF THE CALIFORNIA AIR RESOURCES BOARD 

11 MR. WHITE: Good morning. It's a pleasure to be 

12 here. My name is Eric White. I'm the Assistant Chief of 

13 the Mobile Source Control Division of the Air Resources 

14 Board. I'll be providing some background on the off-road 

15 regulations, why the regulations are important for 

16 California, the history of our request for authorization 

17 from EPA, and a description of the regulation. 

18 Then I will hand the presentation over to Aron 

19 Livingston, Assistant Chief Counsel of the ARB's Office of 

20 Legal Affairs. Aron will review the criteria EPA is 

21 required to consider when reviewing a request for a non22 road engine authorization for California. I know you 
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1 are familiar with these issues, as ARB staff gave a 

2 similar presentation at previous hearings in October 2008 

3 and April 2010. Aron will explain why the regulation 

4 meets the conditions for granting California's 

5 authorization request. 

6 (Screen.) 

7 CARB adopted the in-use off-road regulation 

8 under the authority granted to it by the California Health 

9 and Safety Code to adopt all feasible measures to address 

10 criteria pollutants affecting the state's health and 

11 welfare and to adopt airborne toxic control measures to 

12 address pollutants identified as toxic air contaminants. 

13 (Screen.) 

14 CARB has identified particulate matter as a 

15 toxic air contaminant. Under California law, CARB is 

16 required to make every effort to achieve maximum possible 

17 reductions in public exposure and to identify toxic air 

18 contaminants using best available control technology. 

19 The in-use off-road regulation is also a major 

20 element of the state's strategy to reduce off-site 

21 emissions of nitrogen in order to reduce ambient ozone and 

22 particulate matter levels. Under the California and 
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1 federal Clean Air Acts, California is under a mandate to 

2 meet state emissions standards and national ambient air 

3 quality standards. 

4 (Screen.) 

5 CARB originally approved the off-road regulation 

6 in July 2007. Then in January and July of 2009 CARB 

7 approved amendments to the regulation intended to provide 

8 additional flexibility and relief to affected fleets 

9 during the recession. CARB approved further major 

10 amendments to the regulation in December 2010, again in 

11 response to the recession, as well as reduced estimates of 

12 off-road emissions, which delayed the start of the 

13 regulation by four years and reduced the requirements for 

14 all fleets. 

15 I would note that during the development of 

16 those final set of amendments CARB worked very closely 

17 with industry, including the Association of General 

18 Contractors of America, to develop its proposal that it 

19 presented to the Board. 

20 (Screen.) 

21 As with the off-road regulation, CARB adopted 

22 the truck and bus regulation under its authority to adopt 
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1 all feasible measures to address criteria pollutants 

2 affecting the state's health and welfare. Life the off3 road regulation, the truck and bus regulation is also a 

4 major element of the state's strategy to reduce NOx 

5 emissions in order to reduce ambient ozone and particulate 

6 matter levels. 

7 ARB approved the truck and bus regulations for 

8 adoption in 2008 and approved major amendments to the 

9 regulation in 2010, again in response to the recession. 

10 (Screen.) 

11 In-use off-road vehicles covered by the 

12 regulation are not preempted under Section 209(a) of the 

13 Clean Air Act and a waiver is not required. In September 

14 2011, after the amendments were formally adopted, 

15 California submitted those parts of the regulation that 

16 apply to in-use motor vehicles to EPA as a revision to the 

17 California state implementation plan. EPA approved the 

18 SIP revision on April 4, 2012. 

19 California submitted an authorization request to 

20 EPA for those parts of the regulation that apply to in-use 

21 off-road engines. No party requested that a hearing be 

22 held today for that authorization request and therefore 
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1 the remainder of our presentation will focus on the in-use 

2 off-road regulation authorization request. 

3 (Screen.) 

4 The in-use off-road regulation is one of a 

5 number of in-use non-road regulations California has 

6 submitted to EPA for authorization affecting non-road 

7 engines. To date EPA has granted authorizations for the 

8 airborne toxic control measure for transport refrigeration 

9 units, TRU ATCM, in 2009, which was upheld in April 2010 

10 by the Court of Appeals for the D.C. Circuit, as well as 

11 authorizations for California's shore power and harbor 

12 craft regulations in 2011, December 2011; cargo handling 

13 equipment ATCM in February 2012; and the large spark14 ignited fleet regulation in April 2012. 

15 CARB's request for authorization for the off16 road regulation today was first submitted for 

17 authorization -- was first submitted by California in 

18 August 2008, and California filed supplemental comments on 

19 June 12 and December 29, 2009, February 11, 2010, and 

20 March 1, 2012. This is the third hearing on this waiver. 

21 The authorization is critical to California as 

22 it would allow CARB to begin to implement the in-use 
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1 performance standards and associated enforcement 

2 provisions of the regulation, thereby achieving critically 

3 needed emission reductions. Authorization will also allow 

4 affected fleets to plan and building for compliance. With 

5 the first compliance date of January 1, 2017, affected 

6 fleets need certainty today and need the authorization 

7 now. 

8 (Screen.) 

9 I'm going to wrong way, aren't I. 

10 (Screen.) 

11 There we go, okay. 

12 Now I will briefly describe the in-use off-road 

13 diesel-fueled regulation and its current status. In our 

14 presentation to the EPA at the October 2008 and April 2012 

15 hearings and in our written submittals, CARB has described 

16 in detail the specific provisions of the off-road 

17 regulation. I'd like to give an overview of the 

18 regulation here today. 

19 The off-road regulation addresses emissions from 

20 in-use off-road diesel-fueled vehicles 25 horsepower or 

21 greater and establishes a statewide program to reduce off22 road fleets emissions of NOx and diesel PM. The 
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1 regulation requires all off-road fleets to report their 

2 vehicles to CARB and to label them. It establishes in-use 

3 performance requirements for off-road diesel-fueled fleets 

4 that are strictest for the largest fleets. The regulation 

5 provides numerous other flexibility provisions, including 

6 various exemptions from having to meet in-use performance 

7 requirements. 

8 The Surplus Off-road Opt-in for NOx program, or 

9 SOON, is aimed at achieving additional NOx reductions in 

10 areas that need greater emission reductions than other 

11 areas of the state. For SOON to be effective in a region, 

12 an air district's governing board must opt into the 

13 program and provide incenting funding to fleets that fall 

14 into the program. To date, only the South Coast Air 

15 Quality Management District has opted into this program. 

16 (Screen.) 

17 The off-road regulation applies to large fleets, 

18 greater than 5,000 horsepower in total, beginning in 2014; 

19 medium fleets, with combined horsepower between 2500 

20 horsepower and 5,000 horsepower, beginning in 2017; and 

21 small fleets, 25 horsepower or less, beginning in 2019. 

22 It imposes fleet average targets that then become 
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1 increasingly stringent over a ten-year period. 

2 If a fleet cannot or chooses not to meet the 

3 fleet average target, then it will have to fulfill the 

4 best available control technology, or BACT, requirements 

5 within a given compliance year. This requires a fleet to 

6 retire, repower, designate for low use, or retrofit a 

7 certain percentage of that fleet's horsepower each year. 

8 These BACT rates start out at 4.8 percent of the fleet's 

9 total horsepower beginning in 2014 and then increase to 10 

10 percent annually thereafter over the compliance time line. 

11 The regulation also restricts the fleets from 

12 adding older dirtier vehicles into their fleets. 

13 (Screen.) 

14 Since CARB's staff's last presentation to EPA on 

15 this issue, CARB in December 2010 approved major 

16 amendments to the off-road regulation, which I'd like to 

17 summarize here. The amendments were intended to provide 

18 significant near-term economic relief for off-road fleets 

19 covered by the rule. These amendments delayed the 

20 regulation's start date for all fleets by four years. 

21 Additionally, CARB simplified and reduced the annual 

22 requirements of the off-road regulation so that in each 
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1 compliance year a fleet would only have to meet a single 

2 emissions target. The annual BACT requirements were 

3 reduced from a 28 percent turnover and retrofit 

4 requirement to a combined 4.8 to 10 percent turnover or 

5 retrofitting requirement. This means that a fleet will 

6 have both lower BACT requirements and more flexibility to 

7 choose between turnover or retrofitting to meet -- to 

8 establish compliance. 

9 The amendments also removed all mandatory 

10 retrofitting requirements in the regulation, so that 

11 retrofitting is now a compliance option, not a compliance 

12 requirement. 

13 Additionally, the low-use threshold was raised 

14 from 100 hours per year to 200 hours per year. This will 

15 exempt an additional 10 to 12 percent of the least used 

16 vehicles in the fleet from all cleanup requirements, 

17 resulting in overall lower compliance costs. 

18 (Screen.) 

19 To further simplify the regulation, CARB also 

20 included an optional simplified compliance path for the 

21 smallest fleets in the state. Such fleets can simply 

22 phase out their oldest vehicles as their sole means of 
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1 compliance. 

2 Finally, the credits for early actions were 

3 expanded to encourage progress towards cleaner vehicles 

4 made during this interim period before compliance actions 

5 are required. 

6 Overall, the 2010 amendments made the regulation 

7 simpler and less expensive to comply with, while still 

8 maintaining the important emissions reductions benefits of 

9 the regulation. 

10 I would now like to turn things over to Aron 

11 Livingston to take us through the criteria that EPA must 

12 consider in granting an authorization and applying that 

13 criteria to California's request for authorization. 

14 (Screen.) 

15 MR. LIVINGSTON: Thank you, Eric. 

16 Good morning to the hearing panel and audience 

17 members. Section 209(e)(1) expressly preempts all states, 

18 including California, from adopting emissions standards 

19 for new locomotives and engines and new engines under 175 

20 horsepower primarily used in farm and construction 

21 equipment. 

22 Section 209(e)(2) establishes an implied 
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1 preemption that further prohibits states other than 

2 California from adopting their own emissions standards and 

3 other emission-related control requirements for other new 

4 and in-use non-road engines. California has, however, 

5 been vested by Congress with the right to adopt emission 

6 standards for these other non-road engines, but must 

7 obtain authorization from EPA. 

8 EPA must grant California's request for 

9 authorization unless it can make the specific findings set 

10 forth in Section 209(e)(2). 

11 (Screen.) 

12 First, California in adopting the non-road 

13 emission requirements -- 

14 PRESIDING OFFICER COHEN: Just minimize. 

15 MR. LIVINGSTON: I guess we're safe. 

16 (Screen.) 

17 First, California in adopting the non-road 

18 emissions requirements must make a finding of 

19 protectiveness, that its standards are in the aggregate as 

20 protective of the public health and welfare as applicable 

21 federal standards. Section 209(e)(2) directs the 

22 Administrator to grant the authorization request unless 
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1 she finds that CARB in making its protectiveness finding 

2 acted arbitrarily and capriciously, which is a high legal 

3 standard. 

4 (Screen.) 

5 The Administrator may also deny authorization if 

6 she finds that California does not need its emission 

7 program to meet compelling and extraordinary conditions, 

8 and that's a test that we've met repeatedly, and I'll talk 

9 about that in a minute. 

10 (Screen.) 

11 The third and final prong is that the 

12 Administrator may deny authorization if the California 

13 standards and accompanying enforcement procedures are 

14 inconsistent with Section 209. EPA has long held that 

15 "consistent with Section 209" means the regulation does 

16 not conflict with Section 209(a) and that it's not 

17 regulating new motor vehicles. 209(b)(1)(C) and 

18 209(e)(1),l and I'll go through each of those. 

19 (Screen.) 

20 It's also well established that EPA can only 

21 consider those three criteria set forth in 209(e)(2), that 

22 EPA must give substantial deference to California's policy 
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1 judgments, and that the burden is on those who oppose the 

2 granting of the authorization to show why it should not be 

3 granted. 

4 (Screen.) 

5 So back to the first prong, protectiveness. The 

6 Board made its initial protectiveness finding for the off7 road regulation in Resolution 07-19 back in July of 2007. 

8 It was subsequently confirmed in the January and July 

9 2009 resolutions and most recently in Resolution 10-48 in 

10 December 2010. It was recognized by the D.C. Circuit in 

11 EMA versus EPA and recently by the court in the TRU ATCM 

12 decision that Congress has not granted EPA authority to 

13 adopt emissions standards for in-use non-road engines, and 

14 by providing that California is the only state that may 

15 obtain authorization from the EPA to adopt standards for 

16 in-use non-road engines Congress has effectively provided 

17 that California is the only government agency with 

18 independent authority to adopt and enforce its own 

19 emissions standards and other requirements for these 

20 engines. While other states may opt to adopt California's 

21 standards, they may do so only after California has 

22 received authorization, and the standards must be 
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1 identical to those adopted by California. 

2 Because EPA cannot adopt its own standards for 

3 these in-use non-road engines, California's standards are 

4 necessarily as or more protective without question. 

5 (Screen.) 

6 On to compelling and extraordinary need, the 

7 second prong. EPA has long held that "compelling and 

8 extraordinary conditions" refers to the factors that tend 

9 to cause pollution. With the unique geographical and 

10 climatic conditions of the state, combined with high 

11 numbers and concentrations of mobile sources, California 

12 continues to have the worst air quality of any of the 50 

13 states. The D.C. Circuit in the TRU ATCM decision 

14 affirmed past numerous decisions that the statutory 

15 language as well as the detailed legislative history of 

16 the Clean Air Act affords California broad discretion in 

17 assessing the state's regulatory needs. 

18 (Screen.) 

19 So California, as evidenced by the South Coast 

20 and San Joaquin Valley Air Basins, continues to have the 

21 worst air quality of any state in the Union. Even during 

22 the midst of the recent economic downturn and recession, 
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1 both air basins continue to have numerous exceedances of 

2 ozone and PM 2.5 state and federal standards. 

3 (Screen.) 

4 So, moving on to the third prong of the waiver 

5 criteria, the requirements of the in-use off-road 

6 regulation do not conflict with Section 209(a) or (e)(1). 

7 The regulations do not regulate new motor vehicles or 

8 engines, new locomotives or engines, or new off-road 

9 engines under 175 horsepower used in farm and construction 

10 vehicles and equipment. To the extent that the regulation 

11 require BACT for NOx, the regulation does not establish 

12 emission standards for new engines used in such cleaner 

13 vehicles. Those standards had previously been adopted by 

14 EPA and CARB in other rules. Additional, the in-use 

15 off-road regulation does not require turnover of any 

16 vehicle less than ten years old. 

17 (Screen.) 

18 So, the in-use off-road regulation meets the 

19 first prong of the Section 202(a) test in that it is 

20 technically feasible and provides significant lead time 

21 and flexibility. CARB in 2007 fully considered cost of 

22 compliance and found the requirements to be cost-effective 
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1 and affordable for most fleets and, in response to the 

2 severe economic recession, the amendments adopted in 2010 

3 relaxed the regulation's requirements, lowering the cost 

4 significantly below what the 2007 version of the 

5 regulation would have cost. 

6 (Screen.) 

7 As to feasibility, the regulation provides 

8 sufficient lead time and compliance flexibility, and we go 

9 into some detail on that. Pending authorization, the 

10 requirements commence in 2014 for large fleets and are 

11 phased in over many years. For example, fleet averages 

12 are gradually phased in over a ten-year period, and fleets 

13 that cannot meet the fleet average targets are never 

14 required to turn over more than 10 percent of their 

15 horsepower in any one year. 

