BOARD MEETING

 STATE OF CALIFORNIA

 AIR RESOURCES BOARD

 JOE SERNA, JR. BUILDING

 CALIFORNIA ENVIRONMENTAL PROTECTION AGENCY

 BYRON SHER AUDITORIUM, SECOND FLOOR

 1001 I STREET

 SACRAMENTO, CALIFORNIA

 THURSDAY, DECEMBER 11, 2008

 9:00 A.M.

 TIFFANY C. KRAFT, CSR, RPR

 CERTIFIED SHORTHAND REPORTER

 LICENSE NUMBER 12277

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 APPEARANCES

 BOARD MEMBERS

 Ms. Mary D. Nichols, Chairperson

 Dr. John R. Balmes

 Ms. Sandra Berg

 Ms. Dorene D'Adamo

 Mr. Ronald O. Loveridge

 Mr. Daniel Sperling

 Mr. Ron Roberts

 Mr. John Telles

 STAFF

 Mr. James Goldstene, Executive Officer

 Mr. Tom Cackette, Chief Deputy Executive Officer

 Ms. Ellen Peter, Chief Counsel

 Mr. Michael Scheible, Deputy Executive Officer

 Ms. Lynn Terry, Deputy Executive Officer

 Ms. Kathleen Quetin, Ombudsman

 Mr. Michael Benjamin, Chief, Mobile Source Analysis Branch

 Mr. Tony Brasil, In-Use Control Measures Section, MSCD

 Mr. Michael Carter, Chief, Emission Research and

 Regulatory Development Branch, MSCD

 Ms. Edie Chang, Chief, Program Planning and Management

 Branch

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 APPEARANCES CONTINUED

 STAFF

 Ms. Cynthia Garcia, Population Studies Section, Research

 Division

 Mr. Jack Kitowski, Chief, On-Road Control REgulations

 Branch, MSCD

 Mr. Kevin Kennedy, Chief, Program Evaluation Branch

 Mr. Stephan Lemieux, On-Road Heavy Duty Diesel Section,

 MSCD

 Ms. Gloria Lindner, In-Use Control Measures Section,

 Mobile Source Control Division, MSCD

 Mr. Chuck Shulock, Chief, Office of Climate Change

 Ms. Monica Vejar, Board Clerk

 Mr. Eric White, Chief, Heavy Duty Diesel In-Use Strategies

 Branch, MSCD

 ALSO PRESENT

 Ms. Janet Abelson, El Cerrito City Council

 Mr. Kevin Abernathy, Cal Dairy Campaign

 Dr. Janet Abshire, CA Medical Association

 Mr. David Allen, Alenco Consulting Group

 Mr. Mike Anderson, Anderson Logging, Inc.

 Mr. Myles Anderson, Anderson Logging, Inc.

 Ms. Linda Arcularius, City of Inyo

 Mr. Eric Bassett, Riverview International Trucks, Inc.

 Ms. Shirley Batchman, CA Citrus Mutual

 Mr. Bob Berry, Berry Brothers Towing

 Ms. Autumn Bernstein, Climate Plan

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 APPEARANCES CONTINUED

 ALSO PRESENT

 Mr. Scott Blevins, Mountain Valley Express

 Mr. David Bolland, Association of California Water

 Agencies

 Mr. Hugh Bower, Emanual Jones

 Mr. Barry Broad, CA Teamsters Public Affairs Council

 Mr. Steve Brink, California Forestry Association

 Mr. Doug Britton, Britton Trucking

 Mr. Jack Broadbent, BAAQMD

 Mr. Chris Brown, AICP, MCAQMD

 Mr. Burmeister, BJ Services, Co.

 Mr. Chris Busch, Union of Concerned Scientists

 Mr. Eric Carleson, Associated California Loggers

 Mr. Tim Carmichael, Coalition for Clean Air

 Mr. Mark Castro

 Mr. Tom Carroll, Shasta Union High School District

 Ms. Audrey Chang, NRDC

 Mr. Matt Cohen, Solpower Corp & Clean Fuels Resources

 Mr. Michael Collier, CD Matthes, Inc., Trucking

 Mr. Ken Cooley, City of Rancho Cordova League of Cities

 Mr. Peter Cooper, CA Labor Federation

 Ms. Cynthia Cory, CA Farm Bureau Federation

 Mr. Andy Cox, Mike Campbell & Associates

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 APPEARANCES CONTINUED

 ALSO PRESENT

 Mr. Michael Delbar, Mendocino County

 Ms. Bernadette Del Chiaro, Environment California

 Mr. Daniel Del Moro, PVM Transportation

 Mr. Charles Diaz, Charles Dias Trucking, Inc.

 Ms. Diane Dillon, Napa County, CSAC

 Mr. James Duran, CA Hispanic Chamber

 Mr. Jean Etcheverry, Antonini Fruit Express

 Mr. Andy Garcia, GSC Logistics

 Mr. Gary Gaussoin, Silver Eagle Manufacturing Company

 Mr. David Hagen, RSI Insurance Brokers

 Mr. Henry Hogo, SCAQMD

 Ms. Janice Keating, City of Modesto

 Ms. Kathy Fitzgerald, Fitzgerald Truck Sales

 Mr. John Fleck, Deflecktor

 Mr. Larry Forester, City of Signal Hill

 Mr. Tim Frank, American Farmland Trust

 Mr. Randal Friedman, Marine Corps Installations West

 Mr. Jim Ganduglia, Ganduglia Trucking

 Mr. Michael Graboski, American Rental Association

 Mr. Sean Graham, Freight Wing, Inc.

 Mr. Rob Goliti, Midnight Express Trucking, Inc.

 Mr. Jim Gray, City of Roseville

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 APPEARANCES CONTINUED

 ALSO PRESENT

 Mr. Ron Hall, CR England, Inc.

 Mr. Seth Hammond, Specialty Crane

 Mr. Martin Hopper, Public Power Authority

 Ms. Bonnie Holmes-Gen, American Lung Association

 Mr. Roger Isom, CA Cotton Ginners and Growers Association

 Mr. Bob Johnson, UC Davis

 Mr. Ken Johnson

 Mr. Kent Johnson, AG Production

 Mr. Jeremy Jungreis, Marine Corps Installations West

 Mr. Greg Karras, CBE

 Mr. David Kayes, Daimler Trucks

 Mr. Rachel Katz, Pacific Forest Trust

 Ms. Naomi Kim, California Environmental Rights Alliance

 Mr. Vladimir Kogan, Orange County Sanitation District

 Dr. Joseph Kubsh, MECA

 Ms. Amy Kyle, School of Public Health

 Ms. Barbara Lee, CAPCOA

 Mr. Allan Lind, CCEEB

 Mr. George Little, CTTA

 Mr. Kenny Lloyd

 Mr. Edward Lombard, Contou

 Mr. Steve Lopes, WS Oil Company

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 APPEARANCES CONTINUED

 ALSO PRESENT

 Ms. Gayle Lopopolo, Ganduglia Trucking

 Mr. Jim Lyons, Sierra Research

 Mr. Bill Magavern, Sierra Club California

 Mr. Alvan Mangalindan, Crane Owners

 Ms. Tara Marchant, The Greenlining Institute

 Mr. Matthew Marsom, Public Health Institute

 Mr. Jesse Marquez, Coalition for a Safe Environment

 Mr. J. Michael Martensson, California Groundwater

 Association

 Ms. Julie May, CBE

 Ms. Tara McClanahan, YADARI

 Mr. Lee McCorkle, McCorkle Trucking

 Mr. Michael McDaniel, Continental Tire

 Mr. Jay McDeeman, CIOMA

 Mr. Mike McKeever, SACOG

 Ms. Therese McMilan, Metropolitan Transportation

 Commission

 Mr. Clayton Miller, Lewis & Co.

 Mr. Dan Miller, Save Mart Supermarket

 Ms. Wendy Mitchell, IOU's

 Mr. Alfred Medina, Latino Issues Forum

 Mr. Gary Montgomery, Montgomery Transfers

 Mr. Peter Montgomery, CBIS

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 APPEARANCES CONTINUED

 ALSO PRESENT

 Mr. Glenn Neal, CA Tow Truck Association

 Mr. Brent Newell, Center on Race, Poverty, and the

 Environment

 Mr. Albert Nunes, AC Trucking

 Mr. Alan Osofsky, Rodgers Trucking Company

 Mr. Max Ordonez, CHCC

 Mr. Oralia Ornelas, Juarez Bros. Trucking, Inc.

 Ms. Linda Park, Southern California Association of

 Governments

 Ms. Michelle Passero, The Nature Conservancy

 Ms. Amisha Patel, Cal-Chamber/AB 32 Implementation Group

 Mr. Norman Pedersen, Southern California Public Power

 Agency

 Mr. David Piech, JD Navistar Engine Corp.

 Ms. Michele Pielsticker, CALTAX

 Mr. Norman Plotkin, Plotkin Zins & Associates

 Mr. Bob Ramorino, Roadstar Trucking

 Mr. Brian Rees, CA Poultry Federation

 Ms. Catherine Reheis-Boyd, WSPA

 Mr. Stephan Rhoades, Strategic Education Services

 Mr. Brian Rood, Colonial Life

 Mr. Joe Rosa, Renner Petroleum

 Ms. Dorothy Rothrock, Cal-Chamber/AB 32 Implementation

 Group

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 APPEARANCES CONTINUED

 ALSO PRESENT

 Mr. Rick Row, Sustainable Silicon Valley

 Mr. Michael Rubio, Kern County

 Mr. Sayed Sadredin, SJVAPCD

 Mr. Matthew Schrap, CTA

 Ms. Patty Senecal, CA Government Affairs IWLA

 Ms. Kirsitna Skierka, Sustainable Silicon Valley

 Ms. Sarah Skikne, the Climate Group

 Mr. Mike Scuemake, Central Valley Trailer Repair, Inc.

 Mr. Pery Shusta, Arrowhead Towing

 Mr. Ernie Silva, Coalition for Adequate School Housing

 Mr. Andrew Smith, ATDynamics

 Mr. Neil Smith, Con-Way Freight

 Mr. Dan Souza, Mountain Valley Express

 Mr. Adam Stern, Terrapass

 Mr. Scott Taylor, GSC Logistics

 Mr. Wayne Teece, Dispatch Transportation

 Mr. James Thomas, Nabors Well Services Co.

 Mr. Robert Tichelman, Windyne

 Mr. Chris Torres, F&L Farms Trucking, Inc.

 Mr. Paul Trump, Mike Campbell & Associates

 Ms. Eileen Tutt, CALEPA

 Mr. Christopher Valadez

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 APPEARANCES CONTINUED

 ALSO PRESENT

 Mr. Doug Van Allen, BJ Services, Co.

 Mr. Matt Vander Sluis, Planning and Conservation League

 Mr. Ed Wallace, Robinson Enterprises, Inc.

 Mr. Barry Wallerstein, SCAQMD

 Ms. Linda Weiner, American Lung Association of California

 Mr. Ryan Wiggins, Communities for Clean Ports

 Ms. Lisa Wilcox, Pasadena City College

 Ms. Jane Williams, CA EJAC

 Mr. Sam Zugzda, Leonard's Diesel Repair, Inc.

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 INDEX

 PAGE

 Item 08-10-2

 Chairperson Nichols 3

 Executive Officer Goldstene 4

 Mr. Friedman 9

 Mr. Jungreis 10

 Ms. Chang 13

 Ms. Pielsticker 14

 Ms. Patel 16

 Ms. Skierka 18

 Ms. Rothrock 19

 Ms. Abelson 20

 Mr. Row 21

 Mr. Karras 22

 Ms. May 24

 Ms. McMilan 26

 Mr. McKeever 28

 Ms. Bernstein 31

 Mr. Brink 33

 Ms. Reheis-Boyd 35

 Mr. Lombard 37

 Mr. Cooley 39

 Mr. Gray 41

 Mr. Forester 43

 Ms. Keating 45

 Ms. Park 48

 Ms. Dillon 51

 Ms. Arcularius 53

 Ms. McClanahan 55

 Ms. Del Chiaro 57

 Mr. Johnson 58

 Mr. Busch 59

 Mr. Pedersen 61

 Mr. Rubio 63

 Mr. Hopper 65

 Ms. Katz 66

 Ms. Passero 67

 Mr. Wallerstein 69

 Mr. Montgomery 69

 Mr. Bower 71

 Mr. Ordonez 72

 Mr. Stern 74

 Mr. Brown 74

 Ms. Kim 75

 Ms. Williams 77

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 INDEX CONTINUED

 PAGE

 Mr. Silva 79

 Mr. Magavern 82

 Ms. Marchant 84

 Mr. Carmichael 86

 Mr. Vander Sluis 88

 Ms. Kyle 89

 Mr. Plotkin 91

 Mr. Medina 93

 Ms. Lee 94

 Ms. Skikne 95

 Mr. Kogan 97

 Mr. Bolland 98

 Mr. Frank 100

 Mr. Cooper 102

 Ms. Wilcox 103

 Mr. Marquez 104

 Mr. Newell 106

 Mr. Duran 107

 Ms. Holmes-Gen 109

 Mr. Johnson 111

 Mr. Miller 113

 Ms. Tutt 114

 Board Discussion 116

 Motion 163

 Vote 163

 Item 08-11-1

 Chairperson Nichols 165

 Executive Officer Goldstene 166

 Staff Presentation 167

 Item 08-11-3 & 08-11-4

 Chairperson Nichols 174

 Staff Presentation 177

 Mr. Delbar 276

 Mr. Broadbent 278

 Mr. Piech 279

 Mr. Mangalindan 281

 Ms. Mitchell 282

 Mr. Goliti 283

 Mr. Allen 285

 Mr. Marsom 286

 Mr. McKeeman 288

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 INDEX CONTINUED

 PAGE

 Ms. Weiner 290

 Dr. Abshire 292

 Ms. Holmes-Gen 292

 Mr. White 295

 Mr. Wiggins 296

 Dr. Kubsh 298

 Mr. Graham 299

 Mr. Garcia 301

 Mr. Taylor 303

 Mr. Hall 305

 Mr. Osofsky 306

 Mr. Britton 308

 Mr. Hogo 309

 Mr. Kayes 311

 Mr. Zugzda 312

 Mr. Graboski 313

 Mr. Ramorino 316

 Mr. Cohen 318

 Mr. Fleck 319

 Ms. Senecal 322

 Mr. Tichelman 327

 Mr. Broad 331

 Mr. Diaz 333

 Mr. Gaussoin 334

 Mr. Carroll 340

 Mr. Isom 344

 Mr. Lind 347

 Mr. McDaniel 349

 Mr. Brink 353

 Mr. Sadredin 354

 Mr. Collier 356

 Mr. Ornelas 357

 Mr. Cox 360

 Ms. Lopopolo 362

 Mr. Gnduglia 363

 Mr. Souza 364

 Mr. Blevins 366

 Mr. Nunes 368

 Mr. Rood 370

 Mr. Teece 372

 Mr. Shuemake 373

 Mr. Miller 374

 Mr. Smith 376

 Mr. Lloyd 378

 Mr. Shusta 379

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 INDEX CONTINUED

 PAGE

 Mr. Little 379

 Mr. Neal 381

 Mr. Berry 383

 Mr. Castro 384

 Mr. Smith 386

 Mr. Rhoads 388

 Ms. Arriola 390

 Mr. Hammond 392

 Mr. Steinberg 393

 Mr. Lyons 394

 Mr. Schrap 396

 Ms. Batchman 398

 Mr. Rees 399

 Mr. Johnson 401

 Mr. Montgomery 401

 Ms. Cory 403

 Ms. Fitzgerald 404

 Mr. Etcheverry 406

 Mr. Anderson 409

 Mr. Anderson 410

 Mr. Wallace 412

 Mr. Carleson 413

 Mr. Hagen 416

 Mr. Bassett 417

 Mr. Martensson 419

 Mr. Rosa 421

 Mr. Van Allen 423

 Mr. Burmeister 425

 Mr. Thomas 427

 Mr. Torres 428

 Mr. McCorkle 430

 Mr. Abernathy 431

 Mr. Valadez 433

 Mr. Lopes 435

 Mr. Del Moro 437

 Board Discussion 438

 Adjournment 450

 Reporter's Certificate 451

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1 PROCEEDINGS

2 CHAIRPERSON NICHOLS: Welcome, everybody, to the

3 last meeting of the Air Resources Board for calendar year

4 2008. I want to welcome you to the Byron Sher Auditorium.

5 And it's our custom before we begin to call the

6 meeting to order, and then we all rise and say the Pledge

7 of Allegiance. I'll ask you to join me.

8 (Thereupon the Pledge of Allegiance was

9 recited in unison.)

10 CHAIRPERSON NICHOLS: I have a couple of routine

11 process announcements.

12 First of all, if you look at the agenda, you will

13 notice we have a standing item for a closed session where

14 the Board can in private receive reports on lawsuits. But

15 we're not going to have it today. So I want you to know

16 the closed session is canceled.

17 We are going to take a break after the vote. But

18 unless things go longer than I expect, I don't think we're

19 going to be taking a break this morning. We're going to

20 try to just proceed through this item.

21 I want to let people know this afternoon there

22 are going to be translation services available in Spanish

23 and Punjabi, those of you who are listening on the web and

24 planning for the later hearing. And there will be

25 headsets available outside the room for anybody who would

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1 like to take advantage of them.

2 Anyone who wants to testify on this or any other

3 item needs to sign up with the staff outside the

4 auditorium rather than having people crowd up at the desk

5 here. We have the sign-up tables outside in the lobby.

6 I'm sure you probably saw them on the way in. But in case

7 anybody didn't, we would appreciate it if you would sign

8 up in advantage so we can sort the list and call on people

9 in order.

10 For this item this morning, we're also going to

11 be imposing a time limit, because we've already heard

12 substantial testimony. So for that reason, I'm just going

13 to give a general word here that the Board members can

14 read faster than they can listen and faster than you talk.

15 So we really appreciate it if you have written testimony

16 if you don't just read your written testimony, but submit

17 it and maybe summarize it in a couple of sentences, but

18 not try to go through it completely. You'll also have

19 your testimony entered into the record even if you don't

20 say it.

21 And for safety reasons, I want to remind you in

22 the back of the room there are exists. In the case of a

23 fire, you'll hear an alarm. And we're required to

24 evacuate the room immediately through those exits, to go

25 downstairs, out of the building, and wait until the

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1 all-clear signal. It has actually happened to us. So

2 it's a good thing to note.

3 I'll now ask the clerk to call the roll.

4 BOARD CLERK VEJAR: Dr. Balmes?

5 BOARD MEMBER BALMES: Here.

6 BOARD CLERK VEJAR: Ms. Berg?

7 BOARD MEMBER BERG: Here.

8 BOARD CLERK VEJAR: Ms. D'Adamo?

9 BOARD MEMBER D'ADAMO: Here.

10 BOARD CLERK VEJAR: Ms. Kennard?

11 Mayor Loveridge?

12 Ms. Riordan?

13 Supervisor Roberts?

14 BOARD MEMBER ROBERTS: Here.

15 BOARD CLERK VEJAR: Professor Sperling?

16 BOARD MEMBER SPERLING: Here.

17 BOARD CLERK VEJAR: Dr. Telles?

18 BOARD MEMBER TELLES: Present.

19 BOARD CLERK VEJAR: Chairman Nichols?

20 CHAIRPERSON NICHOLS: Here.

21 BOARD CLERK VEJAR: Madam Chair, we have a

22 quorum.

23 CHAIRPERSON NICHOLS: Thank you very much.

24 We are going to begin now this morning with a

25 continuation from our November Board meeting of the

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1 proposed Climate Change Scoping Plan under AB 32.

2 I want to note for the record I was not here on

3 Friday, November 22nd when we heard some of the testimony

4 on this item. But I have had an opportunity to review a

5 transcript for that day. I understand also that the Board

6 had a vigorous discussion following the testimony and

7 directed the staff to look at a number of items.

8 So this is a continuation of the hearing that was

9 started in November.

10 I'm going to ask Mr. Goldstene, our Executive

11 Officer, to describe what the staff has done in response

12 to the Board's direction.

13 EXECUTIVE OFFICER GOLDSTENE: Thank you, Chairman

14 Nichols. Good morning, Board members.

15 Because this is a continuation of November's

16 discussion, staff does not have an initial presentation.

17 Instead, based on the Board discussion at the November

18 Board meeting and follow-up discussion with you, the staff

19 have prepared a draft resolution and in some cases

20 proposed Scoping Plan language changes to capture the

21 issues.

22 There are also a few cleanup items where we found

23 errors in the plan which we fixed.

24 Both the draft resolution and the proposed plan

25 edits are available outside the auditorium for the public

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1 and posted on the website. And Board members have them in

2 their packets.

3 I also want to mention that at your request,

4 Chairman Nichols, the Environmental Justice Advisory

5 Committee and the Economic Technology and Advancement

6 Advisory Committee collaborated to identify areas of

7 agreement. And we want to thank them for their work.

8 The Committees noted their agreement on a variety

9 of approaches that are necessary to address climate

10 change, including performance standards, a price on

11 carbon, and targeted incentives. We agree the framework

12 for the Scoping Plan reflects this three-pronged approach.

13 The Committee also noted areas of agreement on areas of

14 specific measures, many of which are included in the

15 Scoping Plan and others which we will continue to consider

16 as we implement the Plan.

17 CHAIRPERSON NICHOLS: Thank you, Mr. Goldstene.

18 I also want to extend my thanks to the two

19 statutory committees, the Environmental Justice Advisory

20 Committee and the Environmental Economic Technology

21 Advancement Committee for their work and for their efforts

22 over the past two years to strengthen this plan and to

23 find areas where they could reach consensus.

24 In the testimony in November that I heard as well

25 as in the discussion that I read in the transcript, one of

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1 the things that struck me was the overwhelming support

2 that we heard for proceeding with the Scoping Plan.

3 There's no question in my mind that the vast majority of

4 Californians understand the problem of global warming and

5 understand the need to give some direction and some

6 certainty to our efforts here.

7 I understand that many of these people also

8 identify concerns with specific aspects of the plan, had

9 ways in which they thought it could be strengthened or

10 improved. But overall I feel that we have a very solid

11 basis for what we are working to accomplish.

12 I'm not going to go into a lengthy discussion

13 right now of what I think are the important points about

14 the plan. Because we want to hear from people who didn't

15 get a chance to testify and who have new information that

16 they want to convey before we actually take a vote on the

17 Scoping Plan.

18 But I do want to say at the outset here that we

19 understand that over the time that we've been working on

20 this plan and the time since AB 32 was passed, the state's

21 economic situation has drastically worsened as has that of

22 our country and the world as a whole.

23 And so it's important that we acknowledge that we

24 are listening and noting and we are going to continue to

25 address those issues as we move forward into the

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1 regulatory process to actually flush out many of the

2 details of the plan through individual measures, including

3 further review both of the impact of the individual

4 measures and the plan as a whole and also of the public

5 health impacts on our approach.

6 The Scoping Plan sets a policy direction. I

7 think it creates a very solid road map. But many details

8 of this program must evolve over the next two years.

9 Staff has reviewed last month's testimony and the

10 written comments, and the Board members have as well.

11 We've also had many discussions between November and now

12 to deepen our understanding. And I'm hoping those of you

13 in the audience will see in the resolution that the staff

14 heard your comments and tried to reflect your concerns.

15 And we hope that you will review the resolution carefully.

16 If you were here last month, you know that

17 hundreds of witnesses signed up to testify. And if you

18 were one of those who already testified, I encourage you

19 not to speak again. But if you feel you do need to speak,

20 we really would appreciate it if you would not repeat what

21 you said last month. Please only testify if you have

22 something new to say.

23 And I also want to note that although I'm sure

24 most of you who are here today are sophisticated about the

25 process, it's just important to remember that for us

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1 sitting up here, we don't actually weigh our decisions

2 based on the number of people who testify on one side or

3 another. We don't count the numbers. We don't vote

4 according to the number of cheers for any contestant.

5 It's not that kind of process.

6 What we try to do is really listen to what you

7 say to the substance of it and make a decision based on

8 that. So if somebody else has said what you are planning

9 to say, has made the point, please don't feel you need to

10 make it again.

11 I really urge you to limit your testimony to new

12 information or new ideas. I can't stress too strongly how

13 helpful that will be to all of us so that the Board

14 members can get to a discussion among ourselves along the

15 lines of the resolution that has been distributed to the

16 public. And then we can take action.

17 I think at this point before we call witnesses,

18 if any Board members have any opening comments that they'd

19 like to make, I would note call on you to make them. If

20 not, we'll go straight to the testimony. No. Okay.

21 We will start with Jeremy Jungreis from the

22 Marine Corps Installations West. Mr. Jungreis, Randal

23 Friedman.

24 And if you know that you're going to be coming

25 next in line, I can give a couple more names. Audrey

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1 Chang, Michele Pielsticker, and Amisha Patel, if you could

2 be ready and waiting to come up, that would be helpful

3 also.

4 MR. FRIEDMAN: Good morning, Madam Chair,

5 members. Randal Friedman on behalf of the US Navy.

6 We believe the Scoping Plan to be a thoughtful

7 and balanced blueprint for California's forthcoming

8 regulatory efforts. We must also acknowledge a long

9 history of this Board and your staff in working with the

10 military to accomplish both of our important goals.

11 While there is a number of concerns we highlight

12 today and in our prior September 3rd letter, we also call

13 attention to the many programs DOD has including

14 alternative efficiency and energy programs. Our

15 installations are small cities and provide a wide range of

16 services including housing, medical schools, shopping, et

17 cetera, all designed to reduce VMT and to reduce our

18 impact to surrounding communities, and also to reduce our

19 emissions.

20 We also wish to move even further empowering

21 these communities in the future for alternative energy yet

22 we continue to identify barriers such as building solar

23 facilities greater than one megawatt and our longstanding

24 concerns with the continued ability to use B-20 fuel. The

25 military services must be able to train as we fight. And

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1 while California's initiative to control global climate is

2 important, DOD must ensure regulations do not impair

3 deployability of assets and not prevent the military from

4 adapting to the battle fields of tomorrow.

5 SB 375 has the potential benefits to the military

6 of deterring sprawl that can encroach upon military

7 training. We believe that SB 375 can facilitate

8 development of smart growth strategies that are consistent

9 with military land uses and protect our vast and critical

10 air space network.

11 We also believe that SB 375 can help create

12 affordable housing, which is good in our many locations in

13 high cost coastal areas. For that reason, we ask that you

14 consider formal DOD participation in the RTAC.

15 Finally, we identify some fee issues based on

16 unique federal interest. We believe that's something we

17 can work as regulations are developed.

18 And now I turn it over to Major Jungreis.

19 CHAIRPERSON NICHOLS: Thank you.

20 MR. JUNGREIS: Good morning, Madam Chair members

21 of the Board. My name is Jeremy Jungreis here on behalf

22 of Marine Corps Installations in California.

23 I will ask the Board to please review our written

24 comments. We submitted those yesterday and we have much

25 more amplification to our comments I'm going to provide

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1 right now very, very quickly.

2 One, regional targets setting that's going to be

3 done is included as part of the Scoping Plan. In the

4 coming years, we will need to expand and modify training

5 at some of our ranges. There's been some realignments in

6 the bases. And there's going to lead -- there's going to

7 be changes that could potential -- regional targets could

8 make it more difficult to have the flexibility to do those

9 things in California.

10 So one of the things with SB 375 being

11 implemented, we would ask the DOD emissions associated

12 with those with new training requirements should be

13 emitted from the setting of regional targets and in

14 determining whether the targets has been obtained. I know

15 there is going to be a process going forward. But DOD,

16 really it's a hard it inside the existing RTP context SB

17 375 lays out.

18 One of the ways to facilitate that would be a DOD

19 representative in the ex officio capacity on the Regional

20 Targets Advisory Committee or some subcommittee or task

21 force organized therein. I realize there are a lot of

22 folks who are interested in being part of the RTAC

23 process. We want to make sure that Department of Defense

24 voices are heard and some of our unique requirements are

25 taking into account.

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1 Another point that some of the other commenters

2 raised was about the enforcement authority. I know CAPCOA

3 wants to have a more significant role perhaps in the

4 implementation process of AB 32 Scoping Plan.

5 We would just simply say that it's beneficial to

6 the Department of Defense to operate sometimes in multiple

7 air districts, to have one entity, the California Air

8 Resources Board, that is the enforcement authority and is

9 the rulemaking entity for these types of rules. CAPCOA

10 certainly has a role. The air districts have a role.

11 However, as the Scoping Plan currently lays out is the

12 most efficient way and the most beneficial for the way we

13 operate.

14 And finally, indirect source review rules are not

15 really an appropriate tool for greenhouse gas control as

16 to military activities for a number of reasons as laid out

17 in our comments. And we would ask those remain absent

18 from the Scoping Plan as they currently.

19 And I thank you for your time.

20 CHAIRPERSON NICHOLS: Thank you.

21 We are more aware the military is a major

22 landowner in the state, and you can make a major

23 contribution to this effort. So we appreciate it. Thank

24 you.

25 Audrey Chang, followed by Michele Pielsticker,

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1 and Amisha Patel.

2 MS. CHANG: Good morning, Madam Chair and Board

3 members.

4 I'm Audrey Chang with the Natural Resources

5 Defense Council. Thank you very much for the opportunity

6 to comment.

7 First, I just want to extend a heartfelt thanks

8 to all the staff for their extremely hard work and

9 dedication over the past year. And we do appreciate it.

10 And thank you for the open process that you've run.

11 I'm here today in support of the proposed Scoping

12 Plan and urge you to adopt it today. All eyes in other

13 states and in Washington are on California as we were

14 showing how to tackle global warming in the most

15 comprehensive way. We're really the first state to do

16 what we're about to do here.

17 Not only is the Scoping Plan a pollution

18 reduction plan, it's an economic stimulus plan. It's

19 vital now more than ever for California to enact the

20 policies in the plan to fight global warming as it will

21 act as a powerful economic driver to jump start our

22 economy.

23 We strongly support the plan's overall approach

24 to tackle global warming. There is no single silver

25 bullet, and the plan uses the combination of policy tools

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1 to curb global warming throughout all sectors of the

2 economy.

3 Having said that, NRDC thinks it is important to

4 note there are significant additional reductions,

5 particularly in the land use and industrial sectors, that

6 we believe can and should be achieved in a cost effective

7 manner. We fully intend to participate actively in the

8 upcoming rulemaking process to realize that the full

9 potential of greenhouse gas reductions will be made in all

10 targeted sectors so that California can meet or beat or

11 2020 limit.

12 Thanks to California's leadership here on this

13 plan, we have just the framework we need and the clean

14 economy is clearly right around the corner. We look

15 forward to continuing to work with CARB to implement this

16 groundbraking plan to ensure that we maximize the

17 environmental, economic, and public health benefits to

18 California. Thanks very much.

19 CHAIRPERSON NICHOLS: Thank you. Thanks to NRDC

20 for your sustained participation. Great.

21 Michele Pielsticker from California Tax. And

22 then Amisha Patel.

23 MS. PIELSTICKER: Good morning, Madam Chair,

24 members of the Board. My name is Michele Pielsticker with

25 the California Taxpayers Association.

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1 I'm here to provide comments on the proposal by

2 CARB to use an auction mechanism as a means of

3 distributing carbon offsets. We view the auction proposal

4 as a potential hidden tax on business in violation of

5 Prop. 13. Case law interpreting Prop. 13 requires to

6 avoid characterization as a tax. Fees must not exceed the

7 cost of the regulatory programs they support and the

8 apportionment of the cost among fee payers must be

9 reasonable.

10 An auction mechanism as it has been discussed

11 would not pass this test. The auction in combination with

12 proposed carbon fees likely would generate billions, far

13 more revenue than necessary to administer AB 32. In

14 addition, unless all sectors of industry are covered by

15 the auction mechanism, the auction would fail the test of

16 reasonable apportionment among payers, allowing some to

17 escape the auction process while subjecting others to the

18 substantial cost of participation.

19 To ensure the CARB's mechanism for distributing

20 carbon offsets passes muster under Prop. 13, we would ask

21 that before CARB moves forward with an auction process

22 CARB should obtain legislative clarification as to how

23 auction funds should be spent and the level of funding

24 necessary to cover the cost of regulating emissions under

25 AB 32.

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1 Thank you

2 CHAIRPERSON NICHOLS: Thank you very much.

3 Just to make clear, I know you know this, but in

4 case anyone in the audience doesn't. The plan itself does

5 not actually require an auction, but we have indicated a

6 desire to move in that direction. And we expect over the

7 coming year that we'll have a pretty intense process to

8 design the allocation scheme as well as the use of

9 revenues that might come from the allocation system we set

10 up. So we will expect to hear from California Tax and to

11 work on this issue. Thanks.

12 Amisha Patel.

13 MS. PATEL: Madam Chair and members of the Board,

14 Amisha Patel with the California Chamber of Commerce which

15 representing over 1600 small, medium, and large businesses

16 statewide.

17 We have formerly submitted comments so I'll keep

18 this very short. I promise.

19 As you adopt the plan and proceed with

20 regulations, we hope will you take into consideration the

21 additional work and analysis that needs to be done as

22 pointed out by the peer reviewers, LAO analysis, and other

23 review of the Scoping Plan economic analysis.

24 The deepening recession has affected businesses

25 throughout the state, and we must ensure that we are using

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1 the most cost effective strategies to lead us to the AB 32

2 goals.

3 The reality of climate regulation is that there

4 will be costs, especially in the near term. We need an

5 honest assessment of impacts that so that we can meet AB

6 32 goals in the most cost effective way.

7 Also while we may gain new green businesses to

8 our benefit, we must assess the real impact the Scoping

9 Plan will have on existing businesses in the state. These

10 businesses provide quality jobs and are vital to our

11 economic stability.

12 We believe without accurately addressing the

13 concerns of the peer reviewers there will be ongoing

14 concerns about the viability of the plan and whether it is

15 indeed the most cost effective route.

16 The State cannot afford to misstep. So we must

17 take all the necessary measures to ensure the Scoping Plan

18 and economic analysis is improved on and further studied

19 as we move on with implementation of AB 32. It is

20 important to note that it is in the benefit of all

21 California businesses and consumers that we get this

22 right.

23 Thank you.

24 CHAIRPERSON NICHOLS: Thank you. We agree.

25 Kristina Skierka, Dorothy Rothrock, Janet

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1 Abelson.

2 MS. SKIERKA: Kristina Skierka with the Board of

3 Directors of Sustainable Silicon Valley. We're a 100

4 organization wide group that works with the coalition of

5 businesses, some of the biggest names in the valley. I'm

6 here really to draw attention to our report that was

7 released just this week, because it really explains how

8 one of the key elements discussed in the AB 32 Scoping

9 Plan is a cost benefit of energy efficiency and using

10 existing technologies to reduce carbon footprints

11 environmental impacts.

12 And as our report shows and we've left copies for

13 everybody on the Board, what we've found is our leading

14 partner companies have been able to reduce their carbon

15 emissions by 27 percent over the course of 2000 to 2007.

16 And these are amazing numbers. And on top of that, it's

17 all been done again with existing technologies.

18 So the point really here is that AB 32's goals as

19 far as we can tell from what our members are experiencing

20 are not only achievable but are reasonable. And that even

21 in this time of an economic downturn and some skepticism,

22 that people might reduce their carbon cutting initiatives.

23 In fact, most of the members we have surveyed said they

24 want to continue with the efforts they're doing through

25 energy efficiency and conservation because of the benefit

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1 to their bottom line.

2 Thank you.

3 CHAIRPERSON NICHOLS: Thank you very much.

4 Dorothy Rothrock.

5 MS. ROTHROCK: Thank you, Madam Chair and

6 members.

7 My name is Dorothy Rothrock with the California

8 Manufacturers and Technology Association.

9 We believe this is a tremendous plan. It's very

10 far-reaching. And we believe it will impose significant

11 costs on manufacturers and other businesses and consumers

12 in the state.

13 You have heard our concerns in the past about the

14 fiscal analysis that was done. And we do encourage you to

15 look at the analyses of the peer reviewers as well as the

16 LAO has done on the economic analysis.

17 We are very glad to hear that you're planning to

18 do further review on the plan and that you will improve it

19 and that it is a policy direction only.

20 We believe that the economic analysis as you go

21 forward should be used as a tool to develop the most cost

22 effective regs you can, to determine costs that you cannot

23 control in the plan so that we can determine how to

24 mitigate those costs, and also identify other State

25 policies that could be used to reduce costs.

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1 So we look forward to working with you on this.

2 And I'd just like to thank your staff for all the work

3 they've done over the past few years working with us.

4 Thank you very much.

5 CHAIRPERSON NICHOLS: Thank you. Appreciate your

6 service on the ETAAC Committee as well.

7 Janet Abelson, city of El Centro.

8 MS. ABELSON: My name is Janet Abelson, and I'm

9 the Mayor Pro Tem of the city of El Cerrito, which is next

10 to Berkeley in northern California. Separate from

11 Cerritos in southern California. They get us mixed up.

12 We would like to have their car dealerships, but we don't.

13 Anyway, we do have two BART stations, however.

14 And we're the kind of place where development should occur

15 under AB 32. And we would like to lead. We've taken a

16 number of steps that lead us in that direction already.

17 But we need the resources to do so.

18 And by setting a higher target, CARB sends a

19 signal that appropriate land use is a high priority for

20 achieving greenhouse gas reductions. A higher target will

21 also lead to resources being channeled to appropriate

22 development like the kind we would like to do in my city,

23 El Cerrito.

24 Research clearly shows in the end, sprawl costs

25 cities more money than it generates for the communities in

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1 taxes. What AB 32 can do and what your proposal seems to

2 do as it's presented now is send a signal for SB 375 by

3 setting a target in the range of 11 to 14 million metric

4 tons for greenhouse gas reductions in each region.

5 I'd like to thank you for all the work you have

6 done on the proposal. And we look forward to a successful

7 conclusion. Thank you.

8 CHAIRPERSON NICHOLS: Thank you. Thanks to the

9 City of el Cerrito.

10 Rick Row, followed by George Little, and Greg

11 Karras.

12 MR. ROW: Good morning, Madam Chair and Board

13 members. I'm Rick Row, Executive Director of Sustainable

14 Silicon Valley. And I'll try not to repeat what Kristina

15 Skierka just said.

16 She's mentioned that SSV has a major

17 environmental issue how CO2 emission reduction initiative

18 in which each partner voluntary pledges to work toward

19 self-imposed goals of reducing carbon dioxide and to

20 report their progress each year to Sustainable Silicon

21 Valley.

22 Our report on this is our website at

23 www.sustainablesiliconvalley.org.

24 A subset of our partners, including such

25 organization as CV Therapeutics, Adobe Systems, Marine

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1 Systems, Palo Alto Research Center, and a number of others

2 have reported on this year emissions by electricity and

3 natural gas usage in their facilities each year from 2000

4 to 2007 have successfully reduced their emissions an

5 average of 27 percent over these years, over twice the

6 regional reduction during this time.

7 The year 2000 was a peak year for CO2 emissions

8 for the Silicon Valley region from the year 1990. And we

9 need to see a reduction from this peak to return the

10 region back to the 1990 CO2 emission level.

11 Given the mix of CO2 emissions from electricity

12 and natural gasoline in our region, if the whole region

13 had been able to achieve the 27 percent reduction of our

14 partners' emissions from electricity and natural gas and

15 held emissions from vehicles constant, then the region

16 would have met it's fair share of the State's 2020 goal by

17 2007, more than a decade ahead of time.

18 Thank you.

19 CHAIRPERSON NICHOLS: Thank you very much.

20 George Little, are you here? He's for the

21 trucking rule. He's on the wrong list. I can see that.

22 Now Greg Karras, and then Julie May, and Therese

23 McMillan.

24 MR. KARRAS: Greg Karras, I'm the Senior

25 Scientist with Communities for a Better Environment.

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1 CBE has asked you to reject pollution trading in

2 the Scoping Plan in favor of proven direct controls.

3 We've testified and submitted extensive comments that

4 pollution trading would exacerbate environmental

5 injustice, and I won't repeat those now. We have also

6 presented evidence previously that it would not work.

7 I'm here to speak to new evidence we submitted to

8 you just in the last few days that shows that in fact if

9 you chart this course, instead of charting a course of

10 direct controls with respect to transportation fuel

11 production, you could end up precluding the emission

12 reductions that will be needed to meet 2020 and 2050

13 goals.

14 Oil refineries in California are switching to

15 more contaminated lower quality oil. This stuff is harder

16 to make into gasoline diesel or jet fuel. Takes more

17 energy, burns more fossil fuel, and emits for toxic

18 smog-forming and climate poisoning pollutants for every

19 gallon that's produced.

20 Previous work estimated that a full-blown oil

21 switch could cause GHG emissions from providing the

22 transportation from producing it to nearly rival those

23 from tailpipes.

24 The recent work we submitted is specific to

25 California refineries. It supports this finding in

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1 general and specifically it shows that substantially

2 increased pollution from the beginnings of this

3 accelerating oil switch is already occurring.

4 California is the dominant oil refining center in

5 the western United States west of the Rockies. You're

6 going to lead the trend this way, too.

7 If the predicted emissions increase occurs, it

8 could preclude the reductions we need long term, 2020 and

9 or 2050. That's a real possibility. Pollution trading

10 isn't going to stop this. The invisible hand of the

11 market isn't going to stop this fundamental switch in

12 feedstock and all the infrastructure that's being put in

13 place here and elsewhere to produce and ship the stuff

14 here. It isn't going to work. That should be obvious.

15 Please reject the pollution trading proposal for

16 this and chart a course of direct controls to avoid this

17 like the PUC and the Legislature is already doing with

18 phase out of --

19 CHAIRPERSON NICHOLS: Your time is up.

20 MR. KARRAS: -- electricity.

21 CHAIRPERSON NICHOLS: Thank you. Julia May,

22 Therese McMillan, and Mike McKeever.

23 MS. May: I'm Julie May also with CBE. We didn't

24 get to speak last time, so I appreciate you taking

25 testimony today.

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1 We appreciate your hard work. And we agree the

2 people in California want you to adopt a strong plan. But

3 we're terribly frightened the plan is not going to work.

4 In addition to what my colleague said about the

5 increasing emissions from oil refineries, oil refineries

6 are being lumped together with completely unequal sources.

7 So you've set up a structure of super sector pollution

8 trading that lumps together oil refineries, other

9 industrial sources with residential, commercial, and

10 electrical sources. They have nothing in common.

11 It squanders our opportunity to get public health

12 reductions in California, because we're trading for out of

13 state. It also isn't going to work because there's no

14 equality between these sources. And we don't have

15 enforceable opportunities to make sure they happen out of

16 state. And it also creates an opportunity to create jobs

17 here in California.

18 We beg you to ditch this crazy, out of control,

19 super sector pollution trading.

20 The toxic sources of oil refineries have vast

21 numbers of co-pollutants. Oil refineries emit sulfuric

22 acid mist, carbon disulfide, pneumonia, mercury dioxin,

23 led, benzene. I could list hundreds of others that can't

24 be lumped together with other sources.

25 Even individual refineries are very customized.

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1 Within each refinery you have boilers, heaters, advanced

2 valves, flanges, advanced pumps and compressors, and

3 sulfur recovery units, cokers, catalytic crackers, of

4 different age, different fuel type, different design, and

5 different emissions. They cannot be interchangeably

6 traded. And they cause a lot of harm to neighbors who

7 live nearby from the toxic pollution that's emitted.

8 We submitted detailed proposals for specific

9 controls, including replacing ancient boilers and heaters

10 at refineries, implementing energy efficiency measures at

11 refineries, getting rid of the methane exemptions in the

12 smog rules, and many other additional controls. They were

13 originally considered, and then they are not in the plan.

14 They're listed in your plan as under consideration in the

15 future. That means that the very largest -- industrial

16 sources in total, not just oil refineries in total have

17 almost zero reductions in the plan

18 CHAIRPERSON NICHOLS: Ms. May, your time is up.

19 MS. MAY: Thank you very much. We beg you to add

20 controls on oil refineries and industrial sources. Thank

21 you.

22 CHAIRPERSON NICHOLS: Ms. McMilan, and then Mr.

23 McKeever, and Elizabeth Deakin.

24 MS. MC MILAN: My name is Therese McMilan. I'm

25 the Deputy Executive Director for Policy with the

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1 Metropolitan Transportation Commission in the

2 San Francisco Bay Area. And I want to thank you for the

3 opportunity to share some comments with you. I was not

4 available to come in November.

5 I believe that CARB staff is to be commended for

6 the clarifications made between the draft and the proposed

7 plan. A number of the issues and recommendations we had

8 made were incorporated into the current version, and we're

9 very pleased and happy to see that.

10 Regarding the objective outlined in the plan for

11 regional transportation and land use, the most important

12 and fundamental element is the recognition of SB 375 as

13 the basis for collaboratively defining what that needs to

14 be for the regions.

15 And I believe in addition the resolution language

16 that is proposed right now is very clear and appropriate

17 on that point and I think is a clear statement of the

18 collaborative effort and work that we need to proceed.

19 Far more important than arguing numbers, whether

20 it's five, 10, 12, 14, I think we need to concentrate on

21 reaching consensus among all levels of government that

22 this is a priority. Pushing the envelope of possibility

23 within the confines of our existing authority as regional

24 agencies. And very importantly, seeking reasonable new

25 authority to make continuing gains in greenhouse gas

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1 emissions.

2 And on this point, MTC is particularly interested

3 in making pricing -- efficient pricing of our

4 transportation network a real arrow in our quiver so to

5 speak. We support the proposed Scoping Plan's recognition

6 that pricing strategies can be potential contributors to

7 regional transportation related greenhouse gas emission

8 reductions.

9 What we would like to see in the future is CARB's

10 aggressive support in pursuing legislative changes to make

11 those pricing tools a reality and to get them working for

12 us in achieving the targets that will eventually being

13 developed under SB 375. I thank you for the opportunity

14 to speak.

15 CHAIRPERSON NICHOLS: Thank you. Appreciate your

16 comment. It is something we haven't heard before.

17 Mike McKeever, Elizabeth Deakin, Autumn

18 Bernstein.

19 MR. MC KEEVER: Good morning, Madam Chair.

20 My name is Mike McKeever, the Executive Director

21 of the Sacramento Area Council of Governments.

22 I want to echo my colleague, Therese McMilan's,

23 comments. I think the way you handle the regional

24 planning issue in the draft plan is the right balance.

25 Those of us who were part of the coalition of the

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1 impossible that worked on Senate Bill 375 very much

2 appreciate your Board's endorsement of letting that

3 process work as it is intended. And your RTAC after you

4 have it appointed as you know will have to be back in

5 front of you in pretty much nine short months with some

6 recommended methodology.

7 I do think the resolution language is good,

8 because even though the Scoping Plan itself clearly says

9 let the 375 process work, it's sort of begs the question,

10 well, what's this number doing here and what does it mean?

11 And I do think that your resolution clarifies

12 that. And says to the regions and the stakeholders, break

13 a sweat. Go out and bring us back as many savings as are

14 practical and achievable.

15 I do want to say a couple of more specific things

16 and then I'll be done.

17 One is, for my organization, the biggest

18 component of Senate Bill 375 and why we participated in

19 that bill to begin with is the CEQA relief that comes for

20 smart growth projects. It's the most meaningful reform to

21 that statute in the three-and-a-half decades since it was

22 passed.

23 And the targets are the trigger for the

24 application of those CEQA benefits. That's what the

25 targets do. And so we very much want them to be set in

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1 our region so that our members that have worked so hard

2 and are so far down the road to put smart growth on the

3 ground, whether that's our inner areas in Sacramento and

4 west Sacramento, or our inner ring employment centers in

5 Rancho Cordova and Roseville and elsewhere that are doing

6 this, both in master planned communities and infill, those

7 projects in those communities need that CEQA benefit.

8 We're not particularly interested in the target being set

9 so low that what anyone would call sprawl, low density

10 residential development miles and miles and miles away

11 from employment center find it easier to build their

12 projects under Senate Bill 375, instead of just keeping

13 the playing field where it was before. So that target

14 triggers that CEQA relief and is important.

15 And lastly I want you to know I know you have had

16 some people commenting on your economic analysis. And

17 while it's true for this area, we're going to need transit

18 and infrastructure funding to really make excellence

19 happen. There is also substantial economic savings from

20 building 375 style growth. In our region alone, we

21 estimated $15 billion worth of infrastructure savings from

22 building our blueprint instead of the classic sort of

23 sprawl type of development.

24 Thank you very much.

25 CHAIRPERSON NICHOLS: Thank you.

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1 Elizabeth Deakin.

2 Did I see Senator Fran Pavley in the audience?

3 Are you here? She is here. Would you -- excuse me, but

4 before we proceed to the next witness, would you like to

5 speak to the Board? You didn't sign up, but I'd like you

6 to stand up at least to be acknowledged as the lead

7 author.

8 (Applause)

9 CHAIRPERSON NICHOLS: It's always good to have

10 the author of the bill you're implementing sitting in the

11 audience watching you do it. If we don't do it right, I'm

12 sure we'll hearing soon. All right. Sorry.

13 We were going to hear next Elizabeth Deakin.

14 UNIDENTIFIED SPEAKER: She's not here. I'm here

15 on behalf of her. I just want to say briefly I'm going to

16 submit written testimony from her.

17 CHAIRPERSON NICHOLS: All right. Thank you very

18 much. Appreciate that.

19 We have Autumn Bernstein, Steve Brink, and Cathy

20 Reheis-Boyd.

21 MS. BERNSTEIN: Good morning, members of the

22 Board.

23 My name is Autumn Bernstein. I'm speaking on

24 behalf of the Climate Plan, which is a partnership of

25 leading environmental, civic, public health, and social

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1 equity organizations, including NRDC, Local Government

2 Commission, Policy Link, Transform, American Lung

3 Association, just to name a few.

4 Out of respect for your request to limit

5 testimony, we are attempting to consolidate our comments

6 on land use target into a single testimony.

7 First, I want to thank both Board and staff for

8 your perseverance on this issue. It's been a long road,

9 and I think we've made a ton of progress and I thank you

10 very much for that.

11 I would like to reiterate our concern that the

12 five million metric ton placeholder does not represent the

13 maximum feasible reductions possible from this sector. We

14 believe a much higher target is feasible and would send an

15 important signal that you intend to maximize the potential

16 of SB 375.

17 That being said, we appreciate and understand the

18 Board and staff's desire to let the Regional Targets

19 Advisory Committee do it works and through that identify

20 what the best course of action would be.

21 And we are confident this process will result in

22 targets that are significantly higher than the five

23 million metric ton number.

24 So we would like to see the Board make an

25 affirmative statement that you will change the Scoping

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1 Plan target to reflect the outcome of the SB 375 process

2 and to match the most ambitious targets that are developed

3 through that process.

4 We think this represents a tremendous opportunity

5 to reduce greenhouse gases and achieve a wealth of

6 multiple co-benefits in public health, as well as many

7 other benefits.

8 So we look forward to working with you down the

9 road as we implement 375. Thank you.

10 CHAIRPERSON NICHOLS: Thank you. Really

11 appreciate your consolidated testimony.

12 Steve Brink.

13 MR. BRINK: I'm Steve Brink with the California

14 Forestry Association, Vice President OF Public Resources.

15 Appreciate this opportunity of the Board, Madam

16 Chair, to make a couple of comments. And I'll make just

17 three.

18 One is in the calculation of the 169 million ton

19 reduction needed to get back to 1990 levels, I'm hopeful

20 that the Board and the staff are well aware that while our

21 emissions count in the state emissions inventory and CEC's

22 inventory from 1990 to 2006 estimated those emissions at

23 two million tons per year, staff reviewed all that

24 information in the forestry sector and decided at the time

25 to stick with that number.

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1 In 2007, you may or may not be aware three

2 different experts, including ARB staff, estimated

3 emissions from just the southern California wildfires at

4 six to 19 million tons. That was half the acres burned in

5 the state in 2007. So total for 2007, it was probably

6 something more like 12 to 38 million tons. And a reminder

7 that in 2008, we burned more acres in that state than we

8 did in 2007.

9 So obviously what I want to get across is the

10 challenge to get back to 1990 is I think severely hampered

11 by wildfire in this state, which the Climate Action Team

12 estimates will increase by up to 55 percent by the end of

13 the century.

14 I would suggest they are right in their

15 predictions based on longer, hotter, drier summers, less

16 spring snow pack, et cetera. But unfortunately their

17 prediction came true in 2007 and 2008, about 90 years

18 early. So we do have a significant challenge.

19 And also I want to point out that particularly

20 this past summer in June and July we had a lot of rural

21 communities in northern California that experienced

22 hazardous levels of air pollution. Not unhealthy levels,

23 hazardous levels, clear off the chart for not just a day

24 or two, but for weeks and weeks and weeks and weeks.

25 And I hope State government will consider this

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1 winter having evacuation plans for those communities that

2 have the experience of hazardous pollution levels.

3 CHAIRPERSON NICHOLS: Mr. Brink, you have

4 exceeded your time.

5 MR. BRINK: Thank you very much.

6 CHAIRPERSON NICHOLS: I appreciate your comments

7 and we understand the issue of forest fires and share your

8 concerns. We've made some comments I think if the revised

9 plan that strengthen the connection between adaptation and

10 the emissions picture. Obviously, we have to keep those

11 trees in the ground and alive if we possibly can. So we

12 understand the point.

13 Ms. Reheis-Boyd, glad we got to you before 9:00

14 at night this time.

15 MS. REHEIS-BOYD: Thank you very much, Chairman.

16 My name is Cathy Reheis-Boyd. I represent the

17 Western States Petroleum Association.

18 We have submitted many comments, so I'll keep

19 this very short. I was able to testify last time.

20 But I just wanted to note I had a chance to read

21 the resolution language. And I think it's important to

22 note and as we've expressed, the resolution language is

23 really important. It's your expression of compassion to

24 all of the comments that have been made by many

25 stakeholders.

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1 And for the business community, the comments in

2 particular that you've noted on the importance of the

3 economics, on the importance of ensuring adequate reliable

4 energy supplies as we move into this low-carbon future,

5 whatever it's going to be -- I don't think any of us even

6 know at this point what it's going to look like as we down

7 the road. And it may look different today than it does in

8 the middle and the end.

9 So I just wanted to recognize and thank the Board

10 for including those things. You also mentioned things on

11 carbon capture and sequestration for us is critical for

12 mitigation strategy going forward. So thank you for

13 noting that.

14 In regards to some of the previous comments made,

15 I would like to say that we are very happy to meet with

16 this Board, the air districts, and anyone else who would

17 like to discuss any kind of emission issues related to

18 refineries. Last time I checked in this state, the Air

19 Resource Board and the local districts do not allow

20 increases from refineries from an emissions standpoint.

21 So I would be happy to start with the discussion,

22 but I would like to start with the facts that weren't

23 presented today.

24 So thank you again. And I think it's important

25 as well as we go forward you have acknowledged working

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1 with the Energy Commission and the PUC on the natural gas,

2 transportation fuels, and electricity issues on the energy

3 side. So thank you for the resolution in acknowledging

4 those really important messages.

5 CHAIRPERSON NICHOLS: Thank you.

6 Tara McClanahan, James Brady, Robert Tichelman.

7 MR. LOMBARD: Good morning, Madam Chair, members

8 of the Board. I'm Edward Lombard. Tara McClanahan is on

9 her way in as we speak. And I'm here going to represent

10 James Brady. He had a family matter that kept him from

11 coming today.

12 I'm an independent consultant and also a member

13 of the California Black Chamber of Commerce.

14 Mr. Brady asked me to read this statement for

15 him. Mr. Brady is the owner of an e-waste management

16 company.

17 "As the owner of an e-waste management

18 company, I take environmental issues very

19 seriously and appreciate the work that the Air

20 Resources Board and the state of California in

21 general have done to establish California as a

22 leader in environmental policy. However,

23 environmental responsibility and fiscal

24 responsibility cannot and should not be mutually

25 exclusive.

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1 "We cannot achieve a healthy environment if

2 we attempt to do so at the expense of our

3 economy. In order for AB 32 to succeed, it must

4 be based on realistic economic analysis with

5 policies that deliver the most emission

6 reductions at the lowest possible cost.

7 "The Legislative Analysis Office recently

8 concluded that the Scoping Plan's evaluation of

9 the cost and savings of some recommended measures

10 is inconsistent and incomplete.

11 "Overall, the LAO predicts dire economic

12 consequences unless the fiscal challenges are

13 adequately addressed.

14 "We cannot afford to ignore the current

15 economic climate in our zeal to address the

16 global environmental climate. I'm not suggesting

17 that we abandon our efforts to address climate

18 change. Merely that we exercise due diligence to

19 ensure the best change for success.

20 "I urge you to postpone the approval of the

21 Scoping Plan until proper analysis can be

22 completed and policy recommendations adjusted to

23 accommodate the economic realities associated

24 with AB 32's implementation."

25 Thank you for your consideration. And hopefully

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1 you will allow Ms. MaClanahan to speak once she does

2 arrive.

3 CHAIRPERSON NICHOLS: Of course. Sorry.

4 Robert Ticherman, Ticherman. Are you here?

5 MR. TICHERMAN: Madam Chair, I'm speaking to a

6 different point. It's put in the wrong item. Trying to

7 adjust that.

8 CHAIRPERSON NICHOLS: All right.

9 Ken Cooley, Jim Gray.

10 MR. COOLEY: Good morning, Madam Chairman. My

11 name is Ken Cooley. I'm on the City Council in the City

12 of Rancho Cordova, but appearing today as first Vice

13 President of the League of California Cities. And I thank

14 you for the opportunity to speak on behalf of California

15 Cities.

16 I'm joined today by a number of other city

17 officials in the audience, some of whom will speak. Many

18 of whom are simply here to support the League's concerns.

19 The League of California Cities ended up

20 supporting Darryl Steinberg in his SB 375 process, the

21 coalition of the impossible. We believe that the best way

22 to address transportation-related emissions was the

23 process thought through and laid out in that bill to use

24 sound data in a collaborative process at the local level

25 and regional level to tackle that problem.