16 (Screen.) 

17 Fleets may choose among many compliance options: 

18 retrofitting their vehicles with exhaust systems with 

19 verified emission control devices, or VDECs, replacing the 

20 engines in existing vehicles with cleaner engines, that is 

21 repowering, replacing older, higher emitting vehicles with 

22 newer vehicles equipped with cleaner engines, retiring 
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1 high emitting vehicles, and-or designating high emitting 

2 vehicles as low use, those that operate less than 200 

3 hours per year. 

4 Compliance with the regulation is possible using 

5 existing technology. For example, the stringency of the 

6 fleet average is phased in over time and requires that 

7 fleets meet the emissions requirements only through use of 

8 existing certified off-road engines or the use of VDECs. 

9 In the early years, the fleet average can be met by 

10 phasing out the use of Tier 0 and Tier 1 engines, in that 

11 the regulation only requires fleets to upgrade to existing 

12 Tier 2 non-road certified engines. Only in later years 

13 will Tier 3 and Tier 4 engines be needed to meet the fleet 

14 average requirements. Fleets are not required to upgrade 

15 to Tier 3 or Tier 4 engines if the engines are not 

16 available. 

17 Additionally, the use of VDECs is no longer 

18 mandatory, and for small fleets if VDECs are not available 

19 or cannot be safely installed in certain fleets, fleet 

20 owners are exempted from compliance for those vehicles. 

21 (Screen.) 

22 As to the SOON program, it's also feasible. It 
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1 affects few fleets and utilizes incentive moneys. Most 

2 fleets will not be affected at all by SOON because it only 

3 applies in air districts that opt in and a district can 

4 only make it mandatory for the largest and dirtiest 

5 fleets. As stated, only the South Coast Air Quality 

6 Management District has chosen to participate in the SOON 

7 program so far. 

8 (Screen.) 

9 On the new engine -- well, yes. As to 

10 technology of the new engines, the regulation will push 

11 fleets to upgrade to newer engines and vehicles. In the 

12 initial statement of reasons and technical support 

13 document, CARB fully described the state of technology for 

14 compliance with both requirements. Interim Tier 4 engines 

15 are available now and final Tier 4 engines will begin to 

16 be available for some horsepower groups in 2013. 

17 (Screen.) 

18 As to VDECs, they're no longer mandatory. 

19 Although they might be a viable option for some fleets, 

20 they are now a compliance option, and for small fleets if 

21 a VDEC is not available or cannot be safely installed that 

22 vehicle is exempt from the BACT requirements of the 
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1 regulation. 

2 For those fleets that wish to use VDECs to 

3 comply with the regulation, there are currently nine Level 

4 3 PM systems verified for off-road use. Level 3 systems 

5 are the most effective ones, those that reduce diesel PM 

6 at least 85 percent. 

7 (Screen.) 

8 So now I'll go into some detail on, in addition 

9 to the technologies that can be applied, some compliance 

10 flexibility provisions that were added to the regulation 

11 after the last hearing. They include numerous provisions 

12 that provide fleets with flexibility. For example, small 

13 fleets do not need to begin to meet the emissions 

14 requirements until 2013 and are not required to turn over 

15 vehicles to meet the BACT requirements. Similarly, fleets 

16 in counties that currently are in attainment and public 

17 fleets that reside in rural counties with low populations 

18 may comply as small fleets regardless of the total 

19 horsepower in their fleet. 

20 As a result of the many early credits available, 

21 many large fleets have accumulated significant credits 

22 that will allow them to be in compliance during the 
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1 regulation's first years. The regulation also exempts 

2 from in-use performance requirements low-use vehicles that 

3 operate less than 200 hours per year, emergency vehicles, 

4 vehicles engaged exclusively in agricultural operations, 

5 as well as several other types of vehicles. 

6 Finally, the regulation allows compliance 

7 extensions if there are manufacturer delays in making 

8 retrofits or new vehicles or engines available. 

9 (Screen.) 

10 There are also BACT exemptions for large and 

11 medium fleets. Vehicles less than ten years old, 

12 specialty vehicles for which no used equipment or repowers 

13 are available, vehicles retrofitted within the last six 

14 years, vehicles equipped with OEM diesel particulate 

15 filters, and vehicles with interim and final Tier 4 

16 engines. 

17 Additionally, if a fleet installs the highest 

18 level PM VDEC before January 1, 2013, that vehicle is 

19 exempt from the BACT requirements for life. The fleet is 

20 only allowed to apply this exemption to up to 15 percent 

21 of its fleet horsepower as of December 31, 2012. 

22 (Screen.) 
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1 As to BACT exemptions for small fleets, they're 

2 very similar to the larger fleets. They're never required 

3 to turn over the vehicles in order to meet the BACT 

4 requirements. 

5 (Screen.) 

6 In summary, the regulation is technically 

7 feasible and provides significant compliance flexibility 

8 to fleets. To the extent that the regulation requires use 

9 of technology anticipated for the future, it addresses the 

10 issue by exempting stakeholders from taking action or 

11 giving them additional lead time to comply. 

12 (Screen.) 

13 While the regulation was being developed, 

14 stakeholders raised concerns that some exhaust retrofits 

15 could present safety hazards by impairing operator 

16 visibility. To address this concern, the California 

17 Division of Occupational Safety and Health, OSHA, and CARB 

18 did a joint study of retrofit impacts on the operator's 

19 view in 2010, and earlier this year CAL-OSHA issued a new 

20 regulation to cover exhaust retrofits. 

21 Safety concerns do not impact the feasibility of 

22 the regulation because: first, the regulation has always 
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1 exempted vehicles that cannot be retrofitted safely; and 

2 second, the regulation has now been amended to completely 

3 remove mandatory retrofitting. 

4 (Screen.) 

5 When EPA reviews the technological feasibility, 

6 they give consideration to costs and, as indicated in the 

7 previous slide, sufficient lead time exists to permit the 

8 manufacturers of engine retrofit devices to develop the 

9 technology necessary to meet the standards and other 

10 requirements. 

11 In the context of in-use regulations, the crux 

12 of the analysis on consideration of costs is whether 

13 sufficient lead time exists for development and 

14 availability of the technology by manufacturers that would 

15 allow fleet operators to comply with the regulation. 

16 Thus, the cost passed on to the purchasers by 

17 manufacturers will be largely subsumed in the initial 

18 consideration of the cost to the new engine manufacturers. 

19 EPA and CARB have respectively determined that 

20 the manufacturers of those new off-road engines will be 

21 able to comply within the time provided for their 

22 compliance. Additionally, CARB in adopting a regulation 
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1 in 2007 further considered whether such costs could then 

2 be passed on by the fleet operators to their customers and 

3 determined that fleets will largely be able to absorb or 

4 pass on the cost to the customers. 

5 As discussed below, due to the recession which 

6 occurred since 2007, CARB has modified the regulation to 

7 make it much more affordable and much less burdensome than 

8 as originally adopted. 

9 (Screen.) 

10 Cost was one of the issues that CARB carefully 

11 considered and analyzed during development and adoption of 

12 the in-use off-road vehicle regulation in 2007. The staff 

13 conducted a three-year-long public process discussing 

14 various proposals for the regulation, held over a dozen 

15 public workshops, and held two workshops focused solely on 

16 how the cost of the regulation was estimated and whether 

17 compliance was affordable. 

18 Moreover, the December 2010 amendments have 

19 greatly reduced the compliance requirements and also 

20 provided fleets with early compliance credits that will 

21 allow fleets to significantly reduce their compliance 

22 costs throughout the life of the regulation, especially in 
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1 the near term. 

2 (Screen.) 

3 The amendments approved in December 10 will 

4 result in a significant cost savings for affected fleets 

5 versus the original regulation. The total cost over the 

6 life of the off-road regulation will be reduced by 72 

7 percent, a cost savings of over $1.5 billion versus the 

8 original. The estimated cost of the off-road regulation 

9 between 2010 and 2015 would be reduced by 97 percent, from 

10 over $1 billion to approximately $33 million in 2010 

11 dollars. 

12 Additionally, the peak year cost will be reduced 

13 by almost 73 percent, from $542 million to $146 million in 

14 2010 dollars, and the peak year cost delayed -- will be 

15 delayed from 2013 to 2019. 

16 So this is a dramatic change from prior ARB 

17 authorization submittals, in response to some of the 

18 comments that we've heard in prior hearings. 

19 (Screen.) 

20 So has the recession affected the analysis? 

21 Well, there's no dispute that the most serious economic 

22 recession since the Great Depression has occurred in 
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1 California and elsewhere. But this should not change the 

2 analysis that EPA applies when considering CARB's 

3 authorization request. CARB has adequately addressed the 

4 impact of the recession on off-road emissions and has 

5 modified the regulation accordingly to reduce the economic 

6 impact on affected fleets. 

7 Additionally, there has been no dispute that the 

8 technology to comply presently exists in the time frame 

9 provided for compliance. 

10 Questions of how best to address the impact of 

11 the recession on off-road fleets, how to delicately 

12 balance the health and welfare needs of the state against 

13 the financial costs of the regulation and the ability of 

14 fleets to do business in California are, as EPA has 

15 acknowledged, best left to the state to decide. 

16 The recession and its economic impacts raised 

17 special cost concerns as opposed to broad feasibility 

18 questions. The impact of the recession on the total costs 

19 of the regulation and its effect on the emissions 

20 inventory are questions related to cost-effectiveness, a 

21 question that EPA has long deferred to California's 

22 judgment, which California addressed in amending the 
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1 regulation in December 2010. 

2 (Screen.) 

3 Sorry, I was behind on the slide there. 

4 (Screen.) 

5 We're good. 

6 Okay. Moving on, the second prong of the 

7 consistency test is whether the federal and state test 

8 procedures are able to use the same test unit or engine. 

9 Manufacturers can use the same test unit or engine to meet 

10 both. This test of consistency is satisfied here because 

11 there is no issue as to whether the same in-use engine can 

12 meet both federal and state test procedures since federal 

13 regulations for in-use non-road engines do not exist. 

14 To the extent that fleets voluntarily elect to 

15 use new engines to meet the regulation's requirements, the 

16 state certification test procedures are set forth in a 

17 different regulation and are in basic alignment with 

18 federal new engine test procedures. 

19 So in summary, California firmly believes that 

20 the Administrator is required under 209(e)(2) to grant the 

21 authorization. None of the three guiding criteria for 

22 denial of an authorization can be met. Protectiveness has 
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1 been clearly established. California's compelling and 

2 extraordinary need for its own in-use off-road emissions 

3 program is unquestionable. Finally as discussed above, 

4 the regulation is consistent with Section 209 and is 

5 technically feasible. Accordingly, California requests 

6 that EPA act expeditiously to grant the authorization. 

7 Now Mr. White and I are prepared to answer any 

8 questions the panel may have and to respond briefly to the 

9 comments that are raised. Thank you. 

10 PRESIDING OFFICER COHEN: I believe, yes, there 

11 are some questions. 

12 MR. DICKINSON: Thank you, Mr. Livingston and 

13 Mr. White. I appreciate your testimony. Several 

14 questions. 

15 The first is, to your knowledge is this 

16 regulation currently in any litigation anywhere? 

17 MR. WHITE: I don't believe so, no. 

18 MR. DICKINSON: Okay, thank you. 

19 A question to Mr. White. On Slide 4 -- I don't 

20 know if you can back up -- the last bullet, CARB submitted 

21 authorization requests for several vehicle types that use 

22 off-road engines. I think that carried over to Slide 5, 
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1 is that correct? 

2 (Screen.) 

3 MR. DICKINSON: I think you were mentioning a 

4 variety of other authorizations that EPA has issued. I 

5 just didn't understand that last bullet on line 4. 

6 MR. WHITE: On Slide 4? 

7 MR. DICKINSON: Yes. 

8 MR. WHITE: Yes, Slide 4 was specifically 

9 referencing the in-use off-road diesel fuel regulation, 

10 which has certain elements to it that include off-road 

11 engines -- 

12 MR. DICKINSON: Okay. 

13 MR. WHITE: -- that are used primarily on two14 engine sweepers, as well as agricultural first processing 

15 facilities. 

16 MR. DICKINSON: Okay, and that was part of the 

17 August 21 Federal Register notice announcing hearing and 

18 comment on that? 

19 MR. WHITE: Yes, correct. 

20 MR. DICKINSON: We didn't specifically receive a 

21 request for hearing on that? 

22 MR. WHITE: Correct. 
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1 MR. DICKINSON: We are nevertheless allowing an 

2 opportunity to comment today on that. 

3 MR. WHITE: We would be prepared to respond to 

4 any comments that are on that, but did not include 

5 anything additionally in our presentation on that, on that 

6 request. 

7 MR. DICKINSON: Thank you. 

8 With regard to the second prong of 209(e)(2) and 

9 the need for the California program based on compelling 

10 and extraordinary conditions, EPA is aware that, due to 

11 the economic recession, questions of cost, that California 

12 has continued to amend its regulations. You mentioned 

13 also the deference that EPA has historically afforded 

14 California to make its own policy judgments. Is there 

15 still -- looking at -- this isn't necessarily the legal 

16 test, but is there still a need for this standard per se 

17 in the greater context of addressing NOx and PM emissions 

18 in California? There have been these delays, but is there 

19 still this need for the program at this point? 

20 MR. LIVINGSTON: There have been delays. There 

21 have been reductions in the inventory to roughly 25 

22 percent of what we thought originally. But even at that 
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1 25 percent, we need every ton, every pound, basically we 

2 can get in the Valley and the South Coast to meet both 

3 current ozone and particulate matter standards and the 

4 upcoming more stringent standards which we'll be having to 

5 plan for in the next year or two. 

6 MR. WHITE: I think I would add to that, as we 

7 look at attainment in those two air basins for 2023, the 

8 state has still yet to identify emission reductions of NOx 

9 that are necessary to attain that standard. That includes 

10 the reductions that are anticipated from this regulation. 

11 So I think it's very clear that, as we look at all the 

12 regulatory strategies that the state has already adopted 

13 to achieve that standard, additional reductions of NOx are 

14 still needed. So these are important NOx reductions to 

15 achieve even though they are less than what we had 

16 initially expected we would achieve in 2007 when the Board 

17 first approved the regulation. 

18 MR. DICKINSON: I understand this regulation has 

19 gone through several iterations and there have been a 

20 variety of options for the affected industry and other 

21 operators in California to attend hearings. Can you 

22 generally characterize, either today or in your comments, 
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1 the number of workshops since the last time you've been in 

2 front of us or the number of Board hearings? 

3 MR. LIVINGSTON: At least -- at least one Board 

4 hearing and several workshops. Eric is looking it up. 

5 MR. WHITE: We had -- since the last time that 

6 California was here to testify on our waiver request, I 

7 think we've had ten workshops specifically on or in 

8 conjunction with other measures, this rule. So as ARB 

9 went back and looked at both the inventory and 

10 opportunities for additional flexibility for cost 

11 reductions while still preserving the protectiveness of 

12 the rule, we had ten public workshops throughout 

13 California on this issue. 

14 My last question goes to the third waiver prong 

15 of, I would call it, consistency of 202(a), the tech 

16 feasibility question with consideration of costs. 