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1 We agreed to creating the Regional Targets

2 Advisory Committee with the view they would spend months

3 working through this issue and come back with

4 recommendations that all parties would know were rooted in

5 the best data available and an exhaustive study of the

6 science.

7 We also recognize that that approach allows the

8 diverse regions of California to tackle this based upon

9 their own local knowledge in an iterative process to work

10 through these numbers.

11 And we recognize that that ultimately may yield a

12 statewide number greater than five million metric tons or

13 perhaps less. But it will be rooted in a collaborative,

14 local effort rooted in science. And we as cities are

15 committed to that process of moving it forward.

16 We understand that CARB is the ultimate decision

17 maker in this. And we feel letting this process move

18 forward is the best way to go. The challenge in this area

19 of global warming is not just one of policy. It's one of

20 helping people move forward.

21 You know, there is an essay out of American

22 history known as the Release of Energy by a guy by the

23 name of James Willert Hurst that talks about the miracle

24 of America is that through the evolution of our law, we

25 advance society. In this area, the RTAC process will help

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1 us do that. Another critical challenge that we will

2 face --

3 CHAIRPERSON NICHOLS: Mr. Cooley, you've exceeded

4 your time. If you can summarize or finish.

5 MR. COOLEY: The financing issues associated with

6 local development are critical now in this housing crisis.

7 We have to work those through. We think the pause in the

8 marketplace creates an opportunity for all partners to

9 step back.

10 In my own city, Rancho Cordova, we have

11 developers who see their land as a source of competitive

12 advantage in this new world. We think as this RTAC

13 process goes forward others developers will go through

14 that thought process.

15 CHAIRPERSON NICHOLS: I hope you're right. I'm a

16 veteran of a number of growth management processes in

17 California which always get initiated when the economy is

18 down and get abandoned the minute things look up again. I

19 hope I think 375 gives us the chance.

20 Mr. Gray.

21 MR. GRAY: Chair Nichols, members of the Board,

22 my name is Jim Gray, a Council member with the City of

23 Roseville.

24 We have submitted written comments, but I'd like

25 to make some general comments briefly highlighting three

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1 areas that are of local government concern: Land use,

2 infill, and cost.

3 We need to maintain local land use authority.

4 I've heard many comments seeking higher targets for local

5 government primarily directed at land use planning. And I

6 firmly believe local governments must retain full land use

7 authority so that we can implement programs to best meet

8 our unique situations.

9 We understand the needs, goals, and limitations

10 of our region. And we are best prepared to decide how to

11 meet the State goals in ways that make sense for our

12 communities.

13 While local governments have some influence on

14 project designs, the reality is that developers will only

15 build projects that will be profitable. To motivate the

16 desired change, we should provide incentives. Levying

17 fees on new development is not an incentive. It drives up

18 cost to home buyers and hinders innovation; and providing

19 infrastructure needs.

20 In recent years, our City has invested over $20

21 million in infrastructure improvement to support infill

22 development. These funds are in addition to redevelopment

23 revenues.

24 With the State now rating redevelopment funds,

25 future programs must acknowledge and provide for funding

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1 and incentives so that mixed use, compact infill projects

2 will pencil out.

3 In recognizing the costs and credit existing

4 efforts that we have made, the Scoping Plan proposes an

5 additional public goods charge on water but doesn't

6 provide details about how this will be used. Our city

7 already has extensive sustainability programs in place,

8 including aggressive water conservation programs.

9 We are already anticipating to have to raise

10 rates to comply with the increasingly stringent state

11 conservation incentives. Until more is known, we cannot

12 support passing any additional burdens to our rate payers.

13 CHAIRPERSON NICHOLS: Mr. Forester, your time is

14 up.

15 MR. GRAY: Thank you for your time and efforts.

16 MR. FORESTER: I'm Larry Forester.

17 CHAIRPERSON NICHOLS: I'm sorry. Mr. Gray.

18 Wrong person.

19 MR. FORESTER: Larry Forester, Council member for

20 the City of Signal Hill. And I'm representing 27 cities,

21 so I calculate that as 81 minutes.

22 CHAIRPERSON NICHOLS: Good luck with that.

23 MR. FORESTER: In 27 cities, we represent the 2.2

24 million people. The COG has already done several things

25 working with CARB to reduce greenhouse gases. And that's

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1 our truck replacement program where we replace 600 heavy

2 polluting diesel trucks. And we believe the Board should

3 mandate similar type movements for the replacement program

4 and reduction in cost giving.

5 Given the limited resources that cities like the

6 State have work in the troubled economies today, we urge

7 the Board to emphasize alternate energy sources and

8 transit funding over a long range and scientifically

9 understood programs such as land use regulations.

10 Although you have urged to increase regional

11 greenhouse gases by two million metric tons to five

12 million, we ask you defer this option until we receive

13 impact from the Regional Target Advisory that help set

14 targets. Two million metric tons to five million metric

15 tons is not necessary to reach the 2020 goal.

16 We concur with the Southern California Area of

17 Governments, SCAG, and the League of California Cities in

18 supporting SB 375 and are accepting the responsibility of

19 the greenhouse gas reduction.

20 The greatest thing to happen to local governments

21 is to achieve and greatly achieve the established targets.

22 AB 32 needs to be sensible and successful so southern

23 California and California can continue to lead the nation

24 in reducing greenhouse gases.

25 Setting the target too high without an

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1 understanding to the risk to local government could lead

2 to failure in other states.

3 There are always unintended consequences. We

4 look at the transit agency program you're planning.

5 Unless that's done wisely, we might have increased density

6 and increased traffic congestion.

7 The members of the COG, we ask you to look at

8 financial incentives with all the problems we're now

9 having in both cities and states. We agree that we need

10 to do our fair share. But it needs to make sense. In

11 that, we ask that we be represented on the Regional Target

12 Advisory Committee.

13 And I have summarize that we stand ready to work

14 with you in the 27 cities of the COG, 2.2 million people,

15 and look forward to it.

16 CHAIRPERSON NICHOLS: Thank you.

17 Janice Keating.

18 MS. KEATING: Good morning, Chairman Nichols and

19 members of the Board.

20 My name is Janice Keating, a seven-year member of

21 the Modesto City Council located in the heartland of our

22 state.

23 Thank you for the opportunity to speak to you

24 again from a local perspective on the Global Warming

25 Solutions Act.

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1 I'd like to repeat my earlier contention that

2 local governments need to be an integral part of the

3 process if the ultimate vision is to be realized.

4 As an elected official in a community with a

5 particularly challenged economy, I would like to present

6 my concerns regarding the land use target in the AB 32

7 Scoping Plan. I would have preferred the Board stay with

8 the original recommendation of two million metric tons

9 because it represented a realistic interim goal while the

10 economic impact report was re-visited. But since that

11 ship sailed and none of my colleagues or I knew it was

12 even in the harbor, I would ask the Board not to increase

13 the target any further.

14 Cities with targets that are not energy producers

15 have no place to go to offset the targets than our small

16 businesses. And our businesses are expected to have their

17 own mandated targets in addition to those imposed by other

18 regulatory agencies.

19 The technologies to achieve these targets is

20 frankly non-existent. The promises to add to the already

21 high cost of doing business in California.

22 Earlier this week, German Chancellor Angela

23 Mirkel indicated that she would not approve any European

24 Union climate rules that endanger jobs or investment in

25 Germany. This statement by the leader of the Europe's

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1 most industrialized nation and incoming EU leader was

2 profound. If the nations of west Europe are being forced

3 to take a hard look at the economic impact of climate

4 change regulation, I dare say we have no choice but to do

5 the same.

6 I live in the central valley, the bread basket of

7 the world, an area that is struggling right now. The

8 jobless rate is higher than it has been in decades.

9 Businesses are closing and local governments are

10 struggling to provide basic services.

11 I urge the Board to consider the very human

12 aspect of the mandates before you. No one wants Americans

13 to be reliant on other countries to grow and process our

14 food. But if we are not thoughtful, burdensome mandates

15 will threaten food producers and related industries in

16 California.

17 CHAIRPERSON NICHOLS: Council member, your time

18 is up.

19 MS. KEATING: Targets are meant to have an

20 impact. And your original one was impactful.

21 CHAIRPERSON NICHOLS: We've heard you, and you've

22 made your point. You really have.

23 I just want to make one point to you, because I

24 think there is a misunderstanding here.

25 The issue about the land use item in the Scoping

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1 Plan does not carry over into a burden on local

2 governments to achieve those reductions from sources

3 within their jurisdictions. It only relates to land use

4 and transportation.

5 You may still think it's the wrong number, but I

6 don't want anybody, including you, to walk away thinking

7 that element in the Scoping Plan has anything to do with

8 an assignment of responsibility to local governments or

9 MPOs to deal with the stationary sources under their

10 jurisdiction. It doesn't. It's not written that way and

11 it's not intended that way.

12 MS. KEATING: When you couple everything you're

13 discussing here today combined with SB 375 and all of the

14 other movements in the state of California, I'm afraid

15 we're a bit weary of what's coming down and what will and

16 won't be true when the rubber hits the road and when you

17 sign this document.

18 CHAIRPERSON NICHOLS: I understand this concern.

19 Thank you.

20 Linda Park, Diane Dillon.

21 MS. PARK: Chair Nichols, members of the Board,

22 thank you for the opportunity to provide testimony this

23 morning.

24 My name is Linda Parks. I'm on the Ventura

25 County Board of supervisors and on the Executive Committee

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1 and Regional Council of the Southern California

2 Association of Governments, SCAG. And SCAG is the largest

3 metropolitan planning organization in the state of

4 California comprised of six counties, 188 cities -- I

5 don't know how many minutes that gives me -- and nearly

6 half of the state's population.

7 Under SB 375, we are charged with developing

8 regional strategies to reduce greenhouse gas emissions

9 associated with light and medium-duty vehicles.

10 Your action today on AB 32 Scoping Plan while not

11 explicitly linked to the SB 35 process creates an

12 important piece of the framework in which SB 375 will

13 proceed.

14 Our region is committed to achieving the goals of

15 AB 32 and SB 375. We want to make sure the statewide

16 target associated with local land use action is viewed as

17 obtainable to ensure our region's willingness to meet the

18 target will not wain.

19 Due to the size of our region and our current

20 development pattern, it will be difficult to achieve these

21 goals by 2020. In fact, our most aggressive compass

22 blueprint work is still short of SCAG's region's share of

23 the proposed five million metric tons in the proposed

24 Scoping Plan. However, it is a challenge that we are up

25 for.

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1 Although ambitious, I'm confident with the

2 diligent effort this target can be achieved for our

3 region.

4 I do support the five million metric ton target.

5 And while SCAG believes strongly that if a statewide

6 target is set beyond five million metric tons, the target

7 will be unrealistic for this SCAG region to achieve its

8 share of reductions.

9 If a higher target's set, we are concerned the

10 region will not be as motivated to reach a target that is

11 universally perceived as unattainable. The target needs

12 to be realistic and feasible. And I believe five million

13 metric tons is.

14 The first round of sustainable community

15 strategies developed under SB 375 will demonstrate

16 emission reductions for the year 2020. Subsequent of this

17 first cycle, there will be ample evidence to consider more

18 ambitious targets in 2035 and 2050.

19 I'd like to commend the Board for the important

20 step that you are considering today. We understand the

21 level of challenges that you have taken on, and we are

22 glad that and we want to be partners in that endeavor.

23 Thank you for your time and consideration. And

24 we have provided written copies of this testimony. Thank

25 you.

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1 CHAIRPERSON NICHOLS: Thank you, Supervisor.

2 Diane Dillon.

3 MS. DILLON: Good morning, Madam Chair and

4 members of the Board.

5 I'm Diane Dillon, a County Supervisor from Napa

6 County here representing the 58 counties of the California

7 State Association of Counties, otherwise known as SCAC.

8 I'm also the co-chair of the SCAC Climate Change Task

9 Force that developed our comprehensive and progressive

10 climate change policy which is supported by all 58

11 counties.

12 First, we wish to commend you and your staff for

13 an incredible effort in developing a very comprehensive

14 approach to a complex issue. We appreciate your staff's

15 openness and availability to discussion. In particular,

16 we appreciate Jeff Wier was able to join us at our

17 conference last week in San Diego. And we had a great

18 opportunity for some further dialogue.

19 CSAC did submit written comments regarding the

20 Scoping Plan, but we have not previously testified. There

21 is one issue in particular that compels us to provide

22 testimony today. I'm sure it's no surprise that is

23 concerning the five million metric ton threshold contained

24 in the draft Scoping Plan.

25 We feel that we have two good reasons for asking

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1 you to retain that level that was in the draft Scoping

2 Plan. And those reasons are as important to you as they

3 are to us. And those two reasons are about success and

4 precedent. I'm sure I don't to tell you there are

5 skeptics as to this process.

6 We participated intently in 375. We feel

7 strongly that the diversity that exists throughout

8 California dictates that regional governments are best

9 capable of developing solutions to meet the goals we all

10 want to see.

11 But we're still striving to get political buy-in

12 for the support of the new sustainable community

13 strategies and regional transportation plans. And if we

14 can't achieve that, we are not going to have success at

15 the local level.

16 So we're concerned that a target that's set too

17 high will foster divisiveness before we political support

18 for the process.

19 Our second shared reason for objecting to the

20 threshold is concerning the fact that SB 375 is a very

21 aggressive landmark approach to addressing transportation

22 and land-use related greenhouse gas reductions.

23 California is the leader. The rest of the nation is

24 looking at us. We want SB 375 and this process to be

25 successful and set a precedent.

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1 CHAIRPERSON NICHOLS: Supervisor, I have to cut

2 you off. I'm sorry

3 MS. DILLON: We hope for those two reasons that

4 you will adopt the resolution before you today and let the

5 process work and retain the five million threshold.

6 CHAIRPERSON NICHOLS: We appreciate your coming

7 and your continued involvement.

8 Supervisor Linda Arcularius.

9 MS. ARCULARIUS: Good morning, Chair Nichols,

10 members of the Board.

11 My name is Linda Arcularius, and I'm a Supervisor

12 from Inyo County. And today I'm here representing the

13 Regional Council of Rural Counties, which is comprised of

14 30 of our rural California counties.

15 RCRC appreciates the ARB staff efforts to work

16 with local government during the development of this

17 Scoping Plan. However, we still have some concerns with

18 several of the ideas and offer the following comments.

19 And in respect to your time limits, I will just highlight

20 those. We have submitted a lot of written comment.

21 Our first is to keep the local government GHG

22 emission reduction goal for municipal operations

23 voluntary.

24 During the development of the implementation

25 regulations, we request that funding and technical

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1 assistance be included in any discussions and resulting

2 regulations.

3 We too are here in support of what Supervisor

4 Dillon just said to maintain the five MMT CO2 regional

5 transportation related GHG reduction target. And we echo

6 everything she so eloquently just stated.

7 We are also requesting to maintain the

8 flexibility for economically disadvantaged and rural areas

9 or any waste or any State regulatory programs.

10 And in reference to the evaluation and increasing

11 the carbon sequestration value for forests, we acknowledge

12 that proper timber management can substantially increase

13 the carbon sequestration in reduced catastrophic wildfire

14 risks. The catastrophic wildfires not only eliminate the

15 carbon sequestration capacity of the forest, but they

16 contribute to the tons of carbon, GHG, and particulate

17 matter in the air and in our watersheds.

18 We also would like to really, really encourage

19 you to include a firm commitment by the State to join with

20 local governments to advocate at the federal level for

21 enhanced management of forested lands. We commend the ARB

22 staff for the thoughtful and comprehensive approach you

23 have taken in this complex issue. And we wish you the

24 best of luck as you do this important work.

25 CHAIRPERSON NICHOLS: Thank you very much. Thank

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1 for joining us today. Nice to see you again.

2 Bernadette Del Chiaro, followed by Ken Johnson,

3 and Chris Busch. I realize I promised to take Ms.

4 McClananahan, so that must be you.

5 MS. MC CLANAHAN: Yes, ma'am. Thank you. Good

6 morning, Madam Chair and members of the Board. Thank you

7 again for allowing me to make my statement.

8 My name is Tara McClanahan. My firm is YADARI

9 Enterprises. We are management consulting firm here in

10 the state of California.

11 I'm also a member of the Board of Directors for

12 the California Black Chamber of Commerce which

13 representing a number of companies throughout the state of

14 California.

15 As a small business owner, I've seen the affects

16 of the current economic recession firsthand. And our

17 costs are adding up while our business is going down.

18 It's getting harder and harder to make our ends meet.

19 The Governor and the Legislature are considering

20 billions in new taxes and fees to balance the budget, when

21 many of us cannot afford the high taxes and high costs of

22 doing business that California is already notorious for.

23 That's why I'm particularly concerned about the

24 costs of the Scoping Plan that you all are about to adopt.

25 The State's Legislative analyst and distinguished panel of

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1 pure reviewers have concluded that the plan's near-term

2 cost will be prohibitive, and that is based on incomplete

3 and flawed economic analysis.

4 In the area of energy costs alone, Professor Conn

5 of the UCLA Institute of the Environment observes that

6 electricity prices are expected to rise by 14 percent and

7 that AB 32 policies will increase the likelihood of

8 electricity black out which may pose serious costs to

9 business and consumers. That's just one of his

10 conclusions. The independent reviews are full of others.

11 I understand that you and your staff have to look

12 at the big picture and have to deal in generalities, but

13 not necessarily what your policies might do to individual

14 people and businesses.

15 I can tell you this will impact me on several

16 levels. As a business owner, my costs will go up. And

17 believe me, that 14 percent just for electricity is a

18 material number. Not to mention the other costs. My

19 revenues will most likely go down since my customers will

20 be struggling to pick up their fair share of AB 32 costs

21 and may not be able to afford my services any longer.

22 As a consumer, I'll be paying not only higher

23 utility bills, but more for food and just about everything

24 else as other businesses pass their increased costs on to

25 me. based on what I've seen, ARB staff are the only

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1 people who actually believe the AB 32 Scoping Plan as

2 currently structured won't cost much of anything.

3 CHAIRPERSON NICHOLS: Your time is up. Thank

4 you. Appreciate your input and your organizations.

5 Okay. We'll now return to Bernadette Del Chiaro.

6 MS. DEL CHIARO: Bernadette Del Chiaro with

7 Environment California. Thank you, Madam Chair and the

8 Board for allowing me to speak today.

9 For years now, California has been setting the

10 stage for this play that is how we will play a leading

11 roll in solving global warming. With the Scoping Plan

12 here, you are effectively lifting the curtain. And for

13 the most part, we say bravo. We say bravo especially

14 loudly for the starring players of this play, including

15 energy efficiency, renewable energy, and other tried and

16 true direct measures that we know will work to reduce

17 carbon emissions in California.

18 Madam Chair, as you mentioned in your opening

19 comments, there are a lot of details still to be hammered

20 out. And we look forward to working with the Board on

21 those details. In particular, there are a number of other

22 direct measures that do need to continue to be implemented

23 in California per this plan.

24 I think the Department of Forestry testimony this

25 morning to underscores the need for us to maximize all

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1 those controls that we have ability to put in place to

2 make room for those things that are out of our control.

3 The other important detail of course is above and

4 beyond that to, the extent that we put in place a market

5 mechanism that we put in place 100 percent auction require

6 that all of California's largest polluters pay for the

7 right to pollute our air, our common resource.

8 We not only feel in way, but we submitted over

9 the course of the summer 50,000 public comments from

10 Californians across the state also in strong support of

11 requiring polluters to pay to funnel those moneys into

12 proven energy efficiency and other global warming

13 solutions.

14 So with that, I want to thank you for the

15 strengthened language in the Scoping Plan indicating

16 California is headed towards 100 percent auctions. We are

17 confident once we set down the path of developing the

18 auction program that California will set up 100 percent

19 auction as soon as possible.

20 Thank you very again much.

21 CHAIRPERSON NICHOLS: Thank you.

22 Ken Johnson and then Chris Busch and Norman

23 Pedersen.

24 MR. JOHNSON: Good morning. My name is Ken

25 Johnson. I have three very brief questions relating to

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1 cap and trade.

2 The first two questions are for staff, the.

3 Third is directed to the Board. And I'll state all three

4 questions before getting your response.

5 First, would a price floor of $10 per ton apply

6 to all auctioned allowances be feasible and cost

7 effective?

8 Second, could a price floor potentially achieve

9 significant emission reductions beyond the 2020 limit?

10 And the third question for the Board, should a

11 price floor be evaluated as a potential measure for

12 achieving maximum emission reductions pursuant to section

13 38560?

14 CHAIRPERSON NICHOLS: Thank you. Your question

15 is noted, and we're going to take questions at the end

16 from the Board members.

17 Chris Busch.

18 MR. BUSCH: I'm Chris Busch with the Union of

19 Concerned Scientists.

20 Thanks, Madam Chair and Board members for the

21 opportunity to speak today.

22 I'd like to talk about the peer reviews that have

23 been released since the last hearing. I think the

24 criticism in these peer reviews has been unfair and overly

25 harsh. And I think the Board -- the staff deserves credit

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1 for diligent work and useful progress.

2 It seems the critics expect the staff to achieve

3 an ideal that's never been really achieved anywhere, by

4 anyone. And that criticisms is based more on ideology and

5 theory that markets are essentially perfect and close to

6 perfectly rationale.

7 The comments of Professor Conn just mentioned,

8 frankly he doesn't seem to understand the modeling to me.

9 He seems to think all the efficiencies comes from price

10 response. He doesn't understand the efficiency measures

11 are where of most of the reductions in energy use come

12 from.

13 The limitations of CARB's modeling are shared

14 with other modeling approaches used by, for example, U.S.

15 EPA, the sensitivity analysis that CARB has done since the

16 peer review was completed has shown the results mostly

17 unchanged in the response to the criticisms that have been

18 raised.

19 And let's look at the big picture. CARB's

20 results are essentially in line with most results showing

21 the results of the impact of climate policy to be

22 relatively small. That's when you're excluding all the

23 many benefits of action, including public health benefits,

24 introduced innovation, improved energy security, not the

25 mention the damages that would come from unabated climate

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1 change.

2 We've heard the excuse that more study is needed

3 many times as an excuse for delay. And I ask the Board to

4 reject that argument at this time. Thank you.

5 CHAIRPERSON NICHOLS: Thank you.

6 Norman Pedersen, Michael Rubio, Martin Hopper.

7 MR. PEDERSEN: Thank you, Madam Chair.

8 My name is Norman Pedersen for the Southern

9 California Public Power Authority. SCPPA supports the

10 proposed Scoping Plan. We particularly commend the plan's

11 reliance on complimentary measures to achieve 80 percent

12 of emissions reductions required by AB 32 by 2020.

13 Some of the written comments suggest that even

14 more reductions could be achieved through additional

15 complimentary measures. And we urge you to carefully

16 evaluate those additional measures during the upcoming

17 rule making process. Complimentary measures provide

18 important co-benefits and they constrain allowance prices.

19 Some other comments criticize the staff's

20 economic evaluation of the costs and benefits of the

21 complimentary measures. Overall, at this point perhaps

22 I'm echoing some what you just heard from my friend Chris

23 Busch, while more could always be done on any economic

24 forecast, we believe your staff did an excellent job,

25 particularly given some of the modeling problems they

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1 encountered during the process.

2 We also commend the proposed Scoping Plan's

3 vision of integrating the California program with the

4 Western Climate Initiative. However, we would like to

5 offer two cautionary notes.

6 First, the WCI has been primarily focused on

7 implementing a Cap and Trade Program. WCI has not focused

8 nearly as much as you have on complimentary measures. As

9 a matter of fact I don't believe they have a Complimentary

10 Measures Committee. As a result, when WCI models

11 allowance prices, they project prices that are higher than

12 the prices that have been projected by your staff.

13 We urge that WCI focus more on complimentary

14 measures following this Board's lead.

15 Second, just as intra-state allowance allocation

16 policies have the potential to result in wealth transfers

17 among California communities, as some SCPPA

18 representatives discussed with you back on November 20th,

19 policies on apportioning allowances among WCI partners

20 could result in interstate wealth transfers. And we urge

21 California to be alert to that issue.

22 CHAIRPERSON NICHOLS: Mr. Pedersen, your time is

23 up.

24 MR. PEDERSEN: With these cautions, we urge you

25 to adopt the plan and thank you very much.

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1 CHAIRPERSON NICHOLS: Thank you.

2 Mr. Rubio, Martin Hopper, and then Rachel Katz.

3 MR. RUBIO: Good morning, Madam Chair and

4 honorable Board members. First let me begin by thanking

5 you not only for your entire staff for this great work on

6 this important topic.

7 I'm Michael Rubio, the Chair of the Kern County

8 Board of Supervisors. I'm also Chair of the San Joaquin

9 Policy Council, which represents the ACOGs from the

10 southern part of this valley, which is in Bakersfield all

11 the way to the north of Stockton.

12 And it is particularly a pleasure to stand before

13 you coming from a relatively conservative area of our

14 great state in support of this plan. We support it

15 because clearly we see no longer as rolling back

16 greenhouse gases an option, but it is now the law.

17 But in moving forward with this Scoping Plan and

18 putting it into action, we ask you to consider three

19 things. The first, to put a face on what the fine marine

20 stated. I believe he was the first speaker here, and the

21 military installations. We are proud to partner with them

22 as they are the largest employer in the county of Kern.

23 And if they were an incorporated city, they would be the

24 third largest incorporated city in our great county. So

25 when you establish our targets, please hold them

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1 responsible for their rolling back of greenhouse gases,

2 not us.

3 Secondarily, in looking at the vehicle miles

4 traveled, I come from a great county that is proud to say

5 our central valley feeds this state and the world. But

6 not only are we touting ag and oil, but we're now touting

7 our wind and our sun. And doing so, we are encouraging

8 people to come and built wind turbines.

9 But as a note, if the full phasing of what is

10 being projected to be built out today, it could consume

11 over 100,000 acres in our single great county alone.

12 There's going to generate a lot of vehicle miles traveled.

13 To build those incredible operations, we would ask that

14 you take that into consideration as well.

15 Lastly, when you look at the vehicle miles

16 traveled that is generated or rather that passes through

17 our great central valley, over 50 percent it is estimated

18 by Caltrans does not originate, nor does it terminate in

19 the central valley. So please as you establish our

20 targets, take that into consideration.

21 And in closing, again we want to thank you very

22 much for your hard work

23 CHAIRPERSON NICHOLS: Thank you, Supervisor.

24 Martin Hopper and Rachel Katz and Michelle

25 Passero.

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1 MR. HOPPER: Good morning, Madam Chairman.

2 I'm Martin Hopper, Chair, General Manager of the

3 MSR Public Power Agency. I would like to thank the Board

4 for your positive responses to our prior oral and written

5 testimony. We thank you for that.

6 This morning I just want to make one brief point.

7 And that is we've seen the positive indications in the

8 plan with the harmonization of our efforts here with those

9 of the Western Climate Initiative, particularly in the

10 areas of cap, trade, and allowance regimen.

11 We would like to ask and to have you emphasize

12 the need for that regional cooperation and harmonization

13 to avoid those bad effects as we saw during the electric

14 restructuring a decade ago where California got out of

15 step with the western region and it became horrifically

16 expensive for our consumers.

17 So here we would like to urge you to continue

18 those efforts for harmonization with the efforts of the

19 WCI. And I'm very pleased to see in the document in

20 resolution that we are pointed in that direction. We just

21 ask that you continue to carry on through.

22 Thank you.

23 CHAIRPERSON NICHOLS: Thank you.

24 Rachel Katz.

25 MS. KATZ: Good morning, Chairman Nichols,

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1 members of the Board, and ARB staff.

2 I'm Rachel Katz with the Pacific Forest Trust.

3 We are a nonprofit organization dedicated to conserving

4 America's working forests for all of the public benefits

5 they provide.

6 Thank you for the opportunity to provide one more

7 statement in strong support of the landmark Scoping Plan

8 you're about to vote on.

9 FPT applauds your leadership in tackling the

10 eminent and grave threat posed by global warming. In

11 doing so, ARB has recognized the need to have all hands on

12 deck, calling for a variety of strategies across the

13 economy to achieve ambitious but very achievable emissions

14 reduction targets.

15 PFT would like to commend ARB for incorporating

16 the forests sector into the plan, taking the groundbraking

17 step of addressing both emissions in the sector as well as

18 the great potential for additional carbon sequestration

19 above and beyond current capacity.

20 The inclusion of a robust approach for addressing

21 forests sets a national precedent. It also creates a very

22 positive example the international negotiators can look to

23 as they work on a post Kyoto agreement that addresses

24 international forest laws and degradation.

25 California is home to some of the most productive

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1 forests in the world. With this Scoping Plan, we now have

2 the tremendous opportunity to ensure those forests are

3 appropriately recognized for their climate benefits and

4 that policies are implemented to avoid or mitigate

5 significant losses of their forest climate benefits.

6 We enthusiastically support the inclusion of a

7 no-net loss target for the forest sector and appreciate

8 the broad cross sector impacts of forest including in the

9 energy, land use, and waste management sectors.

10 California is creating an innovative model that

11 we hope others will follow.

12 Again, thank you for your efforts, including the

13 immense amount of work your staff has put in. Thank you

14 as well for the opportunity we have had to work

15 collaboratively with you. We look forward to working with

16 you on the next steps. Thank you very much.

17 CHAIRPERSON NICHOLS: Thank you very much,

18 Ms. Katz.

19 Michelle Passero, Barry Wallerstein, Peter

20 Montgomery.

21 MS. PASSERO: Good morning. Michelle Passero

22 with the Nature Conservancy.

23 TNC appreciated and supports the Scoping Plan and

24 as well as the proposed modifications, particularly as

25 they relate to forests and natural systems.

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1 We also support the resolution. Appreciate the

2 acknowledgement of the nexus between adaptation and

3 mitigation. This is critical I think as implementation

4 moves forward.

5 And we also support the statement to clarify

6 ARB's role with respect to oversight and ensuring

7 consistency and the accounting standards and avoiding

8 double counting that could occur, given all the ranges of

9 responsibility that other agencies and entities may have.

10 We see this plan and the proposed additions as a

11 stimulus package for natural systems and all of us who

12 rely on these systems for our economic well being as well

13 as our quality of life.

14 We do think that there probably is greater

15 potential in terms of reductions to be attained in the

16 land use sector as well as the forest sector. And we look

17 forward to working in the upcoming couple of years on

18 finding the measures, developing the measures to ensure

19 that.

20 And we do urge the Board to unanimously adopt

21 this plan and its modifications. So thank you again for

22 all your hard work.

23 CHAIRPERSON NICHOLS: Thank you.

24 Barry Wallerstein, followed by Peter Montgomery

25 and Emanuel Jones.

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1 MR. WALLERSTEIN: Good morning, Madam Chair,

2 members of the Board. Barry Wallerstein, the Executive

3 Officer of the South Coast Air Quality Management

4 District.

5 And I'm here to speak to the items that have been

6 added to the resolution and to thank James and the staff

7 for being responsive to the issues that we raised last

8 time before the Board.

9 And so I'm here to support the resolution

10 language.

11 James cautioned me last night not to quibble over

12 the size of a diamond in a diamond ring. So I'm not going

13 to do that.

14 There are some things on mandatory reporting

15 where James has agreed to sit down, and we're going to do

16 our best to work through that. But the staff has really

17 reached out in a sense of partnership here, and I think it

18 bodes well for moving forward.

19 And let me just say as a former member of this

20 staff, I don't know there's been a prouder day for the

21 State Air Resources Board than today and all the fine work

22 that went into getting you to this point. Thank you.

23 CHAIRPERSON NICHOLS: Thank you very much. All

24 relationships require continued work.

25 MR. MONTGOMERY: Peter Montgomery, CBIA.

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1 In mutual respect for all of our time, I don't

2 echo what has been said regarding the coalition of the

3 impossible, SB 375, the RTAC, et cetera, et cetera,

4 because that was the basis for the testimony.

5 The one thing I would point out just on -- we

6 have provided -- CBIA provided the Board recently in the

7 last couple days with a technical analysis of basically

8 the estimated targets. The five million metric tons

9 versus two.

10 And just for clarification it is our opinion that

11 five is still a very aggressive number by 2020. So

12 effectively in eight years, you're going to try to affect

13 a significant amount of reductions in greenhouse gas

14 emissions from the regions. It's not insignificant. Our

15 estimate on the analysis shows still 40 to 50 percent

16 reductions. And it could be as high as 60 to 75 percent.

17 As you all know, we're building a lot fewer units than we

18 were based on the assumptions.

19 Just in context, our opinion is five is an

20 aggressive number. We think two is more realistic, but

21 we're here today to support five as a stretch goal and

22 look forward to working through the RTAC process to

23 establish the regional targets.

24 Thank you very much.

25 CHAIRPERSON NICHOLS: Thank you.

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1 Emanuel Jones, Max Ordonez, Adam Stern.

2 MR. BOWER: Madam Chair, members, good morning.

3 I'm Hugh Bower with Emanuel Jones and Associates

4 here on behalf of the city of santa Rosa.

5 We apologize for not having delivered a letter

6 sooner, but I dropped one off this morning.

7 CHAIRPERSON NICHOLS: Sorry. Where do you fit on

8 the list I just gave?

9 MR. BOWER: I'm Hugh Bower. I work Emanuel Jones

10 and Associates.

11 CHAIRPERSON NICHOLS: I see. We got you wrong on

12 the list.

13 MR. JONES: We represent the City of Santa Rosa.

14 First, we want applaud to efforts of the Board

15 and staff. And so on behalf of the City of Santa Rosa, we

16 wish to convey that we support increased reduction targets

17 with the guidance on the issue of funding for local

18 government programs in order to meet those targets.

19 The City of Santa Rosa is committed to reducing

20 greenhouse gases and has taken specific steps towards

21 fulfilling those goals.

22 In addition, we want to note that GHG reduction

23 cannot be met through sustainable new construction or

24 future land use and transportation decisions alone.

25 We suggest that the Scoping Plan include

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1 discussion of innovative measures, such as retrofit

2 programs and/or pricing incentives to address existing

3 infrastructure.

4 The City of Santa Rosa is striving to reduce its

5 own carbon footprint and modify land uses that encourage

6 multi-modal travel. At the same time, the City is

7 struggling to find funding to maintain existing transit

8 services level. Obviously, the funding issue is an

9 important component of this.

10 Our letter provides more specific detail, and

11 we'd be willing to answer any questions from the Board or

12 staff. Thank you.

13 CHAIRPERSON NICHOLS: Thank you.

14 MR. ORDONEZ: Good morning. My name is Max

15 Ordonez from Los Angeles. I have a small business in

16 project management and construction management.

17 I think was here in November, and I did talk a

18 little bit about this big transition that we're looking at

19 from I guess we could call it older businesses into the

20 green technology and the lack of capital for a lot of the

21 smaller companies and particularly the minority community.

22 I'm not going to repeat that statement I made.

23 But talk about something new.

24 I think the Chairwoman mentioned talk about new

25 topics that have come up since then. And the LAO report

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1 was something that came across that's been talked about in

2 the local chambers and NFIB, I'm a member of that. And

3 also Treasurer of the California Hispanic Chamber of

4 Commerce.

5 My comments reference to the LAO report and was

6 kind of troubled by it given that there was certain quote

7 in there that reads that the AB 32 Scoping Plan fails to

8 provide information about the plan's impact on individual

9 businesses and households. It cannot identify the types

10 of disruption certain parties could face under the

11 proposal.

12 This was kind of a sobering moment for a lot of

13 the small business people and given this independent

14 assessment of what we're going to be implementing here in

15 this program.

16 I just want to urge the Board and its strong

17 leadership to really consider all the aspects from a small

18 business perspective and the impact it's going to have and

19 that the impact is probably going to be greater and loss

20 of businesses and therefore loss of jobs related to it.

21 So I just wanted to share that something new

22 that's come up since November. Thank you.

23 CHAIRPERSON NICHOLS: Thank you very much.

24 Appreciate your continued involvement. And I hope we will

25 be able to continue to work with you as we develop those

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1 programs beyond just the conceptual stage.

2 Adam Stern, then Chris Brown, John Kabateck.

3 Mr. STERN: Thank you, Madam Chairman.

4 I'm Adam Stern, Vice President for Policy at

5 Terrapass. I think it's fair to say that Terrapass and

6 companies like it are part of the new green economy.

7 As a small business based in San Francisco, we

8 deliver high-quality carbon offsets verified to the

9 toughest standards that help individuals and companies

10 reduce their carbon foot prints.

11 Our business and those of others are helping to

12 bring new clean technologies to California and reduce the

13 compliance costs of AB 32. There are a lot of businesses

14 like ours waiting for regulatory signals that the market

15 for carbon reductions has arrived and that it's going to

16 grow. Passage of this plan would be a great signal in the

17 right direction. And I trust that that's where you're

18 headed. Thank you very much.

19 CHAIRPERSON NICHOLS: Thank you.

20 Chris Brown.

21 MR. BROWN: Chair Nichols, members of the Board,

22 Chris Brown, AICP Mendocino County Air Quality Management

23 District.

24 I just wanted to echo the comments of my

25 colleague Barry Wallerstein. We appreciate all the hard

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1 work James and his staff and Edie who I've known for quite

2 a while have put into this. And especially appreciate the

3 language in the resolution that reflects the cooperation

4 and the coordination that's going to happen between ARB

5 and the districts. Thank you.

6 CHAIRPERSON NICHOLS: Thank you.

7 John Kabateck, Naomi Kim, and then Jane Williams.

8 Mr. Kabateck?

9 Naomi Kim.

10 MS. KIM: Good morning, my name is Naomi Kim.

11 And I'm with the California Environmental Rights Alliance.

12 And I'm here on behalf of 63 organizations and 93

13 individuals representing thousands of individuals from

14 around the world who have signed on to the California

15 environmental justice movements declaration against the

16 use of carbon trading schemes to address climate change.

17 The declaration is a 28-point document affirming

18 our commitment we will fight at every turn to establish a

19 system of carbon trading and offset use in California,

20 BECAUSE the overwhelming body of evidence from prior

21 pollution trading programs proves that such a program will

22 not reduce greenhouse gas emissions at the pace called for

23 by the international scientific community. And it will

24 not result in the needed shift to a clean energy economy,

25 without which the climate change problem will never be

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1 properly addressed.

2 The irreconcilable problems in pollution trading

3 programs include over allocation, inaccurate measurement,

4 price volatility, stifled technological innovation,

5 windfall profits and harm to consumers, gaming, monitoring

6 and enforcement, phantom offsets, and blown caps.

7 Without magical fixes to these interactive

8 problems and by prioritize the cheapest offramps possible

9 versus helping entities meet an aggressive RPS, for

10 example, a cap and free trade market system will have the

11 opposite effect of stifling the investment needed to

12 develop and deploy clean renewable energy without which

13 California will never reach its long-term goals of 85

14 percent reductions. And the emperor is not wearing any

15 clothes.

16 I have a CD full of 51 document and comments we

17 would like to add to the record, including numerous

18 reports by the Congressional Budget Office that carbon tax

19 or fee could be implemented at a fraction of the cost of a

20 trading program.

21 And most recently, just in the last few days, a

22 study by the US Government Accountability Office finding

23 that "The use of carbon offsets in a cap and trade system

24 can undermine the system's integrity, given it is not

25 possible to ensure every credit represents a real,

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1 measurable, long-term reduction in emissions."

2 The American Enterprise Institute last year --

3 CHAIRPERSON NICHOLS: Ms. Kim, your time is up.

4 MS. KIM: The implementing Cap and Trade Program

5 could be the costliest mistake in human history.

6 CHAIRPERSON NICHOLS: Thank you. And thanks for

7 all the documents you submitted as well.

8 Jane Williams.

9 MS. WILLIAMS: Good morning, Madam Chair and

10 members of the Board. Thank you for the opportunity to

11 testify before you today.

12 I want to make sure that you understand that we

13 worked with the ETAC Committee to submit joint comments to

14 you, recommendation that you're in receipt those.

15 I want to thank Dr. Epstein and Dr. Lloyd and the

16 members of the ETAC Committee for working so diligently

17 with us.

18 I want to underscore the previous speaker.

19 Article yesterday in the international Harold Tribute. EU

20 carbon trading systems brings windfall profits for

21 polluters with little benefit to the climate. The outcome

22 of the EU trading scheme has been four years of squandered

23 opportunity to reduce greenhouse gas emissions.

24 There are now 40 proposed coal-fired power plants

25 for the EU. And the lessons learned are that there are

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1 fresh windfall profits to the worst polluters not EU, huge

2 price increases for food, for services, and for energy.

3 And of course in California those price increases are

4 going to be felt most harshly by the poor.

5 There's very few previous speakers that have

6 talked about this. As you know, the Environmental Justice

7 Advisory Committee to this Board is very concerned about

8 putting a price on carbon that increases the poverty in

9 California.

10 When the first Committee -- when our Committee

11 met first time last year, the economic situation in

12 California was much different. It was one in five

13 children or roughly 20 percent of the children in

14 California are growing up in poverty. That has changed to

15 one in four, roughly 25 percent.

16 As we seek to put a price on carbon and grant

17 windfall profits to the worst polluters, but put that

18 price and the burden of that price back on the poor, we

19 are going to further increase the number of children that

20 grow up in poverty in the state of California.

21 We believe very strongly that the statute has not

22 been followed. We do not agree with the economic

23 analysis. We believe that some of the criticisms are very

24 real. And we urge the Board to think very carefully as it

25 moves forward here on what the impact is of your vote

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1 today and the impact of how we move forward with this

2 program.

3 The Environmental Justice Advisory Committee is

4 very firm in its brief you have not followed the

5 statute --

6 CHAIRPERSON NICHOLS: We do have your formal

7 testimony already. The EJAC Committee sent not only the

8 joint letter, but formal testimony that came this morning

9 from Ms. Johnson-Mizaros, your co-chair. So I think your

10 two minutes are up, if you could just wrap up, please.

11 MS. WILLIAMS: Thank you very much, Chairman

12 Nichols.

13 To wrap up, the Environmental Justice Advisory

14 Committee and the environmental justice movement in

15 California is very disappointed with the outcome of the

16 Scoping Plan. Thank you.

17 CHAIRPERSON NICHOLS: Thank you.

18 Ernie Silva.

19 MR. SILVA: Chairman Nichols, Board members, I'm

20 Ernie Silva. I'm here representing the Coalition for

21 Adequate School Housing.

22 CASH is a 1500 member organization consisting of

23 both school districts involved in the school facility

24 program and the businesses that support them. Our

25 districts represent about 93 percent of the public school

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1 students in California.

2 We have three recommendations that we want to

3 leave with you this morning.

4 First is that as the report recognizes, the

5 Appendix C, page 148, there is a potentially fatal flaw

6 for school districts in the program that we hope to work

7 with you to correct going forward in developing

8 regulations. And that's the emission reductions are

9 largely accounted for in other sectors.

10 We are here to ask that moving forward that

11 credit for school districts energy efficiencies from

12 operations, construction, and other green schools green

13 buildings efforts accrue to the school districts them.

14 Second, the plan and the regulations moving

15 forward shouldn't mandate green school construction beyond

16 the State's ability to fund actual cost and incentives to

17 get schools to do the right thing as your Scoping Plan and

18 appendices recognizes, school districts are doing an awful

19 lot to front load and get ahead of the wave on green

20 schools.

21 The program is very, very complex. There are

22 match amounts grant levels a great diversity among school

23 districts in house in how schools are actually paid for.

24 Both from the State side and local side the ability to

25 float bonds, developer fees, and other mechanisms create

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1 real complexity. And we want to work with you so ensure

2 we don't get ahead of what school districts are able to

3 do.

4 The report itself talks about that. The school

5 facility program money to green schools, the reality is

6 that's less than 2 percent of the funding that's been put

7 forward to build schools as it is. So we really need to

8 do more to ensure that schools get theirs

9 The other piece of school construction are what

10 do we do for energy efficiency in existing schools. We

11 have a modernization program as the Scoping Plan

12 recognizes. That doesn't -- addresses but a fraction of

13 what's done to existing schools. We need to find other

14 ways to address those issues.

15 CHAIRPERSON NICHOLS: Thanks, Mr. Silva. Two

16 minutes goes by really fast, I know.

17 MR. SILVA: I will. The third is that in

18 doing --

19 CHAIRPERSON NICHOLS: You're done. Your time is

20 up.

21 MR. SILVA: Cumulative impact analysis we need to

22 have some safe harbors for the work we are doing --

23 positive work we're doing on addressing cumulative and

24 indirect impacts on school construction.

25 CHAIRPERSON NICHOLS: The work that you're

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1 talking about needs to be done, and we agree with you. It

2 isn't in the Scoping Plan itself.

3 And I'm going to ask people to try to focus on

4 what's in the plan, because that's what we're acting on

5 today. I think we all agree that there's work that needs

6 to be done going forward.

7 Bill Magavern, Tara Marchant, Tim Carmichael.

8 MR. MAGAVERN: Good morning. Bill Magavern,

9 Director of Sierra Club California. And I'm going to

10 focus on what has changed since the November meeting.

11 You've added measures for mandatory commercial

12 recycling, an expectation of 100 percent auctioning, and

13 analysis of cumulative impacts. We think these are all

14 very positive changes. We thank the Board and the staff

15 for making those.

16 I will note at the risk of tarnishing James's

17 diamond we would like to see more emissions reductions in

18 the land use and industrial areas and also further

19 limitations on offsets.

20 But also what we seen happen just in the last few

21 weeks is the economic signals nationally are getting even

22 worse. And that has caused some who had actually always

23 opposed AB 32 to call for its delay. They say that we

24 can't afford these measures. And my response is, we

25 cannot afford delay. California cannot afford to wait

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1 before putting into place measures to reduce the pollution

2 that causes global warming.

3 You're going to be doing additional economic

4 analysis, and I think that's absolutely appropriate. I

5 hope that analysis will include the costs of inaction.

6 What will be the cost to California if we do not take the

7 steps that are outlined in the Scoping Plan. And let's

8 weight that against the costs of actually going forward.

9 We'd also like to see an analysis of whether

10 direct carbon charges would accomplish the goals of AB 32

11 as well as or better than the cap and trade. That would

12 be a very interesting analysis to see.

13 And finally our President Elect has called

14 recently for stimulating the economy through the creation

15 of green jobs and energy efficiency measures. And I think

16 that he and the Congress will be looking to the State of

17 California. And these measures in the Scoping Plan can

18 serve as a model for the whole country. And our Governor

19 has said repeatedly that economic growth and environmental

20 protection should go together. And that I think is

21 exactly what you're doing here today.

22 Thank you.

23 CHAIRPERSON NICHOLS: Thank you very much.

24 Tara Marchant, then Tim Carmichael, and Matt

25 Vander Sluis.

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1 MS. MARCHANT: Hi. My name is Tara Marchant.

2 I'm presenting on behalf of the Greenlining Institute.

3 And I want to say good morning to the chair and the

4 directors. Thank you for this opportunity in speaking.

5 And congratulations to the staff of and your hard work.

6 The Greenlining coalition is the oldest

7 multi-ethic coalition of community-based organizations in

8 the country. We represent 39 community-based

9 organizations including the state's largest African

10 American faith-based organizations, the state's largest

11 minority businesses chambers, and the state's largest

12 immigrant rights organizations.

13 Greenlining has negotiated over 2.5 trillion of

14 community reinvestment commitments to California's

15 underserved communities. Greenlining's green asset

16 program, to which I am the program manager, seeks to

17 ensure that our communities of color are at the forefront

18 of the green economy as active stakeholders in our nation

19 efforts to go green. And Greenlining will work to ensure

20 that low-income and minority communities benefit from the

21 philanthropy, the jobs, the business contracts, and other

22 opportunities that are created.

23 We anticipate further comments in the rules and

24 regulation process in 2009 and in attributing to the

25 article around how money is dispensed to low-income

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1 communities.

2 But finally I want to reference the land use

3 goal. I want to say there are five key issues that relate

4 to land use policies that we see the greatest opportunity

5 for change. That is to develop assets and wealth for our

6 local communities and families. Currently, we do not have

7 reliable transportation. We don't have access to grocery

8 stores. We don't have access to jobs. And AB 32 has an

9 opportunity to actually reward people that live in dense

10 communities.

11 We ask for incentives to redevelop brownfields.

12 There are over 100,000 brownfields in California and most

13 of them exist in smart growth communities.

14 We also ask for additional incentives and rewards

15 for small businesses in dense communities and areas that

16 need job growth. And we also ask for incentives for

17 affordable housing.

18 But finally we wish to look for projects that

19 foster civic participation in the local planning. Our

20 communities want to be leaders. And they want to be a

21 part of this effort to greatly better their lives.

22 And as AB 32 does that, we'll do it with what's

23 tangible to them.

24 So overall, we encourage this process and the

25 solution by inviting our communities to the table. We

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1 recommend an aggressive land use target if it invites the

2 kind of participation.

3 CHAIRPERSON NICHOLS: Sorry. I took my eye away

4 from Ms. Green and your time expired.

5 MS. MARCHANT: We look forward to participating

6 with you further. And thank you again for this

7 opportunity to speak.

8 CHAIRPERSON NICHOLS: Thank you for your comments

9 we appreciate it.

10 Tim Carmichael.

11 MR. CARMICHAEL: Good morning, Madam Chair,

12 members of the Board. Tim Carmichael, Coalition for Clean

13 Air.

14 We appreciate the strengthening changes the staff

15 has incorporated into the recommended adopting resolution.

16 That said, we think it's really imperative that

17 the Board direct the staff to include that resolution in

18 all of its components in the final plan. I believe that's

19 the intent of the staff recommendation, but I haven't

20 heard it today. And think about people around the world

21 that are going to look at this plan. And if many of the

22 key elements in the resolution aren't in the document they

23 see, it will be less impactful.

24 Two specific changes I want -- one specific

25 change, one note of concern.

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1 On the top of page 10 in the proposed resolution,

2 there's some bullets that talk about use of auction

3 revenue. It's really generic language, and we encourage

4 the Board to just add a phrase or two that says something

5 like to include a community benefits fund to assist with

6 adaptation and pollution reduction needs in low income and

7 minority communities. Something to that effect to call

8 out the need to focus on revenues on that need.

9 Finally, in the proposed amendments or edits to

10 the plan on page 6 of that document, there's a new line,

11 allowances will not be required for combustion emissions

12 from carbon-neutral projects. There is a very good

13 argument to be made for this line relative to renewable

14 projects, for example.

15 But let me just raise a caution for the Board and

16 the staff. Think forward to the potential for projects

17 that are going to claim carbon neutrality whether it's a

18 fuel provider for a power plant that's going to do it

19 through sequestration. We need to be very conservative.

20 And I rarely ask this Board to be conservative. In not

21 just granting carbon neutrality to a given project

22 lightly, because it's not the same to sequester carbon as

23 a solution here as it is to achieve the reductions at the

24 facility because of the co-benefits of other pollutants

25 that will be reduced if you reduce carbon at the facility.

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1 CHAIRPERSON NICHOLS: I'm practicing making a

2 gesture. Time is up.

3 MR. CARMICHAEL: I understand the sign language.

4 Thank you.

5 CHAIRPERSON NICHOLS: Okay. Thank you very much.

6 Matt Vander Sluis, and then Amy Kyle, Norman

7 Plotkin.

8 MR. VANDER SLUIS: My name is Matt Vander Sluis.

9 I manage the Global Warming Program for the Planning and

10 Conservation League.

11 I want to thank Chairwoman Nichols and the rest

12 of the Board. This is a momentous occasion. This is an

13 important step forward in California's fight against

14 global warming. Many of the measures included in the plan

15 are going to help strengthen our economy, both in the

16 short term and the long term, protect public health, and

17 protect the environment.

18 There were two points that I wanted to note today

19 that are changes from when we met last month. In

20 particular, on the provisions regarding auctioning, I

21 wanted to thank the staff for the resolution to say you

22 are heading towards 100 percent auction. As we're

23 struggling to pay teachers and bus drivers, it doesn't

24 make sense to provide financially valuable emission

25 allowance to our worst polluters for free. So I think we

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1 can continue moving in this direction to make sure that

2 polluters pay at 100 percent.

3 Secondly, on the land use provisions, I wanted to

4 thank the Board members particularly for asking the staff

5 in November to look at a higher target. I think it's an

6 important step. We need to look at our full potential in

7 the land use sector. And I would encourage the Board

8 today to adopt the higher target of 11 to 14 million

9 metric tons and to say engaged in the SB 375 target

10 setting process as we will to make sure that we achieve

11 everything that's possible in our land use decisions.

12 And that's particularly important, because sprawl

13 is so costly. And when the economy is hurting, we need to

14 make sure we're not making those costly decisions. Sprawl

15 is costly because of the public infrastructure. It's

16 costly because of the public health effects. And it's

17 costly because when someone needs to drive ten minutes to

18 get a gallon of milk, that's money that could be better

19 spend.

20 So I thank you all and urge you to move forward

21 with this aggressive plan. Thank you.

22 CHAIRPERSON NICHOLS: Thank you.

23 Amy Kyle.

24 MS. KYLE: My name is Amy Kyle. And I'm

25 Associate Adjunct professor at the School of Public Health

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1 at the University of California Berkeley.

2 And I came here today because I think there's

3 still one thing missing from the resolution and the plan,

4 and you know, all the other stuff that been done, which is

5 very commendable. And this has to do with the public

6 health assessment. And some of the other issues that

7 you're proposing to assess further.

8 And my recommendation is that you add into the

9 resolution consideration from a comparative point of view

10 of the various elements in your portfolio of policy

11 strategies as you move forward. So that as you continue

12 to analyze each of these specific things, we also can look

13 at them collectively and together to decide particularly

14 with regard to public health where are the benefits going

15 to be maximized as you pick your mix.

16 Because as we move forward here, what you're

17 really doing is setting in motion investment in pollution

18 control technology, in changing building standards,

19 changes to transportation, energy efficiency, all

20 different kinds of things like that. And they have

21 differing kinds of implications for public health.

22 And we can't analyze those at a large scale and

23 think about that, which will then give you and us the

24 opportunity as we move forward to think about what's the

25 best mix in that portfolio, both for the greenhouse side

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1 and for public health side.

2 And because the sectors you're looking at here,

3 energy, transportation, land use, building design, et

4 cetera, have so many major implications for public health,

5 there's an opportunity here to make some major gains on

6 problems that have really been intractable.

7 And I think if you incorporated a comparative

8 look at a more macro level in the health assessment than

9 what we've seen before which is more micro, you have an

10 opportunity to pick your mix of portfolio strategies to

11 accomplish both of those things. That would be really in

12 everyone's best interest. So thank you.

13 CHAIRPERSON NICHOLS: Thank you.

14 Norman Plotkin, followed by Alfredo Medina, and

15 Barbara Lee.

16 MR. PLOTKIN: Thank you, Madam Chair. Norman

17 Plotkin representing the California Independent Automotive

18 Association, California Aftermarket Association,

19 California Automotive Wholesalers Association, and

20 Automotive Refrigerated Products Institute.

21 That was the Governor. He said he'd like your

22 economic team to come over and produce another $50 billion

23 dollars so he can balance the budget.

24 But on a serious note, this process -- one of my

25 favorite books is by Mary Shelley called Frankenstein

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1 about the monster created by private science. And we

2 would just draw a corollary to propagandized science.

3 And so my list of clients, they're very concerned

4 because they want to challenge the orthodoxy. They

5 haven't drank the Cool-Aid. And they know that nature

6 rules the climate, not man. By that they mean that

7 climate change biogenic emissions of CO2 far exceed

8 anthropogenic emissions of CO2 by a magnitude of five.

9 That's not five times. That's ten times ten times ten

10 times ten time ten.

11 So we're dabbling around the edges and up against

12 factors like solar radiation, terrestrial off-gasing,

13 interactions of biosphere including bovine methane in

14 agriculture. And we're very concerned.

15 We've heard here several times that carbon is a

16 pollution. Carbon is not pollution. We are carbon

17 beings, and we are exhale carbon dioxide. Taken to its

18 logical extreme, your efforts today will end up with all

19 of us with meters on our belt charging a fee on the carbon

20 we exhale. We're concerned about the reach and scope what

21 you're trying to do here.

22 With respect to the individual clients, the

23 Automotive Institute and Refrigeration Products Institute

24 was the target of an Early Action Item. We've spent the

25 last two years working with you closely to avoid the ban

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1 of the product and we appreciate your work. Our major

2 concern is that in Scoping Plan now your in addition to

3 the rulemaking we're in, you're laying on top of it a

4 upstream fee. And we think --

5 CHAIRPERSON NICHOLS: Mr. Plotkin, your time is

6 up.

7 MR. PLOTKIN: That's the port we're opposed to.

8 We continue to work with you. Thank you.

9 CHAIRPERSON NICHOLS: We heard you.

10 Alfredo Medina, Barbara Lee, and Sarah Skikne.

11 MR. MEDINA: Good morning, Madam Chairman and

12 members of the Board. My name is Alfredo Medina, and I'm

13 here with the Latino Issues Forum. We're a nonprofit

14 public policy and advocacy institute that is dedicated to

15 advancing new and innovative policy solutions to the state

16 of California. And the history of the Latino Issues Forum

17 for the past 20 years, we have worked to advance those

18 issues and to protect health of Latinos across the state.

19 We would like to thank the Board for

20 strengthening the Scoping Plan and by adding language that

21 identifies communities that are disproportionately

22 effected and by also including cumulative impacts

23 language.

24 However, we are still concerned with the language

25 that is vague in regards to the various scenarios for the

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1 use of auction revenues. And we would like to urge the

2 Air Resources Board to include the formation of a

3 community benefits fund for the adaptation and emission

4 reduction measures for low income and minority

5 communities.

6 This is a huge concern for the Latino Issues

7 Forum, considering it is projected the Latino population

8 will be the majority by 2030. And moreover, it has been

9 documented that Latinos are most disproportionately

10 effected by not only poor air quality, poor water quality,

11 but overall pollution in our state.

12 And we'd just like to urge the Board to

13 incorporate that language and we thank you for your time

14 today. Thank you.

15 CHAIRPERSON NICHOLS: Thank you for

16 participating.

17 Barbara Lee.

18 MS. LEE: Good morning, Madam Chair and members

19 of the Board.

20 My name is Barbara Lee. I'm the Air Pollution

21 Control Officer in Northern Sonoma County and also the

22 immediate past president of the Air Pollution Control

23 Officers Association.

24 I'm here with my colleagues who are standing

25 behind me on behalf of the CAPCOA to express our

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1 appreciation to this Board and especially to Mr. Goldstene

2 for your commitment to collaborative implementation of the

3 Scoping Plan.

4 For decades now, the air districts and ARB have

5 had a proud history of creating the most effective air

6 pollution control program in the world.

7 We are just as proud to be standing here in

8 support of you today as you embark on this historic effort

9 to reduce greenhouse gases. And we are committed to

10 giving you our practical support and dedicating resources

11 to the implementation effort.

12 Thank you for your willingness to reflect all of

13 this in your resolution language.

14 CHAIRPERSON NICHOLS: Thank you for coming out

15 enforce. It's quite a crew. And thank you for the

16 statement.

17 Sarah Skikne and then Vladimir Kogan and David

18 Bolland.

19 MS. SKIKNE: Hi. I'm Sarah Skikne with the

20 Climate Group.

21 Today, we hope you adopt a robust and ambitious

22 Scoping Plan to encourage the growth of California's

23 economy.

24 Just want to highlight three points from our

25 comments that we submitted as we move forward.

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1 One idea would be to -- in terms of revenue from

2 auctioned emission allowances to consider creating a

3 standing advisory committee. The stakeholders could set

4 the criteria and priorities for investment in allocation.

5 Secondly, we'd be happy to offer and modify the

6 content of our publication. It's the Business Guide to a

7 Low Carbon Economy in California. I know you're aware of

8 it. If ARB could use this as a tool for educating

9 businesses about how to reduce emissions, save money,

10 understand policy. If that's useful to you, please let us

11 know.

12 And third point is that we hope ARB will consider

13 encouraging participation by the state's IT sector. I

14 haven't seen much talk about this, but we think the IT

15 sector can both reduce their own emissions through data

16 center cooling and those types of solutions. But I think

17 more impressively help other sectors reduce emissions via

18 smart grid, smart buildings, teleconferencing and these

19 sorts of solution.

20 Our publications 2020 calculates these types of

21 solutions could globally enable reductions of 15 percent

22 of business as usual by 2020. So I think there is a lot

23 to be done there.

24 And we thank you for your consideration and your

25 work on this comprehensive plan.

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1 CHAIRPERSON NICHOLS: Thanks to the Climate Group

2 for all your help.

3 Vladimir Kogan, David Bolland, Tim Frank.

4 MR. KOGAN: Good morning, Madam Chair members of

5 the Board.

6 My name is Vladimir Kogan, Orange County

7 Sanitation District. We serve about three million

8 businesses and residents in Orange County. And treat 250

9 million gallons per day of waste water.

10 We have several sets of comments to you

11 separately and with our sister agencies. And I wouldn't

12 repeat what is included in them.

13 Just want to emphasize couple of point.

14 One, that all rules in the Scoping Plan should

15 include clear difference between biogenic and

16 anthropogenic gases. We use for majority of processes for

17 majority of our combustion sources biogenic gas, renewable

18 fuel, digester gas. And the Scoping Plan so far doesn't

19 make any difference between source gases. California

20 Climate Action Registry and international community

21 usually exclude digester gas in all their calculations.

22 And second one, we believe it's essential public

23 services, in particular waste water treatment facilities,

24 should be excluded in all kinds of Cap and Trade Program.

25 You see, we cannot guarantee any cap established will be

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1 met.

2 Now of course it's recession. But all together

3 population is growing. Waste water is also growing. So

4 we cannot always be sure our emissions will definitely go

5 down.

6 And we also would like to emphasize that more

7 effort should be made to include in the Scoping Plan and

8 corresponding rules for recycling. We are recycling major

9 part of our waste water now and will continue to do it in

10 the future.

11 And in conclusion, let me commend your staff.

12 And we will be working with your staff in developing of

13 corresponding rules. Thank you.

14 CHAIRPERSON NICHOLS: Thank you very much for

15 your participation.

16 David Bolland, Tim Frank, Peter Cooper.

17 MR. BOLLAND: Thank you, Chair Nichols, members

18 of the Board.

19 I'm David Bolland with the Association of

20 California Water Agencies. We represent 450 public water

21 agencies in California and deliver water to over 90

22 percent of the economy, both agricultural and urban.

23 We submitted written comments, and I'll only

24 highlight a couple of major points.

25 California water agencies are already taking many

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1 actions on adaptation that would reduce energy use, their

2 own energy use, to generate more renewable energy.

3 We have quite a number of efforts in the queue as

4 well as on the ground that substantially increase the

5 renewable energy portfolio of many of our water agencies.

6 We believe that the California water agencies can

7 make a substantial contribution to the expansion of

8 near-term renewable energy opportunities. But there are

9 several specific administrative and legislative barriers

10 that need to be removed. And there's no time right now to

11 get into the details on those, but we've identified those

12 in our comment letter. We would like to work with CARB

13 through the regulatory process to remove those barriers

14 and be an early asset to the State in terms of substantial

15 commitment to some renewable energy to displace our

16 current reliance on electricity specifically.

17 I want to thank CARB for the opportunity to speak

18 about another situation which is of real concern the water

19 agencies up and down the state, and that's the public

20 goods charge.

21 ACWA is fundamentally opposed to the public goods

22 charge on water, its member agencies as well.

23 Transferring the public goods charge from the California

24 Public Utilities Commission investor-owned utilities

25 regulatory structure to a State fee on public water

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1 agencies we believe is fundamentally unsound and

2 counterproductive to our investment in local sustainable

3 resource management.

4 Again, water agencies have direct authority to

5 make charges that are related to investments that they're

6 making at the local level on their customers. And we

7 believe this particular proposal is counterproductive and

8 potentially damaging to our ability to renewable energies.

9 I'd like to just for a moment read a little bit

10 of our comment letter.

11 ACWA does not believe the public goods charge is

12 warranted, especially given already significant

13 investments of water agencies and conservation programs

14 and reductions of greenhouse gases are being accomplished.

15 In fact, the public goods charge may well be

16 counterproductive. It's a redistributive component which

17 we believe will punish those agencies that have already

18 made significant conservation in water conservation and

19 stewardship efforts.

20 CHAIRPERSON NICHOLS: Dr. Bolland, your time is

21 up.

22 MR. BOLLAND: And we thank you.

23 CHAIRPERSON NICHOLS: Thank you.

24 Tim Frank, Peter Cooper, Lisa Wilcox.

25 MR. FRANK: Thank you very much. I'm Tim Frank

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1 representing the American Farm Land Trust.

2 I'd like to begin by thanking you for your hard

3 work on this. Clearly, it's a momentous time right now.

4 The document you've put on the floor is something that we

5 can all be proud of. And I think that it has been

6 substantially strengthened since November.

7 I represent a group that's interested in the

8 continued viability of agriculture in California. I'd

9 like to note that I seem to have some common ground with

10 the US military as well in that, you know, we both

11 represent -- we're interested in industries that really

12 depend upon a rural landscape that is unencumbered by the

13 expansion and encroachment of urban sprawl. And we think

14 the approach you've taken in embracing SB 375 in looking

15 at land use is the right one.

16 We appreciate the fact that you strengthened the

17 target to five million metric tons. We would essentially

18 support a higher target. As we note, this is a plan that

19 will evolve over time. We would like to see consideration

20 in the future of even more aggressive targets. But in any

21 case, we do appreciate the forward movement.

22 And finally I'd like to note that the

23 agricultural section of the document which now is sort of

24 formative in its approach. You know, you note there is a

25 good deal of research that needs to be done and a lot of

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1 work in developing the best management practices that will

2 help succeed. We'd like to work with you on that. We

3 think there's lots of opportunity for agriculture to

4 contribute, not so much as part of the problem, but as a

5 part of the solution. There is a lot that agriculture can

6 contribute. Thank you very much.

7 CHAIRPERSON NICHOLS: Thank you, Mr. Frank.

8 Peter Cooper.

9 MR. COOPER: Peter Cooper on behalf of the

10 California Labor Federation.

11 We support the direction that the Board is going,

12 and we support the comments by the Sierra Club in so far

13 as future deliberations need to take into account the

14 impact on the labor market and on job creation and the

15 creation of green jobs.

16 Our members have a lot at stake. We have over

17 two million members, and many of them are in high carbon

18 emitting industries.

19 On the flip side of that, we also have a lot of

20 members in communities that are disproportionately

21 impacted by pollution and carbon emissions.

22 And just a few sentences from the letter that we

23 submitted to the Board yesterday. We're at a momentous

24 time. We have a chance to be a model for the nation if we

25 have bold policy to mitigate climate change and also

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1 stimulate the economy.

2 The state's unemployment rate is the third

3 highest in the nation, currently losing 16,000 jobs a

4 month. The support of the labor movement going forward

5 rests in large part to the willingness of the ARB and

6 policymakers to address the economic concerns of working

7 families.

8 Critical policy decisions before the ARB must be

9 made in the best interest of California's working

10 families, economic stimulus, and equity. Thank you.

11 CHAIRPERSON NICHOLS: Thank you, Mr. Cooper.

12 I have five more names on my list. I'm going to

13 call you all to come forward, please. And when we

14 conclude that list, we're going to close the public

15 hearing. And then we're going to take a five-minute

16 break, and then we're going to come back for a

17 deliberation by the Board.

18 I have Lisa Cooper, Clayton Miller, Jesse

19 Marquez, Brent Newell, and James Duran. So if you could

20 all please come forward.

21 If you think you signed up and your name has not

22 appeared on the list, please come as well. Thanks. Okay.

23 Ms. Wilcox.

24 MS. WILCOX: Good morning, Chairwoman.

25 My name is Lisa Wilcox. I'm a student of the

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1 State of California community college system.

2 CHAIRPERSON NICHOLS: You need to put the mike

3 closer.

4 MS. WILCOX: I'd like to speak specifically to

5 the implementation of AB 32 as it addresses the

6 educational system.

7 I would suggest an inclusion of a time line for

8 the mandatory adoption of the statewide energy management

9 policy as it pertains to California and the community

10 college system and how that could translate to the entire

11 educational system of California.

12 CHAIRPERSON NICHOLS: Thank you.

13 Mr. Miller: Do we have Clayton Miller here? No.

14 Maybe he was on the other item.

15 Mr. Marquez.

16 MR. MARQUEZ: Good morning. My name is Jesse

17 Marquez, Executive Director of Coalition for Safe

18 Environment. We're an environmental justice organization

19 headquartered in Wilmington, a community in Los Angeles.

20 Where I come from, the port of Los Angeles is

21 located. The port is of Long Beach is our neighbor. Even

22 in your scoping plan refers to four oil refineries in

23 Wilmington. But what it left out was we have two

24 bordering us in Wilmington and in Carson. It also left

25 out seven petroleum industry bulk loading and distribution

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1 facilities and numerous other types of facilities that

2 release toxic emissions.

3 From our environmental perspective, what we have

4 done is taken a look at the AB 32 and gone through each

5 section of the law. And as we reviewed each section of

6 the law, try to find where did the Scoping Plan comply

7 with the law. And I'm sorry to say we cannot support the

8 Scoping Plan as it's written, because the Scoping Plan and

9 the law require specific things to be done.

10 Some of the areas that we feel that it has not

11 complied are in reductions. Reductions cannot be achieved

12 in our environmental justice community and other

13 low-income communities if there is a Cap and Trade

14 Program.

15 We've done the research. We've attended previous

16 hearings of ARB and other agencies regarding cap and

17 trade. And what we have learned from all these sessions

18 and the people you've invited in the past, what the

19 lessons learned is they've learned nothing from the

20 lessons. Cap and trade has been a failure worldwide. And

21 that is what stands out. And so we cannot support that in

22 any shape, way, or form.

23 We do support having a cap on emissions. We do

24 believe that there should be an auction. We do believe

25 there should be a limit on permits in order for reductions

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1 to be done.

2 We have great concerns because of the Scoping

3 Plan. It doesn't have any specific requirements for

4 monitoring and limiting emissions. Our organization took

5 a look at the South Coast AQMD oil refineries in

6 Wilmington. And after looking at the last six years of

7 the annual emissions report and we found out that certain

8 categories of criteria pollutants have actually increased

9 every year in the last six years.

10 So where has been the monitoring? Where has been

11 the Notices of Violations and Notice of Compliance

12 Violations?

13 CHAIRPERSON NICHOLS: Mr. Marquez, your time is

14 up.

15 MR. MARQUEZ: We have submitted written comment

16 yesterday and we submitted more today with attachments.

17 CHAIRPERSON NICHOLS: We do have your comments.

18 Mr. Newell.

19 MR. NEWELL: Good morning, Madam Chair, members

20 of the Board.

21 Brent Newell, the legal director for the Center

22 on Race, Poverty, and the environment. We submitted a

23 comment letter yesterday and also submitted the attached

24 documents.

25 I want to touch on two points, one of which I

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1 made during the last hearing, which is the Scoping Plan's

2 failure to regulate agriculture. Agriculture represents a

3 significant fraction of the state's GHG inventory.

4 I want to comment specifically on the CEQA

5 document's failure to analyze this exemption. What

6 consequences does exempting agriculture have on public

7 health and the environment, specifically to San Joaquin

8 Valley communities.

9 Likewise, there's no alternative analysis of

10 including agriculture as part of the plan and what those

11 benefits would be to public health and the environment and

12 what impacts would have from including agriculture.

13 So with that being said, I want to reiterate that

14 the groups that have signed onto our comment letter are

15 strongly opposed to a Cap and Trade Program, because it

16 will fail and it will disproportionately impact low income

17 and communities of color in California.

18 Thank you.

19 CHAIRPERSON NICHOLS: Thank you, Mr. Newell.

20 Mr. Duran.

21 MR. DURAN: Hello. My name is James Duran, Chair

22 of the Legislative Affairs Committee of the California

23 Hispanic Chambers of Commerce.

24 The Hispanic Chambers repeatedly voiced its

25 concerns about the cost of AB 32 Scoping Plan, especially

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1 to minority businesses and low income families and

2 communities.

3 The last time I appeared before this Board to

4 talk about those concerns, I was told my information was

5 based on unreliable sources not credible to this body.

6 That was less than a month ago. Since then, the State's

7 nonpartisan Legislative Analyst's Office, as well as peer

8 reviewers, the Pew Center on Global Climate Change,

9 Resources for the Future, the UCLA Institute for the

10 Environment have all raised similar concerns with very

11 compelling arguments.

12 They conclude the Scoping Plan is based on flawed

13 assumptions and severely understates the cost associated

14 with AB 32 implementation. They observe that because the

15 plan fails to quantify the near and mid-term cost of the

16 plan, which are expected to run into the billions, the

17 plan's assertion there will be no net cost is meaningless.

18 In other words, this plan is an economic train

19 wreck waiting to happen. Up until now, that train wreck

20 has existed on paper. If you approve this plan as

21 presented, it will play out in every life and business in

22 California. Most severely in the lives least able to

23 afford it, our minority-owned companies and low income

24 families.

25 The Hispanic Chambers consistently supported the

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1 goals of AB 32 but raised logical, reasonable questions

2 about the cost of implementation. With the report of the

3 LAO and peer reviewers, we are more convinced than ever

4 that more work is needed to arrive at a plan that will

5 maximize financial hardship while minimizing the emission

6 reductions goal of the legislation.

7 AB 32 implementation will require what could be

8 the most enormous investment ever imposed by a policy

9 initiative.

10 The Hispanic Chambers of Commerce urge you to

11 postpone approval of this plan and to invest the time and

12 effort necessary to protect that investment for

13 California's economy and environment.

14 Thank you.

15 CHAIRPERSON NICHOLS: Thank you, Mr. Duran.

16 Thank you for sticking to the time limit.

17 Ms. Holmes-Gen.

18 MS. HOLMES-GEN: Thank you, Chairman Nichols and

19 members.

20 Bonnie Homes-Gen with the American Lung

21 Association of California.

22 We greatly appreciate the strengthening

23 improvements you're suggesting in the resolution, and we

24 applaud your work on the Scoping Plan.

25 And I just wanted to make a comment on the public

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1 health language that you're proposing for the resolution.

2 We would very much like to see you begin a process that is

3 a very formal high level process for engaging public

4 health agencies and other public health experts. And I

5 know you've indicated here that you're going to establish

6 a working group. And I'm just concerned that could be an

7 internal process that might get buried.

8 So I would encourage you to establish a formal

9 advisory committee or indicate your intent to make this a

10 very formal high level process.

11 And I would encourage you to include

12 representatives of health organizations on this working

13 group, this Advisory Committee. I applaud you for

14 including Department of Public Health, OEHHA, local

15 agencies. But we really do need to have the input of

16 experts also from the broader public health community,

17 including organizations and probably some academic

18 experts.

19 And I also wanted to remind you that some of the

20 agencies and groups that need to be involved in this

21 effort are going to have some challenges in terms of the

22 resources to be involved.

23 So I urge you to recognize your intent to partner

24 with especially agencies that need to be involved public

25 health to make sure that they have the resources they need

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1 to effectively engage.

2 And I also wanted to agree with former speaker

3 here Amy Kyle that this public health process should

4 carefully look not just at individual measures, but at the

5 mix of measures to advise where we can maximize public

6 health benefits and what the opportunities are to make the

7 best progress for public health across the realm of

8 measures that are under review.

9 So thank you so much for the opportunity to

10 comment. And we applaud your work. And we plan to work

11 very closely with you in the implementation of the plan.

12 CHAIRPERSON NICHOLS: Thank you very much.

13 I see people who seem to think they are on the

14 list to testify, although I don't have any more names on

15 my list. If you're standing there, come forward right

16 now. Both of you.

17 MR. JOHNSTON: I did fill out a blue card.

18 CHAIRPERSON NICHOLS: Sorry?

19 MR. JOHNSTON: I did fill out a card. It got

20 lost I guess. Sorry. Excuse me.

21 Good morning. My name is Bob Johnston, Professor

22 at U.C. Davis.

23 I wish to argue that a higher target for the

24 local land use planning item is warranted.

25 First, the Scoping Plan relies primarily on

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1 pricing measures as its major policies. Therefore, I

2 believe it's fair to expect local governments to do the

3 same and implement pricing measures such as parking

4 charges at the workplace and indirect source review in

5 their programs.

6 My research shows such policies greatly reduce

7 VMT, and I believe they are technically feasible to use

8 the language in your statute.

9 Second, economic effects of sustainable growth

10 are positive. Urban growth boundaries, transit

11 investment, and these pricing measures for parking and

12 sprawl reduce overall transport costs about a dollar per

13 person per day in the several regional modeling studies

14 that I've done in California. So it's cost effective

15 again using the terminology from your statute.

16 Third, transit in California has proven to be

17 politically very popular. On November 4th, four large

18 transit bond issues were passed in northern and southern

19 California. The three local issues passed by two-thirds

20 votes, a strenuous requirement. I believe there is strong

21 support for transit and compact growth all over the state.

22 And last, the higher target somewhere around as I

23 said in November eight to ten million tons would create an

24 appropriate and it's now I see an advisory floor under the

25 SB 375 RTAC process. But I think there's importance in

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1 setting that higher target.

2 CHAIRPERSON NICHOLS: Professor Johnston, you've

3 used up your time.

4 MR. JOHNSTON: Thank you for your patients.

5 CHAIRPERSON NICHOLS: Thank you. Okay.

6 MR. MILLER: Good morning, Chairman Nichols and

7 members of the Board.

8 My name is Clayton Miller, and I'm here this

9 morning representing the Building Industry Association of

10 Southern California, which is a member of the Construction

11 Industry Air Quality Coalition, CIAQC.

12 My comment is short and specific. But what I

13 wanted to say is that we wanted to express our strong

14 concern about the proposed recommendation within the

15 Scoping Plan to target a reduction of five million metric

16 tons annually of greenhouse gas reductions from regional

17 transportation related targets.

18 And specifically, it's our understanding that the

19 Board has been asked by some to increase that target

20 number up and potentially pretty significantly now we

21 strongly urge and respectfully urge the Board not to

22 increase the transportation related targets any further.

23 We question whether there is sufficient

24 scientific information to support quantifying greenhouse

25 gas reductions from passenger vehicles and at the proposed

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1 five million metric ton level. And we do not know of any

2 credible scientific evidence that would indicate that

3 larger reductions are reasonably achievable without

4 causing dislocations and extreme economic hardship.

5 So appreciate the opportunity and thank you for

6 your consideration.

7 CHAIRPERSON NICHOLS: Thank you, Mr. Miller. I'm

8 sorry we overlooked you. Your name fell off of a list I

9 think. Thanks for coming.

10 Finally, before we take a brief break, I want to

11 recognize my colleague and partner who has been doing

12 great work on our behalf with the Western Climate

13 Initiative and elsewhere, Eileen Tutt from Cal/EPA.

14 Usually we have public agency officials at the beginning,

15 but this time we're wrapping up instead.

16 MS. TUTT: Thank you, Madam Chair and members of

17 the Board.

18 My name is Eileen Tutt with Cal/EPA. I'm here

19 today on behalf of Secretary Adams in strong support of

20 the draft Scoping Plan. Among many other things that this

21 plan does, it does set us on a path to energy

22 independence. It reduces our reliance on oil, provides

23 clean renewable energy, gives California and many other

24 states the clean cars they want and are demanding, reduces

25 waste, and increases recycling.

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1 As you may know, Secretary Adams Chairs the

2 Climate Action Team. And I just want to acknowledge the

3 Air Resources Board staff in particular because they

4 worked so collaboratively with the other members of the

5 Climate Action Team. And that's clearly reflected in this

6 plan, which is both broad and comprehensive across all

7 state government and local government.

8 Still, it is a plan, and it's a living document.

9 And I'm here today to say that we at Cal/EPA and the

10 Climate Action Team stand ready to work with the Air

11 Resources Board as we implement the measures in this plan

12 that we all know are needed to protect California and in

13 fact the world.

14 I just want to say the world is watching what

15 you're doing here today. Secretary Adams is in Poland at

16 the United Nations Climate Conference, and all their

17 representatives there are from other nations, from states

18 and provinces around the world. And the international

19 community is literally thirsting for the results of your

20 decision on the Scoping Plan today. They recognize that

21 California is a leader on the environment in the world.

22 With that, I just want to thank you. And I

23 really especially want to thank the staff for your time

24 and attention.

25 CHAIRPERSON NICHOLS: Thank you very much. We

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1 will recess and come back at exactly quarter to 12:00.

2 And then we'll turn to Board discussion on the resolution

3 and the plan. Thank you.

4 (Thereupon a recess was taken.)

5 CHAIRPERSON NICHOLS: The first thing I need to

6 do is indicate the public hearing is closed. I was going

7 to do it, but I didn't. Now I have. But now I want to

8 move to discussion at this point.

9 As I indicated at the beginning there have about

10 been a number of big areas that have been identified. And

11 I think the testimony that we heard pretty much indicated

12 who they are. Themes we've been hearing over and over

13 again throughout this process, but they've kind of

14 distilled themselves down to a major issues. And after we

15 ask staff any questions about the items, then I think

16 we'll call for a vote on the plan as a whole.

17 So the first item that I wanted to raise with

18 staff -- these are not in any particular order, certainly

19 not in order of importance -- is the role of the local air

20 district. We've certainly heard from the districts that

21 they wanted to be our partners. We understand they've got

22 a lot of expertise and the ability to play a role in the

23 implementation of AB 32. And frankly we need their

24 resources, because they have a lot of trained and good

25 people out there in the communities where many of the

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1 sectors that we're dealing with are.

2 And I think the Board indicated at the last

3 meeting a lot of sympathy for that viewpoint. Obviously,

4 several of our Board members are here because they serve

5 on the local boards. But I think all of us understand

6 there are measures that we're going to be developing where

7 the districts not only can help with enforcement and data

8 collection and so forth, but where they can actually help

9 develop the rules.

10 On the other hand, there are other things. And I

11 would argue that the development of any type of a cap and

12 trading system is one where to do it at anything less than

13 the statewide level would be a mistake. It would lead to

14 chaos.

15 So I'd like to ask our Executive Officer to

16 respond to how the staff has dealt with that.

17 EXECUTIVE OFFICER GOLDSTENE: Thank you, Chairman

18 Nichols.

19 As you heard in the testimony this morning, the

20 draft resolution before you acknowledges the role of

21 districts and makes a commitment to the districts to

22 develop a work plan to identify the specific regulations

23 and the specific roles the air districts will have in

24 helping implement AB 32.

25 We acknowledge the importance to make sure that

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1 any work that's done by the districts for the

2 implementation is paid for through revenues yet to be

3 identified. But we make that commitment to make sure that

4 the costs for implementation are covered.

5 We offered in discussions with them to provide a

6 free verifier training to the district staff so they can

7 act as verifiers. And we've committed to work with them

8 to develop a software tool to allow the export of

9 greenhouse gas emissions data to the districts. This data

10 would be reported to us under our mandatory reporting

11 rules.

12 And as Chairman Nichols just mentioned, we

13 emphasize in the draft resolution the statewide

14 consistency in several areas is very important to avoid

15 any confusion and for program efficiency.

16 CHAIRPERSON NICHOLS: And with respect to the

17 issue of revenues, because I know there is at least one

18 district that already has a fee that's addressing

19 emissions. How are you planning to work on that?

20 EXECUTIVE OFFICER GOLDSTENE: That's the Bay Air

21 District. They recently imposed a carbon fee. And when

22 they did that, they did make commitments to us that as we

23 move forward on the development of any fees that we have

24 under AB 32, they would take a look to see if they needed

25 that fee anymore and would consider repealing it again to

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1 avoid duplication and confusion.

2 CHAIRPERSON NICHOLS: Any additional comments

3 from Board members on that or the district role issue?

4 Mr. Loveridge.

5 BOARD MEMBER LOVERIDGE: It's been a good

6 discussion. And I think local districts have an important

7 role in this implementation process.

8 CHAIRPERSON NICHOLS: Okay. Ms. Berg.

9 BOARD MEMBER BERG: Thank you.

10 I think I was also very vocal about the roles of

11 the districts, and I appreciate this language.

12 I would also like to encourage, however, from a

13 business perspective that the districts would -- ARB and

14 the districts would be very mindful of duplication,

15 whether it's duplicate fees, duplicate CEQA levels,

16 standards, so that one of the business concerns is trying

17 to work amongst all these different districts and with the

18 State. So I would like us to be very mindful of that as

19 we move forward.

20 Thank you.

21 CHAIRPERSON NICHOLS: All right. Thank you.

22 Perhaps one of the biggest issues that we've

23 heard addressed is the issue of public health coming from

24 the public health organizations like the Lung Association,

25 but also I think it's reflected in the comments that we've

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1 heard from environmental justice groups and the Advisory

2 Committee and also from the business community. There is

3 this concern that although public health is explicitly

4 mentioned in AB 32, there's some concern about whether

5 it's a primary objective, whether it's a part of our

6 normal or our traditional air pollution control programs

7 and just generally how it fits. How our greenhouse gas

8 work fits within the context of our ongoing work on public

9 health. And I think there has been a lot of testimony in

10 favor of the idea that there should be a more formal role

11 for the public health community. I know there was a

12 proposal in the draft for a task force. But we have to

13 flush that out of course.

14 There's also been focus on the need to develop

15 better tools, methodologies, for identifying communities

16 that are adversely affected or disproportionately

17 affected, because we are all adversely affected by air

18 pollution. But there are some areas that are exposed to

19 higher concentrations than others and are oftentimes less

20 able to access resources to deal with those and a desire

21 to see us improve our ability to identify those

22 communities. And then help devise strategies to make sure

23 that AB 32 not only doesn't have a negative impact, but if

24 at all possible actually is working to benefit.

25 And we have identified I think already in the

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1 plan some ways in which we think implementing AB 32 is

2 going to have a beneficial effect on public health. But

3 there are many more questions that continue to come up in

4 this area.

5 So Mr. Goldstene, do you want to take that one

6 on?

7 EXECUTIVE OFFICER GOLDSTENE: Sure. I'll ask

8 Lynn Terry, Deputy Executive to respond to the public

9 health area in more detail.

10 DEPUTY EXECUTIVE OFFICER TERRY: Yes. There was

11 good discussion of the key elements of the proposed

12 resolution language. Bonnie Homes mentioned the working

13 group. And we certainly would see that as a high level

14 group with a lot of expertise with various agencies and

15 organizations.

16 Secondly, beyond the working group, we want to

17 establish a strong working relationship with the public

18 health organizations on an ongoing basis, keep them

19 updated on what we're doing. There's issues of resources

20 for other agencies working on the adaptation issues. We

21 think there's a lot of that local government public health

22 agencies can do on the ground. And we see ourselves at

23 the beginning of that relationship.

24 As well, the technical aspects of looking at our

25 regulation going forward, we've made two specific

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1 commitments. One is to look at the -- to develop

2 methodologies to look at cumulative impacts of regulations

3 that will be developed to implement the Scoping Plan.

4 And then secondarily, AB 32 does require us to

5 look at the issue of cumulative impacts before adopting

6 market measures. And as we talked about in staff

7 presentation last meeting, is that we do intend to use

8 available methods that are out there to identify

9 communities most adversely impacted. And those are sort

10 of the key elements of our work plan going forward.

11 But I would just have to add that from the

12 standpoint of working on our SIPS and meeting our air

13 quality standards, that we certainly in the planning

14 office see huge a opportunity to look at the benefits of

15 this plan with respect to our long-term public health

16 goals, new tighter ambient area quality standards that we

17 will be challenged to meet in the 2020 and beyond time

18 frame, the 2030 time frame for the new ozone standard.

19 So we really see this as an opportunity to

20 integrate these programs and emphasize the public health

21 benefits.

22 CHAIRPERSON NICHOLS: Other questions or comments

23 from Board members? I'm looking down.

24 Dr. Balmes.

25 BOARD MEMBER BALMES: Thank you.

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1 So I have a specific question first.

2 So a working group. Could you educate me on what

3 the exact bureaucratic meaning of that? Because Bonnie

4 Holmes-Gen from the Lung Association was clearly making a

5 plea for voluntary health organizations like hers and

6 others to be included in the public health dialogue about

7 implementation of AB 32. And the working group language

8 in the proposed resolution sounds like it's just confined

9 to State departments and local public health agencies.

10 DEPUTY EXECUTIVE OFFICER TERRY: Well, actually I

11 didn't notice that. And from my standpoint, I think we

12 would have intended to include public health organizations

13 within that structure that it's an obvious communication

14 mechanism. We used a working group as just a convenient

15 terminology.

16 BOARD MEMBER BALMES: And then another specific

17 point. It doesn't need to be in the language. But in the

18 California Department of Public Health, there is an

19 ongoing effort to track the health effects of climate

20 change, specific unit of the Department of Public Health.

21 I can give you details.

22 But that's a unit that's been working without

23 resources -- internal State resources. They're externally

24 funded by the CDC to do this work. And that's a specific

25 area that I think would help us down the road if we had

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1 ongoing data being collected about the health effects of

2 climate change in a systematic fashion.

3 DEPUTY EXECUTIVE OFFICER TERRY: Just a comment.

4 I think you've identified a great agenda item for the

5 first meeting of the working group.

6 BOARD MEMBER BALMES: But I would like to applaud

7 the staff for heeding comments from me and others about

8 increasing the role of public health in the dialogue about

9 implementation of AB 32.

10 CHAIRPERSON NICHOLS: Are there other comments?

11 BOARD MEMBER BALMES: Yes. I also would like to

12 applaud the staff about the cumulative impacts language

13 that's been added.

14 CHAIRPERSON NICHOLS: Great. Okay. Moving right

15 along here, the next item that was on the list that I had

16 was the land use issue. And we heard a lot of testimony

17 for a higher number. We heard some testimony for a lower

18 number. We heard testimony that we probably got it about

19 right, or even if we hadn't, that we should just leave it

20 where it is. And in addition to that, quite a bit of

21 discussion really about how to go about setting the land

22 use target, taking advantage of SB 357.

23 So why don't we hear from the staff about how you

24 intend to move forward, assuming that we adopt the plan

25 and resolution as they are, what you're trying to do here

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1 with this resolution and how you feel that responds to the

2 comments that we've received.

3 DEPUTY EXECUTIVE OFFICER TERRY: Yes. I they'll

4 briefly highlight the approach we took in the resolution.

5 The Chairman clearly outlined the major issue,

6 which is should the number be increased now or should the

7 SB 375 process proceed before changes to that target are

8 made?

9 And then a third tier that we heard last time as

10 well was not to put as much focus on the number, per se,

11 but perhaps to look more broadly at the goals of setting a

12 target with respect to the actual land use patterns that

13 would be improving, the enhanced mobility options, the

14 congestion pricing, market mechanisms. And so on the

15 ground, it was difficult for staff to really make a

16 recommendation that was more explicit. The complexities

17 of the accounting and the interrelationship between all of

18 those strategies within regions and the overlay of the low

19 carbon fuel standard benefits and vehicle technologies.

20 So as staff, our proposal is to use the RTAC

21 process to really come to grips with many of those

22 technical issues. We will have participation of different

23 regions. We will have participation of various experts.

24 And so as staff, we think that will be very valuable

25 exercise to have recommendations from the RTAC within

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1 nine months. That would September of 2009.

2 And then that will give us until June of 2010 as

3 staff to come back with proposed recommendations for each

4 of the regions with respect to regional targets. And then

5 the Board of course will make the ultimate decision.

6 So that was how we designed the resolution with

7 that process in mind. But we also thought it was

8 important to propose some very specific policy statements

9 for the Board to consider. Number one, to be clear that

10 five is not -- is not the Board's intent to suggest that

11 the five is the maximum achievable target, but that the

12 process play itself out and reserve judgment on that

13 point.

14 CHAIRPERSON NICHOLS: I've just been sent a note

15 that people are having trouble hearing and you and I guess

16 all of us. We probably all need to talk right into our

17 microphones. But if there is a way to turn up the sound

18 system a little bit, that would be appreciated by some in

19 the audience.

20 DEPUTY EXECUTIVE OFFICER TERRY: Actually, I

21 think I've hit the high points, and I'll leave it to Board

22 questions at this point.

23 EXECUTIVE OFFICER GOLDSTENE: I'd like to add

24 just one more point, which is that in January we're going

25 to bring a slate of names before you for approval, which

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1 will be the RTAC Committee membership which will be

2 composed of NPOs, air districts. The counties and cities

3 have representatives. This is all spelled out in SB 375.

4 So that will begin the process in January to develop the

5 methodology to assess the regional targets.

6 CHAIRPERSON NICHOLS: I think we're all inpatient

7 to get going and also just concerned by the comments that

8 people feel that we may not have been sufficiently brave

9 or sufficiently ambitious.

10 At the same time, we've heard loud and clear that

11 375 was a major step forward for a lot of folks in this

12 state and a lot of stakeholders. And they just can't see

13 that anything could be done beyond the process that's laid

14 out in 375 without jeopardizing all the good will that was

15 created during that process.

16 And I think we're walking a line here, but I

17 think I'm not going to try to speak for everybody on the

18 Board, because I think others want to speak on this issue.

19 But my sense is that we have to find a way as the

20 ARB, while recognizing that we are not the land use and

21 transportation planning agency of the State, to be clear

22 and to be forthright about what we think is needed, not

23 necessarily what we know about what can be done. Because

24 again this is not our primary area of expertise. But I

25 think we do know a lot about what has to happen if we're

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1 going to not just make it to 2020, but make it to our 2050

2 goal and get on target in the right time frame.

3 So with that, I would be happy to recognize

4 fellow Board members. I'll start with Professor Sperling.

5 BOARD MEMBER SPERLING: Thank you very much.

6 First, I'd like to start out providing a little

7 more context to this. And that is that, you know, it is

8 kind of unusual to have so much attention placed on one

9 measure that, you know, if you look at the amount involved

10 and how much reduction we're talking about is really

11 almost a trivial amount of the total. So many people

12 would question why so much attention.

13 And I want to say there is good reason for this

14 attention to land use and vehicle travel. And that is

15 because there's so much frustration that's been growing

16 over the years about sprawl and about the desire to create

17 better communities. There is actually a David Brook, not

18 known as one of the more liberal commentators wrote a

19 column about a week ago or few days ago, talking about how

20 there had been overshoot after World War II with people

21 moving out of the cities.

22 So I think there is this general sense that we

23 can make our cities and communities much better in an

24 environmental sense and in an economic sense, in a social

25 sense.

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1 And as Chairman Nichols said earlier, there's

2 been many failed efforts at managing our cities and our

3 transportation systems, smart growth and transportation

4 demand management, transportation control measures, you

5 know, the litany goes on.

6 And so many people are looking to what we're

7 doing here, because now we've got a legal mechanism and an

8 institutional structure to actually make progress on

9 improving our cities, making them better communities,

10 making them more sustainable, making them more livable.

11 So what we're doing here, we are not going to

12 accomplish much by 2015 or even 2020 in terms what of we

13 do here. But we're setting in place a process and a

14 direction. Because everything we're talking about here is

15 not really necessarily 2020 we're talking about. We're

16 talking about much bigger changes thereafter. What Kathy

17 Reheis-Boyd from Western States Petroleum said, we're

18 moving toward a low carbon economy and society. That's

19 what we're doing here.

20 So I want to emphasize how important this really

21 is and the fact that everyone from across the country and

22 even in Europe and elsewhere is looking towards us to kind

23 of blaze this path, start this process, and figure out how

24 to make progress. So what we're doing here is breathing

25 life in a movement and a movement that's been expanding

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1 and is widely held.

2 And so I support the resolution. I think, you

3 know, I'd like to read some of the words from it, because

4 what I've learned here is that it's good for everyone to

5 be clear on what we're actually saying. Learned it in one

6 case the hard way as some people know.

7 And that is it says that this, "Regional Targets

8 Advisory Committee should recommend a method to evaluate

9 the full potential for reducing greenhouse gases in each

10 major region of the state and statewide using improved

11 land use patterns, indirect source reviews, enhanced bike,

12 walking, and transit infrastructure, and pricing policies

13 where applicable."

14 And so what we're talking about here is working

15 with the regions and figuring out what really is possible,

16 what would be effective. And the resolution goes on and

17 says it's the Board's intent that the greenhouse gas

18 emissions reductions associated with SB 375 regional

19 targets represent the most ambitious achievable targets.

20 The estimated reduction in the Scoping Plan will be

21 adjusted to reflect the outcome of the Board's decision on

22 SB 375 targets.

23 So what we're talking about is this idea of a

24 living process, a living document, working with the

25 regions to see what makes sense, but being aspirational

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1 about it, not being someone I think who -- as Mr. McKeever

2 said, don't make the targets so low it makes the whole

3 CEQA process and the other parts of SB 375 meaningless or

4 even negative.

5 So I'm endorsing. I think this is great what the

6 staff and others have worked out here in terms of this

7 resolution. And I fully support it.

8 CHAIRPERSON NICHOLS: Thank you.

9 Ms. D'Adamo.

10 BOARD MEMBER D'ADAMO: Well, thank you, Professor

11 Sperling for reading the resolution, because I had those

12 sections underlined and I was planning on reading them

13 into the record as well.

14 I would just like to start by saying that I have

15 made many comments about the need for us to find some

16 mechanism or some hook on the land use issue, because I

17 have been frustrated and I know many have that something

18 needs to be done, although recognizing as the Chairman has

19 so eloquently stated that we are not the land use planning

20 agency.

21 So my main concern into going into this process

22 is to make sure that we get it right. I am one that has

23 spoken out at many previous hearings that I think the

24 number needs to be increased. I still believe that the

25 number needs to be increased. But I had hoped that in the

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1 interim since our last hearing that staff would be able to

2 provide us with some information so as to put us in a

3 better position to be able to make the decision about

4 exactly what that number should be.

5 Unfortunately, staff was not able to do that.

6 And I do want to compliment staff for being honest. This

7 is too important for us to just throw a number out. And

8 so staff I believe worked very hard in the last weeks and

9 was not able to come up with a methodology that we could

10 rely on at the Board level. So I do appreciate the

11 difficulty here.

12 But having said that, what I'm very optimistic

13 about in this resolution is that there is a process to go

14 forward and to identify the methodology. And I fully

15 expect and will be continuing to put pressure on that

16 process as we go forward that we obtain the information,

17 the methodology, and that we will eventually have the

18 information that we need to push for a higher target.

19 September 2009 is right around the corner. So this is the

20 beginning. It's not the end. And I look forward to

21 working with those that know more about this issue than I

22 do.

23 CHAIRPERSON NICHOLS: Thank you.

24 Supervisor Roberts.

25 BOARD MEMBER ROBERTS: Thank you, Madam

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1 Chairwoman.

2 I think this issue has been a great concern to a

3 lot of people. And I've been hearing from a lot of them.

4 I heard from people who had read so much into this that

5 was really disinformation as opposed to solid information.

6 But the thing that's impressed me from the very start is

7 the willingness throughout virtually all of the areas that

8 have come in contact with people in local government, the

9 willingness to want to do something and want to

10 contribute.

11 We have done quite a bit of analytical work in

12 San Diego. And I would tell you to try to set some

13 reasonable percentage of what this over all goal is based

14 on the five million metric tons, I can tell you

15 unequivocally that that is going to be a very difficult

16 target to reach.

17 To flippantly say it has to be more, I'm all for

18 process of analysis and based on some real science as to

19 what is attainable and what that number should be. But I

20 wouldn't support for one minute raising that number in the

21 absence of somebody showing us.

22 I've worked with our planning agency and our NPO

23 and our Air Board. And we are projecting some very

24 drastic measures that are going to be needed to be able to

25 reach these goals. And 2020 I think is going to be

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1 doable. As you start to go beyond 2020, it's going to

2 become extremely difficult in some respects.

3 That's not to say that we shouldn't do it. I'm

4 very comfortable with establishing that as a goal with a

5 very science-based process of considering what any changes

6 should be and what the implications are of those changes.

7 Not just the aspirations. We've always looked at sort of

8 what's the realm of the possible here, too. We want to

9 have something that's attainable.

10 And you have the benefit of local communities

11 right across the board that want to work with you,

12 counties and cities. I haven't heard anybody that is --

13 there's probably somebody out there. But there is a

14 willingness to cooperate. And to me, that bodes well for

15 the success of this. But I wouldn't just wouldn't dismiss

16 it lightly and arbitrarily come up with numbers.

17 So I'm looking forward to the process. And the

18 process may be that that number may already be too high,

19 because we don't know that. And based on our own analysis

20 and tell you it's going to be difficult getting there.

21 CHAIRPERSON NICHOLS: Mayor Loveridge.

22 BOARD MEMBER LOVERIDGE: Let me make my final

23 comment and include focus on land use. Just some

24 observations, kudos, a comment, and then a conclusion.

25 My own judgment, this is the most complex and

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1 comprehensive and important policy initiative in the state

2 of California. I think I would argue that at any forum.

3 What we're doing here today is not just another vote. It

4 is considered a defining vote.

5 Struck by the 42,000 comments. The best of staff

6 work. I think the staff was tested by an incredible look

7 at the pile, incredible number of stakeholders. This is

8 not something that was done in the dark of night. This

9 had an intense public scrutiny. And would acknowledge as

10 we have the good role of staff, the importance of

11 stakeholders. But I did want to also acknowledge our

12 Chair, who I think has been essential to bring the kind of

13 conclusion that we'll be shortly voting on.

14 Second, just a comment on land use. And I like

15 to shift the focus as many of the speakers did from local

16 government. There's a lot of legislation passed in

17 Sacramento and we get kind of immune to the numbers.

18 SB 375 is not just another piece of legislation.

19 It was seen as one of the most dramatic, important,

20 extraordinary pieces of legislation that's been passed by

21 State Legislators. Comparatively as well as in

22 California.

23 Its author is the head of the pro tem of the

24 Senate. He's going to be there, as I understand, at least

25 his colleagues let him another six years. He is going to

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1 be closely following this SB 375 and what happens to it.

2 And so I think the institutional placement of this is

3 important. It's not simply with ARB. It is with the

4 Legislature and with the regions and cities and counties

5 across the state.

6 I think the words we've been using -- if you look

7 at the Scoping Plan, it says local government is an

8 essential partner. And I think that's what we're doing

9 with 375, is seeing local government as an essential

10 partner. And you heard that in the words of Ken Cooley

11 who was representing the League of California Cities and

12 Diane Dillon representing the CSAC and Linda Parks who's

13 representing the largest metropolitan region in

14 California.

15 I guess we all know that in a policy process

16 there's formulation, adoption, and then implementation.

17 So this is not the end, but really the start as we take

18 this framework that we're adopting and look to make it

19 happen.

20 It's not perfect, but one doesn't want perfect to

21 stand in the way of good. I think by almost everybody's

22 judgment, this is an extraordinarily good document.

23 And finally at least as a Professor let me close

24 by reading what the final paragraph in Thomas Friedman's

25 book. Friedman's a columnist for the New York Time, three

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1 times Pulitzer prize winner, author "The World is Flat"

2 and others. He has access to the best and brightest in

3 the world. This is his conclusion to his book called,

4 "Hot, Flat, and Crowded: Why We Need a Green Revolution

5 and How It Can Renew America."

6 "We need to redefine green and rediscover

7 America. And in doing so, rediscover ourselves and what

8 it means to be Americans. We are all pilgrims again. We

9 are all sailing on the Mayflower new. We have not been to

10 the shore before. We fail to recognize that we will

11 become one more endangered species. As we rise to this

12 challenge and become regeneration, redefining green,

13 rediscovering, reviving and regenerating America, we, the

14 world, will not only survive, but thrive in an age that is

15 hot, flat, and crowded."

16 And seems to me what we're doing today is an

17 important start to that direction.

18 CHAIRPERSON NICHOLS: Thank you for that.

19 Dr. Balmes.

20 BOARD MEMBER BALMES: For of all, I'd like to

21 echo first the comments of Dr. Sperling and sort of

22 framing the issue in reading the specific language.

23 Because I think the specific language commits the Board to

24 an ongoing review of the targets. And I think that's

25 critical. We have to adjust them up or down. I hope up.

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1 Depending on the data that we generate.

2 And I think it was Dr. Telles who said he was an

3 evidence-based kind of guy at the last meeting. And I'm

4 as well.

5 So I welcome any mechanism or process that we put

6 in place that will generate data that help us make

7 informed decisions.

8 And I'd like to also echo the concerns that have

9 been expressed by Supervisor Roberts and Mayor Loveridge

10 about making sure that this is a collaborative process

11 with local government, because it's not going to work

12 unless we approach it that way.

13 And so I'd like to say I'm in support of the

14 proposed resolution.

15 CHAIRPERSON NICHOLS: Did you want to add another

16 comment?

17 BOARD MEMBER ROBERTS: Yeah. Just as a footnote,

18 I mentioned something at the last meeting, and I think

19 it's important to bring it up again. And it's kind of the

20 800 pound gorilla that hasn't come up today.

21 One of the things that was so clear on our

22 analysis is the role that public transit is going to have

23 to play. I said we live in a little bit of a

24 schizophrenic state right now and we are cutting public

25 transit. And I don't know a public transit agency in this

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1 state is not reeling. At the same time, as we're setting

2 up mechanisms to put a greater obligation, the land use,

3 the smart growth, no matter what you look at, you're going

4 to find at the center of that is going to be a mandate for

5 a public transit systems that are far better than anything

6 that we have today. And somehow in terms of other

7 policies in the state that's not been acknowledged.

8 You can't say that local government including the

9 transit agencies are going to be partners and then heap an

10 unsustainable requirement on them. And somehow I think

11 there needs to be a wake-up call. I'm not going to point

12 any fingers at any particular people.

13 But it just seems to me that there are things

14 that we at the local level experience and know and things

15 that we have seen have been ignored. And things that if

16 they are continuing, there is not a region in this state

17 that will be able to make anything like the numbers that

18 you're discussing today unless there is a fundamental

19 change and there is a far different perspective regarding

20 issues of public transit. So I don't know who I'm

21 addressing that to.

22 CHAIRPERSON NICHOLS: Well, I'm taking it as a

23 segue -- invitation to segue into the last item on the

24 agenda. It's really two related items in my view. One is

25 the cap and trade itself and then the other is the

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1 economic analysis that looked at the effects of the plan

2 as a whole and where we go from here with further economic

3 reviews of the plans.

4 So maybe starting a little bit more narrowly

5 although it's of critical importance, the Board previously

6 when we looked at the draft and moved to the proposal I

7 think felt comfortable that if you're looking at a policy

8 tool that really we want to have a plan that mixed

9 together direct regulations on sectors, along with an

10 emissions fee approach that we would use to fund the

11 operations of our program and others and that we also

12 wanted to see a cap on emissions and enforce of a cap with

13 allowances that would be distributed to those who are the

14 emitters, the large of the emitters under the cap. And

15 they would then be allowed to as the cap declines, either

16 become buyers or sellers as need be depending on what they

17 need to cover their operations. But there would be an

18 enforceable cap.

19 One of the reasons why a program like that is

20 attractive to many people is that if you auction the

21 allowances, you not only get the security that there are

22 not too many allowances out there. You know exactly how

23 many there are. But also you can raise a very substantial

24 amount of revenue that can be used to address the problems

25 we're trying to deal with here.

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1 Many people -- I think most people who look at

2 what you could use revenue for immediately gravitate in

3 the direction of mass transit because of the need that

4 you've identified, Supervisor Roberts, for an alternative

5 to business as usual in the land use area and the way we

6 use our vehicles, the ability to do it in a way that could

7 be more sustainable. So this raises the question of where

8 we are with that issue.

9 And I think many people have expressed the desire

10 to see the Board speak more strongly about grandfathering

11 of allowance to existing emitters versus an auction

12 system. And the staff has addressed that issue in a

13 pretty strong way I think. And they've also I think been

14 more clear about what they are planning to do next with

15 respect to the cap and trade system. But I think it might

16 be a good idea to just let them respond a little bit

17 further to how that's dealt with also in the resolution.

18 EXECUTIVE OFFICER GOLDSTENE: Thank you, Chairman

19 Nichols. I'll ask Kevin Kennedy and Chuck Shulock to talk

20 about where we are in cap and trade regulations that we're

21 going to have work on and develop and bring back to the

22 Board.

23 PROGRAM EVALUATION BRANCH CHIEF KENNEDY: As

24 noted in the draft resolution, the ARB is committed to a

25 Cap and Trade Program as an important component of the

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1 overall comprehensive program to achieve greenhouse gas

2 reductions.

3 As we developed the plan, we recognized the

4 importance of cap and trade for a number of reasons. It

5 provides a hard emissions cap. It provides for

6 flexibility compliance. It can help stimulate innovations

7 and also sets us on a course to further emission

8 reductions well beyond 2020 as we allow the cap to

9 continue to decline.

10 We have also included in the plan many

11 complimentary measures in sectors that are covered by the

12 Cap and Trade Program and have discussed in the plan the

13 reasons that we believe those measures are needed to

14 compliment the market program.

15 Because the Cap and Trade Program plays a central

16 role, any time that we bring a regulation to the Board

17 that covers sources that are included in the Cap and Trade

18 Program, it's staff's intent to include a proposed finding

19 that identifies reasons that this sort of emission

20 reduction is best achieved through the proposed regulatory

21 approach so that the Board is continually updated on how

22 the two systems are complimenting each other.

23 We have also acknowledged that there is much hard

24 work still in front of us in terms of the detailed program

25 design in the regulatory development process. There are

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1 many difficult issues that we have to address in the

2 design process, many of which you heard about from some of

3 the speakers today. But these are issues that we are

4 confident we will be able to resolve through the course of

5 the regulatory process.

6 Over the last year and also at last month's Board

7 meeting, we have heard many perspectives on the degree to

8 which we should auction allowance, the role of offsets,

9 and many other design elements. These and other key

10 design issues are closely interrelated. During the

11 rulemaking process, we will need to balance the allowance

12 distribution method, that is how much we auction and how

13 much we give away, what sort of limits we place on the use

14 of offsets, how stringent the cap should be, and how

15 quickly it should decline over time.

16 All of this will need to be considered in the

17 context of the overall cost and benefits of the program

18 for California.

19 One of the commenters this morning, Ken Johnson,

20 asked a number of questions about the use of a price floor

21 which would set a minimum price as part of auctioning

22 allowances. This is exactly the sort of program design

23 element that we need to consider fully as we go through

24 the regulatory process.

25 As we move forward, staff will not decide these

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1 issues in isolation. In addition to conducting an open

2 transparent process for the program and regulatory

3 development, staff will be returning to the Board at least

4 twice a year to update the Board on our progress and

5 considering these issues and our progress in developing

6 the regulations themselves.

7 By the end of 2010, we will bring the cap and

8 trade regulation back to the Board for your final position

9 on all of these key issues.

10 In addition to our normal stakeholder processes,

11 staff also intends to seek out expert advise from the

12 outside on a number of key issues. Foremost among these

13 issues will be how to distribute allowances and what to do

14 with any revenue that is generated from the Cap and Trade

15 Program through auctioning. We will also be seeking

16 expert input on the more detailed economic analysis that

17 will be needed for the rulemaking.

18 One particular element of the cap and trade

19 regulation will be the detailed rules that ensure a high

20 quality for the offset credits that might be accepted in

21 the program. These standards are important so that we can

22 be sure that the credits are for reductions that are real,

23 permanent, quantifiable, verifiable, and in addition to

24 reductions that would otherwise be required.

25 One important element of the rule will have to be

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1 that the reduction credits are enforceable by the Board.

2 All of these are requirements of AB 32 itself. We

3 recognize that there remain differences of opinion on the

4 role of offsets in the program and want to remind the

5 Board that you will have the final say on what the rules

6 will look like as we establish their use in the program.

7 In particular with respect to auction, the

8 proposed plan described ARB's belief that 100 percent

9 auction is a worthwhile goal. Based on our discussions

10 with Chairman Nichols and others since the November

11 meeting, we have included in the revised plan language

12 that was distributed today a revised statement of our

13 interest, not just in that as a worthwhile goal, but also

14 in pursuing that goal as we move forward in the program.

15 So that's where we stand. I think the important

16 thing for the Board to remember at this stage is that as

17 we are moving forward, the key decision points will all be

18 brought back to the Board. They will ultimately be your

19 decisions on what the resolution of these issues are and

20 we will have extensive work with stakeholders over the

21 next two years as we help develop those answers.

22 CHAIRPERSON NICHOLS: There is a lot of work to

23 be done, although I would point out we're still further

24 ahead in term of designing a comprehensive cap and trade

25 economy-wide system than anybody else that I'm aware of,

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1 certainly at the state level or within our sister regions

2 around the world really.

3 I mean, the Kyoto itself didn't cover as many

4 sources as we do and did have some serious problems that

5 we heard about earlier on when we were considering the

6 draft with respect to the inability to even tell how many

7 tons were out there so they didn't know how to allocate

8 their allowances.

9 And I think to echo what Mayor Loveridge said

10 earlier, it is important to remember that while we have

11 plenty left to do before we actually start the program, at

12 the same time we are being looked to literally by people

13 around the world as the leaders in terms of dealing with

14 these issues. And I think it's reflected in the level of

15 concern that we hear on all sides about whether we get it

16 right.

17 Are there additional comments?

18 Yes, down here. You do? Okay.

19 BOARD MEMBER TELLES: At the last meeting, as you

20 know, I was the only doubting person in regards to cap and

21 trade on the Board. And I still have some of my doubts

22 still present, despite the fact I spent the last month

23 honing up on cap and trade. And my concerns are some of

24 the same concerns that were voiced here today and that in

25 fact the market may not be the most protective mechanism

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1 for some of the communities that might be affected.

2 In your comments just right now, you didn't

3 mention anything about designing a Cap and Trade Program

4 that puts into it a very strong design feature that

5 actually protect the environmental justice communities,

6 the health of some of our communities that are heavily

7 impacted in air pollution.

8 And I think that's very important as we move

9 ahead with this that those things be put in there. And

10 that's almost on the top of the list of the design of the

11 Cap and Trade Program, not on the bottom of the list.

12 CHAIRPERSON NICHOLS: Would you like to respond?

13 PROGRAM EVALUATION BRANCH CHIEF KENNEDY: That

14 actually is an issue that is very much going to be a part

15 of our rulemaking and is on the list. And it is on

16 oversight on my part not to have specifically mentioned it

17 in my comments.

18 But it is a requirement of AB 32 we're taking

19 very seriously that in developing regulations to implement

20 market mechanisms that we take a careful look at the sort

21 of localized and cumulative impacts that the mechanism

22 might have. And we will be looking very carefully at both

23 the design mechanisms within the program itself and

24 potential uses of revenue that could help get co-benefits

25 from the overall program. So it is something that is very

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1 much part of our plan for moving forward.

2 CHAIRPERSON NICHOLS: I've struggled myself with

3 the cap and trade issue, both for the reasons that Dr.

4 Telles mentioned but also because as a perhaps somewhat

5 overly cynical regulator, I find whenever somebody

6 advocates a policy mechanism as being simple and easy, you

7 should always hold on to your wallet.

8 And in the case of cap and trade, I think it was

9 originally sold as a fast quick way to get a cap in place

10 and start the reductions moving. And of course we see

11 that it's not. First of all to do it in a way that

12 actually assures the reductions you have to have in place,

13 very detailed and extensive monitoring and enforcement

14 mechanisms or you can't have a market that anyone would

15 have any confidence in.

16 And secondly, to actually design it in a way that

17 those who are subject to it are willing to participate in

18 also requires an awful lot of information at a level that

19 frankly you don't have to have when you do source by

20 source regulation.

21 The goal of course is to come up with something

22 that's more flexible and ultimately more cost effective,

23 but it isn't easy to do. So I think we all would love to

24 find something that met those requirements and didn't

25 involve as much work as the cap and trade system does to

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1 get right.