17 Historically, when California has been in the regulatory 

18 business of regulating new motor vehicles or new non-road 

19 equipment, there are several court decisions that describe 

20 how we would evaluate our own regulations or California's 

21 regulations as it affects the new manufacturing. Sort of 

22 the doubling or tripling of the costs of the vehicle might 
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1 be considered prohibitive or potentially inappropriate 

2 under that tech feasibility prong. 

3 Here, as it affects the operators, the end use 

4 operators, how would you suggest EPA consider that, that 

5 cost question? You can submit it today or in the context 

6 of your written follow-up. 

7 MR. LIVINGSTON: I think we'll go into more 

8 detail in the written comments, but certainly you could 

9 start there, with those court decisions on new vehicles 

10 and engines. As you've said, courts have said two or 

11 three times the cost might be prohibitive and we're 

12 nowhere close to that in this regulation. 

13 MR. HOROWITZ: Two questions really quick. The 

14 first one, just on the retrofit safety study, the PM 

15 study. Is that in the docket? Do we have that? 

16 MR. LIVINGSTON: I am not sure. 

17 MR. WHITE: If not, we can ensure that it is. 

18 MR. HOROWITZ: Please submit it for the docket 

19 with your comments. 

20 The second question. I'm not familiar as much 

21 with the SOON program, so could you tell me how the SOON 

22 program differs from the rest of the program? What are 
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1 the specific provisions for the SOON program? 

2 MR. WHITE: Sure, yes. The SOON program is an 

3 optional program that local air districts in California 

4 can opt into, and it would compel operators within that 

5 air basin to apply and accent incentive funding to 

6 modernize their equipment on a schedule that is ahead of 

7 what would be the prescriptive standards that are included 

8 in the regulations themselves. 

9 The provisions of SOON only apply to fleets of 

10 20,000 horsepower or greater, so, as Aron noted in his 

11 presentation, only the largest fleets, the largest fleets 

12 in the state. And it is only required of those fleets to 

13 apply when incentive funding is made available within the 

14 local air district. So it provides an opportunity for 

15 impacted air districts, such as the South Coast, which is 

16 the only district that has opted into that program, to 

17 achieve early NOx reductions ahead of what would otherwise 

18 be required in the regulation. 

19 MR. HOROWITZ: Does it require any additional 

20 technological -- are the standards different? I 

21 understand that they are pulled ahead, but are they 

22 different in any way? 
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1 MR. WHITE: No. The equipment -- it requires 

2 new replacement -- it requires cleaner equipment to come 

3 in and replace existing dirty equipment that's in that 

4 particular fleet. But it does not require that the 

5 vehicles be retrofitted or otherwise modified to be 

6 cleaner than what would be -- what would be available, 

7 commercially available in the marketplace at that time. 

8 As a benefit impact of the SOON program, once 

9 the contract period for that incentive money is over, that 

10 fleet can then count that cleaner equipment that they now 

11 have in their fleet towards their compliance with the 

12 performance standards. So in that sense what they are 

13 doing is they are pre-buying the cleaner equipment to 

14 provide early emission reductions in that air basin, and 

15 then they receive the benefit of having that cleaner 

16 equipment in the fleet once the contract is ended for that 

17 incentive funding. 

18 Most of that funding comes from our program in 

19 the state of California, which is administered by the 

20 local air districts predominantly. 

21 MR. HOROWITZ: Thank you. 

22 PRESIDING OFFICER COHEN: Any questions? 
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1 (No response.) 

2 PRESIDING OFFICER COHEN: Thank you. Thank you 

3 very much. 

4 MR. HADZI-ANTICH: Will you take questions from 

5 the participants here? 

6 PRESIDING OFFICER COHEN: No, that's not our 

7 practice. I'm sorry. 

8 MR. DICKINSON: You can raise it in the context 

9 of your comments and California can choose to reply. 

10 PRESIDING OFFICER COHEN: I'd like to invite Mr. 

11 Ted Hadzi-Antich from the Pacific Legal Foundation. Thank 

12 you. 

13 PRESENTATION OF THE PACIFIC LEGAL FOUNDATION 

14 MR. HADZI-ANTICH: Good morning. My name is 

15 Theodore Hadzi-Antich. I'm an attorney with the Pacific 

16 Legal Foundation in Sacramento, California. I make this 

17 presentation on behalf of Merit Oil Company, California 

18 Construction Trucking Association, the Construction 

19 Industry Air Quality Coalition, United Contractors, 

20 Robinson Industries, the Loggers Association of Northern 

21 California, Delta Construction Company, Dalton Trucking, 

22 Inc., the Southern California Contractors Association, and 
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1 Ron Cinguini Farming. These companies and trade 

2 associations conduct business in California and will be 

3 adversely impacted if EPA grants California's waiver 

4 application for emissions standards applicable to non-road 

5 compression ignition engines for in-use fleets. I will 

6 refer to these emission standards which are the subject of 

7 today's hearing as the non-road diesel standards. 

8 In her opening remarks today, the chair asked 

9 specifically for testimony regarding the criteria under 

10 Clean Air Act Section 209(e) by which EPA must consider 

11 the California waiver applications. My testimony today 

12 directly addresses that request. I do have a copy of my 

13 testimony which I would like to give for the record. 

14 Section 209(e)(2) provides that EPA may 

15 authorize California to adopt standards for non-road 

16 engines and vehicles, but that, quote, "no such 

17 authorization shall be granted if EPA finds that 

18 California does not need such California standards to meet 

19 compelling and extraordinary conditions." Close quote. 

20 Hence, California must apply for waivers from federal 

21 standards on a case by case basis. So held the D.C. 

22 Circuit in two cases, Motor Equipment Manufacturers 
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1 Association v. EPA, a D.C. Circuit 1979 case, and Engine 

2 Manufacturers Association versus EPA, a D.C. Circuit case 

3 decided in 1996. 

4 Now, the clear wording of the statute requires 

5 that EPA not grant any California waiver application 

6 unless California makes a specific showing that it has 

7 compelling and extraordinary conditions necessitating the 

8 particular standards for which the waiver is sought. The 

9 statute states unambiguously, quote, "No such 

10 authorization shall be granted if EPA finds that 

11 California does not need such California standards," 

12 emphasis on the word "standards," to meet compelling and 

13 extraordinary conditions." Close quote. 

14 In connection with the California waiver 

15 application for the industry diesel standards, the issue 

16 before us today, California has not shown that it needs 

17 these particular standards to meet compelling and 

18 extraordinary conditions in California. Because 

19 California has not shown that it needs these standards to 

20 meet compelling and extraordinary conditions, EPA must 

21 under the statute deny the waiver application under the 

22 clear language of Section 209(e)(2) of the Clean Air Act. 
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1 Now, in the past EPA has taken the indefensible 

2 position that California's need for a particular standard 

3 refers not to the need for the standard itself based upon 

4 compelling and extraordinary circumstances in the state, 

5 but rather the need for California to have its own motor 

6 vehicle air emissions program as a whole, and EPA has 

7 taken that position since 1967 when the Clean Air Act 

8 first included the waiver application for that 

9 proposition. See Volume 74 of the Federal Register at 

10 page 32761, March 6, 2008. 

11 EPA's position is that the statutory term 

12 "compelling and extraordinary circumstances" refers to 

13 circumstances requiring California to maintain a motor 

14 vehicle emissions program separate from that of the 

15 federal government. But the clear wording of the statute 

16 requires a different conclusion. EPA must show a need for 

17 the particular standard for which a waiver is being 

18 sought. That's why in Section 209(e)(2) Congress used the 

19 term "standards," not used the term "California program." 

20 It used the term "California standards" by which the 

21 decision of EPA must be determined. Otherwise, it makes 

22 no sense for California to file waiver applications for 
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1 each California standard that differs from the federal 

2 standard. Yet it is clear that waiver applications are 

3 required for individual regulations setting emission 

4 standards. 

5 Congress provided in the Clean Air Act that 

6 California should be given the option of promulgating 

7 specific regulations that differed from federal ones, but 

8 only upon a showing satisfactory to the Administrator that 

9 California needs a particular regulation to meet 

10 compelling and extraordinary conditions in the state. 

11 Absent such a showing, EPA under the Clean Air Act must 

12 deny any waiver application. 

13 Now, the legislative history of the Clean Air 

14 Act shows that Congress intended the word "standards" in 

15 Section 209 to mean specific quantitative levels of 

16 emissions, rather than the California motor vehicle 

17 program as a whole. The Senate Report on Air Quality in 

18 1967, discussing the preemption provision, refers to 

19 standards with specific reference to quantitative limits 

20 for hydrocarbons, for nitrogen oxides, and for carbon 

21 monoxide, in reference clearly to the numerical 

22 limitations to be imposed on those pollutants. 
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1 There is no reference to "program" as an entire 

2 statewide motor vehicle emissions regulatory program. See 

3 Senate Report No. 403, 90th Congress, First Session, at 

4 page 32, 1967. 

5 Moreover, in describing the change made in the 

6 waiver provision in 1977 the House report discusses the 

7 California -- that California may need to have specific, 

8 again, quantitative standards that differ from the federal 

9 ones. See House Report No. 294, 95th Congress, First 

10 Session, at page 302, 1977. 

11 So the need for waivers is set forth in the 

12 legislative history in terms of the need for particular 

13 numerical, quantitative emissions standards. Congress 

14 itself enacted the waiver provision and would not have 

15 given EPA as an administrative agency authority to rescind 

16 the waiver provision by reaching a regulatory conclusion 

17 that California no longer needed its own motor vehicle 

18 emissions regulatory program. 

19 Congress only gave EPA authority to determine on 

20 a case by case basis whether, based on compelling and 

21 extraordinary conditions in the state, California had a 

22 need for the specific quantitative emissions standard for 
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1 which it was applying for a waiver. 

2 Any contrary conclusion would put the question 

3 of Section 209(e)(2) in issue in terms of the 

4 constitutional principle of overbroad delegation. 

5 Congress would not have delegated to EPA the legislative 

6 authority to determine that California no longer needed 

7 its own motor vehicle emissions program. That was a 

8 legislative determination, a policy judgment that Congress 

9 made in 1967. That policy judgment can only be unmade, if 

10 you will, by the Congress. And should EPA continue to 

11 insist on an interpretation focusing on the program as a 

12 whole, as opposed to whether there is a compelling need 

13 for each particular standard, it puts in issue the Section 

14 209(e)(2) in connection with the non-delegation doctrine 

15 as applied by EPA. 

16 So in this waiver application for California's 

17 industry diesel standard, EPA should reverse its past 

18 errors and use the correct statutorily mandated test to 

19 determine whether to grant the waiver. Rather than 

20 focusing incorrectly on California's need for its own 

21 motor vehicle program as a whole, EPA should focus on 

22 whether California needs this industry diesel standard to 
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1 meet compelling and extraordinary conditions in the state. 

2 When EPA applies the correct test, EPA will find 

3 that California has not shown that it needs this industry 

4 vehicles standard to meet compelling and extraordinary 

5 conditions in California. 

6 That concludes my testimony today and I'll be 

7 happy to take any questions you may have. 

8 PRESIDING OFFICER COHEN: Thank you. 

9 MR. HOROWITZ: I don't have any questions. Just 

10 I guess you'll be sending in written comments? 

11 MR. HADZI-ANTICH: Yes, we will. 

12 MR. HOROWITZ: And all the citations that you 

13 made, they'll be in there? 

14 MR. HADZI-ANTICH: Yes, they will. 

15 MR. DICKINSON: My only question I guess is, I 

16 think I understood your comments today, but I'm curious 

17 whether you're solely questioning the need for this 

18 particular standard in the context of the second waiver 

19 prong or are you also questioning whether California has 

20 compelling and extraordinary conditions in general? Does 

21 the standard go to address what may or may not be a 

22 compelling and extraordinary condition? Are you 
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1 contesting that part of the prong? 

2 MR. HADZI-ANTICH: What we're saying is simply 

3 that EPA has been using an incorrect standard with regard 

4 to that prong in Section 209(e)(2). EPA has been using 

5 the standard as to whether there's compelling and 

6 extraordinary conditions in California necessitating 

7 California's continuing to have its own motor vehicle 

8 program. My testimony today is geared toward the 

9 proposition that that is an incorrect standard, that the 

10 correct standard is not to look to whether California 

11 needs its own motor vehicle program, but whether 

12 California has a need based on compelling and 

13 extraordinary conditions within the state for the specific 

14 standard for which this waiver application is made. 

15 That's what my testimony addresses. 

16 MR. DICKINSON: Okay, thank you. 

17 PRESIDING OFFICER COHEN: I have a follow-on 

18 question to that, related. If I understood your testimony 

19 correctly, you're asking us to take a look at California's 

20 showing of specific quantitative evidence that this 

21 standard is necessary for them to meet compelling 

22 circumstances; is that correct? 
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1 MR. HADZI-ANTICH: We are asking you to look at 

2 the quantitative evidence through the filter, through 

3 using the criteria of whether it supports a compelling and 

4 extraordinary need for this regulation. 

5 PRESIDING OFFICER COHEN: Thank you. 

6 MR. HADZI-ANTICH: Thank you. 

7 PRESIDING OFFICER COHEN: Thank you. 

8 I'd like to ask Mr. Nick Goldstein from the 

9 American Road and Transportation Builders Association to 

10 testify. 

11 PRESENTATION OF THE AMERICAN ROAD AND 

12 TRANSPORTATION BUILDERS ASSOCIATION 

13 MR. GOLDSTEIN: Luckily, I brought exactly four 

14 copies. 

15 PRESIDING OFFICER COHEN: Wonderful. Thank you. 

16 MR. GOLDSTEIN: I had no idea. 

17 PRESIDING OFFICER COHEN: We're impressed. 

18 Thank you. 

19 MR. GOLDSTEIN: I also have it on a thumb drive, 

20 or should I just email it to you? 

21 MR. DICKINSON: This is fine. That'll be great. 

22 Thank you. 
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1 MR. GOLDSTEIN: Good morning. I'm Nick 

2 Goldstein, Assistant General Counsel for the American Road 

3 and Transportation Builders Association, or ARTBA. ARTBA 

4 represents more than 5,000 members nationwide involved in 

5 all sectors of the U.S. transportation design and 

6 construction industry. 

7 I'd like to begin my statement by thanking the 

8 United States Environmental Protection Agency for the 

9 opportunity to speak at today's public hearing regarding 

10 the consideration of the California Air Resources Board's 

11 request for a federal waiver from the EPA allowing 

12 implementation of ARB's regulations for in-use off-road 

13 diesel vehicles. 

14 ARTBA's many California members rely heavily on 

15 off-road construction equipment to perform core business 

16 functions and would be directly impacted by ARB's in-use 

17 off-road diesel equipment regulation. Similarly, if ARB's 

18 regulation is eventually adopted by other states, ARTBA's 

19 members in those areas would also be impacted. 

20 The Clean Air Act grants special status to 

21 California due to the state's unique air quality problems, 

22 allowing California to set its own air quality standards 
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1 in many areas subject to federal approval. If approved, 

2 the Clean Air Act then gives other states the choice to 

3 either stay with existing federal standards or opt in to 

4 those passed by California. This could severely impact 

5 efforts at improving our nation's infrastructure, as 

6 transportation improvement projects often by necessity 

7 involve moving construction equipment across state lines. 

8 A patchwork approach to state regulation could lead to a 

9 scenario where equipment becomes usable on one portion of 

10 a project and prohibited in another. 

11 The Clean Air Act does not give California 

12 complete authority to enact its own standards. There are 

13 limitations. Among these limitations, California may not 

14 set its own standards or impose other emission-related 

15 requirements for, quote, "new engines which are used in 

16 construction equipment or vehicles or used in farm 

17 equipment or vehicles which are smaller than 175 

18 horsepower." 

19 This preemption lasts throughout the useful life 

20 of the equipment. The ARB regulations would apply to all 

21 in-use off-road diesel construction equipment with a 

22 rating of 25 horsepower or more and are thus not allowed 
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1 by the Clean Air Act. 

2 Further, the Clean Air Act states that any 

3 proposed California standard must be, quote, "at least as 

4 protective of the public health," end quote, as those at 

5 the federal level. Protecting the public health is a 

6 commendable objective and one shared by ARTBA. EPA, 

7 however, must be cognizant of the impact of ARB's proposed 

8 standards on public health both within California as well 

9 as any other states that would choose to opt into the 

10 California standards if they're enacted. 

11 Due to the enormous expense of replacing the 

12 affected in-use off-road construction equipment, in some 

13 cases more than one million dollars per each machine, the 

14 cost of sorely needed transportation infrastructure 

15 improvements would likely increase. This means that 

16 either fewer roads, schools, housing, and levees will be 

17 built or project owners will have to spend more. For 

18 those projects that go forward, the pace at which they can 

19 be completed would be significantly slowed because the 

20 pool of construction firms with the proper equipment to do 

21 those jobs would likely be diminished. 

22 Now, if I can end the monotone and just do the 
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1 verboten thing of going off the script for a second. 

2 You're hearing from me now, but ARTBA has hundreds of 

3 member companies in the state of California. What is it, 

4 the fifth largest economy in the world? I would just say 

5 -- and I think one of the hallmarks of this 

6 administration, because ARTBA has submitted numerous 

7 comments to the EPA and we've participated in a variety of 

8 different issues -- on a variety of public hearings, 

9 excuse me, on different issues -- it's always been good at 

10 having public hearings in a variety of locations. 

11 We're talking about California regulations here, 

12 California regulation here, and we're having the location 

13 -- I mean, the hearing -- in D.C. I'm screwing up all the 

14 words because it's not written down. This is what I get. 

15 But if you think about it, a lot of our members, 

16 we're talking about companies here with ten or fewer 

17 employees, and they can't take two days, two days minimum 

18 if they took a red-eye, to come here to this hearing to 

19 talk about how this will affect them. I would implore EPA 

20 to at least hold one hearing on this really substantive 

21 issue, that will affect a lot of people, in California, in 

22 Sacramento, in Los Angeles, in at least one place there, 
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1 because we have heard from members that really want to 

2 talk to you. 

3 I'm going to continue with my statement, which 

4 is three pages long and does not adequately represent the 

5 feelings of all the contractors that I'm speaking on 

6 behalf of. So as you listen to this and sort of the 

7 grandiose statements that I wrote really well and I hope 

8 will sound really good throughout the next five minutes 

9 maximum, just keep that in mind. 

10 Nearly 33,000 people die on U.S. highways each 

11 year and many federally funded highway improvements in 

12 these states are specifically designed to address safety 

13 issues. Allowing ARB's rule to go forward could delay 

14 needed safety enhancements that would improve public 

15 health because much of California's transportation 

16 construction community would, as a result, be prohibited 

17 from building them. 

18 Also, the Clean Air Act states that California's 

19 standards should not be adopted if California's public 

20 health protectiveness determination for the ARB rule is, 

21 quote, "arbitrary and capricious," end quote, or if, 

22 quote, "California does not need such standards to meet 
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1 compelling and extraordinary conditions," end quote. In 

2 considering whether ARB's rule is arbitrary and 

3 capricious, ARTBA respectfully submits that ARB's rule 

4 prioritizes one public health issue at the expense of 

5 another, and that on its face is the very definition of 

6 "arbitrary." 

7 While ARTBA is very supportive of both EPA and 

8 ARB's goal of reducing both particulate matter and NOx 

9 emissions, ARTBA does not believe that ARB has considered 

10 fully some of the air quality improvements already 

11 occurring in California and the nation. These 

12 improvements in air quality undercut the need for measures 

13 as severe as the ARB proposal. 

14 Specifically, EPA's own findings demonstrate 

15 that concentrations of fine particulate matter have 

16 declined by 24 percent nationally and 28 percent for the 

17 24-hour standard between 2001 and 2010, while 

18 concentrations of NOx have declined by 33 percent 

19 nationally in the same time period. This decline in 

20 emissions becomes even more remarkable when compared to 

21 additional EPA data explaining that since 1980 gross 

22 domestic product has increased by 127 percent, vehicle 
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1 miles traveled have increased by 96 percent, population 

2 increased by 36 percent, and energy consumption by 19 

3 percent. Indeed, since 1980 the overall amount of 

4 aggregate emissions, including PM, Particulate matter, and 

5 NOx, has decreased by 67 percent. Thus air quality is 

6 significantly improving without the ARB rule. 

7 Finally, the Clean Air Act requires that 

8 California standards comply with the, quote, "feasibility 

9 constraints," end quote, when implementing its rule. 

10 ARTBA has serious concerns regarding the specifics and 

11 feasibility of ARB's off-road diesel rule. ARB's 

12 regulation requires the use of technology which in some 

13 cases may not be available for purchase until 2014. 

14 Further, when technological technology is available, the 

15 sudden increase in demand caused by the ARB rule could 

16 cause supplies to be exhausted. Contractors simply may 

17 not be able to purchase the necessary equipment and could 

18 be barred from continuing their work. 

19 If ARB's rule is fully implemented, there could 

20 be profound negative impacts on California's 

21 infrastructure rebuilding efforts, the health of the 

22 state's construction industry, and its overall economy. 
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1 Instead, ARB must allow technology to catch up to its 

2 regulatory goals by allowing more time to develop 

3 equipment clean enough and available enough, with emphasis 

4 on "available enough," to meet the standards mandated by 

5 the demand that it's trying to create through its 

6 regulation. 

7 Many of California's larger construction 

8 companies have already begun the process of repowering or 

9 retrofitting their fleets in anticipation of these 

10 regulations. However, smaller companies with less than 

11 ten employees, which I mentioned before, make up nearly 80 

12 percent of California's industry, and they'll be severely 

13 hampered by the cost of repowering and retrofitting 

14 equipment that in some cases are the sole asset of their 

15 family-owned business. Additionally, many of these 

16 smaller companies do not have the resources or access to 

17 capital to repower or retrofit the engines and maybe 

18 forced -- and as a result may be forced to park their 

19 equipment, ultimately costing jobs and revenue to the 

20 state's economy. 

21 Under the annual emission targets required in 

22 ARB's regulation, many contractors will be required to 
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1 first repower or retrofit an engine, only to have to turn 

2 around a few years later and replace the entire piece of 

3 equipment when the technology to do to job right finally 

4 hits the marketplace. The total industry-wide cost of 

5 implementation of this rule is estimated to be between 15 

6 and $30 billion over the life of the rule. 

7 It should also be noted that ARTBA did appear 

8 before EPA, and I think I saw some of you at that hearing, 

9 in April of 2010 to discuss the federal waiver for the ARB 

10 rule. Since that time, the nation's economy has shown 

11 signs of what can at best be called a sluggish recovery, 

12 but unemployment in the construction sector has become 

13 even worse. Thus, the construction market is less 

14 prepared to handle the ARB rule now than when I talked to 

15 you before. 

16 With the recent passage of the federal surface 

17 transportation reauthorization bill offering hope for the 

18 construction sector, implementation of the ARB rule now 

19 will cut off the reason for this optimism by denying small 

20 and medium-sized California construction firms the chance 

21 to take advantage of this bipartisan stabilization that's 

22 been offered to the transportation sector. 
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1 In conclusion, the ARB rule does not satisfy the 

2 requirements of the Clean Air Act because it attempts to 

3 regulate equipment below 175 horsepower, could lead to 

4 public health concerns, and is arbitrary and capricious. 

5 EPA should recognize this and deny ARB's request for a 

6 federal waiver. ARTBA looks forward to continuing to work 

7 with both EPA and ARB in encouraging voluntary diesel 

8 retrofitting at an attainable pace, rather than mandating 

9 retrofits at a pace many companies will not be able to 

10 meet. 

11 Thank you. 

12 PRESIDING OFFICER COHEN: Thank you. 

13 MR. GOLDSTEIN: I'd be happy to answer any 

14 questions. 

15 PRESIDING OFFICER COHEN: Any questions? 

16 MR. HOROWITZ: No questions. 

17 PRESIDING OFFICER COHEN: David, any questions? 

18 MR. DICKINSON: No, thank you. 

19 PRESIDING OFFICER COHEN: I don't have 

20 questions, just a comment, to please encourage your 

21 members to submit written comments to us. 

22 MR. GOLDSTEIN: We have. 
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1 PRESIDING OFFICER COHEN: The docket is open and 

2 the public comment period is open yet for another several 

3 weeks. 

4 MR. GOLDSTEIN: We have on a number of 

5 occasions. I'm just being frank -- 

6 PRESIDING OFFICER COHEN: I understand, but you 

7 need to understand we read every single one and we respond 

8 to every single one. It's very important for us to hear 

9 from people. 

10 MR. GOLDSTEIN: And I will definitely do so 

11 again. I would just again restate: at least one hearing 

12 in California. I know it's something -- when I've asked 

13 them for comments on the rule -- and a lot of it went into 

14 my statement and the written comments that we'll be 

15 submitting before the October 22 deadline. But a lot of 

16 what I get back is: Why aren't they coming out here to 

17 talk to us directly about this? 

18 PRESIDING OFFICER COHEN: Thank you. 

19 Mr. Antonio Santos for MECA, please. 

20 PRESENTATION OF THE MANUFACTURERS 

21 OF EMISSION CONTROLS ASSOCIATION 

22 MR. SANTOS: Good morning. My name is Antonio 
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1 Santos. I am Director of Special Projects at the 

2 Manufacturer of Emission Controls Association here in 

3 Washington, D.C. MECA and its member companies would like 

4 to thank the U.S. EPA for allowing us to speak today at 

5 this hearing. We are pleased to provide comments in 

6 support of the California Air Resources Board's request 

7 that EPA grant a waiver for ARB's off-road diesel vehicle 

8 regulation. 

9 MECA is a nonprofit association comprised of the 

10 world's leading manufacturers of emission control 

11 technology for motor vehicles. Our members have over 40 

12 years of experience and a proven track record in 

13 developing and manufacturing emission control technology 

14 for a wide variety of diesel and gasoline on-road and off15 road vehicles and equipment. A number of our members have 

16 extensive experience in the development, manufacture, and 

17 application of particulate matter and nitrogen oxide 

18 emission control devices for in-use diesel vehicles and 

19 equipment, including a majority of the devices on ARB's 

20 Verified Diesel Emission Control System, VDECS, list. 

21 MECA provided testimony in support of ARB's off22 road diesel vehicle regulation when it was first proposed 
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1 in May of 2007. The original rulemaking presented a 

2 balanced, fair, and flexible approach that would achieve 

3 significant PM and NOx emission reductions from in-use 

4 off-road diesel vehicles and equipment in California in a 

5 cost-effective manner. 

6 Since then, the regulation has been amended 

7 three times, each time with the intent to provide economic 

8 relief for the off-road industry. MECA supported the 

9 amendments to the regulation that the Board adopted in 

10 January of 2009 and June 2009 because MECA members shared 

11 first-hand the economic hardships of the construction 

12 industry, as well as the automotive and on-road truck 

13 industries. 

14 The December 2010 economic relief amendments, 

15 however, made major changes to the original rulemaking, 

16 delaying the first compliance date of the regulation to no 

17 earlier than January 1, 2014, a four-year delay from the 

18 original time line, and reducing the retrofit requirements 

19 to a voluntary compliance option. To address these 

20 concerns, MECA and its member companies have been actively 

21 engaged with ARB staff on various approaches that would 

22 provide economic relief to device manufacturers and would 
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1 ensure that retrofit technologies are available when they 

2 are needed. 

3 Regulatory stability is critical for retrofit 

4 manufacturers to justify and build a viable business that 

5 generates green jobs for California. The technology 

6 planning, development, and verification cycle for retrofit 

7 devices comes years ahead of a regulation. The economy 

8 has put a significant strain on businesses of all sizes in 

9 California, including manufacturers of retrofit 

10 technologies. Our members have invested and continue to 

11 invest significant resources in developing and verifying 

12 diesel retrofit technologies for the whole range of in-use 

13 diesel engines currently operating in California, 

14 including off-road diesel engines. 

15 A number of advanced emission control 

16 technologies exist today to significantly reduce PM and 

17 NOx emissions for in-use off-road diesel engines. These 

18 technologies include diesel particulate filters, diesel 

19 oxidation catalysts, selective catalytic reduction, lean 

20 NOx catalysts, exhaust gas recirculation, and crankcase 

21 filters. 

22 MECA has previously provided detailed written 
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1 comments to ARB on the capability of these technologies to 

2 effectively reduce PM and NOx emissions from in-use off3 road diesel vehicles and equipment. Currently, there are 

4 six passive DPFs, including one DPF plus lean NOx device, 

5 and three active DPFs verified as Level 3 VDECs in 

6 California for off-road vehicles and equipment. 

7 Although off-road applications can pose 

8 engineering challenges and special requirements compared 

9 to on-road applications, the use of exhaust emission 

10 control technology for off-road diesel engines is not new. 

11 Both PM and emission control technologies are being used 

12 today on off-road applications in California and 

13 elsewhere. 

14 For over 30 years, off-road diesel engines used 

15 in the construction, mining, and materials handling 

16 industries have been equipped with exhaust emission 

17 control technology, initially with DOCs and followed later 

18 with DPFs. These systems have been installed on vehicles 

19 number equipment both as original equipment and as 

20 retrofit technology on over 250,000 off-road engines 

21 worldwide, including construction and mining equipment 

22 where vehicle integration has been challenging. Over 
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1 50,000 active and passive DPF retrofit systems have been 

2 installed worldwide on off-road applications. More than 

3 20,000 of these filters have been installed, have been 

4 installed successfully in Europe on construction equipment 

5 used in tunneling projects. A 2003 SAE survey of 3,848 

6 construction retrofit installations from 2001 to 2003 in 

7 Europe found a failure rate of only one to two percent. 

8 In California there have been a number of 

9 successful off-road diesel retrofit projects, such as the 

10 Off-Road Showcase Program, where 84 vehicles were 

11 retrofitted with 52 devices, in the South Coast area, and 

12 the subsequent Off-Road Showcase II Program that's 

13 currently ongoing, as well as the runway expansion project 

14 at LAX Airport, where 73 vehicles were retrofitted with 

15 Level 3 DPFs. 

16 Regarding the safe installation of retrofit 

17 devices, retrofit manufacturers h shown that off-road 

18 retrofits can be installed to comply with the Cal-OSHA 

19 retrofit visibility/safety requirements that were 

20 finalized last year. Retrofit manufacturers are using the 

21 best engineering judgment and installation practices to 

22 ensure the safe installation of devices. 
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1 In response to California legislative action 

2 earlier this year, ARB staff reviewed retrofit field 

3 experience since 2002. Of the 35,000 DPFs deployed in the 

4 state, less than 15 safety-related issues were identified 

5 and all of these were shown to be attributed to poor 

6 engine or device maintenance, misapplication of devices, 

7 or the ignoring of warning alarms by the operator. 