2 At the same time, every other tool has its own

3 set of built-in flaws and weaknesses as well. I think

4 that we're pretty far down the road in terms of

5 understanding what can be done and what's wrong with the

6 previous efforts in this area. But there still be some

7 thorny practical, legal, economic issues to be dealt with.

8 And I think the thing that makes me feel most

9 comforted is the fact that once again we have the

10 advantage of being able to use some of the best minds that

11 are out there in academia, in the business community, and

12 elsewhere. People who may have very differing views, but

13 who are willing to come in and engage with each other and

14 with us to try to put something together that will

15 actually work.

16 Yes.

17 BOARD MEMBER SPERLING: So I'd like to follow up

18 on these comments. And I think it is very important for

19 us to be alert to the impact on disadvantaged and impacted

20 communities. And that should be uppermost in our minds.

21 At the same time, if there's anything we've

22 learned through history, it is that we're going to need a

23 price signal. We're going to have to mobilize market

24 forces if we're going to accomplish the kind of changes

25 that we're talking about here. And in a broad sense, that

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1 means a carbon tax or cap and trade.

2 Otherwise, we're talking about government picking

3 winners. If we think government is going to decide how to

4 get these reductions over time in oil use and in

5 greenhouse gases, then, you know, you have more faith in

6 government than I do.

7 But we can put in place the process. And we do

8 need to use these price signals and these market forces in

9 some way. And clearly, I think the staff has done a

10 brilliant job. As an academic, I don't use that word very

11 often. But it's really been brilliant, the Scoping Plan

12 that's been put together, the mix that's been put together

13 of market instruments and regulatory instruments and

14 covering all the sectors. It really is a very, very

15 impressive document. At the same time, as we're hearing,

16 it's just the beginning.

17 But I do want to bring that back. So the cap and

18 trade is a part of it. I do think I would like to suggest

19 that we keep the carbon tax idea on the table, not push it

20 off yet too quickly. And I know the political forces are

21 against it. But, you know, circumstances change. And it

22 is a simpler more elegant approach than cap and trade as

23 any policy wonk will tell you. But it does carbon tax has

24 that T word. And I know that's the problem in the policy

25 process. But anyway, I would urge that we not completely

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1 disregard the possibility of carbon taxes here.

2 But I do want to defend cap and trade. My last

3 thought. There's been a lot of criticism of cap and

4 trade, it hasn't worked, and the disaster in the EU. And

5 it's just not true. In the EU, in particular, it's taken

6 them a while. They started out with a pilot experimental

7 phase. But it is working. And just the fact that the EU

8 is continuing to strengthen it, to work out the details of

9 it and is more committed than ever to it tells us that,

10 you know, that's the bottom line. That it is working and

11 it has the support of all the member nations in Europe and

12 it is being put in place and the rules -- the auctioning

13 is increasing. The rules are being tightened.

14 So if you take a long-term view on it, it has

15 been a success. What it hasn't done -- and this is

16 probably where a lot of the confusion comes about is that

17 in the near term some of the -- as it's introduced, the

18 changes that happen are smaller operational changes.

19 Power plants use natural gas instead of coal, start using

20 some renewables. But they're not completely transforming

21 the capital stock, making completely new investments yet.

22 So sometimes there is impatience on that.

23 But this is putting a market signal in it. We're

24 in it for the long term. You've got to have a price

25 signal. And either you do the carbon tax or you do cap

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1 and trade. And there's really no other long term strategy

2 that's possible.

3 So I'm very comfortable and very supportive of

4 the path we're on, with the caveat that we don't forget

5 the carbon tax.

6 CHAIRPERSON NICHOLS: All right. Thank you.

7 Other comments here?

8 BOARD MEMBER D'ADAMO: I would like to compliment

9 staff, including the language in the resolution on page 9

10 and 10 listing all of the considerations that you must

11 include as you go forward in the design of the program.

12 And just want to state I believe that the

13 interplay between the offsets, the regulatory component,

14 exactly how the auction is going to be structured, all of

15 that fits in with the goals that we have later on on that

16 same page. And that is the goal to provide for a thorough

17 economic analysis as we go forward. And want to thank

18 staff for including time certain of coming back to the

19 Board on December 31st on the economic piece.

20 I believe between the design of the program and

21 this more thorough economic analysis that we will be in a

22 better position to be able to structure the program so

23 that it is truly going forward and providing an economic

24 stimulus, particularly in this time where we have such

25 serious concerns with the economy. And I know we all have

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1 an optimistic view we're going to convert over to a green

2 economy. But without this analysis and without

3 considering all the different components of the design of

4 the system, it would be very easy to misstep.

5 So thank you for including the language. I think

6 you did a good job balance ing the considerations.

7 CHAIRPERSON NICHOLS: Thank you.

8 Ms. Berg was first.

9 BOARD MEMBER BERG: Thank you, Chairman.

10 I would like to echo Board Member D'Adamo's

11 comments on the economic analysis and also would like to

12 state that I believe that this is the first plan that we

13 have looked at that has so many moving parts. And the

14 need to be able to keep track of these parts and to report

15 back to us as a Board where the individual parts are

16 within the Scoping Plan and the big picture. So we don't

17 lose focus of the big picture and what our actual outcome

18 intends.

19 And so I, too, would like to thank staff. I

20 think you've done a tremendous staff in addressing the

21 issues that we brought to you. I have heard from the

22 small business communities, as many of the Board members

23 have their concerns. I think that communication and

24 outreach to these folks as to the additional information

25 that we get on the analysis is critical.

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1 I also think that we've got to remember to deep

2 focused on the goal, which is the reduction of greenhouse

3 gases and no question that the co-benefits are very

4 important. But it's been my personal experience in

5 business that a dynamic and effective plan cannot serve

6 two masters. And we really need to keep the goal in front

7 of us, because then both parts will win. But if we don't,

8 then between losing sight of what we're trying to

9 accomplish and the economic impacts and then the

10 disbenefits health wise, that's where I believe that then

11 we'll see the unintended consequences.

12 So thank you very much for your hard work.

13 And I want to thank the public for their intense

14 participation. And to say it's not over. We're going to

15 continue.

16 CHAIRPERSON NICHOLS: Before I call for a vote

17 and make a few last comments, I want to acknowledge other

18 Board members if they have additional comments.

19 BOARD MEMBER ROBERTS: Let me turn this on.

20 There's a couple of things, and I'll go quickly.

21 First of all, one of the speakers from one of the

22 counties spoke about the military's presence. And I think

23 that's an issue that in San Diego we're very cognizant of.

24 We like the military. We want them to succeed in their

25 mission. But they're a large part of the issue as we

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1 start to look at the county.

2 There's also a second group that hasn't come up

3 that in our county is terribly significant over which we

4 have no control, and it's the Indian casinos. They are

5 major contributors and are not acknowledged anywhere that

6 I know of. And I think that has to be taken into account.

7 We have the largest concentrations of casinos, every one

8 of which is in a remote area in generating prodigious

9 amounts of vehicle miles traveled. And I think these are

10 issues that are major enough that we have been concerned.

11 And when I told you we did an analysis, these are

12 things that have come to light. So in both of those

13 areas, I would hope that staff would work with us.

14 I would also tell you that I have a letter for

15 our Chairwoman, because our regional planning authority

16 would like to speed up the setting of goals for San Diego,

17 because they're intent on having the first regional

18 transportation plan adopted under the new ordinance. A

19 lot of work has been done already. And rather than slow

20 it down, they're asking if you would cooperate with them

21 to perhaps even try to establish a goal in advance of

22 the --

23 CHAIRPERSON NICHOLS: San Diego could be our case

24 study perhaps.

25 BOARD MEMBER ROBERTS: This is a part of the

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1 local cooperation I told you is out there. It's genuine.

2 And perhaps there are things that others will be able to

3 learn by one area of going even a little quicker than you

4 might expect.

5 I also would join my colleagues here in thanking

6 staff. They've been very patient with the numerous stupid

7 questions I've had to ask and have helped me to understand

8 everything from cap and trade to auctions and some of the

9 other esoteric concepts here.

10 This truly is a significant plan, and I think

11 each of us in our own way feels very, very good that we're

12 involved in it. But not just being involved, but being

13 involved in and informed. And helped to be put in a

14 position to make a good decision. For that I thank you.

15 CHAIRPERSON NICHOLS: Dr. Balmes.

16 BOARD MEMBER BALMES: I'll try to keep my

17 comments brief, because I sense the Chairman wants to move

18 on.

19 CHAIRPERSON NICHOLS: I have a time period in

20 mind and we're --

21 BOARD MEMBER BALMES: I'm supportive of your

22 efforts.

23 I'm usually talking about public health, but I

24 want to say strongly I support the staff's proposal to do

25 a more intensive extensive economic analysis.

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1 I've certainly heard from some of the small

2 business stakeholders that Ms. Berg mentioned. I've also

3 heard from the environmental justice community about their

4 concerns about cap and trade. So I was glad that

5 Professor Sperling brought up the T word. And what I

6 would ask is in the economic analysis that we do that we

7 consider how a carbon fee/tax fits into a potential future

8 picture. Because, again, I'm a data-driven kind of person

9 in terms of making decisions. And I don't see anything

10 wrong with going ahead with the Cap and Trade Program

11 that's been outlined, but also keeping options open with

12 regard to analyzing a carbon tax.

13 And I was very much taken by an idea raised by

14 Amy Kyle, a colleague of mine at U.C. Berkeley, about

15 trying to do a comparative analysis of the moving parts

16 that Sandy Berg spoke of with AB 32 with regards to public

17 health impact. I think that's a good idea. How actually

18 to do that, more work for staff I think. But I think it's

19 a good idea and will help us in trying to see how these

20 moving parts will impact public health.

21 And finally, though I don't want to really

22 wordsmith at this late time -- I throw this out with some

23 caution. But I think it would send a useful signal to

24 beef up the top point on page 10 where we say the Board

25 will look at various scenarios for the use of auction

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1 revenue.

2 As Tim Carmichael pointed out, that's very

3 generic. I think it would be helpful if we had something

4 about saying specifically that we would include adaptation

5 and emissions reduction measures in low income and

6 cumulatively impacted communities. Something to that

7 effect. It doesn't have to be real fancy.

8 But I think saying right up front we are going to

9 comply with what I think is the intent of the law would be

10 a good idea.

11 And with that, I wanted to say again, I think the

12 staff has done a really good job in the intervening time

13 which was short between our last meeting and this one in

14 trying to address the many concerns of many stakeholders

15 and Board members. And again, compliment them for their

16 efforts.

17 CHAIRPERSON NICHOLS: Would the staff except as

18 an interpretation of the language that's already there the

19 suggestion that Dr. Balmes just made? I think it's

20 included in your view. I don't know that we can add

21 something at this point. If it's not -- it's what we

22 intend I think.

23 OFFICE OF CLIMATE CHANGE CHIEF SHULOCK: There's

24 a list of issues identified in the Scoping Plan. And the

25 ones that you raise are part of that list.

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1 CHAIRPERSON NICHOLS: So this alludes to those.

2 OFFICE OF CLIMATE CHANGE CHIEF SHULOCK: In

3 putting this together, we didn't single out any particular

4 issues. But it is on the table for what would be

5 considered when looking at the uses of revenue.

6 BOARD MEMBER BALMES: Just if I could make one

7 more comment.

8 I think it would be useful to make sure that

9 those additions to this Scoping Plan actually get

10 published with the Scoping Plan. I think somebody made

11 that suggestion.

12 EXECUTIVE OFFICER GOLDSTENE: That is our plan.

13 CHAIRPERSON NICHOLS: Before it actually goes out

14 in print.

15 Yes, Mayor Loveridge.

16 BOARD MEMBER LOVERIDGE: Just the obvious point.

17 I was trying to emphasize the importance of collaboration

18 with local government. But the whole Scoping Plan is not

19 going to work unless there's collaboration, support, and

20 agreement by all those who are participating in today's

21 and the past week's discussions. So I just think that

22 this is not simply our dictum that we want people to

23 conform to our direction. But this is a corroborative

24 statewide collaborative effort.

25 CHAIRPERSON NICHOLS: Well, let me then take the

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1 privilege of the Chair in adding a few last words.

2 I agree with you about the critical role of local

3 government and in fact would acknowledge that there are

4 many cities and counties in this state and regional

5 entities that have already taken very progressive actions

6 to try to reduce their use of energy, to operate more

7 efficiently, to try to purchase alternative fueled

8 vehicles, you know, to have incentives for their employees

9 to car pool, et cetera. This has been going on for a long

10 time.

11 And we also have to acknowledge the role that

12 many entities and individuals have played on a voluntary

13 basis in the absence of any kind of binding requirements

14 on them to look for ways to reduce their carbon

15 footprints.

16 This is an issue and a movements that goes far

17 beyond what State government can do. But in addition to

18 that, the Air Resources Board didn't develop this plan

19 alone either. As Deputy Secretary Tutt mentioned when she

20 came and spoke at the very end of the public hearing, we

21 had a group of State agencies that actively participated

22 in looking for ways in which they could participate in

23 developing this plan. And their involvement is going to

24 be critical in making this plan work as we move forward as

25 well. So I don't want to fail to acknowledge any of them.

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1 Having said all of that, however, when AB 32 was

2 passed, I know there was a struggle over who was going to

3 be given the assignment to actually develop the plan. And

4 at the end of the day, the Legislature handed that

5 assignment to the Air Resources Board. And I don't think

6 there was universal agreement the ARB had all the

7 necessary tools or skills to bring that about.

8 I'm deeply proud of the work that's been done by

9 the staff and by this Board in taking on this mission. It

10 was huge. It involved increasing our staff certainly, and

11 we were given resources to do that for which we are all

12 are very grateful.

13 But this didn't just involve bringing in some new

14 people and starting a new project. It really ended up

15 involving every part of the Air Resources Board in one way

16 or another. And the untold hours that people have put in

17 to try to get it right, to get the process right, to truly

18 listen and reflect everything they heard and then to

19 incorporate it into something that made sense and could be

20 used as a model, which we know was the intent in drafting

21 AB 32 I think is a remarkable feet. And frankly I don't

22 know anything like it that's ever been done by any

23 government agency in this or any other state ever. And so

24 I don't think it's saying too much to say that this is in

25 a class by itself.

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1 This is a season in which people like to use

2 metaphors about coming out of the darkness and into the

3 light as we get to the end of the year and the days go

4 shorter and we celebrate major holidays in all parts of

5 the world. And I think it really is a remarkable thing.

6 And I want to ask us all to just take a moment to reflect

7 on the fact that although this is just a plan, it's just a

8 road map. There's much work to be done. It is the

9 beginning. Never the less, we have laid out here a path

10 which if followed can actually transform our economy and

11 put us on the road to a healthier state in what I hope is

12 going to be all of our lifetimes and certainly the

13 lifetimes of most of the people in the room.

14 The task of coping with global warming is not

15 something that California can do alone. And it's not

16 something that's going to be finished by 2020 by any

17 means. It's something that our children and grandchildren

18 are going to have to cope with as well.

19 But I think if we can use the road map and the

20 process that we've laid out here that we can honestly say

21 that we've put California on the right track to

22 transforming our economy in a way that's good for the

23 environment, good for our health, good for our future.

24 And so I'm very proud to ask for your vote for

25 this document. I think we probably want to make it

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1 unanimous. But just so everybody gets a chance to cast

2 their vote, I'm going to ask the clerk to read the role

3 and everybody can vote.

4 BOARD MEMBER ROBERTS: Could I put a motion on

5 the floor that we can vote on?

6 CHAIRPERSON NICHOLS: Of course you can. It's

7 Robert's Rules.

8 BOARD MEMBER ROBERTS: That's with the apostrophe

9 after the S. I'd be pleased as at least the senior member

10 present today to do that.

11 CHAIRPERSON NICHOLS: Thank very much.

12 BOARD MEMBER BALMES: I would like to be the

13 second.

14 CHAIRPERSON NICHOLS: All right. We have a

15 motion and a second then.

16 Clerk will call the role.

17 BOARD CLERK VEJAR: Dr. Balmes?

18 BOARD MEMBER BALMES: Yes.

19 BOARD CLERK VEJAR: Ms. Berg?

20 BOARD MEMBER BERG: Yes.

21 BOARD CLERK VEJAR: Ms. D'Adamo?

22 BOARD MEMBER D'ADAMO: Aye.

23 BOARD CLERK VEJAR: Mayor Loveridge?

24 BOARD MEMBER LOVERIDGE: Yes.

25 BOARD CLERK VEJAR: Supervisor Roberts?

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1 BOARD MEMBER ROBERTS: Aye.

2 BOARD CLERK VEJAR: Professor Sperling?

3 BOARD MEMBER SPERLING: Appreciating the great

4 responsibility and the great impact of this, I vote yes.

5 BOARD CLERK VEJAR: Dr. Telles?

6 BOARD MEMBER TELLES: Yes.

7 BOARD CLERK VEJAR: Chairman Nichols?

8 CHAIRPERSON NICHOLS: Yes.

9 BOARD CLERK VEJAR: Yes votes win. Motion

10 passes.

11 (Applause)

12 CHAIRPERSON NICHOLS: Thank you, all.

13 And I note that it is on my watch exactly 1:00.

14 And we will break for an hour and then come back and take

15 up the truck rule.

16 (Thereupon a recess was taken.)

17 CHAIRPERSON NICHOLS: I know there are many

18 people here for the truck item. We do have one other

19 brief presentation before that, because it's part of our

20 regular schedule that we have a research update at every

21 meeting. So for this monthly meeting, we're going to hear

22 a report on current research about lung cancer in the

23 trucking industry, which obviously is relevant to the

24 topic we're going to be discussing later.

25 But before I turn to Mr. Goldstene to introduce

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1 the item, I want to reiterate something I said first thing

2 this morning, which is that translation services are

3 available for anyone who wishes to use them in both

4 Spanish and Punjabi. The headsets are available outside

5 the hearing room at the attendance table, and the two

6 translators are here. So I'm going to ask both of them to

7 repeat this in Spanish and Punjabi.

8 (Thereupon the announcement was translated into

9 Spanish and Punjabi.)

10 CHAIRPERSON NICHOLS: Thank you both, very much.

11 I know there is an overflow room where people can

12 listen and watch what we're doing here on a big screen.

13 It's right next door. So no one will miss hearing if

14 their name is called, although we're not going to be

15 getting into any testimony right away. But the fire

16 marshals ask us to be vigilant about not letting people

17 line up in the back of the room.

18 Whether you're ARB staff or here as a witness or

19 to testify, if you can't find a vacant seat somewhere, we

20 would appreciate it if you would be willing to sit in the

21 other room. I'm going to ask nicely so we don't have to

22 get the strong arm guys in to actually clear the room.

23 I appreciate it. Thank you.

24 Okay. Mr. Goldstene, would you begin?

25 EXECUTIVE OFFICER GOLDSTENE: Thank you, Chairman

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1 Nichols.

2 A number of scientific publications have shown an

3 association between exposure to ambient particulate matter

4 and adverse health effects, such as hospitalizations for

5 cardiovascular and respiratory reduce, lung cancers, and

6 even premature death.

7 Diesel particular matter or diesel PM contributes

8 to the mix of ambient particulate matter and also to the

9 adverse health effects. In fact, ARB staff recently

10 estimated that exposure to direct diesel PM can contribute

11 to 3,500 deaths statewide and 2,000 deaths in the South

12 Coast air basin on an annual basis.

13 Furthermore, in 1998, California identified

14 diesel exhaust PM as a toxic air contaminant based on its

15 potential to cause cancer, premature death, and other

16 health problems.

17 To reduce these risks, ARB has adopted several

18 control measure to achieve emission reductions from diesel

19 sources.

20 Today's health update reviews the latest findings

21 from a national study on lung cancer in the unionized

22 United States truck industry that examines the association

23 between exposure to diesel PM and adverse effects.

24 Cynthia Garcia from our Health and Exposure

25 Branch will make the staff presentation.

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1 Cynthia.

2 (Thereupon an overhead presentation was

3 presented as follows.)

4 MS. GARCIA: Thank you, Mr. Goldstene. Good

5 afternoon, Chairman Nichols and members of the Board.

6 In today's health update, I will present the

7 latest findings on lung cancer mortality impacts by job

8 categories in the US trucking industry. This study is

9 part of a much larger ongoing nationwide assessment of the

10 health impacts on workers in the trucking industry who are

11 routinely exposed to motor vehicle exhaust, including

12 diesel particulate matter.

13 --o0o--

14 MS. GARCIA: First, I will briefly go over some

15 background information on diesel particulate matter, PM.

16 California identified diesel exhaust PM as a toxic air

17 contaminant in 1998 based on its potential to cause

18 cancer.

19 As you know, trucks are major contributors to

20 diesel PM. And diesel PM is a contributor to outdoor

21 PM2.5 levels in California.

22 A growing body of literature exists which links

23 outdoor PM2.5 exposure to adverse health effects such as

24 heart disease, lung cancer, and even premature death.

25 Additionally, recent studies have begun to

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1 investigate further the effects associated with

2 occupational exposure to diesel engine exhaust, which is a

3 concern because employees working in and around trucks may

4 be particularly at risk due to their continued exposure.

5 Earlier this year, we reported on a study by

6 Laden and colleagues who found an increased risk of lung

7 cancer and heart disease deaths for drivers and dock

8 workers in the trucking industry as compared to the

9 general US population of the same age group.

10 --o0o--

11 MS. GARCIA: The results I'm presenting today are

12 from a national study led by Dr. Garshick, which involves

13 the participation of about 31,000 members of the Teamsters

14 union from four companies.

15 The analysis was limited to men older than 39

16 years of age in 1995 with at least one year in the

17 trucking industry. The investigators obtained detailed

18 work records and cause of death of teamsters employed from

19 1985 to the year 2000. Each job category in this

20 population has distinct exposure patterns. For example,

21 long haul and pickup and delivery drivers are exposed

22 directly to traffic, while dock workers are exposed to

23 trucks in the yard and exhaust from the forklifts.

24 To provide insight into lung cancer death

25 patterns associated with these exposures, the

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1 investigators examined lung cancer death rates by

2 different job categories in the trucking industry compared

3 to all the remaining workers within the same age group.

4 The investigators accounted for the healthy

5 worker effect, which is that people who are able to stay

6 in their job tend to be healthier than those who leave

7 employment. On average, people in the Teamsters union

8 worked 22 years; 73 percent worked between 20 and 40 years

9 in this industry.

10 --o0o--

11 MS. GARCIA: During the time of the study, there

12 were 4,306 death recorded, with 779 lung cancer deaths.

13 After adjusting for age and healthy worker survivor

14 effects, the study found that lung cancer mortality risks

15 were elevated in workers with jobs associated with regular

16 exposure to diesel and other vehicle exhaust and that risk

17 increased with more years on the job.

18 The calculated increased risk associated with an

19 estimated 20 years of work for each specific job versus

20 all workers ranged from 65 percent to 120 percent for

21 long-haul, dock workers, pickup and delivery, and

22 combination workers. Combination workers are those that

23 worked both jobs as dock workers and pickup and delivery.

24 Despite the limitations of the study shown on

25 this slide, the results showed a trend in lung cancer

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1 mortality risk that was positively associated with the

2 years of work in jobs with regular exposure to freshly

3 emitted diesel vehicle exhaust.

4 --o0o--

5 MS. GARCIA: To give you an idea how this

6 increase in lung cancer risk in the trucking industry

7 compares to other industries, we looked at the national

8 occupational mortality surveillance system, a national

9 database from the Centers of Disease Control, and saw that

10 for white males between 50 to 64 years of age from 1984 to

11 1998, the trucking industry had lung cancer rates that

12 were among the five highest of all surveyed industry.

13 Moreover, the re analysis of Dr. Garshick's

14 previous studies of railroad workers supports the

15 conclusion that working in an industry with elevated

16 exposure to vehicle exhaust and diesel PM increases risk

17 of lung cancer.

18 Probably one of the most well-known risk factors

19 for lung cancer is regular exposure to second-hand tobacco

20 smoke. How does this environmental tobacco smoke risk

21 compare to the risk to industry workers who have had

22 regular exposure to vehicle exhaust from diesel and other

23 vehicles?

24 The surgeon general's 2006 report found a similar

25 lung cancer risk for non-smokers who live with a smoker

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1 compared to that reported in the literature at large for

2 industry workers exposed to vehicle exhaust and diesel PM.

3 --o0o--

4 MS. GARCIA: The results of this study are

5 important. They show that workers in the trucking

6 industry who are exposed to diesel and other vehicle

7 exhaust have an increased risk for lung cancer and the

8 risk of dying from lung cancer is likely to increase with

9 increasing time on the job.

10 The results from the study are consistent with

11 previous studies in the United States and Canada that show

12 an increased risk of lung cancer in occupations which are

13 likely to be associated with exposure to diesel vehicle

14 exhaust. These results imply that reductions of diesel PM

15 emissions will have health benefits associated with

16 job-specific exposures to diesel and other vehicle exhaust

17 in the trucking industry.

18 In addition, the health impacts from diesel PM

19 emissions are of concern to all Californians. We are all

20 exposed to diesel particles.

21 Diesel PM control measures implemented by the

22 ARB, including the one that will be heard today which

23 reduce exposures on roadways and from idling trucks will

24 help reduce the risk of adverse health impacts from diesel

25 PM exposure, not only in the trucking industry, but also

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1 in the general population that lives, commutes, works in

2 proximity to diesel exhaust sources.

3 That concludes my presentation, and I will be

4 happy to answer any questions.

5 CHAIRPERSON NICHOLS: Thank you.

6 Board member questions? Seems pretty straight

7 forward, unfortunately.

8 BOARD MEMBER BALMES: I guess I would make one

9 comment.

10 Staff choose to highlight this particular paper

11 showing a risk of lung cancer related to occupational

12 exposure to diesel exhaust. But this is just the most

13 recent in a series of papers. There's probably about 40

14 that contribute to this literature.

15 And the Scientific Review Panel of Cal/EPA used

16 information available up to maybe five years ago -- I

17 can't remember exactly if it was longer than that -- when

18 it was determined that diesel exhaust particles were a

19 toxic air contaminant. And the Scientific Review Panel

20 carefully looked at the literature back then and came to

21 that determination, which I agree with. And there's been

22 a number of studies subsequent to that which were

23 mentioned today.

24 So it's just sort of one in a series of studies

25 showing that people exposed to diesel exhaust over many

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1 years at the workplace are at increased risk of lung

2 cancer.

3 CHAIRPERSON NICHOLS: So this was not a study

4 that was designed to focus on truck drivers?

5 BOARD MEMBER BALMES: Well, it was, because they

6 wanted to find a population that was exposed to diesel

7 exhaust on a regular basis, so they used truck drivers.

8 The same group of investigators has looked at railroad

9 workers as well.

10 CHAIRPERSON NICHOLS: Okay. I see. All right.

11 Thank you very much. Thanks. Yes.

12 BOARD MEMBER TELLES: Have you run across a

13 corollary study as far as increased cardiovascular in

14 truck drivers? I've had the privilege of taking care of

15 hundreds of truck drivers. And my impression is there may

16 be an increased cardiovascular risk as suggested by

17 literature indicating that the exposure to PM that most of

18 the mortality is related to cardiovascular, not just lung

19 cancer.

20 MS. GARCIA: Actually, we presented earlier in

21 January of this year a study by Dr. Laden, and Dr.

22 Garshick was also part of that study. And they did find

23 that there was elevated risk to ischemic heart disease in

24 addition to lung cancer in the same cohort.

25 CHAIRPERSON NICHOLS: Okay. Thank you. All

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1 right. Thanks, staff.

2 We'll now move on to our next item, which is

3 actually two agenda items that are being heard together.

4 These two items represent a comprehensive strategy.

5 EXECUTIVE OFFICER GOLDSTENE: Chairman Nichols,

6 we're having trouble hearing.

7 CHAIRPERSON NICHOLS: Is there something wrong

8 with the sound? Okay. Sorry, everybody.

9 I said -- I'll repeat -- that we are now about to

10 consider two agenda items that are taken together. It's a

11 somewhat complex set of items, but they actually do go

12 together and affect the same industry and the same

13 vehicles. And so it made more sense I think from a

14 hearing perspective and from the public's perspective to

15 put the two of them together.

16 So we're dealing with both criteria and

17 greenhouse gas emissions from nearly one million

18 heavy-duty diesel vehicles and the box type trailers they

19 pull that travel on California's roads every year.

20 The staff is going to make one presentation

21 describing the features and impacts of both proposals, and

22 then testifiers that are here to comment on both proposals

23 should comment on both of them at the same time. So in

24 other words, if you're here to talk on two different

25 rules, you should combine your testimony when it comes

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1 time for you to get up and testimony. I just want to make

2 sure people are aware of that in advance. We're not going

3 to go through one whole rule and come back and go through

4 the second rule.

5 Item 8-11-3 is the proposed regulation to reduce

6 NOx and PM emissions from in-use on-road diesel vehicles,

7 also known as the truck and bus rule. This proposed rule

8 also includes proposed amendments to several existing

9 diesel regulations to they will better integrate with the

10 truck and bus rule.

11 Item 8-11-4 is the proposed regulation to reduce

12 greenhouse gas emissions by improving truck and trailer

13 efficiency.

14 The proposed truck and bus regulation is the most

15 significant emissions reduction proposal that this Board

16 has considered in the last decade. Annually, trucks and

17 buses produce one-third of California's nitrogen oxide

18 emissions about and 40 percent of its toxic diesel

19 particulate emissions.

20 The reductions from this rule would provide the

21 largest remaining piece of diesel particulate emissions

22 reductions needed to meet the diesel risk reduction goals

23 established by this Board eight years ago. They would

24 also meet the Board's emission reduction commitments that

25 are contained in our PM2.5 and ozone implementation plans

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1 that have been submitted to the United States

2 Environmental Protection Agency for the state's two most

3 polluted air basins, the San Joaquin and the South Coast

4 air basins. These rules would save more than 9,000 lives

5 over the next decade that would otherwise be lost from

6 exposure to diesel truck pollution.

7 The second regulation we consider the truck

8 greenhouse gas regulation also establishes the first

9 requirements anywhere in the country to reduce greenhouse

10 gas emissions from heavy-duty long-haul tractors and

11 trailers.

12 Adoption of this regulation is consistent with

13 the Scoping Plan that we just adopted this morning which

14 identifies reducing heavy-duty truck greenhouse gas

15 emission as one of the discrete early action measures

16 called out in AB 32.

17 Implementing the regulations will require a

18 substantial investments on behalf of the many businesses

19 that will be affected. To further help business and truck

20 owners comply, the Governor, Legislature, and voters have

21 made more than one billion dollars available in grants and

22 low cost loans. And the Air Resources Board is going to

23 continue to look for additional funding sources and

24 opportunities to assist those affected by these rules.

25 We know that today's economy is in a slump. But

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1 we also realize that we have to keep in mind that the

2 first compliance deadlines under this rule, assuming that

3 we were to adopt it tomorrow at this hearing, will not

4 occur until 2010. And we hope that any recovery is well

5 underway at that time.

6 At this point, I want to ask Mr. Goldstene to

7 introduce this item and to begin the presentation.

8 (Thereupon an overhead presentation was

9 presented as follows.)

10 EXECUTIVE OFFICER GOLDSTENE: Thank you, Chairman

11 Nichols. Good morning, members of the Board.

12 Today, staff is presenting for your consideration

13 a comprehensive strategy to reduce emissions from nearly

14 one million trucks that travel California's highways each

15 year. This strategy is comprised of two parts: A

16 regulation to significantly reduce criteria pollutants

17 from existing trucks and buses, and a companion measure

18 that would improve the fuel efficiency of many of the long

19 haul trucks operating throughout the state and would

20 reduce greenhouse gas emissions.

21 --o0o--

22 EXECUTIVE OFFICER GOLDSTENE: To better describe

23 these proposed regulations and to discuss how they are

24 connected, staff is combining both agenda items into a

25 single staff presentation. To do this effectively, I'll

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1 give a short overview to introduce the items and then turn

2 it over to the program staff that have worked on each of

3 the specific proposals.

4 First, Gloria Lindner will present the proposed

5 truck and bus regulation targeting criteria pollutant

6 emissions. This will be followed by Stephan Lemieux and

7 staff's proposal for heavy-duty greenhouse gas emission

8 reduction measure, which is an important down payment on

9 the commitments and the just approved AB 32 Scoping Plan.

10 After staff's discussion on these two items,

11 we've planned a short break. And then we'll go on to talk

12 about Tony Brasil from the staff will discuss the

13 integration of the two proposed regulations and explain

14 how for the most part each proposal targets different

15 types of fleets with very little overlap, which has been a

16 concern from the industry.

17 Jessica Dean will present information on over one

18 million dollars in incentive funding available to assist

19 fleets in modernizing their vehicles and trailers and show

20 how this funding can be used to make compliance more

21 manageable.

22 Finally, I'll present a few slides to recap and

23 close the staff presentation and will provide staff's

24 recommendations to the Board.

25 --o0o--

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1 EXECUTIVE OFFICER GOLDSTENE: Trucks and buses

2 represent the largest source of NOx and diesel PM

3 emissions in the state. If we're to meet the Federal

4 Clean Air Standards and our SIP targets, we need

5 significant reduction from these vehicles. In fact, the

6 largest share of new emissions reductions in the 2007 PM

7 SIP is expected from existing trucks and buses, and no

8 viable alternative source of emission reductions exists.

9 In other words, there is no Plan B for the state to meet

10 its SIP commitments and to achieve the emission reductions

11 we need.

12 While meeting the SIP commitments is important

13 from a legal perspective, even more important of course is

14 protecting public health. Emissions from trucks and buses

15 are significant contributors to the health risks

16 associated with exposure to diesel PM as well as to poor

17 air quality throughout the state which results in

18 thousands of lives lost each year. If we were to address

19 the impacts, action is needed now. There are no federal

20 programs to fall back on. California must demonstrate its

21 continued leadership in addressing emissions from all

22 sources in the state to protect the health of

23 Californians.

24 --o0o--

25 EXECUTIVE OFFICER GOLDSTENE: Under the Scoping

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1 Plan approved by the Board this morning, this early

2 afternoon, we also must move quickly to implement the

3 State's strategy for achieving its 2020 greenhouse gas

4 emissions target. Today's proposal to reduce greenhouse

5 gas emissions from long-haul tractors and trailers would

6 be the third discrete early action measure considered by

7 the Board.

8 The truck greenhouse gas proposal is the only

9 discrete early action measure identified to reduce

10 greenhouse gas emissions from heavy-duty vehicles. Like

11 the Pavely regulation for passenger cars, this proposal

12 reflects California's leadership role in reducing

13 greenhouse gas emissions from the transportation sector at

14 a time when the federal government simply has not acted.

15 Without approval of the proposal before you, California

16 cannot meet the goals of AB 32.

17 A unique aspect of this proposal is it will

18 result in fuel savings that will exceed the cost of

19 compliance. At a time of near-record diesel fuel prices,

20 such cost savings will provide long-term benefits to

21 regulated fleets. Staff's proposal clearly shows as the

22 Governor has stated that it's possible to improve both the

23 environment and the economy at the same time.

24 --o0o--

25 EXECUTIVE OFFICER GOLDSTENE: While the health

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1 and environmental benefits of the proposal before you are

2 both significant and cost effective, you will hear from

3 industry today that these benefits will result in

4 additional costs that the industry just can't bear,

5 especially in the current economic climate and that more

6 time is needed.

7 We certainly do acknowledge that today's economic

8 environment is challenging and that it is difficult to

9 predict exactly when the economy will recover. However,

10 postponing the adoption of these proposals will only allow

11 the adverse health and environmental impacts from trucks

12 to continue at a significant economic cost to the state.

13 Estimates done by staff and independent outside

14 institutions indicate the cost of inaction greatly

15 outweighs the cost of cleanup.

16 Despite the considerable cost of staff's

17 proposals, staff has made every effort to extend

18 flexibility and additional time wherever possible with no

19 capital investment required until the end of 2010 at the

20 earliest and no trucks required to be replaced until the

21 end of 2012. The requirements would be phased in over

22 more than a decade. This has allowed staff to minimize

23 and spread out the cost and economic impacts on the fleets

24 while obtaining the emission reductions that are needed.

25 Staff has developed both regulations in a way

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1 that would minimize overlapping costs between not only two

2 proposed regulations before you today, but between these

3 and other existing regulations as well.

4 --o0o--

5 EXECUTIVE OFFICER GOLDSTENE: As you will hear

6 later in the Ombudsman report, staff has conducted an

7 unprecedented public process for the development of the

8 proposed regulations. Staff sought and incorporated

9 stakeholder input into both proposals throughout all

10 stages of their development. Because of this, staff

11 believes that they have crafted proposals that provide

12 considerable flexibility and are responsive to industry's

13 needs, while meeting the state's air quality goals.

14 In listening this stakeholders, staff has

15 included provisions that provide multiple compliance paths

16 and that extend the compliance dates for many types of

17 vehicles, including those owned by owner-operators,

18 farmers, and businesses in many rural areas. These

19 elements should help lower compliance costs and more

20 uniformly spread out costs.

21 Perhaps most importantly, staff have structured

22 the proposed regulations to effectively integrate them

23 with new and existing incentive funding perhaps. This

24 will help ensure that considerable incentive funding

25 opportunities exist for many fleets, and in particular for

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1 small fleets. While the more than one billion dollars of

2 available incentive funding is not sufficient to cover all

3 the costs of the proposed regulations, for those fleets

4 that move quickly to take advantage of these funds through

5 a combination of grants and low interest loans, a newer

6 truck can be purchased and financed for about $800 per

7 month.

8 In addition, the technology needed to meet the

9 proposal requirements of these regulations, whether it's a

10 newer truck or retrofit, is available now.

11 I'll now ask Gloria Lindner of the Mobile Source

12 Control Division to present the staff proposal for the

13 proposed trucks and bus regulations. Gloria.

14 --o0o--

15 MS. LINDNER: Thank you, Mr. Goldstene. Good

16 afternoon, Chairman Nichols and members of the Board.

17 Today, I will present staff's proposal to reduce

18 PM and NOx emissions from in-use on-road diesel vehicles

19 operating in California.

20 I'll refer to this proposal as the truck and bus

21 regulation.

22 Today's presentation will also include proposed

23 amendments to several existing regulations. These

24 amendments will allow better integration of the

25 requirements of the existing regulations with the proposed

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1 truck and bus regulations.

2 --o0o--

3 MS. LINDNER: I'll begin my presentation by first

4 discussing why we need the PM and NOx reductions from

5 trucks and buses.

6 Then I will describe the proposed regulation

7 including staff's proposed changes to other existing ARB

8 regulations.

9 I'll then summarize the impacts of the proposal,

10 including its significant emission and health benefits, as

11 well as its associated costs.

12 Then I'll summarize staff's analysis of the other

13 alternatives considered.

14 --o0o--

15 MS. LINDNER: Existing fleets of heavy-duty

16 diesel trucks and buses are the largest contributors to PM

17 and ozone-forming emissions from all sources in the state.

18 As you can see, in 2005, they contributed more than a

19 quarter of all of the NOx and almost 40 percent of all of

20 the diesel PM emitted statewide from all sources.

21 --o0o--

22 MS. LINDNER: In 1998, the Board identified

23 diesel PM as a toxic air contaminant. It is responsible

24 for 70 percent of the known cancer risk from all air

25 toxics. And as you heard earlier today, results in even

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1 greater risk for those who work closely in and around

2 sources of diesel PM, such as truck drivers and dock

3 workers.

4 In 2000, the Board approved the Diesel Risk

5 Reduction Plan, which has as its ultimate goal in 2020 the

6 reduction of diesel PM emissions and their associated

7 cancer risk by 85 percent from 2000 baseline levels.

8 The proposed truck and bus regulation is the

9 largest remaining piece of the Diesel Risk Reduction Plan

10 to be considered by the Board.

11 --o0o--

12 MS. LINDNER: In addition to the risk impacts

13 from directly emitted diesel PM emissions, trucks are a

14 significant contributor to poor air quality throughout the

15 state.

16 Fifteen areas in California are designated

17 non-attainment of the federal ozone standard. In

18 addition, the South Coast air basin and the San Joaquin

19 Valley are designated non-attainment of the federal fine

20 particulate matter or PM2.5 standard.

21 As the maps show, most area of the state and in

22 fact the areas where most people live are out of

23 attainment with one or both of those standards.

24 Federal law mandates the development of State

25 Implementation Plans documenting the actions the State

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1 will take to attain the federal air quality standards in

2 these areas.

3 --o0o--

4 MS. LINDNER: In September 2007, the Board

5 approved the State Implementation Plan or SIP which

6 committed the State to develop measures to achieve

7 emissions reductions from sources under State regulatory

8 authority with the largest share of new emissions

9 reductions of NOx and directly emitted PM expected from

10 trucks and buses. NOx is a precursor to both ozone and

11 PM.

12 Substantial reductions in NOx and PM are needed

13 by 2014 to meet the PM2.5 attainment deadline, and by 2023

14 to meet the ozone attainment deadline.

15 Nowhere in the state and arguably in the country

16 are these emission reductions as critical as they are in

17 the South Coast and the San Joaquin Valley, which have the

18 farthest to go toward meeting federal air quality

19 standards.

20 Staff has used the targeted reductions in the SIP

21 as the goal for this rulemaking, as no other measure can

22 achieve this level of reductions.

23 --o0o--

24 MS. LINDNER: The failure of many regions of the

25 state to meet clean air standards has a significant impact

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1 on the health of all Californians.

2 This year alone, approximately 4,500 premature

3 deaths are associated with emissions from on-road

4 heavy-duty diesel vehicles. By comparison, secondhand

5 smoke is associated with 4,000 premature deaths per year

6 in California.

7 In addition, there are significant other adverse

8 health impacts from trucks and bus emissions, including

9 tens of thousands of cases of asthma and lower respiratory

10 symptoms, almost half a million lost work days, and more

11 than two million restricted activity days.

12 It should be noted that these impacts are

13 consistent with those found by outside researchers as

14 well.

15 The results of a recent study released by

16 researchers at California State University, Fullerton

17 showed similar results for the impacts of poor air quality

18 in southern California and the central valley.

19 The researchers noted significantly increased

20 mortality, asthma cases, and lost work days associated

21 with failure to meet federal clean air standards in those

22 regions.

23 --o0o--

24 MS. LINDNER: I will now describe staff's

25 proposal.

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1 --o0o--

2 MS. LINDNER: The proposed regulation would apply

3 to heavy-duty diesel fueled vehicles operating in

4 California with a gross vehicle weight rating greater than

5 14,000 pounds. The proposed regulation would apply to any

6 person or entity that owns, operates, or sells an affected

7 vehicle in California.

8 It would apply equally to these entities whether

9 based in state or out of state.

10 Drayage trucks and utility owned vehicles would

11 be subject to the regulation, but not until January 1st,

12 2021.

13 Certain vehicles, such as emergency vehicles,

14 military tactical vehicles, personal use motorhomes, and

15 historic vehicles would be excluded.

16 --o0o--

17 MS. LINDNER: This slide illustrates a wide

18 variety of truck types covered under the scope of the

19 regulation.

20 The regulation will apply to many different types

21 of vehicles used in almost all aspects of the California

22 economy.

23 In total, nearly one million vehicles that travel

24 California's roads each year are included. Over 400,000

25 of these are registered in the state, and another half a

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1 million are out of state registered vehicles that visit

2 California each year.

3 Now I will provide an overview of the proposed

4 requirements.

5 --o0o--

6 MS. LINDNER: The regulation would phase in

7 requirements that would achieve substantial NOx and PM

8 reductions such that by 2014 most engines would have

9 filters, and by 2023, all engines would be the cleanest

10 available.

11 The first requirement would be for fleets to

12 begin installing filters on certain older vehicles in

13 their fleet by 2011. If no filter is available or can't

14 be safely installed, then no action would be required. If

15 by 2018 an engine still does have a filter, then it would

16 have to be replaced. Vehicle replacements to reduce NOx

17 emissions would not begin until 2013 and are phased in

18 over the next decade. The regulation is structured so

19 that the requirements can always be met through the

20 purchase of used vehicles.

21 In other words, the proposed regulation never

22 requires the purchase of new vehicles.

23 In general, the regulation would never require

24 the installation of a filter on a vehicle less than seven

25 years old, nor require the replacement of a vehicle less

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1 than eleven years old. Staff recognized that it was

2 appropriate to include a number of special provisions,

3 such as less stringent requirements for small fleets,

4 lower use vehicles, and other provisions which I will

5 describe later.

6 To optimize flexibility for fleets, the proposed

7 regulation includes three compliance options.

8 --o0o--

9 MS. LINDNER: The BACT schedule prescribes which

10 vehicle must be retrofit or replaced based on the engine

11 model year.

12 The percentage limit option identifies the

13 minimum percentage of vehicles in each fleet that must be

14 retrofit or replaced each year.

15 The fleet averaging option provides the most

16 flexibility by allowing fleets to determine which vehicles

17 to retrofit or replace provided specific emission targets

18 are met. This option also allows fleets to take advantage

19 of available NOx control technology.

20 Each year, fleets can demonstrate compliance with

21 any of the three options and can change compliance options

22 from year to year. Importantly, the proposed regulation

23 is structured such that once any one of the three

24 compliance option is satisfied, the fleet is done for that

25 year for that pollutant.

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1 --o0o--

2 MS. LINDNER: To provide a better perspective of

3 what the regulation would require, this table identifies

4 the engine ages that would have to be replaced under the

5 BACT compliance option in each calendar year.

6 As you can see, this option would never require

7 the accelerated replacement of an engine that is less than

8 11 years old. And in fact, it routinely allows vehicles

9 as old as 14 years to continue to operate. Considering

10 the other compliance options, a fleet may be able to keep

11 some older vehicles even longer.

12 --o0o--

13 MS. LINDNER: Currently, many vehicles,

14 particularly long haul trucks that routinely travel over

15 100,000 miles each year, are replaced within seven years.

16 This means that many vehicles will be replaced on a normal

17 cycle well before the regulation would require.

18 Because of this, there will be no requirements

19 for many vehicles subject to the regulation. However, for

20 fleets that keep vehicles longer or operate older

21 vehicles, they may be required to retrofit and/or replace

22 some or all of their vehicles over the next decade.

23 As you can see on this chart, nearly two-thirds

24 of the vehicles covered by the proposed regulation would

25 not be required to take any action. However, for older

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1 fleets, the proposed regulation would require some action.

2 Staff estimates about a quarter of the affected vehicles

3 would need to be retrofit at some point to meet the PM

4 requirements of the regulation. And about a third of the

5 total vehicles would ultimately need to be replaced ahead

6 of their normal schedule.

7 --o0o--

8 MS. LINDNER: By looking at these figures, it is

9 clear to see the reason for requiring accelerated vehicle

10 replacements.

11 Until just a few years ago, existing in-use

12 vehicles emitted about the same level of NOx, 22 grams per

13 mile.

14 It wasn't until 2004 engines were introduced that

15 we started to see significant improvements in the NOx

16 performance of in-use diesel engines.

17 As you can see on the left, the last increment of

18 improvement in NOx emissions is not realized until 2010

19 when the cleanest NOx engines will be available.

20 Because of the long life of a diesel engines, it

21 will take considerable time for these cleaner engines to

22 replace older engines under typical replacement schedule.

23 For PM, the story has been somewhat better. We

24 have seen improvements in diesel PM emissions since 1991,

25 with the cleanest diesel engines for PM having been

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1 available since last year.

2 --o0o--

3 MS. LINDNER: In developing the proposed

4 regulation, staff carefully considered the impact it would

5 have on small fleets.

6 This is important because staff believes that

7 many small fleets face significant challenges in

8 retrofitting and accelerating the replacement of their

9 vehicles.

10 Because small fleets have few vehicles, they have

11 fewer opportunities to take advantage of the fleet

12 averaging or minimum percentage options of the proposed

13 regulation.

14 Scaling back the requirements for small fleets is

15 challenging since small fleets represent such a large

16 portion of the California vehicle fleet and small fleets

17 tends to have older vehicles than average.

18 As can be seen on this slide, almost half of all

19 trucks registered in the state are owned by fleets with

20 three or fewer vehicles.

21 --o0o--

22 MS. LINDNER: To address concerns about small

23 fleets, staff has included special optional provisions for

24 fleets with three or fewer vehicles. These provisions

25 would exempt small fleets from any cleanup requirements

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1 through 2012. After that date, the requirements would

2 vary depending on the size of the fleet.

3 Under staff's proposal, an owner-operator having

4 just one vehicle would need to upgrade that vehicle to one

5 having a 2004 model year or newer engine with a filter by

6 January 1, 2013. The vehicle owner would not have to take

7 any further action until January 1st, 2018, at which time

8 that vehicle would need to meet the PM and NOx performance

9 requirements of the regulation. If these requirements are

10 met with an eight-year-old used vehicle that has a 2010 or

11 equivalent engine, no more action is required.

12 For fleets with two vehicles, the second vehicle

13 would be required to meet the PM and NOx performance

14 requirements by January 1, 2014. Fleets of three vehicles

15 have additional flexibility to meet the proposed PM and

16 NOx performance requirements, giving them until as late as

17 2016 to upgrade their older third vehicle.

18 By 2023, all vehicles must have the cleanest

19 engines.

20 --o0o--

21 MS. LINDNER: Staff believes that it is

22 appropriate to provide some special provisions that would

23 delay the proposed NOx requirements for some vehicles,

24 while keeping them subject to the PM requirements.

25 Accordingly, staff is proposing to include

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1 provisions for unique vehicles until 2021 such that no

2 vehicle would be required to be replaced if a used vehicle

3 with a cleaner engine is not available. This provision

4 addresses uncommon vehicles such as blood collection

5 vehicles, and guarantees that new vehicles are never

6 required to be purchased to comply with the regulation.

7 Staff is also proposing special provisions for

8 certain types of cab-over engine truck tractors that are

9 no longer manufactured, as well as providing early credit

10 for vehicles that have filters installed prior to 2010.

11 Staff is also proposing that vehicles traveling

12 below specified mileage thresholds as well as vehicles

13 operated exclusively in cleaner areas of the state, as

14 shown on the slide, be exempt from any replacement

15 requirements until 2021.

16 To take advantage of all of these special

17 provisions, fleets would have to report information about

18 their vehicles.

19 --o0o--

20 MS. LINDNER: A number of other provisions to

21 assist fleets in complying with the proposed regulation

22 are also included. These include an exemption from all

23 cleanup requirements for vehicles operated less than 1,000

24 miles and 100 hours per year, double credit until January

25 1st, 2018 for hybrid vehicles, and credit for cleaner

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1 alternative fueled vehicles.

2 The proposed regulation also never requires the

3 installation of a filter if one is not available or cannot

4 be safely installed. However, by 2018, the vehicle or

5 engine would have to be replaced with one able to except a

6 filter.

7 Also, fleet owners would not be penalized if

8 there are manufacturer delays in the availability of

9 retrofits, new engines, or new vehicles.

10 Finally, to provide flexibility to out-of-state

11 fleets, provisions are included to allow them to obtain a

12 pass to operate a single noncompliant vehicle in

13 California once each year for up to three consecutive days

14 if they did not anticipate operating that vehicle in

15 California.

16 To utilize all of these provisions, fleets must

17 report information about their vehicles to ARB.

18 --o0o--

19 MS. LINDNER: The proposed regulation also

20 includes special provisions for agricultural vehicles that

21 in some cases delay compliance with the PM and the NOx

22 requirements.

23 Vehicles that may qualify for this provision

24 include those used exclusively for agricultural

25 operations, which includes logging operations, dedicated

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1 fertilizer and crop protection, chemical delivery trucks,

2 farmer-owned vehicles used to support the farm, vehicles

3 that perform specialized work on the farm or on a

4 for-higher basis, and vehicles that are exclusively used

5 the transport harvested crops to first processing centers.

6 Vehicles that perform other function in addition

7 to agricultural operations would not be considered

8 agricultural vehicles.

9 Under staff's proposal, agricultural vehicles

10 that operate below certain annual mileage thresholds would

11 be exempt from the cleanup requirements for a specified

12 period of time, with the number of vehicles qualifying for

13 these provisions set in 2010 and not allowed to grow.

14 The mileage threshold vary initially by model

15 year between 15,000 and 25,000 miles until 2017 when they

16 decline to 10,000 miles per year. All other vehicles in

17 the fleet, except for specialty farm vehicles, would need

18 to meet the same performance requirements as other fleets.

19 Specialty farm vehicles encompassing four

20 specific types of vehicles used on the farm, have no

21 mileage limits and would be exempt from all cleanup

22 requirements until 2023. However, the number of specialty

23 farm vehicles, both in San Joaquin valley and statewide,

24 would be capped under staff's proposal.

25 By January 1, 2023, all agricultural vehicles

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1 must meet the 2010 model year engine requirements,

2 regardless of mileage or use.

3 --o0o--

4 MS. LINDNER: Because staff's proposal will delay

5 the installation of filters on a number of agricultural

6 vehicles, staff performed a screening analysis of the

7 potential diesel PM exposure risk from these provisions.

8 As shown in the figure, staff's preliminary

9 analysis indicates there could be an elevated risk of

10 greater than ten in a million resulting from emissions of

11 uncontrolled vehicles delivering products to a point of

12 first processing. This increased risk appears to be

13 focused along roadways leading to the processing facility

14 and resembles observed risk levels along freeways in urban

15 areas. The risk would vary depending on the number of

16 uncontrolled trucks traveling on the roadway, distance

17 from the roadway, and other factors.

18 While staff does not believe that these findings

19 are sufficient to delay staff's proposals for agricultural

20 vehicles, staff believes it is necessary to better

21 understand this potential impact by evaluating several

22 actual facilities throughout the state.

23 Staff is proposing to report back to the Board in

24 2009 and present appropriate recommendations to address

25 potential impact on communities.

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1 --o0o--

2 MS. LINDNER: Reducing diesel PM emissions from

3 school buses is critical due to health risks associated

4 with childhood exposure to diesel PM.

5 As such, the proposed regulation targets

6 reductions in diesel PM by establishing a retrofit time

7 table specifically for school buses. Buses that cannot be

8 retrofit would need to have the engine replaced with one

9 that can be retrofit by 2018. However, unlike other

10 sectors, school buses would not be required to provide NOx

11 reductions through accelerated fleet turnover.

12 The exception is the remaining 50 or so school

13 buses manufactured prior to April 1st, 1977, before

14 minimum federal safety standards were established.

15 These buses will be required to be removed from

16 service by January 1, 2012. And the State has provided

17 funding for this through $200 million in the lower

18 emissions school bus program.

19 If districts use these funds in the most

20 judicious manner by selecting the most cost effective

21 projects to funds, up to 95 percent of the cost would be

22 covered. Local air districts also have additional local

23 program funds to assist school districts.

24 Because of concerns raised about potential shift

25 for reduced school bus transportation levels due to the

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1 potential cost of the regulation, staff is proposing to

2 monitor any shifts in student transportation associated

3 with staff's proposal.

4 --o0o--

5 MS. LINDNER: Today, all new heavy-duty diesel

6 engines are equipped with PM exhaust controls, typically

7 filters. This means that there is a current pool of

8 vehicles already operating in the state that meet the PM

9 performance requirements of the regulation.

10 As a result of previously adopted ARB regulation

11 and incentive programs, there are several thousand

12 vehicles in operation that have filters installed. These

13 vehicles utilize eleven currently verified PM retrofits

14 produced by eight different manufacturers. These

15 retrofits are currently available for most trucks on the

16 road today.

17 Looking forward, new engine manufacturers are on

18 track to meet 2010 engine standards with engines that are

19 expected to be more fuel efficient than the engines they

20 are producing today.

21 Also, retrofit manufacturers are currently

22 demonstrating high level NOx control technology on about

23 70 vehicles in California and Texas using selective

24 catalytic reduction, or SCR, while in Europe, there are

25 over half a million vehicles in operation already equipped

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1 with this technology.

2 Finally, sufficient new and used cleaner diesel

3 vehicles should be available to meet the anticipated

4 increased demand for the proposed regulation.

5 --o0o--

6 MS. LINDNER: Staff believes it is appropriate to

7 modify several other existing regulations to provide

8 relief to vehicles that are subject to multiple existing

9 regulations and to make changes to improve their overall

10 clarity and enforceability.

11 These changes include provisions for privately

12 owned street sweepers and two-engines cranes. Currently,

13 these vehicles may be subject to three other regulations.

14 In addition, changes are needed to the public

15 fleet and utility regulation to ensure that filters are

16 installed on all vehicles, that appropriate retirement

17 credit is provided to all fleets, and that private

18 utilities have a clear path towards meeting the

19 requirements of both regulations.

20 Also, changes to the drayage truck regulation are

21 being proposed so that filters will be installed on all

22 vehicles traveling to port and intermodal rail facilities

23 in the state. Staff is also proposing that certain

24 vehicle types, in particular armored cars and workover

25 rigs, be allowed to idle consistent with the necessary

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1 operating requirements of those vocations.

2 --o0o--

3 MS. LINDNER: Now that we've covered the

4 requirements of the proposed regulation, let's turn to the

5 total cost and benefits it will provide.

6 --o0o--

7 MS. LINDNER: To evaluate both the environmental

8 and economic impacts of staff's proposal, it is first

9 necessary to ensure that staff has the most accurate

10 emission inventory available.

11 The updated truck and bus emissions inventory

12 developed for the proposed regulation builds upon ARB's

13 current on-road emissions inventory model, EMFAC 2007.

14 Over the past several years, staff analyzed a

15 variety of new data sources, including DMV records, fuel

16 tax and registration fee programs, US Census data, and

17 specialized surveys.

18 Using this information, staff developed more

19 detailed truck and bus categories which better

20 characterize the diversity of truck and bus operations in

21 California.

22 The improved inventory differentiates between

23 in-state and out-of-state trucks, combination and single

24 unit trucks, different vocations, and fleet sizes.