8 In summary, although the amendments to ARB's 

9 off-road diesel vehicle regulation have significantly 

10 delayed the emission reduction goals of the original rule, 

11 MECA commends ARB for taking important steps to reduce 

12 emissions of PM and emission from in-use off-road diesel 

13 vehicles in California. We ask EPA to grant ARB a waiver 

14 for this comprehensive regulatory program. Furthermore, 

15 MECA urges EPA -- excuse me -- urges ARB to remain 

16 vigilant on any further attempts to stay or delay the 

17 overall goals of the agency's various in-use diesel fleet 

18 rules or the agency's broader diesel risk reduction 

19 program. These important emission reduction strategies 

20 not only protect the health of the citizens of California, 

21 but also provide an important source of economic growth 

22 and green jobs for the state. 
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1 Our industry is prepared to do its part to 

2 deliver cost-effective, verified diesel emission control 

3 devices to the market. 

4 Thank you, and MECA will be providing written 

5 comments prior to the closing of the comment period. 

6 PRESIDING OFFICER COHEN: Questions? 

7 MR. HOROWITZ: Just two comments. You testified 

8 that retrofit manufacturers have shown that off-road 

9 retrofits can meet the Cal-OSHA visibility. Can you, I 

10 guess with your written testimony, can you provide backup 

11 for that? 

12 MR. SANTOS: Yes. Obviously, the discussion of 

13 retrofit visibility and safety is very long and protracted 

14 over several years, and MECA in its comments over the 

15 years to Cal-OSHA on that issue, there was a lot of going 

16 back and forth in terms of the issue of masking and 

17 visibility. At the end of the day, the decision that was 

18 made is something that MECA members have agreed with and 

19 have shown, but obviously directly on what you're 

20 commenting on, we can definitely provide within the 

21 comments specific examples. 

22 MR. HOROWITZ: The second comment, and this 
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1 might be better directed to CARB: You mentioned that 

2 there were less than 15 safety-related issues and they 

3 were attributed to poor maintenance. Is that something 

4 that can be put into the record? 

5 MR. SANTOS: Yes. This was based on a request 

6 that was basically made by the legislature to ARB. We can 

7 do that in our comments. 

8 MR. WHITE: We'll look into that. I'm not sure 

9 what the numbers are with reference to this. We will go 

10 back and provide that information. 

11 MR. SANTOS: Those numbers are for both on-road 

12 and off-road. That 35,000 number is not off-road. 

13 PRESIDING OFFICER COHEN: Do you know when that 

14 study was? 

15 MR. SANTOS: It wasn't a direct study. It was 

16 just in response to a request from legislative staff. It 

17 wasn't an official study per se in terms of we're going to 

18 give you the specific number, not an overall full-fledged 

19 report. 

20 PRESIDING OFFICER COHEN: Thank you. 

21 MR. HOROWITZ: Thank you. 

22 MR. DICKINSON: Thanks for your time today. 
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1 PRESIDING OFFICER COHEN: Thank you. 

2 I invite Michael Kennedy of Associated General 

3 Contractors of America. 

4 PRESENTATION OF THE ASSOCIATED GENERAL 

5 CONTRACTORS OF AMERICA 

6 MR. KENNEDY: Before I begin, I do want to just 

7 -- by the way, my name is Michael Kennedy. I'm going 

8 General Counsel of the Associated General Contractors of 

9 America. 

10 In response to some of the previous testimony, I 

11 would like to just make two quick points before I begin. 

12 First, it was suggested that California had delayed its 

13 emissions reduction targets. I would suggest that is 

14 incorrect. The targets that the agency originally 

15 established when it first adopted the rule became the 

16 basis for discussions between AGC and California, and not 

17 once in that process did we ask the state to raise its 

18 targets. The entire discussion revolved around whether 

19 the particular rule they had adopted at the time was 

20 necessary to meet those targets. Throughout the process, 

21 we were careful to respect to judgment of the California 

22 Air Resources Board on what it thought was necessary to 
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1 protect the citizens of the state. 

2 Secondly, with regard to retrofits and whether 

3 they can be done safely, the only thing I would suggest is 

4 that no categorical statement about the safety of 

5 retrofits is going to be true. The fact is that off-road 

6 diesel equipment comes in an almost infinite variety. 

7 Some installations are safe, others are not. The 

8 significant changes that CARB has made change the analysis 

9 of that risk, and with the adoption of the new Cal-OSHA 

10 standard and CARB's commitment to implementing in good 

11 faith the safety exemption it has in its rule, we think 

12 all of those things need to be taken into account. 

13 Again, I'm Michael Kennedy. I'm General Counsel 

14 of AGC of America. I'm here today primarily to recount 

15 the long history of the off-road rule. AGC is the leading 

16 representative of the construction industry in the United 

17 States. We were formed in 1918 and today we speak for 

18 more than 30,000 companies in 95 chapters across the 

19 United States. Among our members are approximately 7,000 

20 of the nation's leading general contractors, 11,000 

21 specialty contractors, and about 12,000 materials 

22 suppliers and service providers. 
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1 AGC members construct office buildings, 

2 apartments, condominiums, shopping centers, factories, 

3 warehouses, highways, bridges, tunnels, airports, water 

4 works facilities, and install utilities for housing 

5 development. We are infrastructure. We are everything 

6 other than the construction of single family homes. 

7 In doing so, AGC's members purchase and operate 

8 a considerable amount of off-road diesel equipment. AGC 

9 understands that the construction industry has a 

10 significant role to play in environmental protection. For 

11 many years, AGC had a formal partnership with EPA. It 

12 remains a leader in the field of green construction and, 

13 more importantly for today's purposes, AGC has long and 

14 consistently supported EPA's clean diesel initiatives, 

15 including its incentives to reduce emissions from existing 

16 fleets of off-road equipment. 

17 From the beginning, AGC has been actively 

18 involved in the clean diesel campaign. AGC has a strong 

19 working relationship with the Clean Air Task Force and it 

20 continues to urge Congress to provide financial and 

21 technical assistance for those seeking, searching for fair 

22 and effective ways to reduce emissions from existing 
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1 fleets of off-road equipment. 

2 California's rule also seeks to reduce such 

3 emissions. It is, however, a mandate that requires 

4 existing fleets of off-road diesel equipment to meet a 

5 series of steadily declining emission standards over a 

6 period of approximately ten years. Each year, the 

7 regulated fleets have to either meet the standard for that 

8 particular year or turn over a certain percentage of their 

9 horsepower. 

10 In addition, if necessary to meet the standard 

11 for the final year, fleets have to continue to turn over 

12 equipment until they meet the standard. After certain 

13 periods of time, the rule forbids California fleets to add 

14 Tier 0, Tier 1, or Tier 2 equipment. The rule also 

15 imposes recordkeeping, reporting and labeling requirements 

16 and restricts idling time. 

17 Among AGC's members, California's off-road rule 

18 has been and remains controversial. Many still consider 

19 it fundamentally unfair for the state to require them to 

20 retire, repower, rebuild, retrofit, or reduce their use of 

21 equipment that met all environmental standards that 

22 applied at the time the equipment came onto the market. 
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1 There is no escaping the sense that California is trying 

2 to change the rules halfway through the second quarter. 

3 California's construction contractors invested 

4 enormous sums in their off-road equipment in the 

5 reasonable expectation that they could lawfully operate it 

6 and use it for the duration of its useful life. 

7 Nor is there any escaping the reality that 

8 emissions from California's off-road diesel equipment are 

9 declining and would continue to decline even in the 

10 absence of this rule. EPA's emissions standards for newly 

11 manufactured equipment are taking effect and as the older 

12 equipment wears out the newer and cleaner equipment is 

13 replacing it. 

14 Back in 2007, when it proposed its off-road 

15 rule, California estimated that the emissions of nitrogen 

16 oxides from off-road diesel equipment were already 

17 destined to drop 68 percent over the 16-year period 

18 between 2009 and 2025. The state similarly estimated that 

19 emissions of particulate matter were already destined to 

20 drop by 76 percent. 

21 Given the great stakes for both the construction 

22 industry and the environment, AGC responded to 
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1 California's proposal. By 2008, when the original rule 

2 took effect, AGC had already submitted comments, 

3 affidavits, and expert reports to California's Air 

4 Resources Board on four separate occasions. These 

5 materials exceeded 300 pages in length and collectively 

6 they laid out the full range of the construction 

7 industry's concerns, including the cost of compliance with 

8 the rule, how badly the rule would damage contractors' 

9 balance sheets, the limits of the technology available to 

10 the industry, and whether the engine manufacturers could 

11 provide the support the industry would require. AGC also 

12 warned of downstream effects on employment in the 

13 construction industry and questioned how well California 

14 had estimated its population of off-road diesel equipment 

15 and its turnover rate. 

16 For much of the construction industry, this off17 road equipment is both critical and an enormous expense of 

18 doing business. This equipment accounts for much, if not 

19 most, of the net worth of many companies engaged in heavy 

20 and civil construction. Above and beyond the amount of 

21 work that these firms can quite literally perform, this 

22 equipment determines how much they can borrow and their 
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1 bonding capacity. Any rule that restricts the use of this 

2 equipment or diminishes its value will have an enormous 

3 impact, particularly on companies being required at one 

4 and the same time to make large investments in new 

5 technology. 

6 So needless to say, AGC was disappointed with 

7 the results of the original rulemaking. The state had 

8 estimated that the cost of compliance would be somewhere 

9 between 3 and $3.4 billion. California's construction 

10 industry put the number closer to $13 billion. And then 

11 there were all the other issues. Was it even feasible to 

12 comply? What about the safety of the men and women 

13 working around this equipment? 

14 In December of 2008, in its first effort to 

15 address the many questions that surrounded the original 

16 rule, AGC petitioned CARB to reopen its rulemaking and to 

17 stay the deadlines for meeting the rule's requirements. 

18 In a 55-page submission that included 9 declarations, AGC 

19 explained that economic conditions had both suddenly and 

20 dramatically changed, making it impossible for contractors 

21 to pass along any of their costs of compliance, that 

22 emissions had already dropped, that retrofitting equipment 
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1 was proving to be far more difficult than expected, and 

2 that financing was far tighter than expected. 

3 When state officials wrote the rule, they had 

4 estimated that California's construction industry would be 

5 adding jobs and expanding as the rule took effect. The 

6 reality turned out to be just a bit different. Between 

7 2006 and 2008, the industry lost 330,000 or 35 percent of 

8 its jobs, and the real GDP originating in California's 

9 construction industry dropped by $13 billion. 

10 At CARB's request, and in response to its 

11 commitment to work with AGC to resolve the issues that the 

12 petition had raised, AGC agreed to extend the deadline for 

13 CARB to respond. AGC did not object to the rule's 

14 reporting requirements, and it recognized that CARB would 

15 start collecting new and better data on California's off16 road equipment in March of 2009. 

17 By the following summer, better data on the 

18 total population, age distribution, horsepower 

19 distribution, and other attributes of the off-road diesel 

20 equipment in California would be available to everyone. 

21 Once it was, both CARB and AGC could more objectively 

22 assess the economic downturn and its effects on emissions. 
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1 The following June, CARB provided AGC with the 

2 data it had collected up to that point in time and a copy 

3 of the OFFROAD computer model that it had used to estimate 

4 emissions from the off-road equipment in California. In 

5 September, CARB provided AGC with more data, and by the 

6 end of November AGC had run all of the new data through 

7 the state's model. 

8 That first look at the new data suggested that 

9 CARB had overestimated 2009 emissions of both nitrogen 

10 oxides and particulate matter you 36 percent. To AGC it 

11 appeared that CARB had room to modify the rule without 

12 compromising its original targets. In December of 2009, 

13 AGC met with CARB to make that very point. AGC was, 

14 however, disappointed to learn later that month that CARB 

15 was not yet ready to entertain any significant changes to 

16 the rule. The first deadline for compliance was in March 

17 of 2010 and as of December 2009 CARB was unprepared to 

18 change it. 

19 In January of 2010, AGC therefore filed a second 

20 petition to reopen the rulemaking. While the first 

21 petition had sought permanent relief, the second merely 

22 requested a delay in the enforcement of the rule. CARB 
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1 had yet to complete its own analysis of the new data and 

2 AGC believed it reasonable to request CARB to delay 

3 enforcement at least until it had completed that step. 

4 CARB responded that it would delay enforcement 

5 until EPA granted the approval that is the subject of 

6 today's hearing. To its greater credit, CARB also 

7 announced that in March it would hold a public hearing on 

8 the economic downturn and whether it justified amendments 

9 to the rule. 

10 AGC carefully prepared for and actively 

11 participated in that hearing. At AGC's request, the 

12 President of the National Association of Business 

13 Economists delivered an independent report on the state of 

14 the economy, including her forecast for the future of 

15 California's construction industry. At AGC's request, 

16 several other experts and contractors also testified. By 

17 the time that hearing came to an end, more than 30 

18 contractors and others had testified that the only way for 

19 contractors to comply with the rule was to sell equipment 

20 that they would otherwise keep, downsizing their 

21 companies, and cutting the number of jobs they could 

22 provide. 
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1 At the hearing, AGC also reported that it had 

2 identified a potentially serious flaw in the OFFROAD 

3 computer model that CARB had used to estimate emissions 

4 from off-road equipment. It seemed that the model's 

5 estimates of diesel fuel consumption were inconsistent 

6 with the available data on the amount of fuel that the 

7 equipment had actually consumed. If the state's original 

8 estimates were correct, then in 2009 its off-road diesel 

9 equipment should have consumed 581 million gallons of 

10 fuel. The data for 2009 suggested, however, that this 

11 equipment had only consumed 164 million gallons. 

12 Something was obviously wrong. 

13 Activity levels and load factors for off-road 

14 diesel equipment are very difficult to determine. By a 

15 process of elimination, AGC came to believe that the 

16 computer model's estimates of these critical factors were 

17 wide of the mark. AGC then introduced a correction factor 

18 and ran CARB's very latest data through the corrected 

19 model. 

20 By the following April, the results were 

21 available, and they were astonishing. They suggested that 

22 CARB had overestimated the emissions from the off-road 
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1 diesel equipment in the state by 350 percent. They also 

2 suggested that California's fleets were destined, without 

3 any further regulation, to meet or exceed the state's 

4 original targets for many years to come. 

5 To its great credit, the state took all of this 

6 very seriously. This is a highly complex and technical 

7 field and even the very best and brightest can easily make 

8 mistakes. The agency quickly launched an independent 

9 review of its computer model, and by September of 2010 

10 CARB had independently reached the conclusion that its 

11 original estimates from the emissions were off by 340 

12 percent. 

13 What followed through the fall of 2010 was a 

14 good faith and ultimately successful effort to reach 

15 agreement on -- to reach an agreement that would both 

16 protect the environment and the construction industry. 