25 Each of these new vehicle categories have their

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1 own unique population, age distribution, and mileage

2 accrual. This specificity enables staff to model the

3 variety of truck fleets and compliance options included in

4 the proposed rule.

5 Based on this inventory, and as can be seen by

6 the black line on this slide, NOx emissions from existing

7 diesel vehicles will decrease over time as older vehicles

8 are replaced with newer, cleaner ones.

9 However, because older vehicles tend to stay in

10 the fleet for as long as 20 to 30 years, this decline in

11 emissions is not sufficient to meet ambient air quality

12 standards. As such, additional emissions reductions from

13 these engines are necessary.

14 Staff's proposal, shown in red, would expedite

15 this reduction in NOx emissions from existing vehicles by

16 124 tons per day in 2014 and 98 tons per day in 2023.

17 These reductions represent the single largest

18 installment of emissions reductions from any regulation

19 approved by the Board in the last decade.

20 --o0o--

21 MS. LINDNER: The significant emission benefits

22 of the proposed regulations are not limited to NOx.

23 As can be seen in this figure, diesel PM

24 emissions are expected to be significantly reduced.

25 Again, the black line in the figure is the

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1 baseline emissions without the regulation. And the red

2 line represents expected emissions with the regulation.

3 As you can see, the proposed regulation would reduce

4 diesel PM by nearly 13 tons per day in 2014 and 5.2 tons

5 per day in 2020.

6 These PM reduction are the maximum achievable by

7 2020, consistent with the intent of the Diesel Risk

8 Reduction Plan.

9 --o0o--

10 MS. LINDNER: Overall, the proposed regulation is

11 expected to avoid 9,400 premature deaths, 150,000 cases of

12 asthma related symptoms, and nearly a million fewer lost

13 work days, as well as many other health impacts.

14 The estimated 9400 mature deaths is higher than

15 the total estimated premature deaths associated with all

16 previous in-use diesel control measures combined. The

17 health benefits from this regulation are valued at 48 to

18 $68 billion.

19 The emission reductions from the proposed

20 regulation also meet the combined PM and NOx SIP targets

21 in the San Joaquin Valley and the South Coast regions in

22 all years with no other measure able to provide this level

23 of reductions.

24 --o0o--

25 MS. LINDNER: Just as the overall benefits of the

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1 proposed regulation are significant, so are its costs.

2 Staff estimates the costs of the proposed

3 regulation to be $5.5 billion between 2010 and 2025. Of

4 this, about 4.5 billion is attributable to California

5 registered vehicles, and one billion for out-of-state

6 vehicles, with most of these costs falling on the

7 warehousing and transportation sector.

8 In estimating these costs, staff's analysis

9 compared the costs of normal replacements to the costs

10 expected to comply with the regulation for nearly 700

11 actual fleets.

12 The analysis was predicated solely on vehicle

13 replacements and filter costs. To the extent NOx

14 retrofits become available, costs could be lowered.

15 The analysis also included both capital and

16 annual costs, including things such as loss in value of

17 older vehicles, increased cost for newer vehicles, and

18 reporting costs.

19 Overall, the cost effectiveness compares

20 favorably with previous regulations adopted by the Board.

21 --o0o--

22 MS. LINDNER: In considering the costs, it is

23 important to understand how used vehicles play a

24 significant role in reducing the overall compliance costs

25 for fleets.

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1 As you can see in this slide, new vehicle prices

2 decline by more than 50 percent in just the first four or

3 five years. This is why staff structured the regulation

4 to allow cleaner used vehicles to be a viable compliance

5 option to lower the overall cost.

6 In fact, the proposed regulation guarantees that

7 new vehicle replacements are never required, and no

8 vehicle need to be replaced until 2012 at the earliest,

9 when used 2010 vehicles should be available.

10 --o0o--

11 MS. LINDNER: The proposed regulation will also

12 require the retrofit of a significant number of vehicles.

13 To estimate these costs, staff used actually installed

14 costs for filters that have been funded through the Carl

15 Moyer Program, as well as what has typically been charged

16 by installers for devices compliant with other ARB

17 retrofit regulations.

18 Staff also included annual filter costs such as

19 cleaning.

20 --o0o--

21 MS. LINDNER: Staff also evaluated the impact of

22 other existing regulations on affected fleets, primarily

23 by evaluating impacts on actual individual companies.

24 This evaluation was done for both the TRU and the

25 off-road regulations. For a refrigerated transportation

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1 company, staff concluded that the impact of the proposed

2 regulation would be relatively small because these fleets

3 typically replace most of their vehicles sooner than the

4 regulation would require. Staff estimates the impact to

5 be about a penny per mile compared to typical revenues

6 ranging from $1.00 to $1.50 per mile.

7 For large construction companies with off-road

8 equipment, staff estimates that the proposed regulation

9 would add about six percent of the cost of the existing

10 in-use off-road vehicle regulation.

11 Staff has also determined there will be little

12 overlapping costs between the proposed regulation and the

13 proposed truck and trailers greenhouse gas regulation. A

14 more detailed discussion of this will be provided later in

15 staff's presentation.

16 Staff also considered the impact of several

17 existing regulations on cranes and two-engine sweepers and

18 concluded that there could be a significant impact.

19 To address this, staff has developed this

20 proposal to better reduce emissions from these vehicles,

21 while resulting in lower compliance costs.

22 --o0o--

23 MS. LINDNER: Staff recognizes that the current

24 economic climate is poor and it is unclear when the

25 economy will recover. However, it's important to note

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1 again that the first retrofit requirements of the proposed

2 regulation don't begin until 2011 and no vehicles would be

3 required to be replaced until 2013, providing time for

4 fleets to realize a recovery in their revenues before any

5 capital investments would be required.

6 In evaluating the impacts on the economy of the

7 state, staff used a peer-reviewed economic model to

8 evaluate the impact the regulation would have on

9 California's $3.1 trillion economy and found that there

10 would be a reduction in grows domestic product of about

11 0.0.014 percent.

12 For jobs, staff believe the proposed regulation

13 could slow growth in some sectors, while increasing it in

14 others.

15 Staff expects most fleets to pass through their

16 costs to customers and consumers. However, the impact on

17 the consumer should not be noticeable, resulting in a few

18 more dollars from increased transportation costs on the

19 price of a new car or on a pair of shoes.

20 Although the overall impact to the economy and

21 the consumer should be small, it will affect fleets

22 differently. To better understand this, staff evaluated

23 the potential impacts on actual individual companies. The

24 following three slides provide a summary of the impacts on

25 one such company.

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1 --o0o--

2 MS. LINDNER: In this example, staff evaluated

3 the impact of the proposed regulation on a trucking fleet

4 having 35 tractor trailers that run about 80,000 miles per

5 year. Typically, this fleet replaces two to three trucks

6 per year and normally buys used four-year-old replacement

7 trucks. The current age of the trucks in this fleet is

8 shown in the table to the right. This fleet would not

9 qualify for any of the special provisions of the proposed

10 regulation.

11 --o0o--

12 MS. LINDNER: This slide illustrates the number

13 of replacements and retrofits the regulation would require

14 for this fleet. The yellow bars show the number of truck

15 replacements, and the blue bars show the number of filters

16 that would we need to be installed.

17 The dashed line represents anticipated truck

18 replacement scheduled this fleet would typically perform,

19 which is normally two trucks in most years, which three

20 trucks in 2011 and to '15.

21 As can be seen, this fleet would need to replace

22 more vehicles than normal in 2012 and 2013 and would need

23 to install filters early in the program. However, it

24 would not need to replace any vehicles in 2014, 2017, or

25 2018.

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1 --o0o--

2 MS. LINDNER: This shows the estimated costs

3 associated with the compliance actions just shown.

4 Normally, this fleet would spend about $80,000 per year

5 purchasing used four-year-old vehicles.

6 The dashed lines shows the normal investments

7 made when replacing vehicles without a regulation in

8 place. This fleet would comply by continuing to buy used

9 vehicles. To lower the capital investments required, the

10 fleet can purchase older vehicles than normal that are

11 otherwise cleaner.

12 --o0o--

13 MS. LINDNER: To help fleets understand what

14 actions are needed and what they need to do to comply with

15 the regulation, staff also plans to develop and conduct an

16 extensive ongoing outreach program. This campaign will

17 build on the outreach staff has already done throughout

18 development of the proposed regulation. Staff is

19 committed to continue to work with industry groups to

20 inform their members about the regulation.

21 Staff will hold training workshops across the

22 state and invite manufacturers of verified filters to

23 share information about their products with affected

24 fleets.

25 Staff would provide training and educational

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1 materials at the workshops and on our website to help

2 fleets understand the choices they will face with respect

3 to finding the most cost effective path to compliance.

4 Staff will also operate a toll free number set up to

5 answer questions about the regulation.

6 Staff also plans to develop and provide

7 electronic tools for compliance planning that will allow

8 fleets to determine what retrofits are available for their

9 vehicles, and to experiment with the various possible

10 compliance paths.

11 In addition, staff plans to develop and provide

12 electronic reporting forms that will allow fleets to

13 report their vehicles on line and demonstrate how they

14 have met the requirements.

15 --o0o--

16 MS. LINDNER: I will now discuss staff's

17 evaluation of an alternative proposed Driving Towards a

18 Cleaner California Coalition, known as DTCC, a coalition

19 of industry stakeholders impacted by the proposed

20 regulation.

21 --o0o--

22 MS. LINDNER: The proposal from the DTCC

23 coalition includes more generous mileage exemptions would

24 delay the NOx com minutes schedule and would exempt more

25 vehicles from any cleanup requirements.

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1 This graph compares NOx emission benefits from

2 the proposed regulation with the benefits from the DTCC

3 proposal.

4 The top black line shows the baseline emissions

5 in the absence of a regulation. The bottom red line shows

6 NOx emissions for the proposed regulation. In between is

7 a blue line which shows the NOx emissions with the DTCC

8 proposal.

9 As can be seen, the DTCC proposal would achieve

10 about 50 percent less emission reductions in 2014 and 2017

11 than staff's proposal. Thus, it would prevent many fewer

12 deaths and would mean we would not achieve the emissions

13 reductions necessary to meet California's SIP targets.

14 --o0o--

15 MS. LINDNER: At the request of industry, staff

16 also evaluated the impacts of the current recession on

17 heavy-duty truck emissions in California. Economic

18 conditions are one of the many factors that may impact the

19 total emissions from trucks on the road. For this

20 analysis, staff analyzed trends in the number of miles

21 driven by trucks in California from 2003 to late 2008,

22 sales of California diesel fuel and the relationship of

23 national truck sales to gross domestic product in the

24 truck industry.

25 Staff found that truck miles driven in California

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1 increased from 2003 to 2007, reflecting the economic

2 growth during that period, and then declined from 2007 to

3 late 2008 as the nation entered the current recession.

4 Diesel fuel and truck sales are also closely linked to

5 economic conditions with both decreasing during the

6 current recession.

7 In summary, fewer miles are being driven by

8 trucks in California, less fuel is being used, and fewer

9 trucks are being replaced such that older trucks are

10 staying on the road longer.

11 Although the observed decrease in truck miles

12 driven and diesel fuel used has resulted in lower

13 emissions, overall emissions in the critical SIP

14 attainment years may increase due to the higher emission

15 rates associated with older trucks staying in the

16 California fleet.

17 --o0o--

18 MS. LINDNER: Finally, staff is proposing a few

19 15-day changes. These changes are shown in the strike-out

20 and underline in your Board packets and are available on

21 the table outside of the hearing room and have been posted

22 on the website for the proposed regulation.

23 Staff is proposing to provide fleets credit for

24 the early retirement of their vehicles during the initial

25 years of the regulation. These provisions would apply

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1 when fleets are downsizing and are an important addition

2 to the proposed regulation considering the current

3 economic climate.

4 Staff is also proposing to provide additional

5 hours of use, until 2014, for two-engine sweepers that are

6 used for back-up service. This is important to address

7 some of the unique economic issues facing small,

8 independent sweeper fleets.

9 Staff is proposing to delay the replacement

10 requirements for motor coaches to provide more time for

11 fleets to replace these vehicles, which can cost as much

12 as 250 to $300,000 used.

13 Finally, staff is proposing other minor

14 clarifying and corrective changes to the proposed

15 regulation.

16 This concludes my part of the presentation.

17 CHAIRPERSON NICHOLS: Why don't we take just a

18 brief pause here so Board members can ask questions. This

19 was a lot of material to cover here. So this would be a

20 good point if anybody has any specific questions about the

21 material that was presented if you want to go into any of

22 it now.

23 Does anybody want to raise anything?

24 Yeah. Go ahead.

25 BOARD MEMBER ROBERTS: Back to what's indicated

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1 in slide 47. Back to what is our slide 47, it's called

2 impacts of recession on emissions.

3 Is this -- I mean, is there some analysis or is

4 this -- it almost reads like, well, you have one thing

5 that's there and something else. It's hard for me to

6 believe even in the older vehicles they're not traveling

7 for fewer miles with a net effect there's less emissions,

8 but we've kind of dismissed that. It seems a little quick

9 to me to dismiss so quickly.

10 CHAIRPERSON NICHOLS: Yeah. I think this is

11 worthy of some more discussion. And I'm sure it's going

12 to come up.

13 Does somebody want to take that one on?

14 MR. BENJAMIN: Yeah. This is Michael Benjamin,

15 Chief of the Mobile Source Analysis Branch.

16 My staff did this analysis, and we looked at a

17 number of different data sets. The first data set that we

18 looked at was monthly VMT data from Caltrans. They have a

19 network of 10,000 imbedded roadway censors around the

20 state. With that information, they can see what the

21 trends in vehicle miles traveled are, not just for

22 passenger cars, but for trucks. So we looked at that data

23 for the past about eight years.

24 We also looked at monthly fuel sales, diesel fuel

25 sales data published by the Board of Equalization, and

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1 this represents diesel fuel sold from the refinery to the

2 distributor. And the relationship between these two tract

3 very well. So in other words, when there is an economic

4 expansion as we saw up until about 2005, 2006, there was

5 an increase in diesel fuel sales as well as truck VMT

6 driven.

7 There is quite a bit of variability in the data

8 from month to month and a various pronounced seasonal

9 effect with more driving and fuel usage in the summer than

10 the winter.

11 We also looked at national truck sales data from

12 Wards database. We looked at the historical relationship

13 of those truck sales to the GDP and the economic in the

14 trucking sector. And there was again a strong

15 relationship with during recession periods new truck sales

16 were down. So clearly during those periods of time during

17 a recession, the fleet as a whole will tend to get older

18 as you have less replacement of older vehicles.

19 And since the emission rates between new vehicles

20 and the older vehicles are quite significant, it

21 definitely does counter the VMT reduction that you would

22 have. So we definitely see that there will be emission

23 reductions as we said in the staff presentation related to

24 less fuel use and to less VMT.

25 But the tricky part is to understand how the

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1 turnover will be impacted by fewer sales. And we were

2 able to do a qualitative assessment. But we don't know to

3 what degree the new truck sales -- the reduction in truck

4 sales would offset the reduction in VMT.

5 BOARD MEMBER ROBERTS: That's really at the heart

6 of my question. Because it seems to me your analysis goes

7 so far and then you kind of jump or at least lead us to

8 our conclusion I'm not comfortable with. Because

9 intuitively I guess I come to just the opposite conclusion

10 that you do.

11 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF

12 WHITE: Maybe we can put up slide number 21, which I think

13 what you're hearing is is that -- you're absolutely right.

14 As vehicle miles go down, less fuel is used. Less

15 emissions occur.

16 But what you have competing with that is the

17 delay that fleets will take in terms of perhaps putting

18 off the purchase of a newer vehicle and the importance of

19 just even a year or two in terms of model year how

20 important that is. And on the slide we show how in-use

21 NOx emissions change by model year.

22 BOARD MEMBER ROBERTS: No. I understand that.

23 But let me say what if I own three or four trucks. It may

24 be that I'm using the newer trucks and not the older

25 trucks.

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1 So I think you're making a big guess on this.

2 And I don't have the confidence in that guess that you

3 seem to have.

4 (Applause)

5 CHAIRPERSON NICHOLS: We're trying to --

6 BOARD MEMBER ROBERTS: It's not going to help

7 with the applause. You don't want to do that.

8 RESEARCH DIVISION CHIEF CROES: Let me take

9 another quick shot at it.

10 If you look at the left-hand one on NOx, you can

11 see that even for the 2004 to 2006 trucks, which are

12 virtually new, the NOx is way, way more than it is for the

13 2007 to 2009 and way, way more than 2010.

14 So what we're seeing is that fleets that can make

15 decisions to even keep these newer trucks and not turn

16 them over. In fact, making a decision to have way more

17 NOx than they would if they chose to turn them over as

18 they could under normal economic times.

19 BOARD MEMBER ROBERTS: Maybe I'm not clear on

20 what I'm saying. We'll get there eventually.

21 CHAIRPERSON NICHOLS: Intuitively, this is a

22 tough sell, frankly.

23 BOARD MEMBER ROBERTS: But to some extent, I

24 think to just say it's a wash is a little speculative. I

25 mean, I would feel better if you could say we don't know

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1 for sure.

2 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF

3 WHITE: I think -- I don't think we do know. I mean, you

4 can make certain estimates and guesses as to how things

5 will change and certainly arrive at a different number.

6 And you have two competing impacts of emissions

7 coming from used and also holding on to the vehicle longer

8 and which one ultimately wins in terms of which way

9 emissions go. I don't think we could say with certainty

10 we know one way or the other.

11 BOARD MEMBER ROBERTS: That was the point I was

12 trying to make.

13 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF

14 WHITE: Maybe that's not what you were looking for.

15 BOARD MEMBER ROBERTS: You've kind of led us to

16 that conclusion. But you're saying there's two things

17 happening. But at the end of the day, we're not quite

18 sure whether they're equivalents or not.

19 I notice you didn't chart it out and show us how

20 it happens over time. I mean, there's two different

21 things are happening. We're not quite sure of the weight,

22 whether they're equal or unequal. Maybe it's even better.

23 But I'm not convinced at least as I look at this

24 that -- and I'm not comfortable with just sort of saying

25 it's a wash. I understand there are two different things

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1 happening, and it's hard to get a pretty good handle on

2 either of them.

3 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF

4 WHITE: That's right. And it has both near term as well

5 as long term implications as well.

6 BOARD MEMBER ROBERTS: I understand. It's going

7 to shift some of the gains would you get from the trucks

8 you could otherwise buy. But it also maybe that given the

9 nature of the economy, you may find the older trucks

10 aren't being used and that there's a benefit -- a net

11 benefit to the lower vehicle miles traveled. I don't

12 know.

13 CHAIRPERSON NICHOLS: Well, I think the one

14 area -- I mean, there is data available on both of these

15 things actually. I think that's what the staff is saying

16 is they've got the data that exists and they've just run

17 the data. They're not making up numbers or models here.

18 They're actually working with what data exists that can

19 tell you how much these vehicles actually are being driven

20 and what's happening in terms of fleet turnover. And I

21 don't think we -- I don't know that we can pursue it right

22 now.

23 But that is the question is where else are you

24 going to go for information if you're not going to look at

25 the data that we do have.

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1 Anyway, I think it's time to continue. We

2 unless -- sorry. Another question.

3 BOARD MEMBER D'ADAMO: Just a quick question

4 about the so-called three-day pass.

5 EXECUTIVE OFFICER GOLDSTENE: For out-of-state

6 vehicles?

7 BOARD MEMBER D'ADAMO: Yeah. I'm just concerned

8 about gaming the system. And I understand you're saying

9 it would be a pass that would be available only for a

10 truck that wouldn't otherwise have come to California.

11 What exactly is the criteria?

12 MR. BRASIL: The provision is in there that the

13 out-of-state fleets can take advantage of all the

14 provisions we built in for the in-state fleets.

15 Fleets that are using the fleet averaging

16 provision would have to identify annually which vehicles

17 are coming to California or are in California and include

18 those in their average.

19 A fleet who replaces a vehicle or does not -- did

20 not include in their average a vehicle that would come to

21 California a single time would be able to bring in that

22 vehicle just the one time. This is largely to address the

23 owner-operators who may not come to California normally

24 has a load to pick up in California. He could come one

25 time without having to replace his truck or put on a PM

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1 retrofit to pick up the one load.

2 They would have to identify in advance and report

3 to us they would be here for the three days. And they

4 could not use that provision again for another year.

5 BOARD MEMBER D'ADAMO: So just to clarify, if I

6 own a large fleet and I've identified the trucks and my

7 plan for compliance, if suddenly I decide, you know, a

8 third of my fleet normally goes in California, two-thirds

9 doesn't. I can't just randomly select trucks from the

10 two-thirds that's not coming into California and cycle

11 them through?

12 MR. BRASIL: No. It would be limited a single

13 truck per company per year.

14 BOARD MEMBER D'ADAMO: But if I own this large

15 fleet and I've identified my compliance plan, would I

16 still be allowed to utilize that three-day pass?

17 MR. BRASIL: The way we've proposed it, you would

18 be able to for one truck that was not in your plan at the

19 beginning of the year.

20 CHAIRPERSON NICHOLS: So it's a very small safety

21 valve.

22 MR. BRASIL: It's for unanticipated a truck

23 breaks down and you replace it with a different one that

24 wasn't in your system at the beginning of the year, you

25 have a mechanism to still operate it the one time.

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1 BOARD MEMBER D'ADAMO: Okay.

2 CHAIRPERSON NICHOLS: Dr. Telles.

3 BOARD MEMBER TELLES: I have quite a few

4 questions. One is the economic impact. I'll start with

5 that. I think it was slide 47.

6 I think the question that is going to be probably

7 asked today and I would like an answer to is which is --

8 not addressed in the economic impacts slide anywhere in

9 here is how many truckers would actually be put out of

10 business by this provision?

11 I know that's a very hard to thing to ask, but I

12 think that's one of the things we're going to be hearing

13 today. And I wonder if you have any analysis of that,

14 what would be the economic -- I mean, that's a fatal

15 economic impact if you're put out business if you're that

16 particular trucker. But what kind of numbers have you

17 come up with, or do you have any numbers?

18 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF

19 WHITE: Well, I guess we didn't really estimate that the

20 regulation was going to put businesses out of business or

21 prohibit independent owner-operators from continuing to

22 perform in the vocation that they are.

23 And we did that really in one of two ways. One

24 was to provide some stringent requirements, provide them

25 more time and give them a smaller first step so they can

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1 go buy an older used truck -- cleaner than what they had,

2 but older used truck to comply with the requirements of

3 the regulation.

4 The second is really looking at targeting the

5 incentive funding towards the owner-operators as a way to

6 combine existing grant programs as well as low interest

7 loans and allow them to get into a newer used truck for

8 what we would hope would be at a reasonable monthly

9 payment and allow them then to continue to operate with

10 that.

11 And that newer truck brings along several

12 advantages to them that they don't have with the older

13 vehicles. More reliable. Maintenance cost will be lower.

14 So our expectation is that that type of situation

15 will occur as well as though there's going to be a need to

16 pass through the cost. We expected many if not most

17 fleets to pass through the costs to their customers, to

18 the consumers and so --

19 BOARD MEMBER TELLES: I don't want any hisses or

20 boos. I'm just trying to look for data. I think this is

21 one of the major data items which is missing is we don't

22 know the economic impact to certain small businesses.

23 MR. BENJAMIN: We actually do have a source of

24 information we could use, which is one of our primary data

25 sources was the DMV registration data that we used to

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1 determine how many trucks there were in California and

2 their fleet size.

3 So we can use that same source of information as

4 we go forward to understand how does the fleet change in

5 terms of the number of fleets, the number of trucks that

6 are going to be on the road and their age. And we can

7 then link that to the economy.

8 But again this is going to be more as a

9 retrospective.

10 BOARD MEMBER TELLES: I want a number. How many

11 are we going to put out of business?

12 I don't want any claps or anything. I mean, this

13 is a serious issue and I think it should be addressed.

14 I don't think we're dealing with, you know, the

15 CEO of General Motors. I think we're dealing with a lot

16 of the small businesses here.

17 EXECUTIVE OFFICER GOLDSTENE: Dr. Telles, there

18 are a lot of factors that would go into trying to predict

19 what that would be. I don't know it's possible to predict

20 it and present to the Board a single number because so

21 much would depend on how an individual -- how an

22 individual runs their business and their customers.

23 We're very sensitive to that, which is why in the

24 proposal we've come up with nearly a billion dollars in

25 funding which we're going to target towards really smaller

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1 owner-operators. That's why the rule has been structured

2 the way it is, because we're sensitive to the question

3 you're asking, but I don't know how we can give you a

4 number.

5 CHAIRPERSON NICHOLS: I think I'm going to

6 suggest that with several of these questions it doesn't

7 make a lot of sense to try to answer them off the cuff.

8 Dr. Telles clearly isn't happy with the answer.

9 I suggest that we -- you, I should say, regroup and prior

10 to this coming back for a vote tomorrow decide how to

11 address that question. The question has been put on the

12 table.

13 BOARD MEMBER TELLES: I probably have some

14 perspectives you'll be more happy with.

15 What is the cost per ton? Do you have an

16 estimate there? Coming from an air pollution control

17 district, you always look at cost per ton for NOx

18 emissions reduction. And I think it's a helpful way to

19 look at that.

20 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF

21 WHITE: Yes. And we actually had it in there in one

22 version of the presentation but took it out to streamline

23 it.

24 But typically what we've done in the past is look

25 at cost per pound, but same metric. For this particular

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1 proposal, it's about $1.40 to $1.90 per pounds of NOx

2 which is actually very cost effective relative to many of

3 the measures the Board has approved in the past.

4 And on the PM side, we're about 42 to $48 per

5 pound, which is well below many of the other PM only type

6 of control measures that the Board has approved in the

7 past.

8 BOARD MEMBER TELLES: And the way we look at it

9 in the San Joaquin Air District is dollars per ton. And

10 if you reduce the total NOx by 480,000 tons, which the

11 rule does, and you divide it by 5.5 billion, you end up

12 with somewhere around $12,000 per ton reduction of NOx for

13 this rule, which is an acceptable number in what it's done

14 in their districts where, you know, our ISR rule number is

15 somewhere around ten to $15,000 per ton. And we have

16 passed things -- and I'm sure some of the other air

17 district control people here probably passed some rules up

18 around $50,000 a ton.

19 So I think from that perspective this is an

20 affordable rule. I mean, it's not totally out of line.

21 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Dr.

22 Telles, we've typically used something around $11 a pound

23 for NOx or HC. When it gets into that level, you start

24 taking a pretty close look at it. And that's $22,000 a

25 ton. So even with your calculation, this is about half of

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1 that.

2 And on the PM one, I think the cost benefit ratio

3 for that breaks even as somewhere in the 250 to $275

4 dollars a pound for PM. So we are well below that in this

5 rule as well.

6 CHAIRPERSON NICHOLS: Thank you.

7 Are there any other questions? Ms. Berg.

8 BOARD MEMBER BERG: I think what I'd like to do

9 is if any other Board members of course have any comments

10 but get to the public testimony when you're comfortable

11 and reserve my comments and questions as we get into the

12 testimony. Because I do also have quite a few questions

13 on the economic impact and certain ways we're going to --

14 who's going to determine what is safe and what is not

15 safe. But instead of going into a lot of different

16 things, I'd like to hear some more testimony.

17 CHAIRPERSON NICHOLS: Okay. Fair enough.

18 I think we're going to hear another staff

19 presentation on the greenhouse gas rule next before we

20 even get to public testimony here. This is a long set of

21 presentations by the staff. But I think it makes sense to

22 lay out what's on the table first before we get to the

23 public.

24 But if people are planning the rest of their day

25 and their evening, I want to tell you what our plans are

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1 here. I think most people know that we're starting

2 tomorrow morning and we're planning on taking tomorrow as

3 long as it takes to get through all of the public hearing

4 items before we take any action on these rules.

5 But the Board has agreed to stay into the evening

6 so that we can accommodate as many people who want to

7 testify tonight as possible. And so we will take a couple

8 of fairly short breaks for stretching, comfort, and food,

9 but we will be going on into the evening probably until

10 about nine o'clock which I think is about as late as

11 anybody should try to listen or speak. So just so you

12 know, that's what our plan is. And then come back

13 tomorrow and start in again in the morning early, 8:30

14 actually the Board is going to get together.

15 So I'm going to turn its back over to the staff

16 for the next piece of this presentation.

17 EXECUTIVE OFFICER GOLDSTENE: Thank you, Chairman

18 Nichols.

19 Now Stephen Lemieux will present staff's truck

20 and trailer greenhouse gas proposal.

21 --o0o--

22 MR. LEMIEUX: Chairman Nichols and members of the

23 Board, I will now discuss staff's proposed regulation that

24 would reduce greenhouse gas emissions in California by

25 reducing the aerodynamic drag and rolling resistance of

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1 heavy-duty tractors and trailers.

2 --o0o--

3 MR. LEMIEUX: First, to provide some perspective

4 on the importance of the proposed regulation, shown here

5 is a breakdown of manmade greenhouse gas sources within

6 the state during the years 2002 through 2004.

7 As shown, the transportation sector, which

8 includes on-road vehicles, airplanes, trains, and marine

9 vessels, is the largest contributor to the total statewide

10 greenhouse gas inventory, producing approximately 38

11 percent of the state's total greenhouse gas emissions.

12 In 2020, greenhouse gas emissions from this

13 sector are projected to increase by 50 percent relative to

14 the 1990 levels. Thus, emissions from the transportation

15 sector need to be reduced significantly in order to

16 achieve the AB 32 goal of reaching 1990 greenhouse gas

17 levels by the year 2020.

18 --o0o--

19 MR. LEMIEUX: To see how heavy-duty trucks in

20 particular contribute to greenhouse gas emissions, this

21 pie chart shows just the greenhouse gas contribution from

22 the transportation sector. As shown, heavy-duty trucks

23 have a significant impact, contributing 19 percent of the

24 transportation sector greenhouse began emission. Note

25 that passenger cars are already subject to greenhouse gas

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1 requirements in California, pending a waver from US EPA.

2 --o0o--

3 MR. LEMIEUX: The goal of the proposed regulation

4 is to reduce greenhouse gas emissions from long-haul

5 tractors and trailers by improving their fuel efficiency.

6 Specifically, improvements in fuel efficiency

7 will be accomplished by requiring the use of more

8 streamlined new tractors and the installation of

9 aerodynamic technology on new and in-use 53-foot long

10 box-type trailers.

11 In addition, the proposal would require low

12 rolling resistance tires for both new and in-use long-haul

13 tractors and the trailers they pull.

14 The technologies that would improve fuel

15 efficiency will be described in greater detail later in

16 the presentation.

17 --o0o--

18 MR. LEMIEUX: The proposed requirements are based

19 on existing U.S. EPA SmartWay Program. The SmartWay

20 Program is a voluntary partnership between the U.S. EPA

21 and the freight industry with the goal of increasing

22 energy efficiency while reducing greenhouse gas emissions.

23 The SmartWay Program has established test

24 protocols and guidelines for certifying fuel efficient

25 tractors and trailers equipped with aerodynamic

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1 technologies and low-rolling resistance tires. Also

2 established are technical specification and requirements

3 used to verify the performance of individual aerodynamic

4 technologies. SmartWay certified tractors, trailers and

5 aerodynamic technologies are discussed in the next few

6 slides.

7 The proposed regulation would create a mandatory

8 program in California requiring the use of SmartWay

9 certified tractors and trailers and SmartWay verified

10 aerodynamic technologies and low-rolling resistance tires.

11 --o0o--

12 MR. LEMIEUX: This table shows the estimated

13 number of tractors and trailers that would be impacted by

14 the proposed regulation. As shown, the vast majority of

15 tractors impacted by the proposal would be from out of

16 state. This is understandable since the focus of the

17 proposal is on long-haul operation.

18 Note that the number of trailers is greater than

19 the number of tractors that pull them. This is because

20 many fleets typically own more trailers than tractors in

21 order to maximize operational efficiency and reduce

22 tractor down time while waiting for the trailers to be

23 unloaded and loaded.

24 The ratio of tractors to trailers varies

25 considerably from fleet to fleet. But using the industry

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1 average, trailer to tractor ratio of 2.5 to one, staff

2 estimates that the total number of trailers affected by

3 the proposed regulation would be over one million.

4 --o0o--

5 MR. LEMIEUX: SmartWay certified tractors need to

6 meet the requirements of staff's proposal are available

7 today. As SmartWay certified tractor must meet US EPA's

8 design specification, to qualify as a SmartWay certified

9 tractor, it must have an overall aerodynamic profile and

10 be equipped with most of aerodynamic technologies briefly

11 mentioned on an earlier slide.

12 Most major tractor manufacturers currently offer

13 at least one tractor model that is SmartWay certified. A

14 SmartWay certified tractor will reduce fuel consumption by

15 three to four-and-a-half percent compared to a regular

16 tractor, resulting in an annual fuel savings of

17 approximately $1800. When considering that the average

18 incremental capital cost of purchasing a SmartWay

19 certified tractor model is 2,100, the return on investment

20 from fuel savings is a little over one year, an excellent

21 return on investment for any business.

22 --o0o--

23 MR. LEMIEUX: Like the tractors, new SmartWay

24 certified trailers are also currently available today.

25 These trailers are outfitted with a combination

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1 of aerodynamic technologies and low-rolling resistance

2 tires that together have been demonstrated to provide a

3 6.5 percent or greater improvement in fuel efficiency and

4 greenhouse gas reductions compared to a traditional

5 trailer. This fuel efficiency improvement would result in

6 an annual fuel cost savings of approximately $3,300 if

7 tractor-to-trailer ratio is 1-to-1 or to $1300 if the

8 trailer-to-tractor ratio is 2.5-to-1.

9 The average incremental cost of a SmartWay

10 certified dry van trailer over a traditional trailer is

11 about $2900.

12 The regulation also applies to refrigerated van

13 trailers, although a new SmartWay certified refrigerated

14 van trailers are currently not offered by trailer

15 manufacturers. This will change in the near future,

16 because U.S. EPA plans to expand the SmartWay Program to

17 certify new refrigerated vans.

18 For now, in order to comply with the proposed

19 regulation, the purchaser of a new refrigerated trailer

20 would be required to retrofit the trailer with individual

21 SmartWay verified aerodynamic technologies and low-rolling

22 resistance tires. The requirements are identical to those

23 that will apply to owners of existing trailers as

24 described in the next few slides.

25 --o0o--

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1 MR. LEMIEUX: I will now discuss retrofit

2 technologies for in-use trailers.

3 Shown here are three examples of verified side

4 skirt technology. When traveling on the highways, side

5 skirts direct the flow of air around the trailers, away

6 from the rear wheels, reducing aerodynamic drag. Through

7 testing, these designs have demonstrated a four percent or

8 greater improvement in fuel efficiency. These fuel

9 efficiency improvements have been verified by fleets

10 throughout the country. In fact, staff has received

11 comments from 13 fleets located in eight different states

12 and two Canada provinces that have experienced positive

13 results using side skirt technology.

14 Currently, there are four companies that

15 manufacture SmartWay verified side skirts. The average

16 cost of these technologies is about $1900 installed.

17 --o0o--

18 MR. LEMIEUX: Also there are SmartWay verified

19 front gap fairings and rear trailer fairings.

20 Front gap fairings as shown in the top three

21 photos reduce the flow of air swirling behind the tractor

22 and collecting in front of the trailer. The resulting

23 reduction in aerodynamic drag has been verified to improve

24 fuel efficiency by at least one percent.

25 Currently, there are three companies that

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1 manufacture SmartWay verified front gap fairing. The

2 average installed cost of a front gap fairing is about

3 $870.

4 As shown on the bottom three photos, rear trailer

5 fairings are devices that are designed to be attached to

6 the rear of a trailer. Designs vary from inflatable

7 devices called boat tails to trailer side and top

8 extensions. All are designed to prevent the air from

9 swirling around the rear edges of the trailer, reducing

10 aerodynamic drag.

11 The SmartWay Program requires these devices to

12 achieve at least a one percent improvement in fuel

13 efficiency. However, there is one SmartWay verified rear

14 trailer fairing that has achieved a five percent

15 improvement, shown in the lower left picture.

16 Currently, there are four companies that

17 manufacture SmartWay verified rear trailer fairings. The

18 average cost of these devices is about $2800 installed.

19 --o0o--

20 MR. LEMIEUX: Two types of SmartWay verified

21 low-rolling resistance tires are currently available:

22 Dual wide tires and single wide tires.

23 Both the dual and single wide models reduce

24 rolling resistance through tread design and material. The

25 single wide design offers additional benefits by reducing

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1 the overall weight of the wheel, since it requires only

2 one rim instead of two.

3 Testing has shown that replacing all of the

4 conventional tires on an 18-wheeler with low-rolling

5 resistance tires can increase fuel efficiency by three

6 percent or more.

7 Currently, there are six tire manufacturers that

8 offer SmartWay verified low-rolling resistance tires. The

9 incremental cost of low-rolling resistance dual tires over

10 a conventional tire varies from no increase to about $50

11 per tire. So at most, the incremental cost of replacing

12 all 18 tires at the normal replacement interval would be

13 about $900.

14 --o0o--

15 MR. LEMIEUX: Aerodynamic technologies continue

16 to evolve, as manufacturers improve both the functionality

17 and durability of existing verified technologies and

18 develop new ways to reduce aerodynamic drag.

19 As shown in the figures above, skirt

20 manufacturers have responded to customer concern with a

21 number of innovative solution such as:

22 Skirts that retract and deploy as a function of

23 speed;

24 Skirts that can be folded up manually to provide

25 more clear an with loading ramps;

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1 And flexible materials in skirt construction.

2 Innovative approaches to reducing drag in the

3 front and rear of trailers are also being explored. Shown

4 in the lower left photo are two examples of the flow

5 control devices that reduce drag by modifying the air flow

6 on the front and rear of the trailer.

7 Staff will monitor the development of these and

8 other emerging technologies.

9 I would now like to discuss the specifics of the

10 staff's proposal, including the scope of the regulation

11 and the proposed requirements.

12 --o0o--

13 MR. LEMIEUX: The proposed regulations would

14 apply primarily to Class 7 and 8 tractors, 53-foot or

15 longer box-type trailers operating in California.

16 The term box-type refers to either a dry van

17 trailer or a refrigerated van trailer. These tractor

18 trailers are the focus of staff's proposal because of

19 their long haul operation, resulting in by far the

20 greatest greenhouse gas benefit from the proposed

21 requirements.

22 The proposed regulation applies not just to

23 California registered long-haul tractors and trailers, but

24 also all in-state and out-of-state long-haul tractors and

25 trailers traveling in California.

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1 Responsibility for compliance would primarily

2 rest with the owners of the tractors and the trailers, but

3 various other parties would also share the responsibility

4 including the drivers, the motor carriers, the

5 California-based brokers that dispatch the tractors and

6 trailers and California-based shippers that ship freight.

7 --o0o--

8 MR. LEMIEUX: I would now like to focus on the

9 specific requirements of the proposal.

10 The proposed regulation would require 2011 and

11 newer model year sleeper cab tractors that operate in

12 California, regardless of the state of registration, to be

13 SmartWay certified. This requirement would take effect on

14 January 1, 2010. These tractors would be equipped with a

15 full aerodynamic package and low-rolling resistance tires.

16 For day cab tractors operating in California,

17 beginning with model year 2011, the proposed regulation

18 would only require the use of low-rolling resistance tires

19 beginning on January 1, 2010. The proposed regulation

20 would not require these tractors to be SmartWay certified

21 since US EPA has not yet developed SmartWay specifications

22 for day cab tractors.

23 Lastly, for 2010 and older year model year

24 tractors operating in California, only the use of

25 low-rolling resistance tires would be required, beginning

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1 on January 1, 2012. Retrofitting with aerodynamic

2 equipment would not be required on these older models

3 since in most cases it would not be technically feasible

4 or cost effective.

5 --o0o--

6 MR. LEMIEUX: Staff's proposal would also require

7 2011 and subsequent model year 53-foot or longer box-type

8 trailers that operate in California to be either SmartWay

9 certified or be retrofitted with SmartWay verified

10 technologies.

11 For those that are retrofitted, they would need

12 to be equipped with SmartWay low-rolling resistance tires.

13 They would also need to be equipped with SmartWay verified

14 aerodynamic devices that would improve the fuel efficiency

15 by five percent for dry vans and four percent for

16 refrigerated vans. This reason for this fuel efficiency

17 difference is that some technologies are not available for

18 refrigerated vans.

19 --o0o--

20 MR. LEMIEUX: For the 2010 and older model year

21 trailers that operate in California, they would be subject

22 to the same requirements applicable to the newer trailers,

23 except they would have more time to comply, until January

24 1, 2013.

25 2010 and older models year trailer owners would

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1 also have the option of an expended compliance plan based

2 on whether their fleet size is considered small or large.

3 A separate optional compliance plan would also be

4 available for refrigerated vans. I will briefly discuss

5 these three plans in the next few slides.

6 --o0o--

7 MR. LEMIEUX: To ease the burden of up-front

8 capital costs, fleets with 20 or fewer 2010 and older

9 model year trailers would have the option to participate

10 in the small fleet compliance schedule. This is a

11 deferred schedule, allowing smaller fleets to stretch out

12 compliance requirements over several years. Fleets would

13 be given until December 31st, 2016, to complete their

14 compliance phase in.

15 Similarly, fleets of 21 or more 2010 and older

16 model year trailers would also have the option to

17 participate in an optional compliance schedule which would

18 allow them to delay full trailer compliance until December

19 31, 2015. However, by opting to participate in this

20 schedule, fleets would be required to begin bringing some

21 trailers into compliance earlier, starting in 2010.

22 Large fleets also can act early and bring

23 trailers into compliance prior to 2010 and receive credit.

24 Specifically, fleets with trailers brought into compliance

25 prior to January 1, 2010 would use earned credits to delay

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1 the compliance of other trailers until the 2016 Calendar

2 year.

3 To participate in both the small and large fleet

4 compliance schedule, a fleet would be required to submit a

5 compliance plan and must allow ARB staff to audit their

6 records periodically.

7 Those fleets that do not submit a compliance plan

8 would have to have every trailer operating in California

9 in compliance by 2013.

10 In consideration of up-front capital costs

11 imposed on fleets that have refrigerated van trailers also

12 subject to the previously adopted transportation

13 refrigeration unit rule during the same time period,

14 staff's proposal would allow fleets to delay compliance

15 with the proposed requirements for certain refrigerated

16 trailers. These trailers would have between 2017 through

17 2019 to comply, depending on the model year of the

18 trailer.

19 --o0o--

20 MR. LEMIEUX: In developing the proposal, it

21 became clear that some tractors and trailers should be

22 exempt from the proposed requirements because of either

23 their operation or their design.

24 For example, short-haul tractors and trailers

25 would be exempt because they typically travel a majority

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1 of their miles at slower speeds, greatly reducing the

2 greenhouse gas emission benefits resulting from the use of

3 aerodynamic technologies.

4 For purposes of the proposed regulation, a

5 short-haul tractor is defined as one that either travels

6 exclusively within a 100-mile radius from its local haul

7 base or travels no more than 50,000 miles a year.

8 Drayage trailers and tractors that pull them

9 would also be exempt, if they limit their travel to within

10 100 miles of their port or rail yard of origin or

11 destination.

12 Container chassis, drop frame vans, and curtain

13 side vans as shown on the slide would be exempt because of

14 their designs, which are not compatible with existing

15 SmartWay verified aerodynamic technologies. This could be

16 reconsidered if SmartWay verified technologies become

17 available for these types of trailers.

18 Emergency and military tactical vehicles would

19 also be exempt.

20 --o0o--

21 MR. LEMIEUX: Presented here are the potential

22 greenhouse gas emissions reductions based on staff's

23 proposal.

24 In 2020, the proposal is expected to reduce

25 approximately one million metric tons of carbon dioxide

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1 equivalent emissions in California and approximately seven

2 million metric tons of carbon dioxide equivalent emissions

3 nationwide.

4 Staff also estimates that from 2010 to 2020 as

5 new fuel efficient tractors and trailers are introduced

6 and in-use tractors and trailers are retrofitted with fuel

7 efficient technologies, greenhouse gas emissions will be

8 reduced by cumulative total of approximately eight million

9 metric tons of carbon dioxide equivalent statewide and

10 approximately 52 million metric tons of carbon dioxide

11 equivalents nationwide.

12 --o0o--

13 MR. LEMIEUX: In addition to the greenhouse gas

14 benefits, reducing aerodynamic drag and tire rolling

15 resistance would also reduce oxides of nitrogen emission.

16 The proposed regulation will reduce oxides of nitrogen

17 emissions by approximately 4.3 tons per day in 2014 and

18 1.4 tons per day in 2020. These reductions will

19 contribute towards attainment of ambient air quality

20 standards for ozone and PM2.5 as set forth in our State

21 Implementation Plan.

22 In addition, the proposed regulation is also

23 expected to reduce California's demand for petroleum. It

24 is estimated that from 2010 to 2020 a total of 750 million

25 gallons of diesel fuel would be saved from operations

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1 within California alone, and approximately five billion

2 gallons of diesel fuel from nationwide operation.

3 --o0o--

4 MR. LEMIEUX: The proposed regulation imposes up

5 front capital costs to purchase and install technologies.

6 One installed, fuel savings will quickly recoup the

7 up-front costs.

8 Shown here is an example of the average cost of

9 compliance, the fuel savings realized, and the payback

10 period.

11 The two columns compare the cost and savings

12 between a typical tractor and trailer based on whether the

13 tractor was a new SmartWay certified tractor or was an

14 older, yet compliant tractor retrofitted with low-rolling

15 resistance tires.

16 Note that because the SmartWay tractor is more

17 aerodynamically styled than the standard in-use tractor,

18 the fuel efficiency gains are greater for the SmartWay

19 tractor, 10 percent versus 8 percent.

20 Correspondingly, the incremental cost of the

21 SmartWay tractor is higher, $2100 versus $250. But the

22 payback period for the retrofitted tractor and trailer and

23 the SmartWay tractor and trailer is roughly the same.

24 As mentioned earlier, the ratio of tractors to

25 trailers varies considerably from fleet to fleet. Many

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1 fleets typically own more trailers than tractors in order

2 to maximize operational efficiency.

3 Staff used the industry average trailer to

4 tractor ratio of 2.5 to 1. A higher trailer to tractor

5 ratio would result in a longer payback period.

6 --o0o--

7 MR. LEMIEUX: As mentioned in the previous slide,

8 businesses will incur up-front capital costs to comply

9 with the proposed regulation. However, the initial costs

10 will be quickly recovered from fuel savings. As a result,

11 the proposed regulation would result in an overall savings

12 to the affected industry.

13 Staff estimates the total cost incurred and the

14 total savings realized by businesses to comply with the

15 proposed regulation over an eleven-year period from 2010

16 to 2020. Staff estimated that businesses will incur a

17 total annualized cost of approximately $8.5 billion from

18 equipment cost and maintenance, and a total annualized

19 savings of approximately $17.1 billion, resulting in a net

20 savings of $8.6 billion.

21 These costs and savings figures have recently

22 been updated and thus differ from the cost estimates found

23 in the staff reported.

24 Specifically, it was recently discovered that the

25 estimates in the staff report over estimated the costs by

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1 double counting new tractors and trailers sold each year

2 and underestimated the savings of such vehicles.

3 --o0o--

4 MR. LEMIEUX: Based on the comment received by

5 stakeholders during the 45-day comment period, staff

6 proposes to the Board the following 15-day changes to the

7 proposed regulation.

8 Staff proposes removing the 100-mile operating

9 range exemption from the tire requirements, but keeping

10 the exemption for tractors that travel less than 50,000

11 miles annually. The rationale for this proposal is that

12 tractors and trailers that accrue more than 50,000 miles

13 per year but stay within 100 mile operating range are

14 likely to be traveling a significant portion of their

15 mileage at highway speeds and will receive greenhouse gas

16 reductions. Even if tractors are operating at lower

17 average speeds, benefits will accrue due to high truck

18 utilization and the relatively low cost or no incremental

19 cost of the tires.

20 Another proposed modification applies to

21 refrigerated van trailers. Staff proposed to remove the

22 reporting requirements for refrigerated van trailers

23 because compliance would be determined by the model year

24 of the trailer and not based on any plans made by the

25 fleet owner. This change would remove a reporting burden

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1 and reduce cost to the affected fleets.

2 Staff also proposes to exempt solid waste

3 trailers because these trailers often travel off-road to

4 landfills. And thus, side skirts and low-rolling

5 resistance tires may not be appropriate for these

6 trailers.

7 Staff also proposes to make other minor

8 modifications as appropriate to add specificity and

9 clarity to the proposed regulation.

10 EXECUTIVE DIRECTOR GOLDSTENE: Thank you.

11 Madam Chairman, we didn't know if you want to

12 take more questions on this item.

13 BOARD MEMBER BALMES: I was wondering why flatbed

14 trailers are not included. I understand that flatbed

15 trailers would have less aerodynamic drag to start with.

16 But the tractors and their tires could be streamlined.

17 But the tractor could be streamlined. You have an

18 improved tires. Is there a specific reason why flatbed

19 trailers are not included?

20 MR. LEMIEUX: Specifically, the design of a

21 flatbed trailer is different than a dry van. They do a

22 lot flexing. And so when you look at an unloaded flatbed,

23 you'll see it has an arch to it. So the designs of

24 skirting technologies that typically fit right along the

25 underneath of the trailer -- and usually those trailers

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1 are straight -- so it requires additional design. That's

2 one factor. There's not really any currently designs

3 available for those trailers.

4 BOARD MEMBER BALMES: So I understand that. But

5 why not the tires, for example?

6 MR. LEMIEUX: Also, flatbeds oftentimes go

7 off-road to deliver equipment in different facilities. So

8 staff didn't have the opportunity or the time to really

9 evaluate the effects of the tire needs for that type of

10 equipment or that type of operation. So we plan to come

11 back to the Board and evaluate that and propose tire

12 requirements for flatbed and other trailers in the future.

13 CHAIRPERSON NICHOLS: The very good numbers on

14 this reflect the fact that this is the SmartWay Program

15 certified devices that already have been through a process

16 of being certified. And all we're doing is really taking

17 them and putting them into our early action plan for AB

18 32.

19 Okay. Well, at this point I think we should take

20 a break of about 15 minutes, no more. Try to make it ten.

21 But 15 and we'll come back. Resume.

22 (Thereupon a recess was taken.)

23 CHAIRPERSON NICHOLS: Mr. Goldstene, we are going

24 to begin.

25 EXECUTIVE OFFICER GOLDSTENE: Thank you, Chairman

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1 Nichols.

2 Eric White is going to discuss the overlap

3 between the two proposed regulations. And then we're also

4 going to talk about the incentive funding. And you may

5 want to take a break in between depending.

6 Eric.

7 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF

8 WHITE: Thank you, Mr. Goldstene.

9 I will now discuss how the requirements of the

10 truck and bus regulation and the truck and trailer

11 greenhouse gas regulation generally do not effect the same

12 fleets and most of the costs do not overlap.

13 --o0o--

14 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF

15 WHITE: In general, most long-haul trucks travel

16 considerably more than 100,000 miles per year, are

17 purchased new, and are replaced in three to seven years.

18 These trucks, which must meet the requirements of

19 the proposed truck and trailer greenhouse gas regulation,

20 are normally replaced ahead of the schedule proposed in

21 the truck and bus regulation.

22 In contrast, a typical truck that would need to

23 be cleaned up under the truck and bus regulation would be

24 about 12-years-old, with most traveling less than 50,000

25 miles per year. This means that most older trucks would

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1 not be subject to the truck and trailer greenhouse gas

2 regulation.

3 Because some fleets operate older trucks more

4 than 50,000 miles each year, they could experience costs

5 from both proposed regulations. Staff considered this and

6 provided a compliance option in the truck and trailer

7 greenhouse gas regulation to reduce overlapping compliance

8 costs by beginning more slowly and extending the

9 compliance period.

10 Staff also intends to make incentive funding

11 available to comply with both proposed regulations.

12 --o0o--

13 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF

14 WHITE: This chart shows the tractor trailer combinations

15 by age and mileage that operate in California. It does

16 not include other types of trucks and buses.

17 The green area on the chart shows which tractor

18 trailer combinations could have cost impacts from both

19 regulations. These are the trucks that travel more than

20 50,000 miles per year and are eight years old or older.

21 Recall, trucks that are this old would have to be either

22 retrofit and/or replaced under the truck and bus

23 regulations.

24 As you can see, the other trucks shown on the

25 graph would either need to meet the requirements of only

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1 one of the two regulations or are too new and travel too

2 few miles to be impacted by either regulation.

3 The next slide shows the proportion of the truck

4 population operating in California that could have cost

5 impacts from both regulations.

6 --o0o--

7 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF

8 WHITE: This chart represents the nearly 1 million trucks

9 and buses operating in the state covered by both

10 regulations. The colors on this chart correspond to those

11 on the previous slide.

12 As you can see, the only about five percent of

13 the trucks operating in California could have costs

14 associated with both regulations.

15 Throughout the development of both proposed

16 regulations, staff emphasized the need for effective

17 enforcement. This is because a robust enforcement program

18 provides a level playing for fleets who are making a

19 significant financial investment to comply.

20 --o0o--

21 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF

22 WHITE: To address this, staff will place a high priority

23 on the effective enforcement of both regulations. ARB's

24 enforcement efforts will build on our existing diesel

25 enforcement programs and will include a strong presence

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1 both in the field as well as auditing fleets.

2 We also plan to expand our existing reporting

3 systems to receive and maintain vehicle information and

4 intend to cross check the information reported with other

5 existing registration programs.

6 Staff will also request additional resources to

7 augment ARB's existing enforcement, outreach, and

8 implementation activities.

9 --o0o--

10 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF

11 WHITE: I will now discuss the availability of incentive

12 funding and how ARB's incentive programs are being

13 coordinated to assist fleets.

14 --o0o--

15 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF

16 WHITE: In aggregate, ARB's incentive programs will

17 provide greater financial assistance to on-road fleets

18 than ever before.

19 As you'll likely hear in comments and testimony,

20 industry faces significant economic challenges with the

21 proposed regulations. In these changing financial times,

22 many fleets may have trouble obtaining traditional lines

23 of credit for new equipment purchases.

24 Existing and upcoming grant programs can provide

25 substantial down payments, and new loan guarantee programs

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1 can help secure financing for the remaining balance of a

2 truck purchase.

3 The grant and loan guarantee programs I will

4 describe can help fleets considerably, and the State's

5 funding will play a key role in the success of both

6 regulations.

7 --o0o--

8 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF

9 WHITE: An unprecedented amount of funding is available to

10 fleets through a variety of incentive programs. In many

11 cases, these programs can be coupled together to provide

12 maximum assistance to effect the fleets.

13 I'll introduce the menu incentives and then speak

14 more specifically about each program, and finally address

15 the option available to the different types of fleets

16 affected by the proposed rules.

17 First, let's focus on the portfolio of incentive

18 option. The Carl Moyer program provides approximately

19 $140 million per year throughout California for purchasing

20 mobile vehicles and equipment in advance of the compliance

21 deadlines.

22 Future funding for exhaust retrofits and new

23 vehicle purchases will be available as grants and vouches,

24 and proposed changes to the program guidelines will expand

25 fleet eligibility.

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1 The Goods Movement Emission Reduction Program

2 enabled by Prop 1B provides over $1 billion expected over

3 several years to achieve early or extra emission

4 reductions from freight movement in California's trade

5 corridors.

6 Staff expects that future funds will be

7 distributed as grants and loan guarantees. Assembly Bill

8 118 provides funds that will allow fleets to access

9 approximately $350 million in loans they may not otherwise

10 obtain on their own. These funds issued as loan

11 guarantees to participating lenders will be available to

12 smaller fleets throughout the state.

13 Approximately $200 million distributed through

14 the Lower Emission School Bus Program will assist

15 California school districts to retrofit their school bus

16 fleets.

17 Let's look at these programs in more detail.

18 --o0o--

19 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF

20 WHITE: The Carl Moyer program has funded over 2,000

21 on-road heavy-duty vehicles in the first ten years of the

22 program and will continue to be an important source of

23 funding for on-road fleets.

24 Many stakeholders and the Board have requested

25 that staff integrate incentive options with regulatory

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1 requirement. In response, staff developed several changes

2 to the 2008 Carl Moyer program guidelines to align more

3 closely with the regulatory proposals before you today.

4 We anticipate an Executive Order in January to formally

5 implement these changes.

6 First, we will extend the eligibility criteria

7 for old trucks by three years so that 1993 and older

8 trucks can participate in fleet modernization. Next, we

9 will shorten the minimum surplus requirement from three

10 years to two years only for small fleets complying with

11 the 2012 compliance deadline in the truck and bus

12 regulation. This will allow more funding and additional

13 time for small fleets to receive funding and will create

14 an incentive for them to purchase 2010 trucks.

15 Also, a new option will allow an owner to retire

16 two trucks and combine their usage to help qualify for one

17 new replacement truck. A similar option already exists in

18 the current Moyer guidelines for off-road equipment.

19 These changes are supported by local air

20 districts and will primarily help small fleet owners by

21 increasing the number of vehicles eligible for funding.

22 To take advantage of this additional flexibility,

23 Carl Moyer Program grants recipients would need to use the

24 BACT compliance schedule during the contract term.

25 --o0o--

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1 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF

2 WHITE: The majority of Carl Moyer Program funding will

3 still be allocated and administered by California's local

4 air districts in the traditional manner, with the changes

5 just described.

6 Additionally, staff has developed a new grant

7 option for small fleets scheduled to begin in spring of

8 2009.

9 This new grant program greatly simplifies the

10 application process. A truck owner could choose a

11 compliant new or used truck at a dealership, complete the

12 grant application while still at the dealership, and

13 within a week receive a voucher worth up to $35,000 for a

14 down payment on that truck.

15 Staff has streamlined the administrative

16 requirement to make it easy for local air districts,

17 dealerships, and truckers to participate statewide.

18 The voucher option could also pair with the loan

19 guarantee at the same time, to provide a complete

20 financing package for a small fleet owner.