17 The final agreement was to push back the original 

18 deadlines for meeting the rule's emission targets and-or 

19 turnover requirements for nearly four years. For large 

20 fleets that was March 12 of 2010 to January 1 of 2014. 

21 CARB and AGC also agreed to cut the percentage 

22 of horsepower that contractors and other fleet owners 
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1 would have to turn over each year. In the first year, 

2 that number dropped from 28 percent to 4 percent. In 

3 years two and three it dropped from 16.8 to 8 percent. In 

4 years four and five it dropped from 28 percent to 10 

5 percent. And in all subsequent years, it dropped from 30 

6 percent to 10 percent. 

7 The parties also agreed to double the number of 

8 hours that vehicles could operate in any one year and 

9 still qualify for special treatment as low-use vehicles. 

10 And, critical to any other state that may also have an 

11 interest in adopting California's rule, CARB and AGC also 

12 agreed to do two other things. First, they agreed to 

13 preserve a series of early action credits, giving 

14 California's contractors an opportunity to get a 

15 significant head start on compliance with the rule and 

16 spread the cost over time. And second, they agreed to 

17 give contractors a more reasonable amount of time to phase 

18 out and salvage the value of their Tier 0, Tier 1, and 

19 Tier 2 equipment. 

20 The net effect was to save California's 

21 construction industry at least $1.5 billion and as much as 

22 $9 billion. CARB estimated that the December 2010 changes 
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1 to the rule would reduce the total cost of compliance by 

2 something on the order of 70 percent, and even today AGC 

3 has no grounds for questioning that estimate. The 

4 actual savings therefore depend on the cost of compliance 

5 with the original rule. CARB put that -- originally put 

6 that between 3 and $3.4 billion. Later it reduced that to 

7 2.15. But the industry, on the other hand, put it at $13 

8 billion. So if indeed the original industry estimate was 

9 correct and we were looking at $13 billion, the 2010 

10 changes reduced the cost by $9 billion. 

11 Even as amended in December of 2010, 

12 California's off-road rule will, however, be a burden for 

13 contractors. California's construction industry has yet 

14 to recover from its sudden and dramatic downturn. 

15 Nationwide, the construction industry continues to shed 

16 capacity, which is just a polite way of saying that 

17 contractors continue to go out of business. 

18 If I may step aside, the big picture is that at 

19 its peak the construction industry was a $1.2 trillion 

20 industry. Today in round numbers it is an $800 billion 

21 industry. The work simply isn't there to support the 

22 number of companies. It's a painful process we continue 
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1 to go through. 

2 The anecdotal evidence suggests that contractor 

3 defaults in 2012 will be higher than in any of the 

4 previous three years. The result is that your review, 

5 EPA's review of the latest and current version of 

6 California's off-road rule, is a matter of grave interest 

7 and even concern. 

8 From the very beginning, though, as it worked 

9 with CARB, AGC encouraged EPA to expect future amendments 

10 to the rule, and to be sure to take them into account. In 

11 its very first letter to EPA in October of 2008, AGC 

12 requested EPA to delay proceedings on California's rule 

13 until the state had completed already announced plans to 

14 revisit at least portions of the rule. 

15 In subsequent submissions to EPA, AGC went on to 

16 explain how and why the rule, the original rule, did not 

17 meet the standards of the Clean Air Act had established. 

18 Among other things, AGC was deeply concerned about the 

19 cost and other estimates that CARB had made, about the 

20 technology that contractors would require to comply, and 

21 about the lead time provided to them. AGC also questioned 

22 whether the rule was ripe for review. 
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1 Over an approximately two-year period that began 

2 in October of 2008, AGC made a total of eight submissions 

3 to EPA, collectively exceeding 550 pages in length. AGC 

4 also participated in the hearing that EPA held on April 

5 14, 2009. AGC considered it important both to express its 

6 views of California's request and to ensure that EPA 

7 stayed abreast of the latest developments. 

8 In its notice of today's hearing, EPA states 

9 that it will not be taking earlier comments and testimony, 

10 based on earlier versions of the rule, into account. The 

11 agency explains that "the December 2010 amendments are 

12 likely to affect" the merits of California's request for 

13 federal authorization to proceed. I am here today 

14 primarily to report that AGC agrees. While the Clean Air 

15 Act has not changed, and the questions that EPA must 

16 address are one and the same, the rule that CARB now seeks 

17 the authority to enforce is very different from the rule 

18 that CARB originally submitted to EPA. 

19 AGC is not prepared to support California's 

20 request, but AGC does believe that the state's request can 

21 be fairly submitted to EPA and left to the sound 

22 discretion of the professionals who staff the agency. AGC 
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1 has been quite impressed by the fair and impartial 

2 approach to this entire matter and AGC has confidence that 

3 EPA will reach the right conclusions. 

4 In the end, AGC remains very concerned about its 

5 members and worries that they will find it difficult to 

6 afford the cost of compliance with even the amended rule. 

7 The construction industry continues to suffer great 

8 economic hardship. At the same time, AGC has an 

9 obligation to give California credit for coming as far as 

10 it has come. 

11 Thank you. 

12 PRESIDING OFFICER COHEN: Thank you. 

13 Any questions? 

14 MR. HOROWITZ: I guess the only question, the 

15 only comment, is there anything you can provide in written 

16 testimony about the cost? 

17 MR. KENNEDY: Yes. 

18 MR. DICKINSON: Michael, I have an on the record 

19 but somewhat personal observation, that I've appreciated 

20 your work throughout this and you've been very helpful to 

21 EPA and myself in understanding the process in California 

22 and understanding your members' concerns. So I just 
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1 wanted to express my appreciation for that. 

2 MR. KENNEDY: Well, I will share with others who 

3 have not taken the time to engage with EPA as much as AGC 

4 has engaged, we were skeptical and concerned at the outset 

5 of this process. It took time for us to gain confidence 

6 in the agency and in the staff in particular, which 

7 conducted itself in a very professional manner. That's 

8 one of the reasons that we are content at this point to 

9 say this rule is within the ballpark. Reasonable people 

10 may disagree about whether it merits federal approval, but 

11 we're not prepared to dispute a conclusion that goes 

12 either way. 

13 MR. DICKINSON: I do have one question. This 

14 gets to -- thank you, Michael. I do have one question 

15 that relates to Michael's question about costs. Fair16 minded people could differ, I suppose, on the original 

17 cost estimates associated with the 2007 rule, whether it 

18 was $2.5 billion to 3.5, $4 billion, compared to the 9 to 

19 $13 billion. Where do you see it today? If I can be a 

20 little more specific, where do you see it for the small, 

21 medium, the average small, medium, and large manufacturer, 

22 -- excuse me -- operator, fleet operator? What's the 
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1 average cost, do you think, per those operators? 

2 MR. KENNEDY: We have not gone back and looked 

3 at that, to be candid with you. We can look into that and 

4 see what we can develop. We were satisfied at the time we 

5 sat down with CARB. Again, I want to emphasize there was 

6 a genuine effort to do the right thing in December of 

7 2010. And it was very different for an agency like CARB 

8 to acknowledge the mistake that it had made. But they 

9 were prepared to do that and, as I told them at the time 

10 and I believe today, it was an excellent example of good 

11 government. Anyone can make a mistake. It's much more 

12 difficult to correct it. 

13 At the time, from our members in California, 

14 including the people responsible for assisting them with 

15 compliance, the costs of the amended rule were considered 

16 to be reasonable. We would not have agreed to that 

17 package of amendments if that time if they were not 

18 considered to be reasonable. 

19 MR. DICKINSON: Thank you. 

20 PRESIDING OFFICER COHEN: I don't have any 

21 questions. I just want to reiterate the request to you, 

22 but to everybody who has provided testimony today. If you 
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1 have data, if you have specific citations that you can 

2 submit with your written comments to support what you've 

3 said here today, that would be extremely helpful. 

4 Larry Joseph, Construction Industry Air Quality 

5 Coalition. 

6 PRESENTATION OF THE CONSTRUCTION INDUSTRY 

7 AIR QUALITY COALITION 

8 MR. JOSEPH: I guess I'd like to start with an 

9 aside. I hope I don't go as far afield as Nick got. One 

10 of the things I've learned -- I've been working on the 

11 non-road preemption since the '91 proposals. I'm a 

12 lawyer. I'm here representing the Construction Industry 

13 Air Quality Coalition. In that whatever the number of 

14 years that is, I've often worked with trade associations 

15 as a client for large entities, automakers, locomotives, 

16 airlines, the construction industry writ large. 

17 This is the first rule or this series in the 

18 last while where the regulated entity is not the 

19 manufacturers, but it's some guy down the street who has 

20 to do these things. When you're working with a big player 

21 -- I imagine this happens in the agency. I know you both 

22 are lawyers. I don't know you. 
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1 PRESIDING OFFICER COHEN: I'm not. 

2 MR. JOSEPH: You're not, good, because that's a 

3 real helpful situation, where you're talking about law 

4 applied to technology, you've got science people, you've 

5 got lawyers, policy people as well. And it's a really 

6 productive batting around of ideas. 

7 Here I don't think, with all due respect to ARB, 

8 that the workshops are about getting it out from these 

9 people who are really far removed from the manufacturers, 

10 the sort of art of what's possible. I certainly 

11 appreciate Mike Kennedy's work representing what's 

12 reasonable. But it really would help -- I think if you 

13 went out to California for a hearing and everyone just 

14 complained, a long line of people complained about how 

15 burdensome this is, that might not be incredibly 

16 productive. But if you actually -- if industry encouraged 

17 their members to sort of work with EPA on the real life 

18 nuts and bolts technical issues, I think very fruitful 

19 information could result from that. 

20 So one of my points that CIAQC asked me to make 

21 is that, as Nick Goldstein mentioned for ARTBA, is that it 

22 would be very useful to have hearings in California, and 
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1 if not hearings perhaps workshops. Just try and get some 

2 information directly from the affected, the regulated 

3 entities here. I think that might be illuminating. 

4 PRESIDING OFFICER COHEN: Excuse me. Could I 

5 just ask you to state your official affiliation for the 

6 record. 

7 MR. JOSEPH: Yes. I'm sorry. My name is 

8 Lawrence Joseph. I am here -- I'm an attorney. I'm 

9 representing the Construction Industry Air Quality 

10 Coalition, who was one of the people the gentleman from 

11 the Pacific Legal Foundation was also representing in his 

12 coalition. As a coalition, CIAQC -- which is its acronym 

13 -- represents the members of Mike Kennedy's group, 

14 represents the local chapters of AGC and also ARTBA, as 

15 well as the Building Industry Association of California, 

16 the Engineering Contractors Association, Southern 

17 California Contractors Association, United Contractors. 

18 These are all some of the local chapters of these 

19 nationwide organizations. And the national organizations, 

20 of course, have every right to speak for them. 

21 CIAQC is perhaps even closer on the ground to 

22 these affected member organizations. They have over 
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1 150,000 pieces of off-road equipment, nearly half of that 

2 heavy-duty. So they have perhaps the most at stake in the 

3 waiver request as an entity. 

4 While we wish that we could do this in 

5 California and still hope that that's possible, we 

6 certainly appreciate the opportunity to comment here. I'm 

7 going to be -- I actually was pulled in at the last minute 

8 because someone couldn't make it. I am, as I said, a 

9 lawyer. Some of these comments, almost all of these 

10 comments, are technical and I'll try to do them justice, 

11 and I can submit a written version as well. I'll have to 

12 do that by email because I didn't bring it. 

13 The basic point we have here is that the rule is 

14 at some level unnecessary, and this goes to what the 

15 gentleman from Pacific Legal Foundation talked about, with 

16 maybe it's time to revisit EPA's longstanding 

17 interpretation of the, I think it's the second prong of 

18 the three prongs in Section 209. 

19 This rule in particular sort of screams for 

20 that, we think. It was originally envisioned after an 

21 inventory that they didn't really have down and it made 

22 assumptions that it was far dirtier than it was. So you 
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1 have this sort of overkill approach -- well, maybe it was 

2 the right-sized weapon for the thing they thought they 

3 were facing, but they weren't facing that much. 

4 Then on top of that, you have the economic 

5 downturn, and that changes everything, to the point where, 

6 as Mike Kennedy said, you're going to reach these same 

7 numbers anyway. So the question is whether this 

8 acceleration to reach them sooner is -- that also goes 

9 into the technological feasibility, the cost of 

10 compliance, all those. At some level the second 209 

11 factor blends in with some of the consistency with 202(a) 

12 factors as well. 

13 Again, this is one of the first retrofit rules. 

14 At least as it was originally envisioned, this rule is 

15 perhaps the most ambitious. But when you have something 

16 new, it's time to consider what you've been doing. You've 

17 been working with manufacturers, whether it's three or ten 

18 or whatever it is. That's been your 209 experience with 

19 waivers up until recently, and revisiting that when you're 

20 opening it up to the guy down the street, not GM or Ford 

21 or whomever, is appropriate and something within the 

22 agency's discretion. Even if we can't force you to do 
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1 that, that doesn't mean you can't do it, and it certainly 

2 would be good government to revisit that. 

3 Anyway, so we have inadequate data about fleet 

4 size, horsepower, consumption, fuel consumption, load 

5 factors. You get overestimated emissions. Then there's 

6 the concern with reliability of the retrofits and the 

7 safety issues, with retrofits. Again, it's a different 

8 process than when you ask Ford in the future to install 

9 something on an engine, a new engine, so they design it 

10 into it and it's integrated. This is being tacked on, 

11 sometimes well, sometimes not. And as again AGC said, 

12 it's too varied an environment to say whether you're going 

13 to get it right every time. As ARTBA said, that's public 

14 safety, too; it's not just the NAC's. It's also someone 

15 getting over, something blowing up, or something being so 

16 expensive that you can't use it and you go out of business 

17 and safer roads don't get built. And of course, there's 

18 the money and jobs that are also important. 

19 Another thing that concerns CIAQC -- and this is 

20 part of the ARB process -- is the original driver for this 

21 in part was PM mortality, and there was I guess someone on 

22 the ARB staff who faked their Ph.D. and cribbed data, and 
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1 a reanalysis of the data shows that some of the mortality 

2 increases under the rule rather than decreases. So 

3 there's very troubling things about the initial impetus 

4 for this rule that again call into question, is this 

5 needed. 

6 There are several other things. They didn't 

7 decrease the value of a statistical life with age, which 

8 is something you're supposed to do. That changes the 

9 public health, perceived public health benefit of this 

10 artificially. The emissions reduction benefits are short11 lived because the fleets were going to get there anyway. 

12 That again reduces the public health benefit. 

13 So that you've got suspect benefits and it 

14 wasn't adequately considered. As AGC mentioned, the ARB 

15 model overestimated by 4.5, or a factor of 350 percent, 

16 the emissions versus based on fuel usage. 

17 One thing that EPA's done, CIAQC thinks, is made 

18 it very difficult to pursue one of the key paths that the 

19 rule envisioned. One is buy new equipment, which can be, 

20 for large equipment like a scraper or a new bulldozer, it 

21 can be a million dollars. That's very hard to do, 

22 particularly when your equipment has been sort of devalued 
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1 from under you. 