21 --o0o--

22 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF

23 WHITE: Authority granted under AB 118, AB 109, and AB

24 1338 allows ARB to implement loan guarantee programs for

25 small fleets and fleets under financial hardship.

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1 We have partnered with the State Treasurer's

2 office to develop a loan guarantee program through the

3 existing CalCAP, or California Capital Access Program.

4 Beginning in the spring of 2009, ARB and CalCAP

5 can assist small businesses to obtain loans they otherwise

6 would not receive. This program targets companies that

7 fall just outside lender's standard loan criteria,

8 including those that likely could have until recently

9 obtained financing, but who would now be turned away in

10 today's more conservative credit climate. The program is

11 not intended for very high risk borrowers.

12 This program design will allow ARB and CalCAP to

13 leverage State dollars at a ratio of about seven to one.

14 This means our initial allocation of funding under AB 118

15 can secure at least $350 million of competitively priced

16 loans for truckers complying with the proposed rules.

17 As you have probably noticed in your packet of

18 stakeholder comments, a number of banks have written

19 letters of support, voicing their intent to participate in

20 this program.

21 Trucking companies will be able to use loan

22 proceeds to purchase used trucks, new trucks, SmartWay

23 products, and exhaust retrofits to comply with the

24 proposed regulations.

25 --o0o--

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1 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF

2 WHITE: About half of the one billion dollars Prop 1B

3 dedicated to emission reductions in California trade

4 corridors has been appropriated to ARB so far.

5 Funds from most recent appropriation will go

6 toward replacements of 2003 and older trucks in the form

7 of grants, regardless of fleet size. Grants will be

8 awarded competitively, based on cost effectiveness and

9 total reductions. Staff is also developing a loan

10 guarantee component for small fleets.

11 Similar to the Carl Moyer Program requirements, a

12 Prop 1B funded truck could not be part of fleet averaging

13 during the two- to three-year period in advance of the

14 BACT compliance date for that truck.

15 The Board will consider program guideline

16 revisions at the February 2009 Board hearing. The

17 proposed changes will include lowering the minimum gross

18 vehicle weight rating to 31,000 pounds to make most Class

19 7 trucks eligible for funding. Staff will also propose to

20 allow funding up to two years prior to a compliance

21 deadline, rather than a three years currently required.

22 --o0o--

23 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF

24 WHITE: Now that I've explained the options available,

25 let's look in detail at what this may mean for the various

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1 types of fleets affected by the proposed rules. Small

2 fleets of one to three trucks have the most funding

3 opportunities. They are eligible for Carl Moyer funding,

4 Proposition 1B funds and loan guarantees. The financial

5 assistance these programs offer will help truck owners

6 upgrade to 2007 or newer trucks, which will bring their

7 fleet into compliance beyond 2020. Upgrading to 2010 or

8 newer trucks will complete their compliance obligations

9 under the proposed regulations.

10 The Fleet Modernization Program provides Carl

11 Moyer funding to replace 1993 or older trucks, granting up

12 to $75,000 per truck replacement. Fleet modernization is

13 only available in air districts that have approved Carl

14 Moyer Program Fleet Modernization Plans. Currently, these

15 districts include the South Coast, San Luis Obispo,

16 Sacramento, and Butte County.

17 The new voucher program offers a significant

18 grant for truck replacement as well. Although the grant

19 amount is lower than that for the fleet modernization

20 option, vouches will be available statewide and offer a

21 quick simplified application and award process.

22 Truck replacement funds are also available under

23 the Proposition 1B Goods Movement Program if the trucks

24 move goods in California's trade corridors. These include

25 the Central Valley, Bay Area, Los Angeles Inland Empire,

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1 and San Diego areas.

2 Loan guarantee programs will be available in

3 spring of 2009. We expect many truck owners to use grant

4 funding as a significant down payment in combination with

5 the loan guarantee for the balance of the cost of a

6 replacement truck.

7 --o0o--

8 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF

9 WHITE: Large fleets operating in trade corridors have

10 replacement funding options available through the Prop 1B

11 Goods Movement Program. The maximum funding amounts for

12 2003 and older trucks are identical to those for small

13 fleets.

14 Enabling legislation allows some flexibility for

15 loan guarantees for large fleets if they face financial

16 hardship. Staff generally defines fleets of ten trucks or

17 less as meeting this criteria.

18 Large fleets are also eligible for grants to

19 offset the cost of verified Level 3 exhaust retrofit

20 filters.

21 New retrofit technologies such as selective

22 catalytic reduction are expected to achieve NOx reductions

23 that make emissions from used truck equivalent to those

24 meeting 2007 engine standards and later. When those

25 devices become ARB verified, they will also be eligible

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1 for incentive funding. During the technology tour

2 tomorrow morning, you will have a chance to preview some

3 of these innovative devices.

4 --o0o--

5 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF

6 WHITE: Agricultural vehicles and school buses have unique

7 funding options.

8 Since the proposed regulation provides

9 agricultural vehicles with extended compliance deadlines,

10 they will have longer surplus funding opportunities.

11 Whereas, incentives from most fleets will end by 2010, we

12 are providing agricultural vehicles funding eligibility

13 through 2019.

14 School buses are eligible for retrofit and

15 replacement funding through the $200 million Prop 1B Lower

16 Emission School Bus Program. The Board has strongly

17 supported the retrofit portion of the program over the

18 years, although most school districts have preferred new

19 buses. Retrofits make economic sense since they can bring

20 ten buses in compliance for the same cost as one bus

21 replacement.

22 The School Bus Program will provide full funding

23 for at least 3500 exhaust retrofits. When staff presented

24 to this Board in March, we estimated the Lower Emission

25 School Bus Program would also replace about 1100 new

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1 buses, although the exact split between bus replacement

2 and retrofit is legislatively left to the discretion of

3 local air districts.

4 Overall, the program has more than enough funding

5 to retrofit every public school bus in California that can

6 be retrofitted if a small portion of the expected

7 replacement funding is dedicated to retrofits.

8 With this shift, 95 percent of the regulatory

9 costs for school buses would be paid by the State funding.

10 In addition to the current Prop 1B program, school bus

11 replacements can be funded by other sources, including

12 local air district motor vehicle fees and the California

13 Department of Education.

14 --o0o--

15 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF

16 WHITE: As I've outlined here, 2009 will bring an

17 unprecedented commitment of on-road funding programs and

18 the widest variety of program options ever afforded to

19 truck owners. This diagram shows the variety of location

20 a truck owner can choose to access the various incentive

21 programs, including local air districts, ending

22 institutions, truck dealerships, and truck stops.

23 Although most access points specialize in

24 particular program, ARB is developing a collaborative

25 outreach plan that will enable each access point to offer

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1 information regarding all funding options.

2 Comprehensive outreach will be especially

3 important to help truck owners match grant funding from

4 air districts and truck dealerships with loan guarantees

5 from banks.

6 --o0o--

7 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF

8 WHITE: This chart offers another way to view the

9 incentive options we've discussed today. No matter the

10 funding source or the fleet type, fleets that act early

11 will have the greatest opportunity to receive incentive

12 funds.

13 --o0o--

14 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF

15 WHITE: Today, I've presented to you a number of incentive

16 option for funding heavy-duty on-road fleets, representing

17 the greatest amount of funding available yet.

18 Staff will closely collaborate as we implement

19 these funding options so we can best assist affected

20 fleets to access these significant opportunities.

21 This completes the overview of the availability

22 of incentive funds.

23 Now Mr. Goldstene will finish the rest of the

24 staff presentation.

25 --o0o--

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1 EXECUTIVE OFFICER GOLDSTENE: Thank you, Eric.

2 Board members, you've heard a lot today about

3 just how important these proposed regulations are to meet

4 our SIP attainment demonstration. Without these

5 reductions, both the South Coast and San Joaquin Valley

6 Air Basins will not achieve federal clean air attainment.

7 This could place over half of the three billion dollars of

8 federal transportation funding that California receives

9 each year and the jobs it provides at risk.

10 But more importantly, without swift and

11 aggressive action, thousands of lives will continue to be

12 lost prematurely each year from the effects of truck

13 pollution with an economic valuation of tens of billions

14 of dollars. So while the cost of the proposed regulation

15 is significant, the benefits it provides greatly outweigh

16 its costs by greater than a factor of ten.

17 Staff has made every effort to reduce the

18 economic impacts of the proposed regulation by providing

19 significant flexibility and additional time where

20 feasible. However, the State's obligation to meet federal

21 clean air standards simply doesn't provide any opportunity

22 to slow down our efforts, and the alternatives that have

23 been forwarded by industry won't provide sufficient

24 emission reductions for us to meet our SIP targets.

25 --o0o--

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1 EXECUTIVE OFFICER GOLDSTENE: The truck

2 greenhouse gas proposal is one of the nine Discrete Early

3 Action measures. As one of the early action measures, the

4 only one identified to reduce greenhouse gas emissions

5 from heavy-duty vehicles, it's an important part of the

6 greenhouse gas emissions target in AB 32.

7 Although there is a cost associated with initial

8 compliance, purchasing new tractors and trailers or

9 retrofit existing units, compliant trucks and trailers

10 will useless fuel, saving their owners and operators

11 money. Thus, the initial capital investment in control

12 technology is an investment that will pay for itself often

13 in as little as a few years.

14 --o0o--

15 EXECUTIVE OFFICER GOLDSTENE: A key element that

16 makes both of the proposed regulations feasible is that

17 this technology needed to comply with them is here today.

18 There are nearly a dozen exhaust retrofit devices

19 currently verified and available for fleets to use to

20 comply with the PM requirements of the truck and bus

21 regulation, with thousands having already been installed

22 here in California. In addition, new trucks are rolling

23 off assembly lines today already equipped with filters,

24 and engine manufacturers are on track to produce even

25 cleaner 2010 compliant engines.

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1 For the proposed truck greenhouse gas regulation,

2 new SmartWay certified tractors and trailers are already

3 being produced and driven on roadways across the country

4 and everyday low-rolling resistance tires are replacing

5 conventional tires on tractors and trailers as a way for

6 fleets to save money. For fleets that have integrated

7 this technology into their operations, they are already

8 realizing the savings from reduced fuel consumption.

9 To provide an opportunity for the Board to see

10 this technology firsthand, tomorrow morning staff has

11 arranged a display on 11th Street. This in the morning.

12 The display will include a SmartWay certified tractor and

13 trailer as well as new retrofit technology that is similar

14 to what will be used by engine manufacturers to meet tough

15 2010 new engine standards.

16 --o0o--

17 EXECUTIVE OFFICER GOLDSTENE: Throughout the

18 development of both proposed regulations, staff has made

19 every effort to minimize the economic impacts on affected

20 fleets while preserving the emission benefits they

21 provide.

22 For example, the first compliance requirements do

23 not begin until 2010 and are phased in over the next

24 decade, while for small fleets additional time has been

25 provided. Also the multiple compliance option provides

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1 significant flexibility to fleets to chose the least cost

2 compliance path.

3 In addition, there is little overlap between the

4 two regulations because long-haul trucks needing to comply

5 with the truck and trailer greenhouse gas regulation are

6 replaced more frequently and are ahead of the requirements

7 of the truck and bus regulation.

8 --o0o--

9 EXECUTIVE OFFICER GOLDSTENE: The economic impact

10 of both proposed regulations would be reduced by incentive

11 money being made available to fleets particularly small

12 fleets. Staff is coordinating more than one billion

13 dollars to assist fleets with actions associated with

14 reducing emissions from trucks and is taking a leadership

15 role in building relationship with private lenders who are

16 key partners in making low interest loans available.

17 --o0o--

18 EXECUTIVE OFFICER GOLDSTENE: Staff recommends

19 the Board approve both of the proposed regulations with

20 15-day changes. Staff would also suggest to monitor

21 impacts of the proposed regulation on student

22 transportation services and to report back by the end of

23 next year on localized impacts of the proposed

24 agricultural vehicle provisions.

25 Before we introduce Mr. Lurmann to present his

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1 study, I don't know if the Board wants to ask any

2 questions about the rule or if you want to move.

3 CHAIRPERSON NICHOLS: I think we want to get

4 going.

5 EXECUTIVE OFFICER GOLDSTENE: Okay. So let me

6 introduce Mr. Lurmann, who is a principle investigator in

7 the recent Cal State Fullerton study that evaluated the

8 adverse health and economic impacts of poor air quality in

9 Southern California and in the San Joaquin Valley.

10 Mr. Lurmann.

11 MR. LURMANN: Members of the Board. My name is

12 Fred Lurmann. I'm manager of Exposure Assessment Studies

13 and President Emeritus at Sonoma Technology.

14 I'm here today to describe a recent study of the

15 benefits of meeting federal clean air standards in the

16 South Coast and San Joaquin Valley air basins.

17 This study was conducted with my colleagues Jane

18 Hall and Vic Brajer at Cal State University Fullerton and

19 it was funded by the Hewlett Foundation.

20 Briefly, the purpose of our study was to assess

21 what's the cost to more than 20 million people living in

22 the South Coast and San Joaquin Valley of sort of the

23 status quo in air quality where there's frequent and

24 severe exceedances of the ozone and PM2.5 standards.

25 We addressed this question using a fairly well

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1 established and widely accepted methodology to assess

2 exposure, health impacts, and economic values. We began

3 using this approach about 20 years ago and published the

4 methodology and science.

5 --o0o--

6 MR. LURMANN: The general approach has been used

7 by EPA, by ARB staff, and so forth. There are minor

8 differences in the parameter choices and spatial

9 resolution and other things. But the general approach has

10 been used many place.

11 Our findings from the study on the exposure are

12 really what most of you probably know. There's no clean

13 season for air pollution in either of these regions. You

14 have a warm season with unhealthful levels of ozone and a

15 cool winter season extended, winter, fall and winter, with

16 elevated PM levels.

17 We have about 65 percent of the population of

18 these regions that live in areas where the annual PM2.5

19 standards exceeded. A lot higher percentage exceed the

20 State standard.

21 And for ozone, we have residents living all the

22 way from Fresno County down to Kern and the Inland Empire,

23 Riverside to San Bernardino, where there's 40 or 50 days

24 per year above the ozone standard.

25 Now, the most troubling consequence of this is

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1 really the --

2 --o0o--

3 MR. LURMANN: -- premature mortality. We

4 estimate in our study 3,000 early deaths every year in the

5 South Coast. Another 800 early deaths in the San Joaquin

6 Valley, for 3,800 total.

7 Just to put this in perspective, this is more

8 than the number of automobile fatalities in those counties

9 per year.

10 --o0o--

11 MR. LURMANN: Other health benefits are listed

12 here. I'm not going to read them all. But they are

13 substantial.

14 You know, 1900 cases of chronic bronchitis in

15 adults. Another 1,600 cases of acute bronchitis in

16 children; emergency room visits; hospital admissions;

17 non-fatal heart attacks, in significant numbers. And

18 140,000 asthma attacks. And a large number, over a

19 million, of school absences. This is quite a laundry

20 list.

21 --o0o--

22 MR. LURMANN: Now the estimated the cost -- the

23 economic value of meeting the standards and eliminating

24 these health impacts.

25 In the South Coast, it's nearly $22 billion per

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1 year, or $1200 per resident.

2 San Joaquin Valley, it totals about almost 6

3 billion per year, or $1,600 per resident, for a total of

4 $26 billion.

5 --o0o--

6 MR. LURMANN: This actually has some conservative

7 aspects built into it. We've always used this in our

8 methodology. But it emits some important health benefits

9 that cannot be valued economically.

10 One of the most important health effects of air

11 pollution is reduction in pulmonary function and also new

12 cases of asthma. And these are things with present

13 methodologies can't really be valued. So in that respect,

14 our estimates are on the lower side.

15 Also, it ignores important health impacts on

16 people living very close to busy roadways which are

17 additional and we believe independent effects from

18 regional air pollution.

19 --o0o--

20 MR. LURMANN: So in conclusion, I'd really like

21 to keep this simple. We are talking about a large cost

22 associated with adverse air quality and the public health

23 benefits of reaching the standards in our view are quite

24 substantial.

25 And as an air quality scientist who's been

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1 involved with California air quality issues for more than

2 30 years, I believe progress on compliance with these

3 standards can only be achieved with regulations that

4 address these remaining poorly controlled emission sources

5 like diesel trucks and buses.

6 I don't believe the argument that it's simply too

7 costly. It's too costly not to do anything about this.

8 It really boils down to the question of whether you want

9 to spend money on health care or emission controls. And I

10 strongly prefer spending on emission controls to improve

11 public health.

12 Thank you.

13 CHAIRPERSON NICHOLS: I know for many years,

14 going back to when I first started doing this work, you

15 know, in the '70s people were trying to find ways to put a

16 number on the benefits so you could actually weigh the

17 costs against the benefits. And it may not be perfect,

18 but it's at least getting better. So we appreciate your

19 contribution.

20 Thank you.

21 We have, as you can all tell, a lot of people who

22 want to testify. And I just want to say a few things

23 about how I hope we can get through this both

24 expeditiously and civilly.

25 So there's going to be a two-minute time limit on

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1 all witnesses.

2 There's a list. And you can find the list. It's

3 up on a big screen out in the hallway. There's about 80

4 copies of it floating around so that people can see where

5 they are. If I don't have to keep reading the names and

6 getting people to come down when they're called for, we

7 will save everybody a lot of time. If you would come in

8 groups of, you know, three, five or so at a time and be

9 lined up waiting for your turn, you will save yourselves

10 and all your fellow members of the group here time as

11 well. And if we can get you to cooperate, that will be

12 really helpful.

13 The other thing I'm proposing is an incentive

14 program. So for those of you who don't know, Air

15 Resources Board members don't get paid for lunch or

16 snacks. So if you see us up here munching on a piece of

17 candy, it's because everybody wrote a check and somebody

18 went out and got it for us. But we've decided to

19 contribute our snacks to you. And we're going to use an

20 honor system here. If you finish your comments in your

21 two minutes or less, please help yourself to a snack from

22 the bowl that's up on the podium. If not, you know who

23 you are, and you'll be -- you know, you'll be very bad and

24 Santa will notice if you take something without having

25 actually met the two-minute limit.

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1 But I'm usually kind of relaxed about this stuff.

2 You know, I let people wrap up, finish up. I'm not going

3 to do it this time. I'm going to be tough. I'm just

4 cutting you off when you get to your two minutes. And

5 really it's only fair, because everybody has something to

6 say but not everybody has new information to actually

7 bring to the debate.

8 The other thing I want to just admonish people --

9 I know you know this, but I'm going to say it anyway. The

10 Board members have indicated, some of us very openly,

11 questions and concerns that we have. We are here to

12 listen, and we do want to learn from you and get more

13 information. However, we don't actually make decisions

14 based on how many people are for or against a rule. We

15 can't do that, for one thing, because legally we have

16 certain parameters that we have to operate in. So there

17 are going to be people who are speaking for, there are

18 going to be people speaking against, and there's even a

19 few I see who are neutral. Please, if you can restrain

20 yourselves from cheering. A laugh or two if somebody says

21 something funny is okay. But other than that, you know,

22 jeers and boos and stuff like that are really not

23 appreciated.

24 So with that, let's get started. And the first

25 group of people, Michael Delbar, Jack Broadbent, Shawn

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1 Guttersen, Steve Weitekamp, David Piech, let's come on

2 down.

3 And welcome.

4 MR. DELBAR: Good afternoon, Madam Chair and

5 members of the Board. I'm Michael Delbar, 1st District

6 Supervisor from the County of Mendocino. And I'm here to

7 represent my unanimous board and our comments in regard to

8 these rules.

9 You have our resolution I believe, and I won't go

10 into those details. And given the time constraint, I'm

11 going to read you some bullets.

12 We are in attainment in Mendocino County. In

13 fact, we have an A rating by the American Lung

14 Association.

15 We have an economy that's based on natural

16 resources, primarily agricultural and timber. These are

17 seasonal activities. And we cannot, despite your staff's

18 claims, simply pass on the cost of these regulations to

19 our consumers. We cannot do that.

20 We are completely dependant on heavy-duty diesel

21 equipment for the delivery of goods in and out of

22 Mendocino County. We have no airport, we have no

23 railroad, we have no ports.

24 We have a median income of 27 percent below the

25 state average. And we have an unemployment rate of 7

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1 percent.

2 Sixty percent of our heavy-duty equipment --

3 diesel equipment is model year '94 and older; 76 is 2000

4 and older. Banks will not loan on equipment older than

5 ten years.

6 And just like the rest of the State of

7 California, we're struggling. And these proposed rules

8 for both on- and off-road diesel equipment will absolutely

9 cripple our economy.

10 The question came up, Doctor, as to what the

11 percent that would go out of business. In Mendocino

12 County, 37 percent surveyed said they will downsize,

13 50 percent said they're out of business. I hope that

14 answers the question for Mendocino County. And I think

15 that is probably typical for most rural counties in the

16 State of California.

17 We gave money back to the state, something

18 counties cringe to do. We gave $64,000 back to CARB

19 because our Carl Moyer applicants cannot do the project

20 and meet the new regs. That I think says a lot.

21 We had 107 fires in Mendocino County this

22 summer - lightning strikes. Not one piece of the fire

23 equipment on those fires would meet these regs. That I

24 think says a lot.

25 We are adamantly opposed as you see by that

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1 resolution. Again, unanimously approved by my diverse

2 board. And that says a lot for Mendocino County, believe

3 me. And we request the Board complete a detailed economic

4 impact analysis for rural counties. That is critical.

5 CHAIRPERSON NICHOLS: Thank you.

6 Time. Thank you.

7 MR. DELBAR: Thank you, Madam Chair.

8 CHAIRPERSON NICHOLS: Jack Broadbent.

9 MR. BROADBENT: Good afternoon, Madam Chair,

10 members of the Board. My name is Jack Broadbent, and I

11 serve as the Executive Officer for the Bay Area Air

12 Quality Management District.

13 On behalf of the air district -- the Bay Area

14 District, I offer our very strong support for the staff's

15 proposed In-use On-road Diesel Vehicle Rule and the other

16 rule amendments before you today.

17 In the San Francisco Bay Area there is a heavy

18 reliance on trucks to move goods and provide services.

19 Because the diesel PM represents about 80 percent of the

20 risk and because we have a somewhat dense population in

21 the Bay Area, we have a number of impacted communities

22 including the West Oakland, Richmond, the Bayview in

23 San Francisco, Concord, San Jose, and the 880 corridor.

24 From our Community Air Risk Evaluation Program,

25 the West Oakland community alone, the residents in that

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1 community run the risk of about three times higher than

2 the rest of the Bay Area just from breathing the air. And

3 this is in large part due to just all the truck traffic

4 along the 880 corridor.

5 The rule before you today will significantly

6 reduce the risks and improve air quality in the Bay Area

7 as a whole.

8 We also support the flexible compliance

9 approaches that are recommended by your staff. And we

10 stand ready to help implement this rule, not only through

11 our grant program, but also our enforcement efforts as

12 well.

13 So in closing, we strongly support this rule,

14 Madam Chair, members of the Board.

15 Thank you very much for this opportunity.

16 CHAIRPERSON NICHOLS: Thank you. You've earned a

17 pretzel or a --

18 (Laughter.)

19 MR. BROADBENT: Thank you.

20 CHAIRPERSON NICHOLS: Thanks very much.

21 Mr. Guttersen, followed by Mr. Weitecamp.

22 Is Mr. Guttersen here?

23 All right. Dave Piech.

24 MR. PIECH: Thank you, Madam Chair and the rest

25 of the Board. Thanks for the opportunity to comment.

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1 Dave Piech from Navistar. We're certification and

2 compliance of new engines. And Navistar is one of the

3 largest -- a large producer of new diesel engines and

4 diesel engine emission technology.

5 The two items that I really want to mention -

6 I've already submitted comments - but specifically the

7 regulation suggests that the installer and manufacturer of

8 the emission retrofit will determine the OEM warranty.

9 And that is the wrong. The original engine manufacturer

10 will determine that warranty. And they'll generally

11 determine that warranty at the time of failure. And

12 that's important because, as it applies to '06-'07 and

13 through '09 engines, those engines have an integrated

14 DPF -- as far as manufactured by International, have an

15 integrated DPF and engine control technology to regenerate

16 the DPF. And removal or replacement or changing that

17 after-treatment system can affect and will affect

18 emissions performance of that engines. And at that point

19 in time if there's either replacement by another

20 manufacturer of an emission control technology or some

21 other sort of add-on technology such for NOx reductions,

22 that would have to be determined at that point in time.

23 And the last item as far as the truck, because we

24 do manufacture trucks that go into various configurations,

25 we are concerned at Navistar that the truck configuration

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1 with this after treatment may not be applicable in all

2 circumstances.

3 So we're willing to work with the ARB staff to

4 see what we can do to make the rule applicable to these

5 considerations. And we look forward to that discussion.

6 Thank you.

7 CHAIRPERSON NICHOLS: Thank you very much.

8 Mr. Mangalindan.

9 MR. MANGALINDAN: Chairman Nichols, members of

10 the Board. My name is Alvan Mangalindan, a representative

11 of the Crane Owners' Association and Association of Crane

12 Rental Contractors out of northern California.

13 Our members currently own approximately 1,000

14 mobile cranes, of which a large portion are two-engine

15 cranes that are licensed for travel on California

16 roadways. As you are probably already aware, our industry

17 is currently subject to multiple CARB regulations and

18 their respective record keeping and reporting

19 requirements, specifically the PERP and the off-road

20 regulations.

21 In an effort to address these issues, we've

22 worked with -- we continue to work with CARB staff as a

23 means to address issues in our industry regarding cost

24 efficiency and while still being able to achieve CARB's

25 emissions goals.

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1 We'd like to thank CARB staff for their efforts

2 and for their continued willingness to work with us.

3 We request from the Board today that the

4 two-engine crane provisions contained in the rulemaking

5 package today be adopted immediately, independent of any

6 possible delay as to the rest of the provisions contained

7 in the rulemaking package.

8 Thank you.

9 CHAIRPERSON NICHOLS: Thank you very much.

10 Is Mr. Goliti here?

11 Apparently I skipped over Mr. Weitecamp,

12 California Moving and Storage Association. If you're

13 here, I didn't -- I'm sorry. Please come testify.

14 No?

15 And we're trying to move in people from the other

16 room who apparently didn't realize. If you're on the

17 list, on the first page or two, please come on in.

18 Okay. Wendy Mitchell.

19 Thank you.

20 MS. MITCHELL: Good evening, Madam Chair and

21 members. My name is Wendy Mitchell. I represent W.M.

22 Consulting, and I'm here on behalf of the investor-owned

23 utilities.

24 I'm here to congratulate staff on the wonderful

25 job that they did on this complicated issue. We feel that

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1 they streamlined on both the Public Utility and the

2 Private Fleet Rule and actually reduced the criteria

3 pollutants. And, therefore, we think this is a win-win

4 for the policy and for the State of California.

5 We know these are difficult decisions and

6 difficult times for everyone. But we appreciate the hard

7 work of the staff and the Board.

8 Thank you very much for your efforts.

9 CHAIRPERSON NICHOLS: Thank you.

10 David Allen, Matthew Marsom.

11 The gentleman who's standing here, did I fail to

12 call you?

13 MR. GOLITI: Rob Goliti.

14 CHAIRPERSON NICHOLS: I'm sorry -- oh, Rob

15 Goliti, come up on. Sorry. I called your name and then

16 passed over you.

17 MR. GOLITI: I thought I took an invisible pill.

18 CHAIRPERSON NICHOLS: You're being too polite.

19 MR. GOLITI: I'm Rob Goliti. I'm President from

20 Air Carrier. We're located in Fresno, California. I have

21 12 tractors and 16 refrigerated trailers. I'm going to

22 have to comply with two rules at the same time.

23 But I'm actually not here to either oppose or

24 support the rule. I'm concerned about the notion that

25 we're going to be able to pass the cost on to consumers.

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1 In that light, if you do not enforce whatever rule you

2 adopt - I don't mean just throw it out there and do it

3 randomly - you're going to create a really bad situation

4 for those of us that have been in business for a long

5 time. Because what's going to be created is I'm going to

6 pay $125,000 for a truck, $65,000 for a trailer, and my

7 competitor will spend $10,000 for a truck and $5,000 for a

8 trailer. So you don't have to be an accountant to

9 understand the numbers there when they go in and they bid

10 on loads that I'm doing.

11 My friends and I have already lost a substantial

12 amount of business this year from rate cutting, mostly

13 from out-of-state carriers that come in. So I'm a little

14 concerned about the three-day provision for the

15 out-of-state carriers, because typically what they do is

16 they come into California, deliver their load, perhaps in

17 the Bay Area; in order to reposition the truck in Los

18 Angeles, they'll take a load at below cost to get to Los

19 Angeles. So you have intrastate carriers here that need

20 those loads at a fair profit in order to do these things.

21 So when you start carving out portions of the

22 industry, you're going to create fraud. And it's going to

23 be there whether you do it or not. And that's why I hope

24 you have a plan in place, whether it's holding the

25 shippers or receivers liable for using carriers like that,

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1 because it's going to be very hard to monitor the

2 situation. And if you don't, those of us that have been

3 around for a long time will not be around any more.

4 Thank you very much.

5 CHAIRPERSON NICHOLS: Thank you. Good point.

6 I'm making a note to ask about that later.

7 David Allen.

8 MR. ALLEN: Yes, ma'am. My name's David Allen.

9 I'm with Alenco Consulting in Fresno, California.

10 Earlier today I heard a question about what the

11 cost is of people going out of business -- truckers going

12 out of business. If we take 10 percent of the truckers on

13 the road, which would be about 15,500 truckers, and

14 extrapolate it out, what they would lose -- what the state

15 would lose in terms of revenue into the state coffers: We

16 talk about income taxes based on two drivers; one office

17 worker; DMV fees with two tractors and two and a half

18 trailers; DOT fees based on two tractors, two and a half

19 trailers; state sales tax based on paying just $2,000 per

20 company for annum, which is a low number; and fuel tax

21 revenue based on $1500 per company per annum, you're

22 looking at a yearly net loss to the state in revenue of

23 $64,606,000 at 10 percent. That's 15,000 trucks.

24 If we double it and we lose 20 percent of our

25 fleet, we end up with $129,212,000 in lost revenue to the

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1 State of California.

2 If we go with the numbers from Mendocino County,

3 which was 30 percent, we end up with $193,818,000 in lost

4 revenue to the state of California.

5 We are in a financial crisis. Do we want to

6 strap small businesses and run them out of business, cause

7 the State of California to lose the kind of revenue that

8 you're talking about here, in a time when we need to worry

9 about the coffers of the state?

10 I thank you for your time, ladies and gentlemen.

11 CHAIRPERSON NICHOLS: Thank you.

12 Matthew Marsom.

13 MR. MARSOM: Good afternoon, Chair Nichols,

14 members of the Board. My name is Matthew Marsom, Director

15 of Public Policy at Public Health Institute. And we're

16 pleased to have the opportunity to add our voice to the

17 many others who are to vote of adoption on the proposed

18 diesel truck and bus regulation without delaying

19 implementation or weakening health protections.

20 We applaud CARB for tackling smog-forming

21 emissions, particulate matter, and global warming

22 emissions from the single biggest source of toxic diesel

23 pollution in the state. CARB must adopt both regulations

24 to protect public health from poor air quality and the

25 impacts of climate change.

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1 Of course we are well aware of the challenging

2 economic times that we face here in California and that

3 you are presented with -- as you are presented with this

4 regulation. However, the cost of doing nothing to address

5 the harmful health, social, and economic costs of these

6 emissions are far greater. CARB's own estimates show that

7 the regulations will save over 9,000 lives over the course

8 of the next decade and between 49 to 69 billion in health

9 care costs due to the prevention of early deaths, illness,

10 and hospitalizations.

11 In the short time I have I want to emphasize two

12 points: First, that the health effects of diesel

13 pollution, specifically in air pollution in general, are

14 most burdensome in low income communities and communities

15 of color, most impacted by the multiple sources of

16 pollution. The public health community sees at firsthand

17 the devastating impacts of these pollutants on those who

18 are most at risk through increased burden of chronic

19 disease and lost lives.

20 Secondly, truck drivers themselves have an excess

21 lifetime cancer risk. Long-haul drivers with the longest

22 driving records are one and a half to two times as likely

23 as workers not exposed to diesel exhaust to develop lung

24 cancer during their lives. New research shows that

25 short-haul truckers face even higher rates of death and

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1 disease.

2 The study concluded that a reduction of diesel

3 particulate matter would have health benefits for the

4 trucking industry and the general public who live,

5 commute, or work near diesel vehicles.

6 Children are especially susceptible to the

7 harmful effects of diesel soot because their lungs are

8 still developing.

9 Finally, we do hope that CARB will continue

10 vigorous outreach --

11 CHAIRPERSON NICHOLS: Time's up.

12 MR. MARSOM: -- to truck drivers.

13 Thank you for allowing me the time. Thank you.

14 CHAIRPERSON NICHOLS: Thank you.

15 Jay McKeeman.

16 MR. McKEEMAN: Good evening, Board members,

17 Chairman Nichols.

18 Dr. Telles, I have a very unscientific way of

19 giving you an estimate of how many people might go out of

20 business. Will all those people in the audience that

21 might go out of business because of this regulation please

22 raise your hand.

23 Very unscientific, but at least an expression of

24 interest.

25 I'm Jay McKeeman with the California Independent

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1 Oil Marketers Association.

2 California motorists rely on a largely invisible

3 system when they fuel their vehicles. Almost 20 billion

4 gallons of gasoline and other fuels are distributed

5 annually in this state and motorists have become

6 accustomed to the ability of shopping fueling locations at

7 their leisure, with confidence that the fuel will be there

8 when they need it.

9 Californians do not realize that this

10 distributed-just-in-time system works based upon a myriad

11 of small independent and family-owned businesses. Those

12 are our members, fuel distributors.

13 In addition, there's been a significant change in

14 the ownership of retail stations in the state. Many of

15 the major oil companies are quickly divesting their

16 interest in service stations to small or medium-size

17 businesses. And also a number of our members own and

18 operate service stations as well.

19 The reason I go into this detail is that there is

20 a perfect storm brewing on the horizon. That perfect

21 storm is related to air quality and other environmental

22 mandates that are providing significant expense to our

23 members.

24 The first element of the perfect storm is

25 something that you're familiar with called the enhanced

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1 vapor recovery. And by April 1st of next year all service

2 stations need to be retrofitted --

3 CHAIRPERSON NICHOLS: Time. I'm sorry. But you

4 have submitted written comments and we make sure that we

5 can --

6 MR. McKEEMAN: These were not in my written

7 comments.

8 CHAIRPERSON NICHOLS: This is addition --

9 MR. McKEEMAN: And I'll forgo the cookie.

10 (Laughter.)

11 CHAIRPERSON NICHOLS: I know. But you'd have to

12 get three other people to give up their space to you as

13 well, if anybody wants to donate their time.

14 Thank you. I'm sorry. We're trying to give

15 everybody a chance.

16 Linda Weiner.

17 MS. WEINER: Good evening. My name is Linda

18 Weiner with the American Lung Association. Thanks very

19 much to the CARB staff for all of your hard work.

20 I'd like to speak very briefly about the health

21 costs of the regulations in terms of public health

22 history, so to speak.

23 Any time a new industry sector is regulated there

24 are always issues of cost of compliance, understandably.

25 But just as with seat belts and catalytic converters and

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1 other vehicle pollution controls, California benefits by

2 taking the lead. And as with other CARB diesel controls,

3 this regulation will provide many times more benefits to

4 the health of the public than the cost of the regulation.

5 And this is especially true now.

6 With every new study and with improved research

7 methodology, we have a better picture of the health

8 impacts in terms of cost and in terms of number of

9 impacted California residents from illness. And the

10 results show at least $8 in benefits for every dollar

11 spent on the diesel truck and bus regulation.

12 In addition, this is the largest amount of

13 available funding ever provided the state being offered to

14 offset compliance costs. So by enacting this regulation,

15 not only would the State of California save money but also

16 relieve the genuine toll of human suffering from asthma,

17 lung cancer, heart disease, and premature deaths, with the

18 high burden on seniors, elderly, truck drivers, and low

19 income communities who are the most impacted.

20 We know the human suffering is real because at

21 the Lung Association we work with people who can't breathe

22 because of air pollution. And we respectfully ask today

23 that you adopt a strong regulation and make public health

24 history by doing that.

25 Thank you.

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1 CHAIRPERSON NICHOLS: Thank you.

2 Dr. Janet Abshire.

3 DR. ABSHIRE: Hello. Thank you to the Board for

4 hearing our presentations.

5 I'm Dr. Janet Abshire and I'm here at this -- the

6 California Medical Association asked me to present today.

7 I'm an occupational and environmental medicine physician

8 and a preventive medicine physician. And I also have a

9 nutrition degree before my M.D., so I'm very motivated to

10 do anything that's preventive.

11 I'm in the first line as a physician and I've

12 seen the trend of the increasing asthma patients. I have

13 a patient who is a 68-year-old PhD student in a program,

14 believe it or not, and she actually wears a mask every

15 time she goes outside. She had late onset asthma at the

16 age of 60 while living in southern California, so she's

17 probably a good example of an asthma onset.

18 And I think that there's plenty of evidence

19 already spoken about about the billions of dollars of cost

20 in medical care and in lost work days and in lost school

21 days caused by the particulate matter and the nitric

22 oxide. But also consider not just the absenteeism and the

23 lost days but also the presenteeism in patients that are

24 suffering from an illness and that are not as productive

25 on the job as they would be and not doing as well in

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1 school as they would be. So we would be improving

2 productivity in the workforce and improving potential in

3 our school children.

4 So the California Medical Association has had

5 longstanding policies in helping prevent pollution

6 sources. And in October the delegates on the board

7 actually also proposed a specific regulation to limit

8 diesel exhaust. They applaud the Board -- the Air

9 Resources Board for their leadership in this position and

10 establishing this regulation. I believe we can no longer

11 separate the health care problems from the pollution

12 problems that cause them.

13 Thank you very much.

14 CHAIRPERSON NICHOLS: Thank you.

15 Bonnie Holmes-Gen, followed by John White

16 substituting for Dr. Seavey.

17 MS. HOLMES-GEN: Chairman Nichols and Board

18 members. Bonnie Holmes-Gen with the American Lung

19 Association of California.

20 And the America Lung Association of California

21 has joined with 16 other state and local public health

22 organizations to urge adoption of this measure. And you

23 have our letter from all of these organizations I believe

24 in your packet that calls on the Board to adopt this

25 critical public health measure without delay, and comments

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1 that this measure is critical not only to prevent

2 premature death and illness but to protect the health of

3 vulnerable populations, as Dr. Abshire was talking about.

4 I wanted to make the comments that as we face the

5 staggering health care costs of diesel pollution, our

6 conclusion is that this regulation is not just something

7 that you could do or you should do but it is something

8 that you must do. You must do this to address the public

9 health crisis created by diesel pollution. You must adopt

10 this regulation to ensure that we meet our federal clean

11 air standards and to ensure further investments toward a

12 clean energy economy.

13 We have been flooded with concerns about soot

14 pollution from the public. One 70-year-old woman, newly

15 diagnosed with asthma and concerned about rising health

16 care costs, commented that there may be retrofits

17 available for trucks but there are no retrofits available

18 for her lungs. I think this puts a human face on the

19 crisis that we're facing.

20 You will have and you have heard many complaints

21 today from truck owners and operators, and this is not

22 surprising. There's a big change that you're instituting

23 here, and this industry has escaped regulation for some

24 time. But we urge you to keep your focus on the public

25 health impacts of this regulation and the leadership that

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1 is critically needed from your Board to make this

2 transition to cleaner vehicle technologies.

3 We believe your staff has developed a fair and

4 balanced regulation and done everything possible to

5 balance a flexibility compliance choices. And the funding

6 incentives, as you've heard, are tremendous and

7 unprecedented.

8 CHAIRPERSON NICHOLS: Time.

9 MS. HOLMES-GEN: Thank you very much. We urge

10 you to move forward and adopt both the truck and bus and

11 the greenhouse gas.

12 CHAIRPERSON NICHOLS: Thank you.

13 MS. HOLMES-GEN: I guess I can't have --

14 CHAIRPERSON NICHOLS: Right.

15 (Laughter.)

16 MR. WHITE: Thank you, Madam Chair and members of

17 the Board. My name's John White representing the Clean

18 Power Campaign.

19 I worked on the original legislation that

20 established the Toxic Air Contaminant program. It's been

21 a long, long time since the passage of that legislation in

22 1983. The Diesel Risk Assessment was adopted a

23 significantly long time ago as well.

24 We've worked together to put programs in place to

25 jump start and develop the technology. We now have the

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1 fruits of that labor. We have very, very substantially

2 good equipment available. And we have now, with the work

3 that you're doing with the Treasurer's office, a

4 significant amount of assistance available. In addition

5 to the Moyer program, that will continue, we also have the

6 loan programs that you put in place.

7 I think this is a moment to step up and invest in

8 our energy economy and in new technologies. I think this

9 program can and should be expanded to the rest of the

10 country. We should pool our resources and work together.

11 I know implementation is going to be tricky, but I think

12 we all have it in us to work together. And we pledge our

13 support to you and your staff and to those affected by the

14 rule because, as Ms. Holmes-Gen said, we know this is

15 going to be a large step but we think working together we

16 can get there and accomplish great things for the economy

17 and public health.

18 Thank you.

19 CHAIRPERSON NICHOLS: Thank you.

20 Ryan Wiggins.

21 MR. WIGGINS: My name is Ryan Wiggins. I'm here

22 on behalf of Communities for Clean Ports and a large

23 number of Californians who signed in on my petition to

24 urge a very strong diesel and truck rule.

25 This state has been facing a silent economic and

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1 health crisis for many decades. Dirty diesel trucks cost

2 us over $28 billion a year in premature deaths, hospital

3 visits, lost days of work and health costs. According to

4 CARB's own study, this regulation will save between 48 and

5 $68 billion. That's 42.5 -- between 42.5 and $62.5

6 billion above and beyond the cost of this regulation.

7 Many say that we should seek alternatives on

8 this. In truth, it would be a great error to delay

9 cleaning up diesel emissions, because you know the economy

10 will recover. And as it recovers, there'll be more trucks

11 on the roads, driving more miles, and emitting more

12 pollutants.

13 Also CARB made it publicly known to industry and

14 the public through its pieces of legislation including the

15 Diesel Risk Reduction Plan, the State Implementation Plan,

16 the Goods Movement Emissions Reduction Plan, that it

17 intended to pursues these measures and reduce PM emissions

18 by 85 percent by 2020 and comply with federal air quality

19 standards.

20 The over one billion dollars in public financing

21 should be directed towards small fleets and the older

22 fleets.

23 One other thing I would like to point out is, as

24 we did this petition, we had over 3,000 signatures outside

25 of California, although we didn't intend to do this. Many

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1 of these benefits will also accrue to other states as

2 well, because we don't just operate in a vacuum. So

3 essentially this program will actually benefit other

4 states, reducing particulate matter petitions in their

5 areas as well.

6 Thank you.

7 CHAIRPERSON NICHOLS: Thank you.

8 Dr. Joseph Kubsh.

9 DR. KUBSH: Good afternoon, Madam Chair and

10 members of the Board. My name is Joe Kubsh. I'm the

11 Executive Director of the Manufacturers of Emission

12 Controls Association. And I'm here today to provide my

13 industry's strong support for the truck and bus reg that's

14 before you today.

15 Our industry is providing emission control

16 technology solutions for new trucks for 2007 and 2010

17 trucks as well as a large variety of retrofit technologies

18 that are available already on California's verified list

19 to provide options for compliance with this regulation.

20 With respect to retrofits, by our count more than

21 250,000 diesel particulate retrofit filters have been

22 installed successfully on trucks and buses around the

23 world today. And not only do our members develop and

24 verify and manufacture technologies, but we have extensive

25 experience with the safe application of retrofit

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1 technologies on both on-road and off-road equipment, and

2 we pledge our support to work with your staff to make sure

3 we put together a good set of safety guidelines with

4 respect to the applications of retrofits on both on-road

5 and off-road equipment.

6 And, finally in this day when green jobs is a

7 good buzz word that we hear every day on the news media, I

8 like to think of the emission control industry as the

9 father of green jobs. We were green before green was

10 cool. And these regulations, along with other elements of

11 your diesel risk reduction plan, have and will continue to

12 produce clean green jobs for California.

13 Thank you very much.

14 CHAIRPERSON NICHOLS: Thank you. It must be nice

15 to be fashionable.

16 (Laughter.)

17 CHAIRPERSON NICHOLS: Sean Graham.

18 MR. GRAHAM: Good evening. My name's Sean

19 Graham. I'm the President of Freight Wing, Incorporated.

20 Freight Wing produces aerodynamic trailer attachments that

21 have been approved for use on EPA SmartWay trailers.

22 Tomorrow morning our side skirt and gap fairing products

23 will be demonstrated for the Board.

24 I'd like to quickly address the primary concerns

25 regarding trailer dynamics, including fuel savings, return

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1 on investment, durability, and availability.

2 Freight Wing alone has participated in ten

3 testing projects using industry standardized SAE J1321

4 procedures that are conducted by respected third parties

5 including the Department of Energy, EPA, and Transport

6 Canada. This testing, in addition to a great deal of data

7 generated by other companies, has clearly demonstrated the

8 5 percent fuel savings specified by the SmartWay trailer

9 for aerodynamic aids.

10 We've also conducted extensive fleet operational

11 testing. Over 80 percent of the fairings we sold this

12 year, approximately 2,000 fairings, were sold to return

13 fleet customers that have been pleased with the product's

14 performance.

15 In a recent J1321 test we demonstrated a 7

16 percent fuel savings with the new skirt technology that

17 will be on display tomorrow alone. Consequently this

18 product has been approved by the EPA as a standard-alone

19 solution to the aerodynamic requirement of the SmartWay

20 trailer, meaning it does not also require a gap or rear

21 fairing. Note that this is new information and the

22 product was previously considered an emerging technology

23 in the staff evaluation.

24 With this level of fuel savings and a list cost

25 of $1,600, an ROI can be achieved in approximately 60,000

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1 miles of trailer operation with diesel at the current cost

2 of two-forty per gallon.

3 Our skirt and others are constructed of very

4 durable plastic panels that can flex to absorb impacts

5 from the side and ground low-clearance situations. Our

6 products are also compatible with intermodal operations

7 due to an angled mounting configuration.

8 Several suppliers are well positioned to meet the

9 industry's potential need for aerodynamic attachments.

10 Through relationships with major industry suppliers and

11 trailer OEMs, we currently have extensive national product

12 support and manufacturing capability.

13 Thank you.

14 CHAIRPERSON NICHOLS: Thank you.

15 Andy Garcia.

16 MR. GARCIA: Madam Chairperson, members of the

17 Board. My name is Andy Garcia and I'm here representing

18 GSC Logistics as Chairman of the Board, while opposing the

19 Private Fleet Rule.

20 My company employs over 150 drivers at our

21 logistics facility within the Port of Oakland. Many of

22 our drivers have purchased 2004 tractors, attempting to

23 abide by existing CARB regulations. The Private Fleet

24 Rule will be devastating to port drayage drivers because

25 their 2004 tractors will be in violation of CARB's

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1 regulations after December of 2011. All port drivers have

2 financed their 2004 tractors over a minimum of 60 months

3 and could not trade it in for a newer tractor if the

4 Private Fleet Rule is implemented. Fundamentally the

5 drivers would be out of business.

6 The downturn of the economy is affecting the Port

7 of Oakland as an import or export gateway. Oakland still

8 remains as a discretionary port for all importers. The

9 current trends for container fees, infrastructure fees,

10 and CARB's regulations are forcing importers to choose

11 alternative import gateways in the northwest, the east,

12 the southeast, and the gulf ports.

13 We have recently lost in the last 90 days over

14 13,000 containers per year to the northwest ports, who

15 coincidentally have guaranteed a four-year moratorium on

16 any container fees, infrastructure fees, and environmental

17 regulations. Port of Oakland carriers are being seriously

18 affected and are unable to compete against the northwest

19 ports because of fee assessment and environmental

20 regulations. We are doing the best we can financially to

21 achieve CARB's requirements and retain our customers.

22 The beneficial cargo owners utilizing the Port of

23 Oakland will not support drastic price increases required

24 to meet the Private Fleet Rule. Instead, they will direct

25 their container volumes to other ports northwest, east,

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1 and the gulf. The overall reduction of import and export

2 volumes --

3 CHAIRPERSON NICHOLS: Mr. Garcia, your time is

4 up. I'm sorry.

5 MR. GARCIA: Thank you.

6 CHAIRPERSON NICHOLS: I see somebody else from

7 your company was right behind you, is that correct?

8 MR. TAYLOR: I'll pick it up from there, Madam

9 Chairman.

10 CHAIRPERSON NICHOLS: Very well done.

11 MR. TAYLOR: My name is Scott Taylor. I'm the

12 President and CEO of GSC Logistics. We operate a fleet of

13 over 150 tractors at the Port of Oakland, serving large

14 manufacturers and retailers such as Target, William

15 Sonoma, Wallgreen's, Hewlett Packard, JC Penny.

16 I'd like to address the amendment to the Port

17 Drayage Truck Rule that changes the requirements that was

18 established by CARB in December 2007. Along with our

19 drivers and customers, we will meet the current CARB

20 requirements even if we cannot get help from the state in

21 the form of port grants or loans, because along with our

22 drivers and customers, GSC Logistics is committed to doing

23 our part.

24 However, it's time that Sacramento also do their

25 part by making decisions that are business friendly. GSC

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1 Logistics and some of our owner-operators have already

2 purchased 2004 trucks so we can be compliant by 2010. But

3 now at the last minute CARB wants to amend these rules.

4 You told us a 2004 truck would be good for four years, and

5 now it's only going to be good for two years.

6 Furthermore, with the state of the economy, we

7 cannot absorb costs that go beyond the current CARB

8 requirements. The beneficial cargo owners are willing to

9 do their part. But California's going beyond what's fair

10 and reasonable. You may think the beneficial cargo owners

11 do not have a choice. But they do. They can pick other

12 ports. As my associate, Andy Garcia, just mentioned,

13 they're already leaving our company and going to

14 Seattle-Tacoma. If you do not removal the amendment

15 requiring port drayage trucks to adhere to the Private

16 Fleet Rule, I can guarantee you we'll lose more business

17 and more jobs. If you do not remove this amendment,

18 beneficial cargo owners will find gateways other than

19 California, such as Seattle, Tacoma, Prince Rupert in

20 Canada, and eventually Mexico.

21 In conclusion, we support the DTCC and ask that

22 CARB remove the amendment that port drayage trucks meet

23 the Private Fleet Rule.

24 Thank you.

25 CHAIRPERSON NICHOLS: Thank you.

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1 Mitch England, followed by Ron Hall.

2 MR. HALL: My name is Ron Hall. I'll actually be

3 speaking for Mitch and myself.

4 Thank you for the opportunity to speak. I'm the

5 Director of Business Strategy for CR England. And before

6 I comment on our position, I'd like to say a few things

7 about CR England. We are the largest refrigerated carrier

8 in the nation and transport topic's 36th largest for hire

9 carrier. So we have a big stake in this decision.

10 I'd also like to mention that CR England is

11 currently a SmartWay certified provider at the highest

12 level, 1.25 compliance point. And we see new technologies

13 on fuel conservation as a core concept in our management

14 of fuel expense. In fact, we're having conversations with

15 Freight Wing right now. So I thought I should mention

16 that.

17 Regarding the truck and bus regulation, the

18 SmartWay regulation, I would like to say as a statement of

19 position we are opposed to both regulations. We support

20 the written statement submitted by the California Trucking

21 Association on October 3rd and December 4th. I'm not

22 going to review those details. They're already on record.

23 I would like to comment, however, on the

24 equipment modifications and what we perceive as full fleet

25 requirements based on the current proposed legislation.

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1 We believe that freight destines for California

2 is broad enough in its origin throughout the country that

3 equipment that would be required to be positioned for

4 California-destined loads and be certified for this rule

5 basically would require us to implement a full fleet

6 implementation, not just an isolated California fleet

7 implementation.

8 There's an additional reason that we feel that

9 would be required. Transloading is not an option with

10 most of the food products that we haul. The assumption

11 that we can transload on to a certified trailer at the

12 border is --

13 CHAIRPERSON NICHOLS: Thank you, Mr. Hall. Your

14 time's up.

15 MR. HALL: Thank you.

16 CHAIRPERSON NICHOLS: Thank you.

17 Mr. Osofsky, followed by Doug Britton.

18 BOARD MEMBER D'ADAMO: Mr.

19 MR. OSOFSKY: My name is Allen Osofsky with

20 Rogers Trucking Company. We're a family-owned trucking

21 company in the San Francisco-East Bay Area. We have been

22 in business for the last 45 years and employ 150 people.

23 Our drivers are members of Teamsters Local No. 70 in

24 Oakland.

25 We are concerned over the aggressive nature of

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1 the truck and bus rule in regards to replacing or

2 retrofitting trucks that do not have the latest emission

3 technology. Our company purchases good quality used

4 trucks when it is time for replacement.

5 Due to the nature of the competition we face and

6 typically a non-union environment, we have to watch our

7 costs in order to stay competitive and to continue to

8 employee quality union labor. The point being, that we

9 can provide an attractive working environment using the

10 latest equipment we can afford that suits our operational

11 needs.

12 In the past two years we have replaced 17 of our

13 oldest equipment, 1980 with vintage, with late 1990-early

14 2000. For us to purchase new equipment is not

15 economically feasible even with the help of the grant

16 programs.

17 We feel that through attrition we can do our part

18 to deal with the emission problems that our state is

19 facing and still maintain a competitive posture in these

20 uncertain times.

21 We ask that you support the proposal adopted by

22 CTA and endorsed by DTCC. We appreciate the fact that

23 clean air is a human necessity and should be clean. We

24 also believe that jobs and a viable supply chain bringing

25 food and other needed products for human consumption are

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1 also a human necessity. We need to maintain a viable and

2 clean transportation network.

3 Thank you very much.

4 BOARD MEMBER D'ADAMO: Thank you, sir.

5 Mr. Britton, followed by Barry Wallerstein.

6 MR. BRITTON: My name is Doug Britton, President

7 and owner of Britton Trucking.

8 I am currently running ten trucks, with the age

9 of the trucks ranging from 11 years old to 20 years old.

10 I am your target.

11 In early 2009 I will take delivery of four new

12 trucks with the 1B proposition money. My debt will

13 explode to two and a half times the amount that I have

14 ever carried in my last 20 years. This scares the heck

15 out of me.

16 By the end of 2013, before this debt is retired,

17 I will have to buy three more trucks. This will push my

18 debt level to three times my current level. Imagine

19 buying a house three or four times the value of your

20 current house with no guarantees of a pay increase or more

21 work. Most of our current financial problems in America

22 are due to people carrying debt that they thought they

23 could service but now cannot. Yet this is what your Board

24 is currently mandating on an entire industry. In my case,

25 as many as 70 percent of my upgrades will come within the

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1 first five years.

2 I ask you to at least accept the driving towards

3 a cleaner California alternative on the three options of

4 compliance. I also ask you to consider the enforcement

5 proposal of tying emissions compliance to the bid program

6 and DMV. If not, I will be competing against

7 non-complying competitors who will run for years before

8 getting caught, figuring that they have nothing to lose,

9 all the while charging less than I need to operate.

10 Thank you again for this opportunity to speak.

11 CHAIRPERSON NICHOLS: Thank you, sir.

12 Barry Wallerstein, followed by David Case.

13 MR. HOGO: Good afternoon, members of the Board.

14 Dr. Wallerstein had to leave. And I'm Henry

15 Hogo, Assistant Deputy Executive Officer of our Mobile

16 Source Division at South Coast Air Quality Management

17 District.

18 I want to express the staff's strong support for

19 the proposed regulation. And we urge the Board to adopt

20 the regulations as proposed by staff.

21 Recognizing that the regulation actually has the

22 single largest emission reduction in NOx in the State

23 Implementation Plan, without it we would not be able to

24 meet our attainment goals. And, more importantly, the

25 diesel emissions still contribute 80 percent to the air

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1 toxics problem in southern California.

2 We do want to make a request of the Board and

3 staff to clarify the district's authority -- permitting

4 authority relative to the two-engine cranes and sweepers

5 since they're moving out of the registration program. And

6 historically local air districts have been able to permit

7 unregistered equipment with conditions to meet local air

8 quality needs. I think with the -- there's some concern

9 with the air districts that with the amendment to move

10 these two-engine cranes and sweepers out of that program

11 or keep it unregistered, we need a clarification on that.

12 So we request that the Board clarify our district

13 authority.

14 With that, we do urge the Board to adopt the

15 regulations.

16 BOARD MEMBER D'ADAMO: Thank you.

17 All right. Mr. Goldstene.

18 EXECUTIVE OFFICER GOLDSTENE: Mr. Hogo's talking

19 about an area of state law, it's in the Health and Safety

20 Code. We're not intending to change the permitting

21 authority. But if there's an issue, we'll work it through

22 with them.

23 BOARD MEMBER D'ADAMO: Thank you.

24 MR. HOGO: Thank you.

25 BOARD MEMBER D'ADAMO: All right. David Kayes,

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1 followed by Sam Zugzda.

2 MR. KAYES: Good evening. I'm David Kayes. I'm

3 an engineer with Daimler Trucks North America. I was

4 active in the development with the U.S. EPA of the

5 SmartWay tractor-trailer program. And I work for a

6 company that strives daily to improve the fuel economy,

7 lessen the fuel consumption, lessen the greenhouse gas

8 emissions of our customers' vehicles. And we manufacture

9 many SmartWay vehicles. Yet, we object to the greenhouse

10 gas proposal.

11 The fundamental reason that we object is, in

12 contrast to what Mr. Lemieux said, there actually is no

13 test protocol or guideline for certifying SmartWay

14 vehicles; and in contrast to what Chairwoman Nichols said,

15 there is no thorough process for certifying vehicles.

16 This is something very important to understand.

17 The vehicles selected for the SmartWay program

18 were done on a sort of "you know it when you see it" idea

19 of what constitutes an aerodynamic vehicle. It was done

20 in such a way that there is the very real possibility that

21 some vehicles that are more efficient than SmartWay

22 certified vehicles are actually not SmartWay certified and

23 may be barred from pulling the most common trailers on the

24 roads. And, therefore, you run the very real possibility

25 of barring from California roads vehicles based upon no

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1 scientific reason.

2 What we at Daimler Trucks recommend in our

3 efforts to constantly improve fuel economy in California

4 and elsewhere is that California work with the DOT and the

5 EPA to develop an actual rigorous program to measure fuel

6 economy from vehicles. And only after that program

7 exists --

8 BOARD MEMBER D'ADAMO: Thank you, Mr. Case. Your

9 time is up.

10 Mr. Zugzda, followed by Walt Simmons.

11 MR. ZUGZDA: Hello. I'm Sam Zugzda with

12 Leonard's Diesel Repair. We're an affiliate member also

13 of the CDTOA.

14 The biggest threat the people face if this bill

15 becomes law is that of our freedom. To even think of

16 telling a citizen of the United States of America they no

17 longer have the right to operate the equipment they use to

18 earn their living is a disgrace.

19 Not only will this put a lot of independent

20 trucking companies, owner-operators, and other small

21 businesses out of business. The costs associated with

22 dealing with the regulations and everything in general --

23 the property values are going to go down on all these

24 vehicles. It's taken away the people's value, what

25 they've earned, their livelihood - it's taken that away

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1 -just for passing a law that, if you study the charts, all

2 this is doing is saving a little bit of time as far as the

3 cleanliness of the air. The quality of the air is going

4 to improve whether this law goes through or not. With the

5 law, it goes through a little bit faster, it gets the air

6 a little cleaner. But the quality is still improving with

7 or without the law.

8 Everything we own is transported in a truck. The

9 building here, all the materials were hauled in with a

10 truck. All the food we eat. This isn't just affecting

11 trucking industries and a certain number of businesses.

12 It's going to affect all of us, every citizen of the State

13 of California -- that trickles down through the whole

14 nation. It's an added expense on everything that we

15 consume.

16 BOARD MEMBER D'ADAMO: Thank you very much, sir.

17 Thank you for your testimony.

18 MR. ZUGZDA: Thank you.

19 BOARD MEMBER D'ADAMO: Walt Simmons, followed by

20 Bill Magavern.

21 Mr. Simmons?

22 Bill Magavern?

23 Michael Graboski.

24 MR. GRABOSKI: I'm Mike Graboski from the

25 American Rental Association. ARA is in opposition because

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1 the rule is unfair to medium heavy-duty vehicles and

2 especially lower-use vehicles.

3 Can I have the next slide.

4 --o0o--

5 MR. GRABOSKI: The proposed rule rewards higher

6 use and therefore higher polluting vehicles and penalizes

7 lower use and lower polluting vehicles. We think it

8 disproportionately shifts costs to lower-use fleets like

9 the rental fleets.

10 Next slide.

11 --o0o--

12 MR. GRABOSKI: Rental vehicles are driven

13 typically about 8,000 miles a year. The average medium

14 heavy-duty vehicle drives about 23,000 miles a year. And

15 the average heavy-duty tractor-trailer runs about 60,000

16 miles a year. The rule does not account for this

17 disparity.

18 Rental vehicles also have low total accumulated

19 miles. These vehicles are less deteriorated, and the rule

20 does not also consider deterioration.

21 --o0o--

22 MR. GRABOSKI: This slide shows averaging. The

23 off-road rule considers a ten model year fleet, which is

24 typical of a rental fleet, as clean. This on-road rule

25 considers ten model year fleet as a dirty fleet.

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1 --o0o--

2 MR. GRABOSKI: The in-state medium heavy-duty

3 fleet produces only about 14 or 15 percent of the total

4 emissions of NOx in 2008.

5 --o0o--

6 MR. GRABOSKI: And yet when you look at capital

7 compliance costs, it looks more like about 25 to 30

8 percent of the useful dollars being spent to reduce

9 emissions that are being charged to the medium heavy-duty

10 fleet.

11 --o0o--

12 MR. GRABOSKI: On a dollar-per-ton basis, we

13 estimate that 8,000 mile fleet may cost as much as seven

14 times the heavy heavy-duty fleet cost.

15 --o0o--

16 MR. GRABOSKI: Please distribute the cost fairly

17 based on your own cost effectiveness guidelines. In my

18 complete slides and written testimony I provided some

19 ideas for fixing the rule. But I propose one here today

20 that would help. Modify the averaging provisions to

21 account for deterioration of emission factors and weight

22 the average by VMT. You provided a similar option in the

23 off-road rule using hours of use. This would provide

24 fairness by moving the burden to the higher use, higher

25 polluting fleet. You could also examine the 2014 and 2015

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1 averaging targets to preserve the NOx benefits but provide

2 some flexibility for particulate.

3 Thank you.

4 CHAIRPERSON NICHOLS: Time's up. Thanks.

5 Perfect.

6 Bob Ramorino.

7 MR. RAMORINO: Let me be the first to say good

8 evening, Madam Chairwoman and members of the Board. I

9 think it's probably evening time by now.

10 I'm Bob Ramorino. I'm president of a family

11 company based in Hayward, California, known as Roadstar

12 Trucking. We are currently 49 years old. Next year will

13 be our 50th year if we get there. We employee 60 people,

14 good, hard-working people. And we run 30 diesel trucks.

15 So what does this regulation me for me? In five

16 calendar years after you pass this regulation I will

17 essentially have to replace each one of those 30 trucks.

18 Now, we can argue with staff and look at details and look

19 and see if I should retrofit a couple of them. To me,

20 it's not a good use of my money. I'm going to try and

21 stay ahead of this and replace all 30 trucks.

22 That's a $3 million price tag. And by the end of

23 the fifth year I will simultaneously be paying on all 30

24 trucks at one time. That's $900,000 in annual payments.

25 That's inconceivable how we would pay for that. No bank

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1 will loan any company that type of capital to make those

2 payments.

3 I heard a number thrown out here today, $800

4 payments. We're taking delivery of a brand-new truck

5 tomorrow morning, and those payments are going to be

6 $2,052.57. So there's a disparity there.

7 Just in the last two months with the economy

8 tanking and the fiscal markets crashing, things are much

9 different than they were a few months ago. I have been

10 notified that our company is going to receive Prop 1B

11 funding for five replacement trucks. That's $250,000 of

12 public money that's going to be given do my company. For

13 the first time in 20 years, I hope I can secure a new line

14 of credit. We're having trouble with the bank. We've

15 never had that trouble in the last two decades.

16 I also heard the comment a few nights ago on TV

17 from Mr. Kay, an ARB spokesman, saying no money, not a

18 dime has to be spent until 2010. That's a simplistic

19 approach. We can't wait until 2010.

20 CHAIRPERSON NICHOLS: Your time's up.

21 MR. RAMORINO: We need to start replacing them

22 now. Please support the DTCC and the CTA alternative.

23 Thank you.

24 CHAIRPERSON NICHOLS: Thank you.

25 John Fleck.

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1 Okay. We'll take the next person.

2 Matt Coen.

3 MR. COEN: Chair Nichols and Board. Thank you

4 for hearing this. I'm going to shortcut this because,

5 one, it's sort of a side to the main thing. I'm neutral

6 on these regulations.

7 But there's a part of the regulation that I don't

8 understand. The technical support document seems to be

9 the foundation of the regulations. And recently there was

10 an advisory sent out that states that you cannot use an

11 aftermarket fuel additive in a V-Deck. They don't seem to

12 have any source of information in the technical support

13 documents to state why this is so. In my conversations

14 with ARB, they seem to be a little confused. Obviously

15 there are some products on the market that don't belong on

16 the market. But there's already state laws and EPA laws

17 that state if a fuel additive could raise emissions or

18 damage any emissions control devices, it's against the law

19 and you could ban them. So you don't really need to write

20 a new regulation for something that already exists.

21 But what worries me is an aftermarket additive

22 can become a viable additive if the V-Deck manufacturer

23 says so. So in other words, the industry that the fuel

24 additive industry competed with or tried to several years

25 ago now has control over it.

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1 Now, we tried in the '90s to interest ARB in

2 emissions reductions with additives. We didn't make it.

3 Natural gas came in and kind of beat us. Then biodiesel

4 came in and that kind of beat us.

5 And we're not sore losers. But now V-Decks,

6 which are actually extremely effective, still need to be

7 protected, and clean fuel is critical.

8 So there's a whole lot of fuel additives that are

9 on the market that need to keep fire trucks and ambulance

10 running that are getting banned along with some of the

11 flaky ones. And I think ARB needs to come back and look

12 at another mechanism to get these additives approved. Not

13 verified, but just approved, yes, they're not going to

14 damage V-Decks, without giving that right to the V-Deck

15 manufacturer.

16 Thank you.

17 CHAIRPERSON NICHOLS: Thank you.

18 Are you ready?

19 Okay. Good.

20 MR. FLECK: Hello. My name is John Fleck. And

21 if you read that little quip from Tom Friedman, who is a

22 native of the State of Minnesota, I believe that what I

23 have in my bag may be just the next green Google or the

24 next green Microsoft.

25 --o0o--

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1 MR. FLECK: You could read about, if you cared,

2 in Chapter 3 of the Walmart effect entitled "Makin'

3 Bacon - a Walmart Fairytale" to learn a little bit about

4 me. I'm from Birchwood Village, Minnesota, a place that's

5 brought Scotchtape and other notable items to America.

6 --o0o--

7 MR. FLECK: This regulation that you speak to

8 deals with the aerodynamic front bumper, it deals with an

9 aerodynamic mirror, it deals with over-the-cab fairing, it

10 deals with a cab side extender, it deals with fuel tank

11 fairings.

12 It also in the trailer portion of the reg deals

13 with side skirts as well as boat tails, trailer wing,

14 whatever you want to call them.

15 Go ahead.

16 It does not deal with this specific area, the

17 wheels. The wheels are standard on everything, regardless

18 of the configuration. They're on all of those things that

19 you eliminate.

20 Go ahead.

21 --o0o--

22 MR. FLECK: Twenty years ago I developed a

23 product that failed. It saved energy under SAE Type 2.

24 But in the real world it failed.

25 Go ahead.

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1 --o0o--

2 MR. FLECK: Under the current criteria that

3 SAE -- or that EPA requires, the No. 3 is that the testing

4 must be done on the track.

5 Go ahead.

6 --o0o--

7 MR. FLECK: We have been doing testing with

8 Schneider National. They have tested this product in '07,

9 in '08. And we are currently right now introducing this

10 product on to their trucks.

11 This product has been parsed, tractor only,

12 trailer only, tractor and trailer only. And it has been

13 found to save one quarter of one percent per wheel cover.

14 I believe it is the least amount of investment for the

15 highest payback than any of the technologies that are

16 being discussed right now.

17 Go ahead.

18 CHAIRPERSON NICHOLS: Thank you. Your time's up.

19 MR. FLECK: Thank you so much. There's the

20 product.

21 CHAIRPERSON NICHOLS: Okay. Sounds intriguing.

22 MR. FLECK: You're going to see it on the roads

23 of --

24 CHAIRPERSON NICHOLS: Okay. Thank you.

25 Robert Tichelman.

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1 MR. TICHELMAN: I'm just waiting for my slide

2 deck to load, please.

3 CHAIRPERSON NICHOLS: All right. Let's -- is it

4 there? If it's not, we can go with the next person.

5 Tim McCarthy.

6 Tim McCarthy?

7 Patty Senecal.

8 See, it helps not to have slides.

9 (Laughter.)

10 CHAIRPERSON NICHOLS: Us low-tech people.

11 MS. SENECAL: Thank you, Madam Chair, Board

12 members. My name is Patty Senecal. I represent the

13 International Warehouse Logistics Association and

14 International Association of Refrigerated Warehouses.

15 These are supply chain providers to retailers,

16 manufacturers, importers and exporters.

17 The rule as defined includes the shippers as the

18 owners of the freight, a distribution center, or a

19 temporary freight storage facility. Our members fit the

20 latter two categories. We are not cargo owners. We are

21 third party logistics providers. We do not -- or, excuse

22 me. Change pages.

23 We oppose to having the California shipper

24 warehouses as the enforcement arm for CARB, because CARB

25 is transferring costs -- enforcement costs and liability

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1 to the California shipper warehouse. We do not have

2 direction or control over these motor carriers and the

3 trucks and trailers that they have. Since the trucks or

4 trailers will not have a CARB sticker on them, the shipper

5 warehouse will be required to inspect all equipment.

6 How will the shipper warehouse know if the truck

7 qualifies for the 100-mile short-haul rule, if the

8 equipment is in good operating condition, not damaged or

9 properly functioning or if the trailer is part of the

10 optional fleet schedule?

11 The warehouse will have to inspect and document

12 every single piece of equipment that comes through our

13 terminals. And some of our distribution centers have at

14 least a hundred dock doors running on two shifts. The

15 cumulative cost of staff time and delays for drivers are

16 unfairly incurred by the warehouse shipper.

17 Our employees and workers in warehouses are not

18 trained as truck mechanics. And we would have to go out

19 and add staff that is certified in truck mechanics to

20 inspect every truck to make sure it's SmartWay compliant,

21 that the equipment is in good order. And this would be at

22 a significant cost.

23 We recommend the removal of the California

24 shippers from enforcing this rule and subsequent

25 penalties. CARB can enforce the rule with CARB staff,

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1 through weigh stations at state lines, roadside with the

2 smoke testing teams, or through DMV registration.

3 An example of this rule is if CARB was to pass a

4 regulation that every person who left this building could

5 only be loaded out into a vehicle that was alternative

6 fueled. How would you enforce that? You'd have to add

7 staff, mechanics, because you wouldn't let people leave

8 the building unless they had a specific car. You're

9 asking us not to load freight until we've inspected every

10 single truck and trailer that comes through a facility is

11 an enormous burden for us to have to facilitate. So we

12 would ask that the warehouses be removed from the rule.

13 CHAIRPERSON NICHOLS: Question?

14 BOARD MEMBER LOVERIDGE: Could Staff respond to

15 that?

16 CHAIRPERSON NICHOLS: Oh, yes. You extended your

17 time with a question here.

18 Staff, can you respond to that?

19 MR. LEMIEUX: Yeah, Ms. Senecal, I think she

20 maybe misunderstood the changes that we recently made to

21 the proposal. What we've done is we removed the receiver,

22 and now we just have the shipper responsible. But in

23 that, the shippers are only responsible when there's a

24 violation given to the motor carrier and that they're

25 notified. So once the shipper is notified that a motor

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1 carrier that they've been using is in violation, then they

2 have to take some action.

3 So if they don't get notified, there's no penalty

4 associated to the shipper. But once they're notified,

5 then they can receive penalties if they don't notify the

6 motor carrier and make sure that they're in compliance.

7 MS. SENECAL: May I respond?

8 CHAIRPERSON NICHOLS: Sure.

9 MS. SENECAL: Thank you, Madam Chair. Thank you,

10 Stephan.

11 I understand the rule has been changed on the

12 back. And so if the warehouse distribution center gets an

13 NOV, we would be responsible to work with the motor

14 carrier. That would mean inspection of every single truck

15 and trailer, because we're going to have to document that

16 we have talked to them, that they're aware of the rules.

17 And, again, we're going to do everything not to be

18 penalized so we can comply with the rules. So we still

19 believe we're in the rule at the end and we shouldn't be

20 enforcing CARB rules. There's enough CARB staff and other

21 mechanisms, rather than adding cost on to our side to have

22 to go out and police the equipment.

23 CHAIRPERSON NICHOLS: I'm not following you.

24 MS. SENECAL: So in other words if we get a

25 notice of violation at the warehouse --

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1 CHAIRPERSON NICHOLS: You're told now -- you're

2 leaving the building.

3 MS. SENECAL: I'm leaving the building.

4 CHAIRPERSON NICHOLS: Okay. And somebody hands

5 you a piece of paper or gives you a card, it says,

6 "Patty, you can't get into the car because it doesn't meet

7 our standards." I don't see why that's an extra burden on

8 you.

9 MS. SENECAL: Because what the rule is intended,

10 as it's been discussed with us, is that once we have a

11 Notice of Violations, we have to make sure the motor

12 carrier understands, the shipper understands. And if for

13 some reason equipment is still loaded out, then the

14 warehouse is part of the penalty process. So we would

15 notify the carriers. But, again, the only way we're going

16 to protect ourselves to our customer is to inspect and

17 document every single piece of equipment that we're not

18 loading out non-compliant equipment.

19 CHAIRPERSON NICHOLS: I think we'll talk about

20 this further.

21 MS. SENECAL: Okay. Thank you. I appreciate

22 that.

23 CHAIRPERSON NICHOLS: Okay. Thank you. I

24 understand your point.

25 MS. SENECAL: Okay. Thank you.

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1 CHAIRPERSON NICHOLS: Are you ready, Mr.

2 Tichelman?

3 Yes.

4 MR. TICHELMAN: Thank you, Madam Chairman and

5 Board. My name is Robert Tichelman. I'm President and

6 CEO of a company called Windyne. We provide fuel

7 efficient aerodynamic add-ons to the long haul trucking

8 industry and transport and currently provide the highest

9 rate of return on the SmartWay approved system.

10 --o0o--

11 MR. TICHELMAN: I'm not actually here to sell my

12 product or give a technical presentation. But I was asked

13 by your staff as well as the SmartWay staff to come make a

14 presentation that I've been talking do them about. In

15 fact, we've only been dealing with CARB for the last two

16 and a half weeks and they were unaware of our product

17 beforehand.

18 What I want to take a look at and what SmartWay

19 vehemently supports me on is the fact that the standards

20 that they identified at 6 1/2 percent are over two and a

21 half years old and are based around older technology that

22 was low in its capabilities at the time it was originally

23 developed.

24 --o0o--

25 MR. TICHELMAN: And so I want to take a look

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1 at -- they want to move from -- and why they haven't

2 changed their values is they're currently working on a

3 protocol to bring up testing as opposed to go through the

4 testing process. And so they're not in the process right

5 now of adjusting the number until they get the protocol in

6 place to warrant the numbers that they're working with.

7 And so we take a look at -- and they will talk

8 about a 20 percent or a 10 to 20 percent number that they

9 have. And is 6 percent too low? And they think that it

10 might be. And they want to move the goal post. They want

11 to go from a static measuring system of 6, 6 1/2 percent

12 and go dynamic. As they bring new products in like ours

13 and like the Freight Wing product you heard earlier that

14 raises those levels up, they want to change that number

15 and have it float. So the goal posts are going to move.

16 --o0o--

17 MR. TICHELMAN: And so the business case that I

18 want to talk about is, you have a hypothesis or a theory

19 that on the trailer there's four major areas of

20 efficiencies that you can work with - the gap fairing, the

21 trailer skirts, the boat tail, and the low rolling

22 resistance tires.

23 --o0o--

24 MR. TICHELMAN: Currently if you use the 6.5

25 percent standards and the current products from the

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1 marketplace, you're going to have to identify three of

2 those areas to just meet that 6 percent, leaving very

3 little room to add another product and increase the number

4 as it goes by. And it would be unfair to, you know, the

5 transporters who put this equipment on their trailers.

6 Are you going to then grandfather them in or are you going

7 to have to require them to take the stuff off and then

8 meet the new compliance numbers? And that's what we call

9 the crisis of conscience, is you gave them a number, they

10 met that number, and now you've changed the number on

11 them.

12 So, you know, what we're trying to promote is --

13 you know, SmartWay is looking at a number more of like 8

14 percent. And they were saying that we should suggest that

15 don't take their number as it was two and a half years

16 ago, look at the industry today, look at the products that

17 we have. We have a technology that takes one of those

18 areas and meets and beats the 6 1/2 percent requirement,

19 leaving three areas available for increased efficiencies,

20 adding a boat tail, adding the gap fairing as we go along.

21 --o0o--

22 MR. TICHELMAN: So you take a look at what it is.

23 You know, require us as an industry to come up with better

24 and more concise products that we're working with. And

25 we've come up with products that now allow for -- what,

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1 they change?

2 EXECUTIVE OFFICER GOLDSTENE: That's the

3 automatic shut-off. But the lights will be back on

4 shortly.

5 CHAIRPERSON NICHOLS: Oh, we're going to get the

6 lights back on again. Sorry.

7 Okay. Continue, please.

8 MR. TICHELMAN: So what you see is, you know, a

9 thoughtful solution. Don't have a bar set so low that the

10 transportation industry will put a 2 percent belly fairing

11 on, a 2 percent gap fairing and a 2 percent boat tail,

12 meeting their six percent number, leaving very little room

13 to go. Make it a thoughtful decision, take a 6 1/2

14 percent belly fairing, and then have some room as we go

15 through and change this. And it requires innovations like

16 we've done. We've provided for, you know, horizontally

17 adjustable and vertically retractable, giving the most

18 surface area available of any trailer fairing that's out

19 there.

20 So consider raising the number, believe it or

21 not, from 6 1/2 to 8 percent, in fact, because once

22 SmartWay gets their testing protocol in place, they're

23 going to raise that number themselves.

24 Thank you.

25 CHAIRPERSON NICHOLS: Okay. Thank you.

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1 Matt Griffin.

2 Henry Hogo.

3 Oh, he spoke already. Okay.

4 Barry Broad.

5 MR. BROAD: Good evening. Barry Broad with the

6 Teamsters.

7 I'll just say that we're sticking our neck out

8 and we're strongly supporting this regulation. However,

9 there was one really big problem with it, which can be

10 fixed in your 15-day comment period, and I hope you take

11 this seriously.

12 You're essentially killing your regulation with

13 kindness, because the owner-operators that get a deal for

14 not complying to this -- with this for a long period of

15 time, they mostly work for trucking companies as a

16 replacement for employee drivers. They're

17 under-capitalized. They don't make very much money.

18 And what happens in the trucking industry and

19 what will happen here, because it has happened before many

20 times, with all the port drivers, with much of

21 agricultural trucking, is overnight these trucking

22 companies will convert employee drivers to independent

23 contractors, generally misclassifying them, in order to

24 avoid having to comply.

25 So trucking companies like Rodgers or whatever,

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1 that got 30 truck drivers, they will have to comply. But

2 a trucking company that's working 135 owner-operators -

3 you heard that guy, 135 owner-operators, no employees - he

4 won't have to comply at the same time. That's a very bad

5 result. And what you're going to do is actually

6 contribute to furthering the underground economy in this

7 industry, which is the second worst industry in America

8 for all this kind of fraud.

9 And what needs to happen is that you need to make

10 sure that the carriers that actually employee these

11 people, whether they're employee drivers or they're

12 owner-operators, that they are on the hook to comply. And

13 you don't create perverse incentives in the marketplace to

14 undermine -- that will undermine your own regulations.

15 CHAIRPERSON NICHOLS: So your testimony is the

16 anti-Patty Senecal testimony basically?

17 MR. BROAD: I love Patty --

18 CHAIRPERSON NICHOLS: Not a personal --

19 MR. BROAD: -- but she's not always right.

20 However, I am. So that's -- thank you.

21 (Laughter.)

22 CHAIRPERSON NICHOLS: But you would be taking the

23 opposite perspective on that issue, that they should be

24 forced to and --

25 MR. BROAD: Yes, absolutely. Or everybody should

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1 be treated the same. And if they're forced -- I mean, it

2 really is the carriers who hire them. The only real

3 independent single truck operator or system left is in

4 construction trucking. There really isn't much of it left

5 anywhere else, where a truck driver actually deals with a

6 shipper. There I can see, you know, you could delay this,

7 because these are true entrepreneurs.

8 In the vast part of the marketplace where these

9 people are just a way to get around paying Social Security

10 tax, you're making a big mistake because you are going to

11 create all kinds of unfair competitive imbalances. But I

12 think it's fixable, and I think you can fix it pretty

13 easily.

14 So I'd love to work with your staff. Thank you.

15 CHAIRPERSON NICHOLS: Thank you, Mr. Broad.

16 Charles Diaz.

17 MR. DIAZ: Good evening, Madam Chair, Board

18 members. My name's Charles Diaz, owner of Charles Diaz

19 Trucking.

20 CHAIRPERSON NICHOLS: Do you like this romantic

21 lighting that we have here?

22 MR. DIAZ: Yes.

23 (Laughter.)

24 CHAIRPERSON NICHOLS: Should be putting candles

25 out.

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1 Sorry.

2 MR. DIAZ: Our company plans to stay in

3 California as we do -- we can do what our state asks for.

4 This new regulation, timing, speed, could not be the

5 worst. Our customers and inventors are pushing our margin

6 to their lowest point. This new regulation is an

7 additional cost that is unbearable at this time. We too

8 want cleaner air, but there are alternative solutions that

9 must be looked at to slow this implementation.

10 Thank you.

11 CHAIRPERSON NICHOLS: Thank you.

12 Gary Gaussoin.

13 MR. GAUSSOIN: I'm Gary Gaussoin. And ironically

14 my initials are GHG. So every time I see that it jumps

15 off the page at me.

16 (Laughter.)

17 MR. GAUSSOIN: I'm Chairman of Silver Eagle

18 Manufacturing Company. And it appears today I'm one of

19 the many aerodynamics manufacturers. And I'm here to

20 support that element of the proposal, because they really

21 do work.

22 And I would also agree with the gentleman from

23 Daimler Trucks that SmartWay really doesn't have a testing

24 protocol. They are trying to develop one. It's based

25 only on test tracks. Temperature, 68 degrees to 86

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1 degrees. So you couldn't prove a product that might be

2 the best thing going at this time of year. So I think it

3 has some fatal flaws.

4 And also, they are rules that are dependent on

5 methodology rather than on results. So I would suggest

6 that you work on results instead of methodology. And I

7 think you'll find a federal code for motor vehicles. They

8 try to take that approach for that very reason, because it

9 really does provide a barrier to technology.

10 For instance, we have a product that goes against

11 the idea of closing the gap, because it actually can

12 create a suction on the front of the trailer just like the

13 suction on the back of the trailer and help pull it

14 forward. So those rules don't work very well.

15 Also, I did a little economic payback analysis.

16 As much as a manufacturer's selling stuff, you want it to

17 have a high payback. I think the results are a little

18 exaggerated. All these tests are run at highway speeds.

19 And of course a vehicle has an average speed that's lower

20 than that. And then if you take a 100,000 mile truck, if

21 you divide by 2.5 on the trailers, you get 40,000 miles.

22 So be conservative on your payback calculations.

23 So, in conclusion, I think you should have rules

24 that regulate for performance, not for methodology, to

25 keep things open. You should allow for proven devices.

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1 Have other methodologies -- if people can prove to the Air

2 Resources Board that these things meet your requirements,

3 your performance requirements, you should accept them.

4 I think SmartWay is being underfunded, and it's a

5 bit of a dilemma of a horse to hitch to right now.

6 I think you should also allow removable devices

7 for aerodynamics.

8 CHAIRPERSON NICHOLS: Your time's up.

9 MR. GAUSSOIN: Thank you.

10 BOARD MEMBER SPERLING: Chairman Nichols?

11 CHAIRPERSON NICHOLS: Sorry. Yes.

12 BOARD MEMBER SPERLING: This issue's coming up

13 several times about the SmartWays.

14 CHAIRPERSON NICHOLS: Yes.

15 BOARD MEMBER SPERLING: And he was making a

16 recommendation that I didn't understand that seems

17 relevant about there's a problem with a method. And I

18 didn't understand what the fix was. I mean we've heard

19 this enough that I was wondering --

20 CHAIRPERSON NICHOLS: People have devices that

21 SmartWay hasn't certified that they think we should be

22 allowing is how I'm understanding that.

23 BOARD MEMBER SPERLING: Well, it's even

24 broader -- yeah, and it's even broader than that, the

25 deficiencies of the SmartWay program.

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1 MR. LEMIEUX: Yeah. For one thing to start off,

2 the SmartWay program is a voluntary program. So they've

3 worked with the industry to come up with some of these

4 methodologies that would, you know, be able to be used.

5 And for the tractor side right now, the way they've

6 approached it, it's sort of a groundbreaking program for

7 them, is they sit down with each manufacturer and look at

8 the lines of the models of their tractors; and they want

9 the manufacturers, you know, initially to come up and

10 demonstrate to them what is the most fuel-efficient

11 tractor and why.

12 So you couldn't really compare the tractor

13 efficiency from one brand to another. But within the

14 brand of a tractor - and that's the way it currently is

15 right now - you can look at the way it's built, the way

16 it's designed to see which ones are more aerodynamic. And

17 then they establish that particular model for that

18 manufacturer as the SmartWay certified.

19 Now, in the future to replace that they have to

20 do more in terms of demonstrating why the next generation

21 is better than the current one. And they are also working

22 towards establishing a protocol that's sort of being able

23 to set a threshold to where each manufacturer can try to

24 meet that threshold. Then it's not limited to a couple

25 models per manufacturer.

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1 BOARD MEMBER SPERLING: So there's this

2 fundamental --

3 RESEARCH DIVISION CHIEF CROES: I think the

4 simple answer -- the simple answer is I think we've

5 recognized that there are deficiencies in the SmartWay

6 program. We've been working with EPA to try and

7 collaborate on improving those, not entirely successfully.

8 And we're going to try and jump ahead of where things are.

9 But right now SmartWay's the best that we have. So we're

10 proposing its adoption, understanding that, and planning

11 to bring more back to you like in a year or so when we do

12 more work on it.

13 MR. LEMIEUX: And if I could add one more thing.

14 The other part of this that we didn't talk about is the

15 component part where you get the biggest bang for the buck

16 in terms of efficiency improvements. For example, the

17 side skirts. In the cases like that, they are thoroughly

18 tested. It isn't a random mode - this looks good, that's

19 good enough - it's SmartWay certified. They do have to

20 certify them SAE procedures and verify it.

21 BOARD MEMBER SPERLING: And tires?

22 MR. LEMIEUX: And tires, they also have

23 methodologies that they use to determine efficiency of the

24 tires. And they are going towards an ISO-established

25 methodology that all tire manufacturers will be using.

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1 Right now there's a few methodologies that they can use to

2 demonstrate fuel efficiency.

3 So, again, you can't compare one make tire to

4 another. But within a make of a tire you can establish

5 which one's more fuel efficient. And that's the way it's

6 working right now.

7 BOARD MEMBER SPERLING: That's not very

8 reassuring.

9 RESEARCH DIVISION CHIEF CROES: There are

10 standard tests for tire efficiency which were used by the

11 tire manufacturers.

12 BOARD MEMBER SPERLING: Could I just ask that

13 maybe tomorrow there'd be just a very brief presentation

14 on how we're going to -- this whole process is going to be

15 improved, give us some assurance that it's on a more sound

16 basis than it is now and what's the time table for that

17 and how that fits in with our requirements. I mean I've

18 heard this story from enough people to believe that

19 there's a real fundamental problem here.

20 EXECUTIVE OFFICER GOLDSTENE: Yes. We also hope

21 to have representatives from EPA here tomorrow as well.

22 BOARD MEMBER BERG: And also that if we're going

23 to change and bring things back in a year, where does that

24 leave the people that are buying this equipment?

25 RESEARCH DIVISION CHIEF CROES: That's for

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1 additional equipment.

2 BOARD MEMBER BERG: Okay. I'm just saying that

3 overall I don't want to pass one regulation and come back

4 a year later, put more -- people get confused, and it's

5 costly.

6 MR. LEMIEUX: Right. We do plan to broaden the

7 program and establish new requirements in the future, but

8 not as a retrofit but for newer trailers and tractors that

9 come into the marketplace. So we will not be requiring

10 companies that are investing in technology to replace

11 those technologies.

12 CHAIRPERSON NICHOLS: Okay. Tom Carroll.

13 MR. CARROLL: Good evening, Madam Chair, members

14 of the Board. Thank you for allowing me to speak this

15 evening. My name's Tom Carroll. I represent about three

16 speakers that you'll be hearing from tonight that

17 represent the school pupil transportation industry.

18 I myself represent 5,000 students from 1800

19 square miles of Shasta County who are in support of clean

20 air. However, we are opposed to these regulations. These

21 regulations would basically cripple the school pupil

22 transportation industry in California; and at a bare

23 minimum we ask that you remove school buses from this

24 regulation.

25 Twelve months ago I was involved in talks

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1 regarding these proposed regulations, and I was guaranteed

2 at that time that school buses were not going to be part

3 of this regulation. February 1st, 2008, that all changed.

4 According to the proposed school bus BACT

5 schedule, it would cost my school district $1.8 million by

6 January 1st of 2014 to comply with the best available

7 control technology. That's approximately four school

8 budget years from now. That would require that we replace

9 eight school buses and retrofit ten school buses in a time

10 frame that we would normally purchase four school buses.

11 As you can see, that's a significant capital expense for

12 us.

13 In my school district we have approximately a $15

14 million budget, of which is $1.5 million goes to school

15 pupil transportation. That's money that's diverted

16 directly from the classroom to transportation because it's

17 considered a necessary service in our large rural area.

18 We're also experiencing a $2 million reduction in

19 funding this year, thanks to the $14 billion deficit in

20 the State of California. We're anticipating another $2

21 million deficit -- or $2 million reduction in funds next

22 year.

23 Funding opportunities that were spoken of. The

24 Department of Education has a small school district bus

25 replacement program -- grant program that's not applicable

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1 to any school district in the State of California that has

2 more than 2500 students. So my district would not qualify

3 for that. Never have, never will. We have 5,000 kids.

4 The Lower Emission School Bus Program that was

5 mentioned earlier, and Eric made some mention about 95

6 percent of the retrofits could be paid for that, I

7 respectfully disagree with Eric's numbers. The money is

8 not divided up equally among the state, with a dollar or

9 two dollars going towards every bus. It's predominantly

10 aimed at the southern part of the state.

11 As an example, my district operates 10 percent of

12 the 220 school buses in Shasta County. We have not been

13 awarded any retrofit money under the Lower School Bus

14 Emission Program. Fifty-four of the 220 school buses in

15 our county are pre-'87 and an additional 50 are pre-'94,

16 which means there's over a hundred buses that require

17 retrofits and/or replacement.

18 Shasta County received $4 million underneath this

19 program, of which $124,000 was absorbed by our local air

20 quality district for administrative oversight. We can

21 afford to replace with $875,000 left approximately 50 to

22 65 retrofits, depending on what you consider the fair

23 price for that. And approximately 17 school buses will be

24 replaced with about $2.5 million. As you can see, that

25 leaves a lot of school buses in my county. We're not

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1 going to get 95 percent of them retrofitted and replaced.

2 That money's got to come from some place. It's going to

3 come from the General Fund.

4 And that doesn't even take into account the

5 reduced capacity on the school buses because of the

6 recently implemented seat belt regulation. We're trading

7 in 84 passenger buses for 50 passenger buses. Nationally

8 800 students lose their lives while being transported back

9 and forth to school by means other than a school bus.

10 Children in a school bus, nationally we lose 6 students

11 annually going back and forth to school in a school bus

12 versus 800 that don't ride a bus. So I don't know what

13 the cost methodology is for figuring that out, but I'd

14 like to see somebody do it.

15 Also, I'm also concerned, if this rule is going

16 to pass, why haven't the opacity check regulations been

17 removed? Worst diesel trucks would have to be opacity

18 checked. If we're going to go through the particulate

19 trap and the NOx reduction, why are we still going to be

20 burdened with a 40, 50, 60, 70 dollar test on an annual

21 basis for these vehicles?

22 CHAIRPERSON NICHOLS: Your time is up.

23 MR. CARROLL: Thank you very much. I appreciate

24 the time.

25 EXECUTIVE OFFICER GOLDSTENE: Madam Chair, could

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1 we just -- I'd like to ask Jack Kitowski to make a quick

2 update to the Board on this.

3 CHAIRPERSON NICHOLS: All right.

4 ON-ROAD CONTROL REGULATIONS BRANCH CHIEF

5 KITOWSKI: I did want to clarify one point. And at least

6 this part of it would be good news for Mr. Carroll.

7 There is no part of the school bus requirement

8 that would require replacing buses by 2014. The earliest

9 school bus -- it is primarily a PM retrofit requirement.

10 And the earliest replacements would not occur until 2018

11 if the bus could not be retrofitted.

12 MR. CARROLL: That's not a very good lengthening

13 strategy to wait another four years to replace another --

14 CHAIRPERSON NICHOLS: Come on. You've had your

15 turn. Thank you.

16 Robert Isom.

17 MR. ISOM: Good evening, Madam Chair.

18 CHAIRPERSON NICHOLS: Excuse me. Everybody's

19 being given an opportunity to speak here. And we're not

20 engaging in dialogue. Thank you.

21 MR. ISOM: Good evening. Well, I must say first,

22 I liked it better when the lights were off. I know the

23 light's reflecting off my balding head --

24 (Laughter.)

25 MR. ISOM: -- blinding my colleagues in the other

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1 room looking at the screen.

2 My name is Roger Isom. I'm with the California

3 Cotton Ginners and Growers Associations, and representing

4 a coalition of over 70 ag groups that have worked a long

5 time with the ARB staff, over 18 months, on trying to

6 develop something that works.

7 But let me be very clear. We don't like this

8 regulation. Our members don't like this regulation.

9 You've already heard from one of my members today.

10 But with that said, we understand the ozone

11 situation, especially in the San Joaquin Valley and the

12 South Coast; we understand the trucks are number one

13 source; we understood when we had our first meeting with

14 ARB and they said, "Look, guys every ag truck's going to

15 have to be replaced in this." So, you know, we get that.

16 However, I think it also has to be understood

17 that ag trucks are a little bit different. Most of our ag

18 trucks are low mileage.

19 I think Dr. Telles brought up the issue of cost

20 effectiveness. The cost effectiveness number that Mr.

21 White brought up is an average. And that's driven way up

22 by all the long-haul trucks that drive a lot of miles.

23 When you look at the low mileage ones, you know, we're not

24 talking a few dollars per pound, for example, the 15 or

25 20,000 mile-per-year trucks; we're talking over $100,000

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1 per ton. So it's very expensive.

2 Some of our trucks are highly specialized. For

3 example, a cotton module mover used in my industry, a

4 brand-new cotton module mover truck is $193,000. They're

5 so specialized that there is no used market. I can't go

6 to the Freightliner dealer, the Peterbilt dealer in Fresno

7 and buy a used one. I have to buy brand-new. So there

8 had to be some special considerations given to those

9 trucks.

10 It's also important to note that the incentive

11 funds that we've talked about, the majority of ag trucks

12 are not eligible for those. They're below the weight

13 limit. And I know that ARB's working on lowering that.

14 Or the low mileage, they're not going to rank high enough

15 in the priority to get the funding. The ones that drive

16 more miles, they're going to be higher on the priority

17 list and get the funding.

18 So I think what we did is we sat down with ARB,

19 took all those things into consideration and developed

20 something that we think is workable. We would oppose

21 anything that makes this rule any more stringent than what

22 it is today.

23 The last thing that I would say and leave with

24 you is that we would encourage ARB after this rule's

25 adopted to work to try to find more funding. And I will

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1 give you my personal commitment that we'll do anything we

2 can to find -- bring more funding. Because if we had

3 enough money, we'd buy new trucks tomorrow. We don't like

4 driving 1970 and 1980 trucks.

5 CHAIRPERSON NICHOLS: Thank you.

6 MR. ISOM: So I would just encourage you guys to

7 do all you can to bring more money.

8 Thank you.

9 CHAIRPERSON NICHOLS: Time's up. Thank you.

10 Allan Lind.

11 MR. LIND: Thank you, Madam Chair. I'm Allan

12 Lind. I'm here on behalf of the California Council for

13 Environmental and Economic Balance. And we're here to

14 support your proposed regulation.

15 I wanted to expression our appreciation for the

16 staff's help in working with us on a couple of complex

17 problems. And the challenge of writing a new regulation

18 and intertwingling it with nine or ten other existing

19 regulations is a formidable task.

20 In our previous communication with you we were

21 concerned about some of those overlaps. And I think your

22 staff has done an excellent job of addressing those.

23 I wanted to be clear though that in the latest

24 changes with respect to the two-engine cranes, it's our

25 understanding that because this rule doesn't take --

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1 there's an acceleration provision -- or accelerated

2 compliance provision in the existing regulation that says

3 if you can get some changes made before March of 2009 --

4 it's based on horsepower of the total fleet. In a

5 two-engine crane thing, you move a couple of engines into

6 the existing fleet and you might skew that qualification.

7 It's my understanding that since this rule will not take

8 effect until after March 1st, that that conflict doesn't

9 exist. And I just wanted to get that on the record.

10 We do have two concerns. And maybe staff can

11 sort this out for us. The incentives that you provide for

12 hybrid vehicles and alternative fuel vehicles are curious

13 to us. They compel, they require the Executive Officer to

14 provide credits for hybrid vehicles if they provide at

15 least 20 percent greater fuel economy. I'm wondering if

16 that's a disincentive for somebody to try to provide 40

17 percent or 80 percent. Because if you only have to

18 provide 20 percent, you get the incentive.

19 Likewise for the alternative fuel vehicle. There

20 is an anomaly here where it provides the incentive of

21 counting their PM index, if you will, towards a fleet as

22 zero. Well, at some point some of these alternative fuel

23 vehicles I think that you'd want to go from -- maybe

24 kick-start it with a zero credit for PM. But all of the

25 alternative fuels have PM, I mean with the Board's concern

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1 over health costs.

2 CHAIRPERSON NICHOLS: Time's up, Mr. Lind. I

3 hate to cut off somebody who's supporting us, but we've

4 got to do it.

5 MR. LIND: Thank you.

6 CHAIRPERSON NICHOLS: Okay. Jean Roggencamp.

7 Did she leave?

8 Michael McDaniel.

9 MR. McDANIEL: Boy, it's getting late, isn't it?

10 CHAIRPERSON NICHOLS: It is.

11 MR. McDANIEL: I'm Michael McDaniel.

12 CHAIRPERSON NICHOLS: We're going to take a break

13 actually for -- we're going to take a half hour break

14 in -- I'm hearing dissent from the audience. We'll

15 consider that.

16 Okay. Go ahead.

17 MR. McDANIEL: I'm with Continental tire. We're

18 one of the premiere SmartWay suppliers for both tires and

19 we're also going to have an inflation chip next year at

20 the OE level. We'll be the predominant supplier Class 6,

21 7, and 8 trucks for an inflation monitoring system in

22 trucks. We strongly support the SmartWay regulations.

23 I've been making fuel-efficient tires for years.

24 We think a couple of things that we need to

25 consider very seriously: The first-off, the SmartWay

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1 tires are now only about 6 percent of all the products

2 that we make. And they are certainly suitable for

3 long-haul trucks. In California, only less than 30

4 percent of trucks are made for the line-haul service. A

5 whole different class of tires work on regional, urban or

6 intrastate trucks. If we put the current approved

7 SmartWay tires, and all of the manufacturers at the

8 current tires approved, they will not work well on the

9 service. So what will happen, fleets will get 30 and 40

10 percent less mileage on tires, which is certainly a

11 tremendous cost to the fleet and it's also an

12 environmental problem of another sort.

13 The other problem, and the most significant

14 problem, there's no provision in the tire bill for

15 retreads. Eighty-some percent of fleets retread for

16 economic considerations. It cuts a fleet's costs about 30

17 percent. But also, saliently, it is environmental. If we

18 take the three million, three and a half million tires

19 retreaded every year in California, which is a 130-pound

20 tire, and we put them in landfills rather than put them

21 back in service, you've got an environmental train wreck.

22 Tires are extremely difficult to handle in landfills that

23 handle environmentally.

24 We're making two recommendations. One's that the

25 standards be moved to regional and urban tires, a whole

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1 different standard, be made --

2 CHAIRPERSON NICHOLS: Your time is up.

3 MR. McDANIEL: -- so that you could have a broad

4 range of tires.

5 Thank you.

6 CHAIRPERSON NICHOLS: Okay. I need to check with

7 the court reporter about your need for a break here. Are

8 you okay with continuing or do you want to take a break?

9 You need a five-minute break?

10 All right. We will take a five-minute break and

11 then we will reconvene.

12 (Thereupon a recess was taken.)

13 CHAIRPERSON NICHOLS: I know there are people who

14 need to testify tonight. And we want to make sure that

15 those of you who can only testify tonight get heard.

16 There are other people who seem to be saying that

17 they want to shift over till tomorrow. But as far as I

18 can tell, the clerical staff here is just plain confused

19 about whether people are leaving tonight and thinking that

20 they can just come back tomorrow and pick up where they

21 left off. I don't want to do that. If there are people

22 who left already, who just disappeared without telling us

23 they were, you know, planning to come back, they're going

24 to have to sign up and take their place in order just like

25 everybody else, because it won't be fair to the other

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1 people.

2 And I have no idea if there are going to be

3 hundreds of more people showing up tomorrow to testify. I

4 hope not, because we've heard a lot of good testimony

5 today. But we'll just have to take that as it comes.

6 Meantime, our Board has some refreshments in the

7 back and the ability for people to just get up and take a

8 break. And we have both closed-circuit TV and audio back

9 in the back. So that when people aren't sitting here, as

10 long as they are in the area back there they are hearing

11 everything that's going on out here.

12 So we are not going to take a dinner break. The

13 Board is going to stay here and we will just continue for

14 as long as we can. And hopefully that will accommodate as

15 many people who came here with the intent to be heard

16 tonight as we possibly can. That's our goal.

17 BOARD MEMBER LOVERIDGE: Are you going to

18 establish a time?

19 CHAIRPERSON NICHOLS: I had said previously 9

20 o'clock. I believe that 9 o'clock is as long as I can

21 stay here tonight and still be listening. I need my

22 sleep. So that will be when we will close off.

23 All right. So those are the ground rules.

24 Let's proceed with Steve Brink.

25 MR. BRINK: Thank you, Board members and Madam

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1 Chair. Steve Brink, California Forestry Association,

2 representing many of the forestry fleets throughout

3 northern California.

4 And I'd just like to say, it was very

5 interesting. You heard Mendocino County earlier. And in

6 our surveys with them, we find -- throughout rural

7 counties in California, we think that, as forestry is, 60

8 percent of those fleets are older trucks. And it's

9 primarily because those trucks are running 50 to 60,000

10 miles a year. They need 20 years to get the useful life

11 out of the truck. And so they have old trucks. Surprise,

12 surprise.

13 And we also find in there fleet owners are

14 running -- the fleet calculator on-line to have business

15 plans in anticipation of the rule. And they are running

16 into what we call crunch time, just as staff showed

17 earlier in the graphs, that 2011 to 2014 is crunch time,

18 particularly for fleets with older trucks. And many of

19 our fleet owners, when they run the numbers, they run out

20 of cash at about year three. You heard that earlier as

21 well. They simply cannot get through the rule. And so

22 that leaves them with just -- then the only two options

23 they have is you significantly reduce the size of your

24 fleet or you save the pain and go out of business now.

25 A couple other things I wanted to mention. We

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1 support the earlier testimony that talked about VMT.

2 There's a lot of what I believe you'll have 2004 trucks,

3 for instance, long-liners on the road today putting on

4 150,000 miles a year versus a 1991 truck putting on 40,000

5 miles a year in rural counties. That 2004 truck will be

6 emitting more NOx than the 1991 truck.

7 Second, we believe the cost of the rule has been

8 substantially understated. Earlier staff showed that 23

9 percent of a million trucks are going to need filters. We

10 find that filters cost 20 to $45,000 installed per truck,

11 depending on how many filters you have to put on. Let's

12 say 20,000 times --

13 CHAIRPERSON NICHOLS: Your time is up. I'm

14 sorry.

15 Mary Pitto.

16 Sayed Sadredin.

17 MR. SADREDIN: Good evening, Madam Chair, members

18 of the Board. My name is Sayed Sadredin and I'm the

19 Executive Director and Air Pollution Control Officer for

20 San Joaquin Valley Air Pollution Control District.

21 Simply put, there is no way for the San Joaquin

22 Valley to come into attainment with the particulate

23 standards and the ozone standards without major reductions

24 in NOx emissions from heavy-duty diesel trucks. That is

25 the biggest source of emissions in San Joaquin Valley.

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1 And without the rule that is before you, we will not be

2 able to meet those standards. They are the largest source

3 of emissions, with 50 percent of our entire NOx emissions

4 inventory being attributed to heavy-duty diesel trucks.

5 So we urge you to adopt the strongest rule that

6 you can adopt today, which is the rule that is proposed to

7 you by your staff.

8 Having said that, we are also quite sympathetic

9 to the economic concerns that have been raised by the

10 small, medium, and agricultural sector of trucking

11 operations. And we believe incentives can play a major

12 roll in softening the blow and reducing the economic

13 burden.

14 We are taking a number of actions at the local

15 level to increase funding. We are using our indirect

16 source review fees and mitigation fees towards reducing

17 emissions from trucks. And we are looking at increasing

18 DMV funding to provide additional funding for the sources

19 that are under your consideration today.

20 We do ask, however, that your staff and your

21 Board also work with us to both streamline the incentive

22 guidelines, the Prop 1B guidelines that will come before

23 you next year, to make that process work easier. And then

24 more effectively -- we have already had effective

25 conversations with your staff. And some of those

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1 recommendations from your staff will address those needs.

2 We also ask that you work with us and the

3 stakeholders - and I'm almost done - to help us secure

4 additional incentive funding both at the state and federal

5 level to deal with this problem.

6 Thank you very much.

7 CHAIRPERSON NICHOLS: Thank you.

8 Oralia Ornelas.

9 Michael Collier.

10 MR. COLLIER: Good evening. My name is Michael

11 Collier. I'm the Operations Manager for C.D. Matthes

12 Trucking in Fresno, California.

13 By industry standards, we're a pretty small

14 company. We have 20 power units. All our power units are

15 cab-over engine trucks that exclusively haul 57-foot

16 trailers.

17 Under the rules that I've read here today, our

18 company is not eligible for the exemption of 57 footers.

19 And under the research I've done over the last two weeks,

20 approximately 30 trucks that haul these trailers would be

21 eligible. However, they work for a mixed fleet trucking

22 company. They do not haul exclusively 57s. We are the

23 only carrier out of approximately seven carriers that are

24 exclusively 57 footers.

25 In answer to Dr. Telles' question earlier this

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1 evening, 90 percent of the 57-foot fleet will be out of

2 business in 2012. That will leave a whole 10 percent

3 left. And they will be out of business in 2018. There is

4 no solution for us. We have to either completely re-equip

5 our fleet with trucks and trailers, and then we cannot

6 service our customers the way we are now.

7 I'm definitely opposed to this. And I'm speaking

8 for the owner of C.D. Matthes as well, Janice. She's also

9 opposed. Our company cannot afford this change.

10 CHAIRPERSON NICHOLS: Thank you.

11 Is Janice Matthes also speaking?

12 Okay. Paul Trump.

13 MR. TRUMP: Thank you. Good evening to the

14 Board. My name is Paul Trump, company called Mike

15 Campbell & Associates. We are in the City of Industry in

16 Stockton, California. We're a warehousing trucking

17 company throughout California.

18 ARB has affected us this year with many

19 regulations. And to Ms. Berg's comment, the TRU

20 regulation, which isn't part of today, but we complied.

21 We changed out 300 refrigerated units this year. And

22 about six week ago, maybe a little less, you guys said six

23 more months to figure it all out. You've got to figure

24 out whatever you're going to do on this rule and get it

25 right before you make changes, because it's a substantial

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1 change. Change out one thing to another, it's going to be

2 a real problem.

3 A lot of technology's not there yet. And my

4 colleague will talk a little bit more about that and how

5 it will affect you guys and how it affects us.

6 One of the comments earlier staff talked about on

7 some page 75 of your regulation how only 5 percent of the

8 companies were affected by both regulations. How many are

9 affected by three? TRUs, trailers, and the heavy-duty --

10 and the bus and truck. So it affects a lot of us in many,

11 many ways.

12 While we support the clean air, we'll also be

13 permitted to sell our old equipment to other states. So

14 if you really want to clean up the air here in California

15 and the rest of the world, why can we move our equipment

16 over to Nevada and Arizona? Doesn't seem to do what you

17 really are trying to do, which is to make clean air.

18 We hope that this Board would adopt the DTCC

19 alternative proposal. And thank you for your time.

20 CHAIRPERSON NICHOLS: Go ahead. And then we'll

21 hear from Oralia.

22 I'm sorry. When I call your name, please stand

23 up and say something, or I won't know you're here.

24 MS. ORNELAS: Sorry.

25 Okay. Go ahead.

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1 MS. ORNELAS: Hi. I'm Oralia Ornelas. I'm here

2 on behalf of Juarez Brothers Trucking and De La Garza

3 Trucking. They're based out of Bakersfield. Our primary

4 haul is we haul the raw bulk carrots from the field to the

5 packing shed.

6 And first I would like to emphasize on how

7 everything that surrounds us is dependant on the trucking

8 industry in one way or another. And with this emissions

9 problem that we've been faced with, the trucking industry

10 has had very negative publicity.

11 And, first of all, we weren't there when these

12 standards were set when we purchased this equipment. You

13 know, the emission standards were set at, you know,

14 whatever it was. But yet now we're being faced with --

15 we're being penalized and having to rectify this problem,

16 where -- I think where this needs to be directed is it

17 needs to be directed to the manufacturer, who's more

18 familiar on how to fix this. All this grant and funding

19 money should be given to them and let them try to figure

20 out the most effective way on reaching our goal of

21 attaining better quality of air.

22 You know, I've been listening to everyone up here

23 today, and there's so many pros and cons on this. And we

24 just need to stop passing the buck and, you know, let them

25 do it and fix it.

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1 Thank you.

2 CHAIRPERSON NICHOLS: Thanks for your comment.

3 Okay. Mr. Cox.

4 MR. COX: My name's Andy Cox. I work for Mike

5 Campbell & Associates. And I just wanted to comment on

6 the heavy-duty greenhouse gas measure.

7 I really wanted to be for this measure. And I

8 read it and unfortunately I'm not.

9 Dr. Sperling, I wanted to address a couple of

10 things that you were asking about the U.S. EPA's

11 project -- the SmartWay project. The U.S. EPA has in

12 their SmartWay project 13 different strategies that they

13 use to certify different trucks and trailer combos as

14 SmartWay certified. The aerodynamics technology is only

15 one of those strategies. There's 13 different strategies.

16 The driver training strategy combined with

17 electronic speed reduction as well as just improving

18 logistics strategy, both of those account for more

19 reduction in greenhouse gas than solely the aerodynamic

20 technologies.

21 Now, the ARB is using the U.S. EPA's SmartWay

22 model to completely model this entire regulation around.

23 It's not the way that the U.S. EPA intended it. They

24 intended for carriers to use many different strategies to

25 come up with the good numbers.

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1 They also did all their studies at 62 miles per

2 hour -- 62 miles per hours. The speed limit for trucks in

3 California is 55 miles per hour. Aerodynamics work at

4 higher speeds. According to the DOT's website, the

5 average highway speed in California is 48.43 miles per

6 hour. And then according to another U.S. EPA study, these

7 aerodynamics overcome friction over 50 miles per hour.

8 That's a big range right there. That aerodynamics may not

9 even be working so much for trucks that are traveling

10 around in areas that are very impacted.

11 I know that our fleet averages around 39, 40

12 miles per hour. We're not seeing anything from these

13 aerodynamics.

14 We did a test with three different phases. The

15 first one was standard operation. Second one was with

16 side skirts. The third one was with low rolling

17 resistance tires.

18 The low rolling resistance tires helped. They

19 did help.

20 The side skirts we used -- and, mind you, we're

21 going from Chino, California, to Las Vegas, Nevada. We

22 actually saw a slight reduction in fuel efficiency with

23 the side skirts we used. I'm not going to name the

24 company or anything that we used.

25 But those were our tests over a month's time.

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1 I have my written comments up on the website.

2 And I urge you all, please, to read them before you think

3 about this and vote tomorrow.

4 CHAIRPERSON NICHOLS: Thank you.

5 MR. COX: Thank you.

6 CHAIRPERSON NICHOLS: Gayle Lopopolo.

7 MS. LOPOPOLO: My name is Gayle Lopopolo. I'm

8 co-owner of Ganduglia Trucking, a 70-year-old trucking

9 firm in Fresno, California. I'm also the Chief Financial

10 Officer of the company. And as such, it is my job to make

11 sure we pay our bills.

12 Ganduglia Trucking maintains a fleet of 27

13 truck-tractors with 30 employees. Put another way, we

14 support 30 families, for a total of 106 adults and

15 children.

16 Normally, we would replace one or two trucks, new

17 and/or used, each year, but only if we can afford to do

18 so. We maintain our annual payments at about $250,000 for

19 tractors and trailers.

20 The trucking industry operates on a small profit

21 percentage of 2 to 3 percent annually. This means we all

22 have to watch our budgets very closely. And herein lies

23 the problem with the current CARB proposal. Trucking is a

24 hugely capital intensive business. And we are being told

25 to replace too many trucks in too short a period of time

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1 for our finances to allow.

2 With the current CARB proposal, Ganduglia

3 trucking would have to replace seven new trucks in 2013.

4 That's 26 percent of our fleet in one year, at a time in

5 which there would be no compliant used vehicles available.

6 Other years would require purchases of three vehicles.

7 This would increase our payments for trucks, trailers, PM

8 and NOx retrofits from $250,000 annually to between

9 525,000 and 613,000 annually from 2013 to 2018.

10 Our budget simply cannot support these enormous

11 increases. And neither can we assume that these costs can

12 be passed on as rate increases. In our case, we would

13 have to have a 7 to 8 percent rate increase for at least

14 six years, and this is unheard of in the trucking

15 industry. If we're competing against a large trucking

16 company not faced with forced truck replacement, guess

17 what? We don't have a haul.

18 CHAIRPERSON NICHOLS: Ms. Lopopolo, your time is

19 up. But Mr. Ganduglia, your partner, is here, and he

20 signed up.