2 So it's far easier to do repower, but -- and I 

3 haven't had time to look at this. I'm sorry, I was pulled 

4 in at the last minute. But CIAQC maintains that EPA's 

5 replacement engine regulation, 40 CFR 1068.240, makes it 

6 difficult to repower. So that's an issue where -- and I 

7 believe CIAQC's going to be requesting formally that that 

8 be widened so that people can meaningfully pursue a 

9 repower rather than having to go out -- a repower for 

10 $150,000, which maybe is attainable, rather than having to 

11 buy something new. Because of the ARB procedure is 

12 flexible but the EPA is not, it doesn't solve the problem. 

13 So that's a roadblock that EPA could fix and we'll 

14 request that formally, as I said. 

15 Again, EPA -- 

16 MR. DICKINSON: Go ahead. We're talking about 

17 that point. 

18 MR. JOSEPH: Okay, good. 

19 ARB's midcourse correction for the economy. 

20 Even that, while it was necessary, was too optimistic. So 

21 the new construction companies declined versus the 

22 assumptions there by about 17 percent more. Operating 
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1 hours are still down 40 percent from the peak. So while 

2 they did do a midcourse correction, I guess we would 

3 prefer that reasonable people come out on our side rather 

4 than disagree or come out the other side. 

5 Even the corrected numbers are optimistic as far 

6 as vis a vis what has actually happened in the ensuing two 

7 years. And that again goes to -- even if that's -- that 

8 goes to the cost of compliance, that goes to the economic 

9 feasibility, that goes to something that is within EPA's 

10 power to consider. 

11 On that, actually, there's no reason for EPA to 

12 fast-track this. Even if you're not convinced you should 

13 deny the waiver, that doesn't mean you have to grant the 

14 waiver. The agency has lots of priorities and the D.C. 

15 Circuit case was quite clear that you have the prerogative 

16 to decide what you want to work on next, and there's no 

17 compelling reason to do this now. 

18 So even if you can't deny it, it doesn't mean 

19 you have to grant it. You can wait and see what's going 

20 to happen with some of these data. 

21 Mike Kennedy covered the fuel consumption issue 

22 well. CIAQC has data on that that they've been gathering 
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1 from 2005. We'll be submitting data on that. 

2 Another thing that's happened vis a vis 

3 predictions is the fleet's a lot newer than anticipated. 

4 So in 2005 it was 4 percent Tier 0 and Tier 1. Now it's 

5 about 50 percent. That's faster than they anticipated 

6 that happening, and again it means that there's less need 

7 for this regulation in the first place. 

8 I mentioned there is some question about the 

9 premature death discoveries or analysis for PM 2.5, and 

10 that again questions the reason for having this 

11 regulation. 

12 So basically, yes, this is a rule that doesn't 

13 need to be adopted. It doesn't need to be approved by 

14 EPA. We'll get there without it. It's a huge barrier to 

15 jobs and recovery. And the agency's under no obligation 

16 to grant the waiver even if you're not ready to deny it. 

17 PRESIDING OFFICER COHEN: Thank you. 

18 MR. HOROWITZ: On that, the point you made about 

19 EPA's regulations, we've been informed about it. We are 

20 actively looking at that issue. 

21 MR. JOSEPH: May I ask a question? 

22 MR. HOROWITZ: Sure. 
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1 MR. JOSEPH: What I was recommending -- I just 

2 heard about this two days ago, sorry. I was recommending 

3 they file a petition. Is that something that you'd not 

4 welcome or would that be productive? 

5 MR. HOROWITZ: I think if you do it, if you did 

6 it in the context of this, of your comments here, it would 

7 be helpful. 

8 MR. JOSEPH: Okay. That's what we were planning 

9 to do. 

10 MR. DICKINSON: I don't have any questions. 

11 Thank you. 

12 PRESIDING OFFICER COHEN: Thank you. 

13 MR. DICKINSON: Thanks for coming today. 

14 PRESIDING OFFICER COHEN: Mr. Joe Rajkovacz. 

15 MR. RAJKOVACZ: Rajkovacz. 

16 PRESIDING OFFICER COHEN: Rajkovacz, thank you. 

17 California Trucking. 

18 MR. RAJKOVACZ: Good old Irish name. 

19 (Laughter.) 

20 PRESIDING OFFICER COHEN: I thought so. 

21 PRESENTATION OF CALIFORNIA 

22 CONSTRUCTION TRUCKING ASSOCIATION 
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1 MR. RAJKOVACZ: Hopefully -- I don't know if you 

2 can hear me all right. I don't have half my hearing, so I 

3 can't tell if I'm blasting out or not. 

4 MR. DICKINSON: You're fine. 

5 MR. HOROWITZ: Loud is good. 

6 MR. RAJKOVACZ: Okay, good. 

7 My name is Joe Rajkovacz, Director of 

8 Governmental Affairs and Communications for the California 

9 Construction Trucking Association, or CCTA, headquartered 

10 in Upland, California. The CCTA is a 501(c)(6) nonprofit 

11 trade association founded in 1941, and our members are 

12 active in all facets of construction trucking in 

13 California, including owning and operating non-road 

14 diesel-powered equipment subject to CARB regulations that 

15 are the focus of today's hearing. 

16 The CCTA asks that the Environmental Protection 

17 Agency reject CARB's requested waiver to enforce its non18 road diesel standards since California in our opinion has 

19 failed to meet the requirements of Section 209(e)(2) of 

20 the Clean Air Act. Specifically, the CCTA believes CARB's 

21 rule is arbitrary and capricious and that California does 

22 not need such California standards to meet compelling and 
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1 extraordinary conditions, two key considerations for the 

2 agency to make in deciding to grant California a waiver. 

3 According to CARB data from 2008, off-road 

4 equipment accounted for less than four percent of total 

5 particulate matter in the California on a list of the top 

6 ten sources for PM. PM from off-road diesels ranked 

7 number nine on that list. Most importantly, emissions 

8 inventory data relied upon by CARB has failed to account 

9 for the significant decreases in PM that were previously 

10 attributed to non-road diesel-powered equipment that now 

11 sits idle, unable to work in California. 

12 It is no secret that our nation has been mired 

13 in the worst economic recession since the Great 

14 Depression. According to the U.S. Bureau of Labor 

15 Statistics, California's current statewide unemployment 

16 rate is 10.7 percent and it is the third worst in the 

17 nation, behind the much smaller states of Rhode Island and 

18 Nevada. Eight of our cities rank in the top ten 

19 nationally for unemployment, with El Centro peaking out at 

20 an astounding 29.9 percent. 

21 In California the economic recession has had a 

22 devastating impact on many of our small business members. 
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1 Simply, for many small businesses there is little or no 

2 work. For those fortunate enough to get some of the 

3 public sector work that is available, it is not enough 

4 steady work or revenue to secure financing needed to 

5 service a mortgage for upgraded equipment. 

6 I'd like to ad lib here, at the same risk some 

7 of the others have. There's a much more causal 

8 relationship between poverty, lack of a job, and poor 

9 health than any model related to air quality, PM exposure. 

10 The decrease in construction trucking activity -

11 - excuse me. The decrease in construction activity also 

12 has had the ancillary effect of significantly reducing PM 

13 previously associated with non-road diesels. Projections 

14 of future economic activity to justify the regulations are 

15 just best guesses. Nobody can truly estimate when the 

16 California construction economy might recover to the point 

17 where idle equipment might be placed back in service. 

18 From our members' perspective, there is no economic 

19 recovery and no silver lining in economic forecasts. 

20 Besides reductions in PM from economic factors, 

21 other factors have been acting independently of CARB 

22 regulation to already power PM associated with non-road 
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1 diesels. Some larger contractors have been deploying 

2 newer, lower emissions equipment into the market, and of 

3 course in 2010 all diesels sold in the United States had 

4 to comply with EPA's ultra-low sulfur diesel mandate. 

5 When properly factored together, California 

6 cannot show any compelling and extraordinary reasons to 

7 specifically target non-road diesels for regulation as a 

8 major contributor to air quality issues in California. 

9 The economic recession has already helped CARB achieve its 

10 goal. 

11 PRESIDING OFFICER COHEN: Thank you. 

12 MR. DICKINSON: I have one question. First, 

13 thank you for traveling to Washington today. We 

14 appreciate the time. 

15 MR. RAJKOVACZ: I did the redeye, as was 

16 mentioned. 

17 (Laughter.) 

18 MR. DICKINSON: Well, enjoy the baseball game as 

19 well. 

20 This question is really to both you and 

21 potentially to California. In terms of the idle equipment 

22 that the contractors or operators currently have, how do 
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1 you -- in your estimate, how does that play into 

2 California's provisions that allow sort of an exception, 

3 if you will, for low hours of use equipment? 

4 MR. RAJKOVACZ: I think that's a great question. 

5 A lot of the off-road rules talked about it in terms of 

6 hours that gets to permissibility. I have operated 

7 equipment and I've hit 4,000 hours in a single year. So 

8 it's 200 hours -- and this does get to an issue of the 

9 metering. You know, some people probably think an hour is 

10 an hour on your clock. A lot of these meters -- this is 

11 my own personal experience -- an hour can literally kick 

12 off a half hour. It depends on the quality of the meter. 

13 What I'm getting at is there's not a consistency 

14 of how those meters, hour meters, work on equipment. I'm 

15 sure maybe some others might be a little bit more informed 

16 than me on that. That's my own personal experience. 

17 So for somebody, if they get the opportunity to 

18 bid a job, from my own personal experience, they can hit 

19 that 200 hours fairly quickly, and then they're done for 

20 the year. How do you develop the financial resources in 

21 an economy right now and with these rules? As someone 

22 mentioned earlier, your equipment as a small business, 
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1 that's where all your assets are. And when you don't have 

2 the ability to either work or that equipment's been 

3 devalued, so nobody wants it, how do you go and 

4 financially get a mortgage to operate? You're caught in a 

5 Catch 22, a financial Catch 22. 

6 I recognize that you can't take -- that EPA 

7 doesn't look at economic, the economic equation. But you 

8 know, that's really going on here. You have a lot of 

9 small businesses. I want to mention that it seems to me 

10 that a lot of the environmental regulation of the 

11 transportation industry that's going on, that one's 

12 position is predicated on their size within the industry. 

13 I see that fairly consistently, that the larger players 

14 in the industry tend to be supportive, more supportive 

15 than smaller players. And it does get to the ability, the 

16 feasibility of getting the financial resources to upgrade 

17 equipment and then, more importantly, to be able to 

18 consistently get the business to maintain the mortgage. 

19 I don't know if that -- 

20 MR. DICKINSON: That answered it, and I welcome 

21 any additional written comments or thoughts you have. 

22 MR. RAJKOVACZ: We will be submitting written 
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1 comments. 

2 MR. DICKINSON: Thank you. 

3 PRESIDING OFFICER COHEN: Thank you. 

4 Steven Milloy, an independent consultant. Good 

5 morning. 

6 PRESENTATION OF CALIFORNIA CONSTRUCTION 

7 AND TRUCKING ASSOCIATION 

8 MR. MILLOY: Good morning. 

9 I only made two copies. I'm sorry. 

10 I guess it's good afternoon at this point. 

11 PRESIDING OFFICER COHEN: Yes, I guess so. 

12 MR. MILLOY: My name's Steve Milloy. I'm the 

13 publisher of JunkScience.com. I'm an attorney and a 

14 biostatistician and a consultant, and I'm here on behalf 

15 of the California Construction and Trucking Association. 

16 So I make this presentation on behalf of CCTA, whose 

17 members will be harmed if EPA grants California's waiver 

18 application. 

19 Now, under the Clean Air Act California must 

20 show that compelling and extraordinary conditions exist to 

21 justify a waiver. In my view California has not and 

22 cannot meet this standard in terms of public health. The 
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1 key alleged component of concern in diesel exhaust is 

2 airborne particulate matter, PM 2.5. CARB claims that PM 

3 2.5 kills people on a short-term basis -- that means hours 

4 and days after exposure -- and also on a long-term basis, 

5 after years and decades of exposure. 

6 With respect to the short-term claim, I have 

7 just completed the first ever California-wide study of PM 

8 2.5 short-term mortality. My study is the largest, it's 

9 the most recent examination of the potential relationship 

10 between PM 2.5 and short-term mortality. It is the only 

11 systematic study in existence, that is with no cherry12 picked data. 

13 My results cover the years 2007 to 2010 and 94 

14 percent of the California population and show absolutely 

15 no correlation, that is no statistical relationship, 

16 between daily PM 2.5 measurements and daily mortality, 

17 even among the groups that CARB and EPA say are the most 

18 vulnerable to PM 2.5. Of the approximately 377,000 people 

19 who died statewide in California from heart and lung 

20 causes during 2007-2010, the correlation between daily 2.5 

21 readings and daily death tolls was 0.004. That is, the 

22 correlation is zero. 
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1 For the approximately 310,000 people aged 65 

2 years and older who died of heart and lung causes during 

3 2007 to 2010, the correlation between daily PM 2.5 

4 readings and daily death tolls was negative 0.004. So 

5 that correlation is also zero. I intend to submit these 

6 results for the record. 

7 Significantly, the data for my analysis is 

8 publicly available, so that my results can be verified by 

9 others. The air quality data I used came from the 

10 California Air Resources Board. The death data I used 

11 came from the California Department of Public Health. The 

12 publicly available nature of my data stands in stark 

13 contrast to the usually publicly unavailable data that 

14 CARB and EPA have relied on for 15 years with respect to 

15 PM 2.5. 

16 It's indefensible that the state of California 

17 hasn't already done this very same analysis, or has it and 

18 it just doesn't want us to see the results? 

19 With respect to CARB's claim that PM 2.5 is 

20 associated with mortality over the long term, as CARB and 

21 EPA well know, none of the existing studies are systematic 

22 or scientific in nature. All involve data from cherry-
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1 picked geographic areas and data from cherry-picked time 

2 frames. All involve undisclosed and unavailable health 

3 data, thereby preventing independent review. 

4 Even so, any fair reading of any of the existing 

5 studies leads to this came conclusion as my California6 wide study. That is, that there is no demonstrable, 

7 measurable, detectable relationship between PM 2.5 and 

8 mortality. Moreover, it is epidemiologically improper to 

9 assert that such a relationship can even be detected, 

10 because in no study has any researcher ever measured how 

11 much PM 2.5 any subject inhaled. No study has ever shown 

12 that PM 2.5 has ever caused a single death or any other 

13 health effect for that matter. No one in fact can explain 

14 how PM 2.5 can biologically cause death or ill health 

15 effects. 

16 Moreover, as any competent and honest 

17 epidemiologist will tell you, epidemiology is only useful 

18 for detecting high risks of rare disease, the classic case 

19 of smoking. With PM 2.5, however, the supposed risks are 

20 very low and the health point, mortality, is common to all 

21 humans. The fact that CARB continues to assert that PM 

22 2.5 is causally associated with mortality despite the 
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1 aforementioned fatal shortcomings means their claims are 

2 without a foundation in fact. I am confident that if CARB 

3 and EPA never undertook a valid systematic scientific 

4 approach to studying PM 2.5 or ozone, SOx, NOx, or other 

5 air pollutants, they would be forced to acknowledge that 

6 there is no scientific evidence that U.S. ambient air 

7 quality has any detectable effect on public health. 

8 The reality is that the air in California does 

9 not require the stringent standard proposed here. 

10 California's air is already clean and safe from the 

11 standpoint of public health, and there is no credible or 

12 truly scientific evidence to the contrary. Yes, we can 

13 measure particulate matter, ozone, SOx, NOx in the air, 

14 but none of these airborne substances have ever posed a 

15 detectable public health problem in California or the 

16 U.S., and that's a matter of historical fact. 

17 As levels of these pollutants in ambient air 

18 have dropped dramatically over the past 50 years, it 

19 belies belief to assert, as CARB and EPA have, that 

20 present day air quality resulting from PM 2.5 or NOx 

21 emissions poses an ever-increasing public health risk. As 

22 my California-wide analysis portends, the walls are 
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1 closing in on the scientific inaccuracies and fallacies 

2 espoused by CARB and EPA. EPA should start unwinding the 

3 dubious analysis and false conclusions of CARB and 

4 determine that there is no valid rational whatsoever for 

5 these rules, let alone a compelling and extraordinary need 

6 for them. 

7 PRESIDING OFFICER COHEN: Thank you. 

8 Questions? 

9 MR. HOROWITZ: No. 

10 MR. DICKINSON: Thank you for your time. 

11 PRESIDING OFFICER COHEN: Thank you very much. 

12 It's our practice in these hearings to allow 

13 California to testify a second time. But first I'd like 

14 to ask if there's anyone else who wishes to present 

15 testimony today? 

16 MR. HADZI-ANTICH: Very briefly. 

17 PRESIDING OFFICER COHEN: Yes, please. Thank 

18 you. 

19 MR. HADZI-ANTICH: The only thing I would like 

20 to add is -- 

21 MR. HOROWITZ: Can you restate your name? 

22 PRESIDING OFFICER COHEN: Restate your name? 
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1 MR. HADZI-ANTICH: I'm sorry. Theodore Hadzi2 Antich of Pacific Legal Foundation, representing the ten 

3 clients that I stated before. 

4 The only thing I would like to add is just to 

5 bounce off a couple of comments that were made earlier. 

6 My clients have submitted a request to EPA also for this 

7 hearing to be held in California, preferably Sacramento, 

8 which is a central location. My clients have members that 

9 would very much like to testify personally. These are 

10 members who own and operate the specific types of 

11 equipment that are covered by these regulations. These 

12 individuals have firsthand knowledge of the impact of 

13 these regulations on their livelihood, their businesses, 

14 their abilities not only to pay the mortgages for their 

15 equipment, but also to pay for the mortgages on their 

16 homes, because their businesses rely on the availability 

17 of this equipment. 

18 So I would simply echo the sentiment that EPA 

19 give serious consideration to conducting a supplemental 

20 hearing on this waiver application in California. 

21 PRESIDING OFFICER COHEN: Thank you so much. 

22 Thank you. 
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1 Would California like to make a further 

2 statement? 

3 MR. WHITE: Yes. 

4 MR. LIVINGSTON: There or here; it doesn't 

5 matter. 

6 PRESIDING OFFICER COHEN: You can tag-team. 

7 MR. WHITE: I'll let him go first. Always let 

8 the attorney go first. 

9 CLOSING PRESENTATION OF THE CALIFORNIA 

10 AIR RESOURCES BOARD 

11 MR. LIVINGSTON: I'm Aron Livingston, the 

12 Assistant Chief Counsel. Mine will be very short. 

13 A number of commenters brought up the lack or 

14 supposed lack of compelling and extraordinary conditions 

15 in California. We have a two or three -- well, a two-part 

16 response. First is that we'll likely submit and ask to be 

17 incorporated by reference our prior comments on the issue 

18 of the program as a whole, that the EPA should be looking 

19 at our standards on the program as a whole. We submitted 

20 extensive comments on that in the greenhouse gas 

21 rulemaking and the reconsideration for the greenhouse gas 

22 waiver submittal for on-road motor vehicles, but the same 
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1 principles also apply here and in the reconsideration. So 

2 we'll resubmit those. 

3 It was also extensively briefed in some of that 

4 litigation and we'll try and find some relevant briefs 

5 that will assist EPA in the review of that. 

6 The second part of that is that comments 

7 basically ignored -- and this will be in some of the 

8 briefing under other comments -- our prior comments on the 

9 issue, but it pretty much ignores the significant 

10 strengthening of the Clean Air Act of 1977 and the broad 

11 interpretation that Congress gave to California's program. 

12 So you have to review the use of the term "standards" in 

13 that context. 

14 Then third, I'm not even sure it's all that 

15 relevant because the D.C. Circuit has already opined that 

16 EPA's review of that particular prong in the off-road 

17 sector specifically was upheld, and it's looking at the 

18 program as a whole, and the TRU decision was upheld. So I 

19 think that horse was beaten to death, but we'll beat it 

20 some more and send you some more information on that. 

21 Secondly, even if you decided that you couldn't 

22 look at the program as a whole, which we think would be 
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1 inappropriate, we would not urge you to do that, but if 

2 you do look at it in the alternative, we have demonstrated 

3 that a need for the quantitative amount of reduction that 

4 we would be getting from this measure, even as amended, 

5 and I will let Eric speak more to that. 

6 MR. GOLDSTEIN: Did the horse leave the barn or 

7 get beaten to death? 

8 MR. LIVINGSTON: We're still beating it. 

9 MR. WHITE: I also wanted to respond to a couple 

10 different comments that were raised today concerning the 

11 problems. Concerning the comments from ARTBA, I think 

12 many of the issues that were raised by ARTBA are well 

13 documented in the administrative record that we provided 

14 as part of the rulemaking, whether it relates to safety15 related issues and the changes that were promulgated in 

16 response to that, whether it's the availability of 

17 equipment, technical feasibility of Tier 3, Tier 4 

18 equipment, availability for fleets to be in compliance 

19 with the regulation, and associated provisions within the 

20 regulation which provide relief from the regulation if 

21 that technology does not become available, and issues 

22 around costs and cost assessments that were done as part 
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1 of the 2010 rulemaking, really do address the issues that 

2 are there. So I would encourage EPA staff to make sure 

3 that you go back and relook at that record because I think 

4 it does lay out a fairly good response to the issues that 

5 were raised. 

6 One issue that I heard kind of raised over and 

7 over is the need, the compelling need question: Does 

8 California really need these, recognizing changes to the 

9 inventory? And I want to thank Mike Kennedy for pointing 

10 out I think quite well the historical process we went 

11 through in terms of going back, reevaluating the inventory 

12 from the initial inventory that we developed in 2007, 

13 recognizing both substantial reduction in activity within 

14 the state associated with the recession, as well as being 

15 able to go back and look at the basic inputs into the 

16 inventory model, whether it was how equipment is used, how 

17 much equipment is there, those types of issues. 

18 Because as I tell people, I think as the state 

19 has demonstrated over and over as it updates and does 

20 other types of efforts to move towards compliance with 

21 national air quality standards, inventories are moving 

22 documents. They are constantly improved as new data comes 
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1 in. So what you see is a reflection in this rulemaking of 

2 that process working and working well. Where there were 

3 questions about whether or not the inventory was accurate, 

4 ARB in California going back and relooking at that through 

5 a very public process that included its own separate 

6 series of workshops to engage stakeholders on the changes 

7 that were being made to the inventory, to arrive at an 

8 inventory that would be used to support the rulemaking 

9 that we did. 

10 But even with the lower emissions, even with the 

11 reduced emissions that we saw both in the base inventory 

12 as well as from the recession, what we see is that in 2010 

13 mobile sources in California, about 71 percent -- let me 

14 rephrase that -- non-light-duty, heavy-duty sources of NOx 

15 in the state, are 71 percent of our mobile source 

16 inventory in 2010, and that grows to 77 percent in 2020. 

17 So clearly there is -- 

18 MR. HOROWITZ: I'm sorry. What about the 71 

19 percent? 

20 MR. WHITE: 71 percent of all emissions, mobile 

21 source NOx emissions, come from non-light-duty 

22 applications -- trucks, construction equipment, ships. 
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1 That number grows to 77 percent by 2020. 

2 This regulation is important if the state is 

3 going to meet its NOx obligations and achieve important 

4 emissions reductions that we're going to need to 

5 demonstrate attainment. We would estimate that this 

6 regulation in 2023 will provide 9 tons per day, nearly 9 

7 tons per day of NOx emissions, throughout the state, and 

8 half a ton of PM emissions, PM 2.5 emissions. 

9 Again, all of this is -- this is all kind of 

10 contained in the record, but I highlight those in terms of 

11 not only this source category is an important contributor 

12 to NOx emissions, mobile source NOx emissions in 

13 California, but the benefits of this regulation even with 

14 the reduced inventory are substantial and important. 

15 If you look at recent work that was done by ARB, 

16 which we will submit as part of -- which we will submit to 

17 EPA -- what we have titled "visioning," vision work, which 

18 kind of looked at what does the state need to do to meet 

19 its long-term ambient and GHG emission reduction targets? 

20 What we have seen is to meet national ambient air quality 

21 standards in the South Coast is going to require an 

22 additional 80 or 85 percent reduction in NOx emissions by 
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1 2023. So that presumes every regulation that has already 

2 been promulgated is fully implemented, and yet we still 

3 fall substantially short of the NOx emissions reductions 

4 that we need. 

5 So clearly there is a compelling need for the 

6 emission reductions that this regulation will provide, let 

7 alone the benefits that it does to reduce diesel risk 

8 throughout the state and address mortality. In all due 

9 respect to the gentleman from CCTA, I think both ARB and 

10 EPA have both clearly identified, and through thousands of 

11 peer-reviewed documents, that there is a link between PM 

12 2.5 exposure and mortality. 

13 So I would request that certainly you go back 

14 and take a look at it, but I think the link is clear. 

15 Poor air quality has adverse health impacts and can lead 

16 to premature mortality, and I think that's an important 

17 benefit of this. 

18 The last thing that I did want to just briefly 

19 touch on is process. California has I think a long 

20 tradition of engaging stakeholders in very meaningful ways 

21 as it develops its regulatory process, certainly, as we 

22 talk about regulations that have such far and wide-ranging 
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1 impacts on fleet owners. And I think throughout this 

2 entire process the tens of workshops that we have had to 

3 discuss, to gather information on impacts, to gather 

4 information about -- to share regulatory proposals and get 

5 feedback from them, I think has been very successful, has 

6 been very informative, and I think at the end of the day 

7 has allowed us to arrive -- allowed us to arrive at a 

8 proposal and a regulation that found that right balance 

9 between economic impact and environmental benefit. 

10 At the end of the day, that is a very difficult 

11 policy decision that the state of California must weigh 

12 and the California Air Resources Board did weigh in 

13 approving this regulation. So while I think there have 

14 been numerous calls to hold hearings in California, we 

15 think that the public record that this regulation was 

16 developed on provides the information U.S. EPA needs to 

17 hear from affected fleets in California, to understand 

18 what the impacts are going to be, and weigh those, as the 

19 California Air Resources Board did in determining that 

20 this was a necessary regulation to move forward to address 

21 the extreme nonattainment areas that exist in both the San 

22 Joaquin Valley and the South Coast Air Basins as it 
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1 relates to ozone, as well as the nonattainment status of 

2 those two regions for PM 2.5. 

3 So I think with that I would like to certainly 

4 close out our comments today, unless there's any further 

5 questions. 

6 PRESIDING OFFICER COHEN: I have one. 

7 MR. HOROWITZ: I have a couple. 

8 PRESIDING OFFICER COHEN: My question -- we 

9 heard testimony today that one of the reasons this 

10 regulation or these regulations aren't necessary is 

11 because fleet turnover and investments that the industry 

12 has already made will eventually get us to where we need 

13 to be. So I would appreciate, if this is already not part 

14 of the record, if you could submit information to us that 

15 explains how long it would take to get to that nine tons 

16 of NOx and a half ton of PM without these regulations? 

17 MR. WHITE: Sure. Information on that is in the 

18 2010 statement of reasons. What I would say is that, as 

19 with any source category, whether you're talking about 

20 light-duty cars or you're talking about heavy-duty trucks, 

21 emissions go down with time as new standards take effect 

22 and begin to permeate throughout the fleet. The challenge 
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1 that California faces is that the rate of penetration and 

2 the rate at which those emission reductions from natural 

3 attrition will be realized are insufficient to provide the 

4 necessary NOx reductions that the state needs to meet 

5 federal and state ambient air quality standards. 

6 So only through rules like this where we can 

7 accelerate that turnover to the cleaner equipment as it 

8 becomes commercially available, is the only way California 

9 has identified to achieve the nearer-term emissions 

10 reductions from those source categories that they need, 

11 relative to simply allowing natural attrition to take 

12 hold. 

13 PRESIDING OFFICER COHEN: Thank you. 

14 MR. HOROWITZ: Two specific questions. There 

15 was a specific reference to being required to repower an 

16 engine and then replace it a few years later. How do you 

17 respond to that? Is that something that the regulations 

18 do require? 

19 MR. WHITE: My response would be that the 

20 regulation does not require that. The regulation sets 

21 fleet average targets which allow fleets to select the 

22 compliance path that makes most sense for them, 
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1 recognizing differences within their fleet in terms of the 

2 equipment that they have, costs that they might be able -- 

3 that they would have to incur to comply with the 

4 regulation, and the timing of the regulations, since it 

5 does stagger based on fleet size. 

6 The regulation in its initial version I think 

7 many argued did require replacement of vehicles or 

8 repowering of vehicles multiple times. This regulation in 

9 our view does not require that, and the structure of it 

10 has been changed substantially so that with only a single 

11 fleet average target to meet, the need to, we would say, 

12 touch a vehicle multiple times is no longer a part of the 

13 regulation. 

14 MR. HOROWITZ: The second question. I believe 

15 there was one commenter who talked about the issue of this 

16 affecting fleets in other states. Putting aside 177 

17 states or I guess Air 209(e)(2)(b) states, does the 

18 regulation of fleets here -- are there fleets centralized 

19 in California or does the regulation go to the fleets that 

20 are centered in California? How is that done? 

21 MR. WHITE: The regulation applies equally to 

22 all equipment that is operated in the state, regardless of 
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1 where the fleet itself is located. So if you are a fleet 

2 that is wholly contained within the state of California, 

3 all of your equipment would be subject to this regulation. 

4 If you're a fleet that is a multi-state, has a multi5 state presence, only the equipment that you would operate 

6 within the state of California would be subject to this 

7 regulation. So equipment that is used outside of 

8 California is untouched and uncovered by the provisions of 

9 the rule. 

10 MR. HOROWITZ: Okay. 

11 PRESIDING OFFICER COHEN: Thank you. 

12 If no other party wishes to present testimony to 

13 this hearing panel -- 

14 MR. HADZI-ANTICH: Excuse me. May I just 

15 comment for one moment? 

16 MR. DICKINSON: You can submit your comment by 

17 written comment. Thank you. 

18 PRESIDING OFFICER COHEN: We will proceed to 

19 close this hearing. As noted at the outset, the public 

20 comment period for these matters will remain open until 

21 October 22, 2012. 

22 This hearing is hereby closed. Thank you all 
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1 for coming and participating today. 

2 (Whereupon, at 12:38 p.m., the hearing was 

3 adjourned.) 

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