21 MS. LOPOPOLO: Yeah, but he'd rather not

22 interchangeable.

23 CHAIRPERSON NICHOLS: Well, I'm sure that's true.

24 MS. LOPOPOLO: Can I have 15 seconds?

25 My solution is: To consider easing the PM 2.5

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1 deadline of 2014, because that's a killer deadline for us;

2 or, number two, consider the CTA proposed plan.

3 I urge you all to consider the enormity of your

4 decision to our company, the business community, and the

5 State of California.

6 Thank you.

7 CHAIRPERSON NICHOLS: Thank you.

8 They're very effective. But it's going to come

9 out of your time now, Jim.

10 MR. GANDUGLIA: That's fine.

11 I'm concerned about one thing, ladies and

12 gentlemen, and to the staff: How can we pass these costs

13 on? Because the global marketplace competitiveness of the

14 State of California is the key issue here. If we can't

15 pass these costs on and somebody outside of the State of

16 California can buy products from God only knows where

17 cheaper than they can buy it from California and we can't

18 sell these products, we then cannot do anything about air

19 quality problems because the State of California will be

20 in the dumpster.

21 Thank you.

22 CHAIRPERSON NICHOLS: Okay. Thank you.

23 Dan Souza.

24 MR. SOUZA: Good evening, Madam Chair, members of

25 the Board. My name is Dan Souza. I'm Vice President of

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1 Maintenance and Environmental Affairs with Mountain Valley

2 Express a regional less-than-truckload carrier in

3 California and Nevada.

4 We believe improving the air quality in

5 California is very important. And we have strived to do

6 our part by early retrofits and replacement programs of

7 our truck and auto fleets, as well as retrofitting our

8 lighting at all of our major terminals in California. As

9 you can see, we have been very proactive when it comes to

10 the environment, but still have major concerns with the

11 timeline schedule in staff's proposal.

12 The aggressive time frame places a very heavy

13 economical burden on our company through 2014. The cost

14 will exceed over $8 million through the next six years for

15 retrofit and replacement, 2014 being the most aggressive,

16 at an over-three-million-dollar investment. Even with

17 these numbers and utilizing the staff fleet average

18 calculator, we find that additional investments in

19 equipment will be needed by 2017, not to mention a double

20 turnover with some equipment at additional cost to our

21 company.

22 Staff has recommended rate increases to our

23 customers to help offset the cost. But with the

24 competitive market we operate in, a rate increase above

25 our general increase will not fly. After working the

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1 numbers, we found that on average with our general

2 increase we would have to ask for an 8 to 12 percent

3 increase overall. With the struggling economy and

4 reduction in the national gross domestic product, shippers

5 will not be able to accept the added cost in shipping

6 rates, and most will ask for a rate decrease. Companies

7 will be forced to look at their costs very closely and cut

8 where needed.

9 Unfortunately, with the high price of health care

10 coverage in California, this will probably be the first

11 place many companies look to reduce their costs, along

12 with retirement plans and wages.

13 Mountain valley Express is a strong proponent of

14 the CTA and DTCC alternative language and strongly urge

15 the Board to reconsider the alternative language proposal

16 alongside with your staff's recommendations.

17 CHAIRPERSON NICHOLS: Time's up. Thank you.

18 MR. SOUZA: Thank you.

19 MR. BLEVINS: Good evening. I'm Scott Blevins,

20 President of the Mountain Valley Express.

21 We employee 400 families here in California. We

22 are a California-based carrier. So this regulation

23 certainly affects us very adversely. We are not strongly

24 opposed to it. We certainly have embraced the regulation.

25 And I'd like to acknowledge Tony Brasil and Eric White,

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1 your staff members, for their time helping educate our

2 industry in regards to the regulation. That has been very

3 beneficial.

4 We are on a road to early compliance, as Dan just

5 indicated, through $2 million in equipment purchases in

6 2008. Two million dollars in one year for our company is

7 a huge number. We cannot continue on that pace year after

8 year, when you have to finance your equipment. The

9 margins in the trucking industry average 3 percent. We're

10 not making a lot of money out there as it is. It's a huge

11 expense.

12 As I said, we embrace the green image. We run

13 hybrid vehicles, hybrid Toyota Priuses in our sales fleet.

14 We do all that we can to encourage green practices

15 throughout our industry and throughout our company, and to

16 our shippers and our employees.

17 But the biggest hit that we see with this rule is

18 exactly that. The years 2013 and 14 we cannot financially

19 make this happen in our company. We would either have to

20 reduce our fleet or totally go out of business, which we

21 certainly are not focused on doing. We're focused on

22 compliance, as we have been through every California

23 regulation, from the BIT program to universal waste

24 recycling programs, storm water pollution control. We do

25 all the compliance issues we have to do here in

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1 California, and we've been very successful with that. But

2 that year, '13-'14, is the biggest hit that we see, and I

3 think everybody in this room sees, as the financial hit

4 that this rule will give us.

5 And I've asked the question, if we can prove that

6 we have done everything financially possible to meet the

7 regulation and to meet the rule through equipment

8 replacement, retrofitting and certainly funding

9 opportunities that we are enjoying through the state and

10 through the taxpayers - thank you very much - that if we

11 can prove we cannot quite get there in '13-'14, what

12 exemption or relaxation of this rule could occur? And I'd

13 ask the Board to certainly take a look at that, because I

14 think we're hearing that somewhat uniformly here today.

15 I also ask that you do embrace the DTCC

16 alternatives through the CTA.

17 Thank you very much. Happy Holidays.

18 CHAIRPERSON NICHOLS: Thank you.

19 Albert Nunes.

20 MR. NUNES: My name is Albert J. Nunes. I'm

21 President of A.C. Trucking in Manteca, California. We

22 have a 25-truck fleet. Our operation runs over 150

23 trailers. So our operation is a little different than

24 some that were mentioned in the program.

25 We have embraced the program. We want to do all

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1 we can to bring our fleet into compliance. This year I've

2 already purchased three tractors that are '08 and

3 compliant. We have retrofitted tractors with the exhaust

4 systems.

5 But if you take the fleet calculator, put it

6 together, my fleet will not be able to exist past 2012.

7 This has become a major problem for me, a decision of what

8 I'm going to do with my 47 employees.

9 And, by the way, you know, Dr. Telles, you talked

10 about health care and those issues. Well, this industry I

11 think, as many of us, pay a hundred percent of our

12 employees' health benefits and their families. And those

13 things are not going to be available to us. We're going

14 to have to find other alternatives.

15 When we talk about the SmartWay program, I'm a

16 proud year and a half certified SmartWay carrier. We have

17 done things that they have asked us to do, in low

18 resistance tires - super singles, you might call them -

19 all kinds of different air fairings. But have we seen the

20 benefit of it? No. Our company has not seen the benefit

21 of that issue.

22 Also, Chairman Nichols talked about in her

23 videotape of 400,000 diesel trucks in California, and she

24 also mentioned there were 500 visiting our state on a

25 regular basis. I think there's the real problem we have

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1 to deal with. There's no way that I believe that your

2 staff or any other enforcement is going to be able to

3 monitor that and keep those trucks from polluting our air.

4 After we've done all we can do, it's still incumbent upon

5 your group to monitor and police it, and I don't believe

6 it's possible.

7 These are some of the things that I think need to

8 be looked at. Please embrace the CTA alternative, which

9 might get us through this ordeal.

10 Thank you.

11 CHAIRPERSON NICHOLS: Thank you.

12 Brian Rood.

13 MR. ROOD: Good evening. My name is Brian Rood

14 and I represent a company by the name of Colonial Life.

15 We are an employee benefit partner of the California

16 Trucking Association. And I'm here this evening to

17 encourage the Board to consider the collateral impact of

18 the proposed regulations as it relates to companies that

19 rely on the trucking industry to support their own

20 businesses, especially in light of the current economic

21 malaise.

22 Here's a specific example of something that I

23 came across in the last month or so. There's a small

24 company in Adelanto, California, by the name of D.J.

25 Transportation. As part of our business model, we call on

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1 CTA members, introduce ourselves, and then hopefully set

2 up an appointment to come back and present our products

3 and services. Between that two-week period from the

4 initial appointment till the time I called on them they

5 had laid off six employees. If we continue to put

6 pressure on companies like this, which are the heart of

7 the trucking industry, you will put them out of business.

8 It's only a reality when you walk into the bay

9 and you find a second generation owner of a trucking

10 company that's been handed down by his father that you

11 understand the reality of what actually happens on a

12 day-in, day-out basis. And this is not isolated. It

13 happens over and over again for people like me who call on

14 members of the trucking industry.

15 The decisions that are made here will have an

16 impact that reaches far past the individual trucking

17 companies themselves. It will impact myriad vendor

18 relationships like the one that our company enjoys. We

19 rely on a vibrant trucking industry to keep our doors

20 open, hire employees, provide benefits to those employees,

21 participate in charitable organizations and make

22 contributions, et cetera. And we strongly urge you to

23 consider the alternate proposal that is put on the table

24 under the DTCC.

25 Thank you for your time.

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1 CHAIRPERSON NICHOLS: Thank you.

2 Wayne Teece.

3 MR. TEECE: Good evening, folks. I work for

4 Dispatch Transportation Group of Companies. We are based

5 in Fontana, California, and run at our peak 900 vehicles

6 throughout Fontana, San Diego, Los Angeles, Oxnard, and

7 Bakersfield.

8 We've been involved in every major freeway,

9 onramp, offramp, and housing tract that's been built in

10 southern California. And much of it, Mayor Loveridge, we

11 built the bypass outside your window.

12 On a personal note -- oh, and I want to give you

13 this because it would describe the majority of the

14 California Dump Truck Owners' Association and the

15 California Trucking Association members. I'm a father of

16 three, 28 years married to the same woman, a horseman,

17 volunteer for a posse down in southern California where we

18 go out on search and rescues, and I work with the cub

19 scouts.

20 And, in fact, I'm not someone who's trying to

21 skirt regulations, as the Lung Association might have led

22 you to believe. So much so that I invited Tony Brasil and

23 his group of people to our company headquarters, put

24 together a staff of maybe eight or ten other industry

25 owners and executives, and tried to help Mr. Brasil put

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1 these together.

2 It all went very well until I tried to explain to

3 him that the economic impacts -- and, Dr. Telles, this

4 should answer your question -- the economic impact on

5 these companies, and his answer was "I don't care." I'm

6 not taking him out of context. His flat-out response was

7 "I don't care. I have a mandate to meet. If that puts

8 some people out of business, so be it."

9 That brings the entire study, in my opinion, into

10 question, its validity. I would urge you to force them

11 not to just adopt some of the other proposals but to come

12 back to us with an -- an industry, and let us work jointly

13 to come up with a project or a rule that will serve

14 everyone and not put the balance of us out of business.

15 Thank you very much for your time.

16 CHAIRPERSON NICHOLS: Thanks, Mr. Teece.

17 Mike Shuemake.

18 MR. SHUEMAKE: I'm Mike Shuemake. I own Central

19 Valley Trailer in Fresno and Stockton. We employee 60

20 people. We've been in business about 25 years.

21 We service all the trucking customers in the area

22 with their trailer needs, or as many as we can. And I'm

23 here today to express my opposition to the proposed

24 heavy-duty greenhouse gas rule, even though it would

25 benefit my company greatly. But if I can't -- I cannot

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1 sell something I don't believe in. While aero devices may

2 help a small number of our customers achieve greater fuel

3 economy, most would see no improvement, while incurring

4 higher maintenance costs and higher acquisition costs.

5 I believe staff used numbers provided by

6 manufacturers of these devices without taking into account

7 the unique California transportation industry's real-world

8 challenges, which include lower speed limits and heavy

9 congestion on our roadways.

10 While these devices have their place, it should

11 be up to the individual companies to determine their

12 economic viability.

13 I urge the Board to adopt the position of the

14 National Trailer Manufacturers Association and the

15 National Trailer Dealers Association, which is to leave

16 the SmartWay as a voluntary program.

17 Thank you very much.

18 CHAIRPERSON NICHOLS: Thank you.

19 Donald Redfearn.

20 Dan Miller.

21 MR. MILLER: Good evening, Madam Chairman members

22 of the Board. My name is Dan Miller. I represent Save

23 Mart Supermarkets. We operate 200 tractors and

24 approximately 500 trailers in northern California and

25 northern Nevada.

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1 We are very concerned about the environment as a

2 company and we will continue to replace our tractors on a

3 regular basis and we will continue to strive to offset

4 those additional costs that we incur. However, we reach a

5 point where we can't offset all those costs and ultimately

6 it has to be passed on to our customer, which are many

7 people in this room.

8 We will continue to strive to reduce our fuel

9 consumption, which in turn reduces greenhouse gases,

10 through aerodynamic tractors, governing of tractor speeds,

11 cruise control, and enforcement of idle shutdown as well

12 as APU installations.

13 We do have some serious concerns about the

14 SmartWay portion of the greenhouse gas regulation,

15 however. Number one has already been mentioned - the

16 study was based on 62 miles an hour. We as a fleet with

17 those 200 tractors average 45.7 miles per hour. We will

18 not offset that additional cost of those requirements of

19 those fairings and those trailers with any fuel savings.

20 In addition, by putting fairings on our 53-foot

21 trailers, it reduces our access to our stores. Where we

22 have pits in many of those stores, those fairings will not

23 clear the pits. We will be forced to dispose of those

24 53-foot trailers and replace them with more than the

25 number we dispose of with a smaller trailer, thereby

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1 increasing our loads on the road, increasing our

2 greenhouse gas.

3 Thank you very much. And I urge you to consider

4 the SmartWay portion of the regulation.

5 Thank you.

6 CHAIRPERSON NICHOLS: Thank you.

7 Andrew Smith.

8 MR. ANDREW SMITH: Good evening. My name's

9 Andrew Smith. I'm the CEO of ATDynamics, a

10 California-based company commercializing fuel efficiency

11 technology in the global trucking industry.

12 We're here today to share some fleet experiences

13 with trailer aerodynamics equipment and to share a brief

14 story.

15 Two weeks ago I returned from a trip to the

16 Middle East, specifically the United Arab Emirates, or

17 UAE. The UAE is a small desert country on the Persian

18 Gulf, but it is a small country with 9 percent of the

19 world's oil reserves. The United States has about 3.

20 Literally billions and billions of dollars are pouring

21 into this country. And while money's not available for

22 redoing bridges in the United States, they're literally

23 building exotic island resorts on their coasts in order to

24 have a place to build bridges.

25 The reason I bring up this story is because of

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1 the irony that U.S. trucking fleets are sending another

2 two to three billion dollars a year to this part of the

3 world because of unaerodynamic box-like trailers. And

4 we've had an incredible time over the last two years

5 working with fleets to end this unnecessary transfer of

6 wealth.

7 The ATDynamics flagship product is a trailer

8 tail. It's a rear-mounted device dealing with drag behind

9 the trailer that delivers 5 percent SAE-tested results to

10 long-haul fleet operations.

11 Our customers who use this technology are already

12 fully compliant with the proposed CARB regulations for

13 trailer aerodynamics, and they met these regulations at

14 what will be a net profit. Their payback period is about

15 6 to 24 months. Some fleets like the trailer tail because

16 it avoids some of the damage that side skirts are exposed

17 to. But most fleets that we are working with are looking

18 at combinations of side skirts and trailer tails to get 9

19 to 12 percent fuel efficiency gains.

20 In summary, we are proud to be part of a growing

21 movement to reduce greenhouse gas emissions, to reduce

22 global oil dependency, to increase green manufacturing

23 jobs, and to save fleets money.

24 Thank you very much.

25 CHAIRPERSON NICHOLS: Thank you.

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1 Kenny Lloyd.

2 MR. LLOYD: Good evening. I drove here all the

3 way from Bishop. I'm here representing my two kids, Carly

4 and Bodie. I look around here and I see bottles of

5 Crystal Geyser. The water either came from the Owens

6 Valley where I live or from Shasta. And my kids said,

7 "Dad, what are people going to do if this thing goes into

8 effect?" And I said, "Well, if you're a small business

9 person and you've got two or three trucks, you're probably

10 just going to pack up and move to Nevada or Arizona and

11 not deal with it anymore." You're going to be the shipper

12 if you're the manufacturer. You're going to have to be

13 taking care of all of your garbage once again that comes

14 out of this building.

15 Nobody above me has to compete for a job.

16 Everybody out here competes for a job. You people have no

17 clue about your regulations. You're going to amend them,

18 you're going to add on to them, and you're going to

19 continue to strangle this state. It's disgusting. I'm a

20 sixth generation person in the People's Socialist Republic

21 of California and I'm disgusted with some of the stuff

22 that goes on here.

23 Science is built up of facts as a house is built

24 of stone. But an accumulation of facts is no more science

25 than a heap of stones is a house.

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1 Thank you.

2 CHAIRPERSON NICHOLS: Okay. I don't think we

3 actually disagree with that, by the way.

4 Perry Shusta.

5 MR. SHUSTA: Good evening. I own a small towing

6 company in east Contra Costa County. I have two heavy

7 wreckers. At original purchase these trucks cost anywhere

8 from 350 to $400,000. In 2012, I will be forced to get

9 rid of them. I cannot retrofit them. They are too old.

10 East Contra Costa County has two heavy wreckers.

11 I operate them. Trucks will have to come from great

12 distances to deal with uprighting tractor-trailers that

13 have rolled over and blocked the freeway. How much more

14 smog and pollution and time congestion will be wasted

15 because I have no choice. I cannot afford to buy new

16 trucks. I will have no choice but to get rid of them and

17 actually let about five drivers go.

18 Thank you.

19 CHAIRPERSON NICHOLS: Thank you for your

20 testimony.

21 George Little.

22 MR. LITTLE: My name is George Little. I operate

23 College Oak Towing and COT Transportation right here in

24 Sacramento. I employee 40 people, run about 35 units

25 overall between the two companies.

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1 I'm not opposed to the continued putting on of

2 these products on the new manufactured trucks. I'm

3 totally opposed to the retrofit device. The reason I'm

4 going to tell you that is in the last 40 years that I've

5 been in business, 37 of those was in the automotive repair

6 business and I ran a licensed smog shop for 37 years. We

7 installed every device that was ever okayed in this state

8 on automobiles and light trucks. The retrofit devices of

9 the NOx's created nothing but problems. People had no

10 power in their units. They ping'd. They would heat up

11 dramatically.

12 At the same time, the manufacturers of the new

13 cars kept making progress. 1974 they made a great

14 progress when they come out with high energy ignition. In

15 the '80s they come out with throttle body injection, which

16 more than reduced the smog putout. In the '90s they've

17 come out with the electronic fuel injection. And after

18 about 2000 -- right now we can probe the tailpipes of

19 these cars and come up with zero practically every time.

20 You can even get five years without a smog

21 certificate now they don't even require because the cars

22 are running so clean. I firmly believe the trucking

23 industry can do the same thing.

24 I talked to people that was putting out these

25 devices many times. They told me that, "Oh, they're going

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1 to work on these trucks." I said, "I'm very concerned

2 about the metallurgy in the engines and the radiator

3 capacity and the heating that it's going to cause." "It's

4 going to be okay."

5 Now, I just ordered and took receipt on a

6 brand-new Peterbilt. And I always order a 378, which is a

7 sloped nose in the front, so where we can have good vision

8 on the road. It's not available. "Well, why isn't it

9 available?" I asked the manufacturer. "Because it's four

10 inches higher in the front and it's about eight or ten

11 inches wider along the front." "Why?" "Because we had to

12 make room for that big cooling system to where we can cool

13 these new engines and have the right capacity for it."

14 CHAIRPERSON NICHOLS: I didn't mean to interrupt

15 your story but your time is up.

16 MR. LITTLE: Well, okay. Let me say one more

17 thing. Nine-eleven in our history was a bad day. A lot

18 of people died. We went to war over it. I'm going to

19 remember 12/11 if you vote for this as a bad day for the

20 truckers of California. It's their deathknell.

21 Thank you very much.

22 CHAIRPERSON NICHOLS: Thank you.

23 Glenn Neal.

24 MR. NEAL: Thank you. My name is Glenn Neal and

25 I'm representing this evening the California Tow Truck

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1 Association, and I'm representing over a thousand member

2 companies with over about 15-plus thousand employees and

3 families.

4 Timing is everything in the world that we live.

5 And I need not remind this group of the economy and where

6 we're at. So I'd like to highlight on some things that

7 are very specific to our industry, some things that I

8 think that had been slightly overlooked with staff's

9 report.

10 One of which is simply that our industry is

11 comprised of a lot of smaller companies, some of them with

12 revenues at less than $500,000. It's a multitude of

13 companies networks throughout the state, because we are

14 first responders. We don't qualify for the emergency

15 vehicle status. We're not emergency vehicles, but we are

16 first responders. And we're available 24 hours a day, 365

17 days a year to deal with whatever happens.

18 It is our best guess through discussions and the

19 state-of-the-industry survey that we did recently, in June

20 of this year, that approximately 40 percent of our

21 industry will be taken out based on the type of program

22 that is put together here in front of us today.

23 Our units don't run 20, 30,000 miles in a year.

24 They sit and wait. Twenty-four hours a day, 7 days a

25 week, 365 days a year they're sitting and waiting in the

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1 majority of the time. So the mileage is low, the fuel

2 output is -- the cost is great. The cost of replacement,

3 there are technical problems with the retrofitting due to

4 the hydraulics involved on the units. Idling time,

5 obviously we have to run because we can't function without

6 that.

7 And, lastly, on a more personal note, I happen to

8 own a truck distributorship for towers. And I can tell

9 you that the new truck sales have dropped in excess of 60

10 percent in 2008, partly because nobody knows what's

11 happening. There is no market for used trucks. And

12 unfortunately --

13 CHAIRPERSON NICHOLS: Your time is up. Sorry.

14 MS. LOPOPOLO: -- I can't finance anybody.

15 Thank you.

16 CHAIRPERSON NICHOLS: Bob Berry.

17 MR. BERRY: Madam Chair, members of the Board.

18 I'd like to say thank you very much for the opportunity to

19 speak tonight.

20 I've been in business for 36 years. I own 16

21 trucks. Nine of those will be in compliance by July 1st

22 of this next year. I won't have them paid for until 2013.

23 And then I have to replace the most expensive part of my

24 fleet; that's the heavy-duty end of it. I sit in the

25 corridor of Highway 24, 580, and I-80. We work a lot of

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1 truck wrecks. And as it stands right now, I don't think

2 it's economically possible for us to replace the trucks we

3 need to deal with the major rollovers, the major truck

4 wrecks. And we deal with those now. This is a very

5 expensive proposition.

6 I'm all for clean air. I have four children --

7 four daughters and I have six grandchildren. I believe in

8 the quality of life, has to take precedence over the

9 absolute quality of the air being cleaner than it is

10 today.

11 I was told by one of your staff members, this

12 gentleman over here, Tony, that if we did nothing that we

13 would be in full compliance by 2025. That's 60 months.

14 And you're going to uproot this economic -- we're already

15 in a terrible situation now.

16 Mark Twain said there's three types of lies.

17 There's a white lie, there's a damn lie, and then there's

18 statistics. And I think I've heard all three tonight.

19 Thank you very much for your time.

20 CHAIRPERSON NICHOLS: Okay. Dick Stewart.

21 Is Mr. Stewart here?

22 Mark Castro.

23 MR. CASTRO: Good afternoon. I'd like to thank

24 the Board for giving me the opportunity to speak today.

25 And my name's Mark Castro, and I'm the co-owner

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1 of Castro & Castro Trucking. My family's been in business

2 for over 40 years. My grandfather originally started the

3 trucking company. My father took over. And then now he

4 just recently gave it to me because of his illness.

5 I'm here in opposition of the rule, because I

6 operate three trucks and I just can't see it being

7 economically feasible of actually being able to carry this

8 over.

9 I'd like to thank the ARB staff for considering

10 the ag provision and also the small truck rule provision.

11 But at my highest point in the season I operate

12 15 trucks. And right now I'm operating four. And I

13 recently just had to lay one of my trucks off and -- it

14 was one of my personal trucks, not one of my

15 owner-operators, just because from a cost-benefit analysis

16 I would make more money. And therefore I just -- one of

17 my main concerns is if -- many of these people, they don't

18 have year-round work. And if you had a brand-new truck,

19 therefore you'd have to have insurance on the truck for

20 year-round. And if these people don't have year-round

21 work, then therefore they wouldn't be able to have an

22 insurance payment or afford a truck payment. And I'd just

23 like you to take that into consideration when you're

24 taking your vote.

25 Thank you so much.

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1 CHAIRPERSON NICHOLS: Thank you.

2 Bob Nieuwenhuis from Con-Way Freight. Are you

3 here?

4 MR. NEIL SMITH: He just wanted to fill out a

5 card to say he was against it.

6 Good evening, Madam Chair --

7 CHAIRPERSON NICHOLS: Hi.

8 MR. NEIL SMITH: -- and the Board. I'm Neil

9 Smith.

10 CHAIRPERSON NICHOLS: Okay.

11 MR. NEIL SMITH: Okay. And I wasn't jumping in

12 front of anybody else.

13 CHAIRPERSON NICHOLS: Nope. Got it.

14 MR. NEIL SMITH: I'm Vice President of Operations

15 for Con-Way Freight. Con-Way is a large transportation

16 logistics company, with 31 locations in the State of

17 California, employing 1500 people, and also serving over

18 40,000 customers.

19 Our three main components are SmartWay

20 participants and, two, Con-Way Truckload and Con-Way

21 Freight have achieved the highest scores possible from

22 SmartWay. In other words, we are the best of the best,

23 and yet we still don't meet ARB standards.

24 Today I would like to focus my comments on the

25 53-foot trailer rule. Con-Way is the only major fleet to

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1 have installed and operated with aerodynamic trailer

2 skirts. After two years of operation on 400 trailers, we

3 decided the maintenance costs and operational issues were

4 not offset by the fuel savings.

5 Our experience also leads us to question ARB's

6 assumptions about payback on the investment in various

7 trailer technologies. We already use low rolling

8 resistance tires. The assumed fuel savings are much

9 higher than we experienced in real-world operation. The

10 purchase and installation costs assumed were substantially

11 less than we experienced. And the miles run and cost of

12 fuel are both much lower than the assumptive modeling.

13 Con-Way's experience is that there are other

14 means available to meet the desired fuel efficiencies and

15 therefore the corresponding emissions reductions with

16 alternative means of compliance making use of various

17 tractor and trailer technologies in combinations that suit

18 a particular company's operational characteristics rather

19 than one-size-fits-all approach being proposed.

20 Con-Way asks that rather than unfunded, untested

21 mandates, that the ARB Board allow alternative means of

22 compliance, including consideration that a carrier with

23 the highest SmartWay score possible would be considered in

24 compliance of the proposed rules.

25 Bottom line for us, that this is a multi-million

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1 dollar mandate without significant benefits for us or the

2 citizens of California at a time when trucking companies

3 and all other businesses are dealing with the most

4 challenging economic environment since the great

5 depression.

6 Thank you.

7 CHAIRPERSON NICHOLS: Thank you.

8 Bruce Wick.

9 Stephen Rhoads.

10 MR. RHOADS: Thank you. My name is Stephen

11 Rhoads. I represent the School Transportation Coalition.

12 Madam Chair, you were hoping that this economy

13 might turn around in 2010. It's not. Ledge analysts did

14 a report last month, said that state revenues would not

15 reach last year's revenue levels until the year 2013-14,

16 five years from now.

17 Education is going to take between a 5 and an 8

18 percent cut this year. This year, in the middle of the

19 year. It's a major crisis for the state. It's a major

20 crisis for education.

21 You should make your rules in education

22 contingent upon available funding for school buses.

23 Should do that for several reasons. One had to do with a

24 conversation that Jack and a fella from Shasta were going

25 to have.

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1 Your rule -- under your rule, 1,769 pre-1987

2 buses that do not have any particulate standards as it

3 relates to PM do not have to be replaced until the year

4 2018. 2018 kids are going to ride in those school buses.

5 Those school buses are more cost effective from an air

6 quality perspective to replace those than it is to put

7 traps on new buses. That should be your number one

8 priority. Move the date up. Let's make it contingent

9 upon funding and let's get funding to replace them.

10 Number two.

11 CHAIRPERSON NICHOLS: Is your microphone on?

12 They're losing sound apparently.

13 MR. RHOADS: Can anybody hear me?

14 CHAIRPERSON NICHOLS: Now we can. You just need

15 to be closer to the mike.

16 MR. RHOADS: The second issue: We have

17 differences with the staff on the calculation of the

18 impact of the rule. But one thing is very, very clear.

19 And, that is, to school districts -- school districts will

20 have to spend $500 million in the next ten years to do

21 what the rule requires. Five hundred million dollars and

22 the replacement of the school buses and the installation

23 of the traps and maintaining them. We believe, your staff

24 does not, that that is a state mandate under the

25 constitution, a reimbursable mandate. It's a fiscal

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1 liability to the state of $500 million. You do not want

2 to have in these fiscal times a newspaper article or a

3 reporter or a headline that says you have passed

4 regulations that have a potential $500 million state

5 mandate.

6 In order -- if you're not going to make it

7 contingent, I would take these rules and I would just wait

8 until the end of this fiscal crisis that the state is in

9 right now until the spring and then adopt it. We

10 cannot -- will not be able to borrow money to pay our cash

11 flow in February. We can't even get bond money to do the

12 school facilities and the state transportation facilities.

13 The state does not need another potential liability right

14 now. The fiscal community does not need to see this. Put

15 it off. Deal with it at the end of June. That would be

16 the fiscally logical thing to do.

17 Thank you very much.

18 CHAIRPERSON NICHOLS: Your time's up. But thank

19 you.

20 Okay. Richard Mello.

21 Are you here? Richard Mello.

22 Nathan Crum.

23 Anna Arriola.

24 Good evening.

25 MS. ARRIOLA: Good evening. My name is Anna

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1 Arriola. Thank you for letting me speak. Thank you for

2 the Board members to give me the opportunity.

3 I come from Commerce. It's a city east of Los

4 Angeles. I bought a home in 1948.

5 In 1978 it was a nice community. It was a small

6 town and perfect for raising a family.

7 Now, it has turned into our worst nightmare.

8 Commerce has now become the hub of distribution, and the

9 pollution is unbearable. Too many people are becoming

10 ill, too many children are getting asthma, too many people

11 are having leukemia and cancer.

12 I know over here everybody's talking about money

13 and jobs. Well, I'm talking about give me a chance to

14 live a healthy life, to give that chance to the children

15 of my community.

16 You don't value life. You just value things,

17 material things.

18 The truckers are fighting for a job. The

19 businessmen, they don't want to lose money. Money can be

20 replaced. Jobs can be replaced. Life cannot be replaced.

21 All the Board members, you can help me or help

22 money. You can help the jobs and the truckers. So it's

23 your choice. Either you help the children and the people

24 in my community or you help the other people.

25 Thank you.

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1 CHAIRPERSON NICHOLS: Thank you very much.

2 Actually we hope we could do both. That would be

3 the goal.

4 David Atwater, are you here?

5 John Browning, are you here?

6 Seth Hammond?

7 Yes.

8 MR. HAMMOND: Good evening, members of the Board

9 and Chairman. I'm here representing Specialty Crane and

10 Rigging in Santa Barbara. And also I'm the past president

11 of the Southern California Mobile Crane Operators Group.

12 We represent 14 companies that provide the majority of the

13 crane service in southern California.

14 I want to thank the staff for working with us.

15 We first appeared in front of you in December of 2006 in

16 Bakersfield to have the Board take a look at the need for

17 special treatment on our cranes. Cranes are low mileage

18 use, very expensive. Made most of them in Europe.

19 And we want to thank Eric White and Tony Brasil

20 for their efforts to work with us to come to an agreement

21 on this.

22 We figure that -- we feel that the provisions of

23 your -- the modifications that you're making to the rule

24 that will help our cranes, we feel that that's going to be

25 a good provision to help us. And we want to thank the

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1 association for that work. It shows that if you show up

2 and you give a good reason why things can be worked on

3 collectively, you can come to some good decisions.

4 So we do support the proposed changes in this

5 rule that will affect our cranes.

6 Thank you so much.

7 CHAIRPERSON NICHOLS: Thank you.

8 Lee Steinberg.

9 MR. STEINBERG: Good evening, Madam Chair and

10 staff. I want to thank you very much for the opportunity

11 to have worked with you folks for the last several years.

12 I'm the president of the Mobile Crane Owners Group in

13 southern California. And our members own and operate more

14 than 90 percent of the mobile crane rental fleet in

15 southern California.

16 We support immediate adoption of Appendix L, the

17 requirements for two-engine cranes, even if there happens

18 to be a delay in the adoption of the balance of the

19 proposal.

20 The adoption of L provides a comprehensive

21 approach to regulating the diesel-powered cranes, which

22 are now subject to three different rules - the

23 off-highway, PERP, and on-highway. Adoption will help our

24 relatively small industry to continue to invest in

25 equipment required by California industry contractors and

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1 state and federal agencies to provide efficient means of

2 lifting, hoisting, and support a competitive California

3 economy.

4 Thank you.

5 CHAIRPERSON NICHOLS: Thank you, sir.

6 Jim Lyons, Sierra Research.

7 MR. LYONS: Good evening. I am Jim Lyons from

8 Sierra Research. I'm here on behalf of DTCC. I've

9 submitted written comments as No. 394 in the package if

10 you're interested in reading them.

11 As you've heard today, all of the benefit

12 estimates that have been presented are all based on an

13 assumption that we're not undergoing a recession of

14 historic magnitude. The question is how big might the

15 impact of this recession be on emissions from the trucking

16 fleet in California?

17 I've made some assumptions to check this out.

18 What I've done is I've looked at diesel fuel sales as

19 reported by the Board of Equalization in the State of

20 California. They're down 8 percent so far this year. I

21 assume they'd be down another 8 percent for next year,

22 there'd be a slow economic recovery thereafter, picking up

23 steam as we move from 2012 onward.

24 If I can go to slide 5, please.

25 --o0o--

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1 MR. LYONS: Thank you.

2 But back one, please.

3 This is the NOx emissions inventory. The red

4 line at the top is what's in your staff's assessment, the

5 blue line is their assessment of the benefits of the

6 regulation, and the green line is the impact of making

7 these changes in VMT assumptions for the base line that

8 I've just mentioned to you.

9 As you can see, the potential magnitude of the

10 VMT impact is as big as the effect of the regulation.

11 Now, I've got two points to make here. My

12 analysis has been done based on assumptions. Your staff

13 may have some other assumptions that may not agree with

14 mine. These are all going to be assumptions. There's

15 been no rigorous analysis done of the impact of this

16 economic situation on VMT in the truck industry or

17 emissions. That needs to be done before you adopt a

18 regulation. Therefore, I would urge you to get that

19 assessment - this is a $5 billion regulation that, as

20 you've heard, may affect the livelihoods of thousands of

21 people - before you make that decision. I'm not saying

22 don't adopt a regulation. I'm saying look at the proposed

23 regulation and the alternatives in light of a base line

24 that reflects today's economic reality.

25 Thank you.

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1 CHAIRPERSON NICHOLS: Thanks, Mr. Lyons.

2 Matthew Schrap.

3 MR. SCHRAP: Hello. And thank you very much for

4 the opportunity to present here this evening. I'd have to

5 start by introducing myself. My name is Matthew Schrap.

6 I'm Director of Environmental Affairs with the California

7 Trucking Association.

8 I would like to start off by commending ARB

9 staff, especially the Private Fleet Rule staff. We've

10 been working with them for almost three years now, and

11 I've watched this regulation -- or that one in particular

12 regulation evolve quite substantially.

13 Now, I won't repeat anything you've already heard

14 today and I won't go into detail on our comments, because

15 I'm sure that staff has analyzed them thoroughly, despite

16 the fact that one of the staff members of the greenhouse

17 gas staff hadn't seen the ATA comments as of this morning.

18 But nevertheless we hope that the Board members thoroughly

19 take a look at ours as well as ATA's comments. They have

20 some very interesting information.

21 We understand the need for the reductions, the

22 need to meet the federal guidelines, the need to address

23 the health impacts. You can tell nobody here today, on

24 the industry side especially, has said, "Don't do

25 anything." Everybody realizes that there are reductions

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1 that need to be achieved, and no one is saying, "Don't do

2 anything."

3 Now, there are a lot of issues. But, again, no

4 one wants dirty air. But these issues are representing

5 several challenges. And we look at the potential for

6 cargo diversion, we look at the ability for carriers to

7 pass on their costs, the availability of equipment. The

8 list can go on and on. I won't even address the inflated

9 motor coach inventory. But nevertheless there are several

10 issues.

11 Now, it is obvious, as Mr. Lyons has stated, that

12 one way or another there are emissions reductions

13 associated with this economic downturn. VMT and fuel use

14 is down, and that means that emissions are down. Coupled

15 with the fact that people are going out of business,

16 people are getting laid off and people are losing their

17 benefits, it makes for a very unique situation.

18 And, Dr. Telles, I know that your question about

19 job loss or businesses have been addressed through an

20 informal pole. But by staff's own admission, in 2014

21 we're looking at up to 14,000 jobs being lost. And it's a

22 proverbial drop in the bucket in the overall grand scheme

23 of things, unless that's your job, I guess.

24 CHAIRPERSON NICHOLS: Mr. Schrap, your time is

25 up. But we do have your written testimony.

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1 MR. SCHRAP: Okay. Thank you.

2 CHAIRPERSON NICHOLS: And I think the Board

3 members have been pretty diligent about reading their way

4 through the mountains of things that we've received on

5 this issue.

6 Brian Rees.

7 Shirley Batchman.

8 MS. BATCHMAN: Good evening. I'm Shirley

9 Batchman. I'm with California Citrus Mutual.

10 And I just want to echo the comments that you've

11 heard from an earlier ag rep. Do we like this rule? No.

12 But with the majority of the citrus acreage located in the

13 San Joaquin Valley, we recognize that we have a role to

14 play in helping that air district meet its SIP

15 commitments.

16 So with that, I want to focus my comments tonight

17 just specifically on incentive funding. There has been a

18 lot said tonight about the dollars that are available to

19 help people comply with this rule. And, yes, there are

20 dollars. There's Carl Moyer. There's Prop 1B.

21 Agriculture will not be able to take advantage of that, as

22 you have heard in the past, because we are low mileage and

23 we cannot compete with the people who are doing 75,000,

24 100,000 miles a year.

25 You haven't heard yet tonight, but I think you

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1 might tomorrow, that there's some money coming from the

2 farm bill. It's $150 million, it's over five years, and

3 it's spread through all the states. So we do not know

4 what's coming to California and if agriculture will be

5 able to compete for that money. And even if we can, it

6 will still be a very small part.

7 So the message I want to leave you with tonight

8 is that the ag component of this rule is critical in

9 helping us be compliant in helping the San Joaquin Air

10 District meet their SIP requirements.

11 Thank you.

12 CHAIRPERSON NICHOLS: Thank you.

13 Kent Johnson.

14 MR. REES: Oh, I'm sorry. Madam Chair, I wasn't

15 able to run in quick enough. I'm Brian Rees with the

16 California Poultry Federation.

17 CHAIRPERSON NICHOLS: Oh, sorry.

18 MR. REES: I'm sorry to go out of order. I'll be

19 very brief, because a lot of what I was going to say and a

20 lot of what our membership has said has been said already.

21 Basically I'm here not to argue on behalf of my

22 membership against clean air, against the need for

23 attainment. What we're here to argue with is the timing

24 of this issue.

25 We have said since this process began that we're

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1 willing to work with the Board. What has changed

2 significantly since AB 32 was passed and these regulations

3 were -- the process began was a significant change in the

4 economic climate of not only the state but the nation.

5 And these economic realities have affected not only the

6 entire ag community but our folks in particular via grain

7 production costs. We compete with ethanol for corn,

8 obviously increased transportation costs.

9 These are not insignificant costs to an industry.

10 Where our membership has run the numbers, they at their

11 most economically viable option for reaching attainment

12 with the regulations would cost our membership upwards of

13 $12 million; and at a time when again the economic climate

14 is not conducive to those kinds of outlays when you're not

15 expecting them. And we as producers of poultry products

16 have significant out-of-state competition. And that is

17 not an insignificant issue for us in terms of an economic

18 disincentive and putting us at a disadvantage with

19 out-of-state producers, who will not have to retrofit

20 their fleets to the extent that our in-state producers

21 will.

22 Thank you.

23 CHAIRPERSON NICHOLS: Thank you.

24 Kent Johnson.

25 MR. JOHNSON: Good evening, Madam Chair and

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1 members. Thank you for this opportunity to comment on the

2 proposed on-road diesel regulations. My name is Kent

3 Johnson, and I own a local farm input supply business in

4 Stanislaus County. We supply local farms in my area with

5 commercial fertilizers used during the busy planting

6 season.

7 I would like to thank the ARB staff that

8 recognized the unique aspects of agriculture and developed

9 the provisions to address their issues.

10 This rule will cost my business a substantial

11 amount of money. Most of my trucks will fall under the

12 rule. However, the agricultural provisions will provide a

13 more economically viable time frame in which to replace

14 the specialty vehicles that deliver these necessary

15 products into the field for our growers.

16 Thank you.

17 CHAIRPERSON NICHOLS: Thank you very much.

18 Gary Montgomery.

19 MR. MONTGOMERY: I'm Gary Montgomery. I have a

20 single-truck trucking operation in the Sierra Foothills of

21 Tuolumne County, and I haul construction materials.

22 I don't argue with the intent of this proposal.

23 But the economic timing and the nature of the proposal

24 really couldn't have come at a worse time for most of us.

25 At the conclusion of 2006 in our area there were

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1 25 trucks of my nature hauling around our area. At the

2 present time, there are 8. There's people that have been

3 repossessed. Their trucks have been -- either walked away

4 from the payments or they just parked them.

5 My own personal gross income is about 45 percent

6 off from what it was at this time. I purchased a

7 brand-new truck in 2006. I usually trade my trucks off

8 every seven years. Under the current proposal, I won't

9 make it till seven years before I have to retrofit the

10 truck to be able to trade it in. I could trade it off

11 earlier, but the dealer don't take it because they have to

12 spend the money to retrofit the truck.

13 The State of California at last count is about

14 $28 billion in debt. The last time I spent my biennial

15 terminal inspections it went up 400 percent, from a

16 hundred bucks to three hundred seventy-five. The vehicle

17 license fee will probably go up. To what nature, we don't

18 know. And the state is planning to do away with all the

19 public works projects in the next two weeks. So I'm not

20 really sure where the income's going to come for our kind

21 of business.

22 Because of my circumstances, the present state of

23 the economy probably won't make me go bankrupt. But this

24 proposal at this time, with the nature of the way it is,

25 may very well convince me to just close my business as it

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1 is, because it won't be viable financially anymore.

2 Thank you.

3 CHAIRPERSON NICHOLS: Thank you.

4 Cynthia Cory.

5 MS. CORY: Chairman Nichols and the Board.

6 Cynthia Cory, California Farm Bureau.

7 I want to thank the staff for all the time they

8 worked with the ag community to help the small family

9 farmers be able to comply with this rule. I just want to

10 emphasize that it's not going to be a panacea, it's not

11 going to work for all family farmers, or foresters, as you

12 heard. It is going to -- especially not going to work for

13 those who -- when you go into the produce section and you

14 see that wonderful lettuce and your milk and your eggs,

15 those are the folks that won't be able to take advantage

16 of the ag provisions, because that's the stuff that has to

17 come on a regular basis because it's very perishable.

18 But I just want to emphasize that, you know, ag

19 has been voluntarily trying to reduce our emissions for a

20 long time. But since 2004, we're being required -- we're

21 being mandated because of SB 700. And I just want to --

22 keep this in mind as we go forward, that the stationary

23 sources that have been around for a long time, since the

24 beginning of the Clean Air Act since 1970, have had a long

25 time to comply. We're doing a lot in a very short period

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1 of time, where we air permits on our farms, dust permits.

2 We're cleaning up our forklifts, we're cleaning up our

3 irrigation pumps, now our trucks, and next our tractors.

4 So I just want to make sure you understand we're trying to

5 do a lot in a short period of time.

6 But I do want to -- we really appreciate the

7 effort that you have made for the limited amount of family

8 farmers that will be able to take these low mileage

9 provisions. And we want to thank the staff for their

10 help.

11 CHAIRPERSON NICHOLS: Thank you.

12 Kathy Fitzgerald.

13 MS. FITZGERALD: Madam Chair, Board members. My

14 name is Kathy Fitzgerald. I'm dealer-principal for

15 Fitzgerald Truck Sales in Oakland. I've been peddling

16 trucks in northern California for the last 25 years.

17 The first thing I want to share with you folks is

18 that you've been hearing mostly from people in the

19 trucking business. We're a very chatty group of people.

20 But what you haven't been hearing from is the other

21 50 percent of the people who operate trucks that are not

22 in the trucking business, that largely don't know anything

23 about this regulation at all. I know this, because when I

24 go talk to them and I tell them, they want do shoot me,

25 shoot the messenger. So just be aware that there is a

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1 whole nother roomful of people that don't know about this

2 regulation yet.

3 The second thing is, our business is off a full

4 50 percent with just the threat of this regulation. What

5 happens is the customers don't have any trade value. So

6 when they come to buy a truck, they can't put their truck

7 down to buy the next truck. They've got to reach into

8 their pocket and pull out their hard earned money.

9 Well, you all say about the grants, the grants,

10 the grants. Well, the grants are great. I've worked with

11 quite a few customers putting the grant proposals

12 together. They have to pretty much dedicate a full-time

13 staff person to putting these grants together. And then

14 they hope and pray and light candles; and, you know, one

15 ten is going to get the grant money. So, realistically, I

16 don't think that the grants are going to bail these people

17 out.

18 These people have been in business for a long

19 time, they've been bringing your products to you.

20 Everything they say, all the -- everything we have is

21 brought to you by a truck. And this is going to affect

22 the entire trucking business.

23 I saw on your slide a new truck would be $800 a

24 month. That's not even close. Three times that amount -

25 $2400 a month is about an average payment on a new truck.

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1 So just realize that your numbers, your statistics need to

2 be quadrupled.

3 Finally, I support the Coalition's proposal, the

4 DTCC proposal.

5 And the last thing I want to leave you with is,

6 remember, a world without trucks stops.

7 Thank you.

8 CHAIRPERSON NICHOLS: Perfect. You did two

9 minutes exactly.

10 Jean Etcheverry.

11 MR. ETCHEVERRY: Good evening. My name's Jean

12 Etcheverry. I'm with Antonini Fruit Express in Stockton.

13 We're an agricultural commodity hauler.

14 We have 65 trucks in our fleet. We also use

15 about 40 independents during the season and we rent about

16 40 trucks during our season.

17 We have about -- during season we have about 200

18 truck drivers that we employ. But because this past year

19 has been rather difficult in coming up with money, we've

20 had a high turnover because we haven't been able to afford

21 to pay our drivers any more than we paid them three years

22 ago.

23 Our customers also were not very nice to us this

24 year with the fuel price issue that we all had. We've had

25 to absorb a big increase in cost because we weren't able

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1 to pass our fuel costs on to our customers very easily.

2 Now that the prices have come down, of course our

3 customers are asking for price decreases immediately.

4 Next year we don't think that things are going to

5 be much better in the ag trucking business. This year

6 profits were pretty bad for us and I think across the

7 whole industry. Next year we don't anticipate to be any

8 better than this year.

9 Over the past couple of years we have upgraded

10 our fleet considerably at the cost of many millions of

11 dollars. Sixty percent of our fleet is 2007 or newer.

12 Many more millions will have to be spent in the next few

13 years to upgrade our fleet to the current regulations as

14 proposed.

15 Our ability to increase our hauling rates to

16 cover current and future equipment cost is very, very

17 limited. The margins in the agricultural industry from

18 farmer to hauler to processor are very low. We cannot

19 expect to pass any costs on very easily.

20 Much has been made of the money available to

21 assist trucking companies through Prop 1B. Unfortunately,

22 this money is largely unavailable to my company and others

23 in the agricultural business. The restrictions on funding

24 being available only to replace or retrofit trucks that

25 will operate wholly within California -- Pardon?

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1 Am I not close enough? I'm sorry.

2 The restrictions on funding being available only

3 to replace or retrofit trucks that will operate wholly

4 within California having GBWR upgraded and 33,000 pounds

5 and have continuous registration for the prior two years

6 have effectively eliminated my fleet from consideration.

7 More than 99 percent of my fleet miles are within

8 California. But that 1 percent out of California

9 eliminates 15 percent of my fleet for funding

10 consideration. Many of our trucks do not meet the GBWR

11 restrictions, as ag trucks need to be as light as

12 possible.

13 Also, ag trucks typically operate four to

14 six months a year, so registration is limited to those

15 months, requiring two years --

16 BOARD MEMBER ROBERTS: Your time is up.

17 MR. ETCHEVERRY: Pardon?

18 BOARD MEMBER ROBERTS: You had the benefit of

19 going over two minutes because we lost a little time in

20 the transition.

21 MR. ETCHEVERRY: Oh. I get to go on, is that

22 what you're saying?

23 (Laughter.)

24 BOARD MEMBER ROBERTS: No, you don't.

25 MR. ETCHEVERRY: Darn.

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1 BOARD MEMBER ROBERTS: But you get an A for

2 trying. Okay?

3 Yeah, Leonard Gollnick, followed by Mike

4 Anderson, followed by Myles Anderson.

5 In any order.

6 MR. ANDERSON: Okay. Mike Anderson from Fort

7 Bragg, Mendocino County. For those of you that don't know

8 where that's at, that's part of that other state - rural

9 California.

10 Rural California is the area that has no

11 particulate matter problem, has no NOx problem, has no

12 opportunity to take part of the 1B money. That's the area

13 where the Carl Moyer money all goes to the county and the

14 municipalities and doesn't come down to the private

15 fleets.

16 That's the area where 60 percent of the trucks

17 are pre-'95 trucks. Those trucks have got mechanical

18 engines in them that costs $45,000, not $15,000, to

19 update.

20 There's a real serious inequity in this rule

21 package. I know you've heard it from the people in

22 Shasta, you've heard it from a lot of people today. And

23 there's two things that I think that you need to do.

24 I'm relatively sure you're going to pass this

25 package as is. But when it's passed, I think the science

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1 needs to be looked at by an independent third party. And

2 I think in addition to that this cost analysis needs to be

3 analyzed by an independent third party so that, going

4 forward, money that's available to help these businesses

5 survive this rule package is dealt to the individuals that

6 really need it.

7 We put on 50 to 60,000 miles a year on our

8 trucks. When we buy them new, they're good for a million

9 miles. That takes us 15 to 20 years to wear a truck out.

10 If you're working in the commerce corridor where the

11 billion dollars is going, you put on 150,000 miles a year

12 and you update your truck every six to seven years.

13 I think you really need to look at these issues.

14 There's a real serious issue of inequity here and it needs

15 to be addressed going forward.

16 Thank you.

17 BOARD MEMBER ROBERTS: Thank you.

18 We have Myles Anderson, followed by Ed Wallace.

19 MR. ANDERSON: Thank you very much. My name is

20 Myles Anderson, following up. I'm also from Mendocino

21 County. You might recognize a little bit of a resemblance

22 there.

23 But I think he pretty much spelled out issues

24 with Mendocino County that we have. I just want to talk

25 about something that should be an economic solution to

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1 this problem, and that's DPS. And by looking at CARB's

2 web page and looking at the DPS for on-road trucks, going

3 through them, there's six filters on there that supposedly

4 work for a wide range of engine model years. Now, if you

5 really look at those closely, three of them are

6 de-verified this month. So we've got three filters left

7 to choose from, right now, right when the Board's going

8 the make a decision on this package.

9 First, the Cleaire Horizon. A 370 horsepower

10 limit. Regeneration takes five hours. It has to be

11 plugged into the 208 volt service, and it has to be done

12 every eight hours of service. There's virtually no trucks

13 that run around here -- that run in this state for an

14 eight-hour period and then can take five hours of down

15 time.

16 Engine Control Systems' Pure Filter. The

17 Executive Order states it's only verified for engines with

18 PM emission levels of .1 to .01 gallons per brake

19 horsepower-hour. That's an electronic engine. This will

20 not work on a mechanical engine.

21 The previous filter I talked about will not work

22 on a mechanical engine.

23 The cost of Cleaire Horizon, 22 to $25,000 per

24 filter; engine Control Systems' Pure Filter, $16,000.

25 Those two will work on an electronic engine.

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1 HUSS, an active filter, the only one that will

2 work on a mechanical engine pre-93. It has to have an

3 opacity score of less than 25. It has to be a relatively

4 clean mechanical engine. It has a horsepower limit of 250

5 horsepower. That means these filters have to be stacked.

6 Each filter costs between 21 and $23,000. That's $45,000

7 per truck, mechanical engine. I's not feasible. The

8 truck's worth about five to ten.

9 BOARD MEMBER ROBERTS: Thank you, Mr. Anderson.

10 I've got Ed Wallace and then Eric Carleson.

11 MR. WALLACE: Good evening. I'm Ed Wallace, a

12 partner in Robinson Enterprises. We're in Nevada City,

13 California.

14 We're going to be subject to four rules when the

15 ag rule comes down next year. We've got portable,

16 off-highway, this rule, and then ag and forestry next

17 year. We're very concerned about the cumulative effect of

18 all these rules coming in at one time.

19 I want to talk specifically about filters. We

20 have 55 old trucks that are pre-2005. Interestingly, we

21 purchased a 2006 truck. We've got 115,000 miles on it.

22 It hasn't missed one day of work. It doesn't have a DPF

23 on it.

24 Now, it was so good that we bought six 2007

25 trucks. We have in excess of 10 percent down time with

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1 those trucks. They have -- we're putting a third

2 generation heating coil on there - Arg, it is called.

3 We have two 2008 trucks. And to make us feel

4 good, we're very proud of those 2008 trucks. They've run

5 fine until yesterday morning. All the shop crew was going

6 to do was take it from the line and put it into the shop.

7 It failed. "Failure to combust" is the code. It's a

8 priority code we're not allowed to fix. It had to be

9 towed back to the shop. So we're what, 60 miles away from

10 the registered dealer.

11 Anyhow, I'd urge you to really take a good look

12 at these filters and filter rules. Better delay -- in my

13 view, delay the implementation of them until they work.

14 As Myles just pointed out, they're very expensive for

15 these filters. They have a short life. We can't afford

16 the 10 percent down time in our businesses. We have five

17 to seven month logging season, is it.

18 Thanks for your time.

19 BOARD MEMBER ROBERTS: Thank you, Mr. Wallace.

20 Eric Carleson, followed by Susan Nixon.

21 MR. CARLESON: Hello. And that was Ed Walker

22 with Robinson Enterprises, one of our member companies.

23 You've heard from our members on financial,

24 economic, and filter availability data. I'm here to bat

25 cleanup.

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1 Our industry is in a fragile condition. Housing

2 is down, log prices are down, mills are closing, we're not

3 taking any more logs at this time.

4 Meanwhile, our trucks and equipment can help with

5 fire fighting and the collection of woody biomass and the

6 cleaning up of fires and the carbon that they put into the

7 air in the state. We would like to be around to help you

8 with that, but we need to be around to help you with that.

9 We have members with large fleets. You've been

10 hearing from some of them this evening. And they're

11 facing the struggles, with potentials of bankruptcy if

12 they have to buy and make the changes to these trucks over

13 the next few years. They have concerns about the filter

14 availability, the filter affordability. These are very

15 important issues to them, and I think that's one of the

16 reasons we wanted to bring them up with some of the data

17 we had here tonight.

18 They operate mainly in clean, low population, NOx

19 and particulate matter attainment districts - timber

20 country. We have a number of members who are

21 owner-operators. They have just a few trucks, in some

22 cases just a single truck, and they have to earn their

23 living in six months or less and during that time try to

24 make what profit they can, stay in business, raise their

25 families.

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1 Next, in terms of the clock running out, it's

2 true. We've heard some of this tonight. But we would

3 agree that as we try to tell our own members about this,

4 many of them still don't know that this rule is

5 potentially coming, this devastating rule. We have

6 members who are trying to buy trucks now to comply, that

7 if this rule passes will not be in compliance in a year.

8 And though we're doing what part we can, we think it's

9 incumbent on this Board and its staff to continue to

10 communicate through all means necessary that this rule is

11 coming and give people the proper lead time to try to

12 prepare for it. Because we keep bringing the people who

13 simply don't know it's out there. Large state, large

14 population.

15 To the extent that there are health concerns

16 being reviewed by the Board in the preparation of this

17 rule, we would add that there's always reason as you

18 review job loss data to review the health impacts on heads

19 of households who lose their jobs and the impact on their

20 health to sustain job loss, by the impact on their

21 children with health insurance loss.

22 We have many older members in their sixties who

23 have been driving --

24 BOARD MEMBER ROBERTS: Thank you.

25 MR. CARLESON: Thank you.

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1 BOARD MEMBER ROBERTS: I've got Susan Nixon.

2 Is Susan here?

3 Charley Rae, CalCIMA.

4 Is Charley here?

5 David Hagen, followed by Eric Bassett.

6 MR. HAGEN: Great. I get a chance to get up and

7 move. Been here all day.

8 I'm David Hagen from RSI Insurance Brokers. We

9 have offices in Costa Mesa and Gridley. We have 54

10 employees and family, and we are a family business. And

11 we treat our customers as family too. We've been in

12 business for over 20 years.

13 We're a specialist in trucking. That's what we

14 do - wheels. And we're real concerned about these

15 measures.

16 Commend staff for their hard work. I've heard it

17 from CTA staff members and others commending staff for all

18 of their hard work on a monumental task.

19 But the fact of the matter is that I've sat here

20 all day and listened. And Dr. Sperling, I heard his

21 comments very clearly. And I want to go back to that,

22 about methodology, equitability, parity -- pull up

23 whatever word you want. I am real concerned about that.

24 We all are after the same goal.

25 Chairperson Nichols brought up the fact to

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1 Ms. Arriola from Commerce that we all hope to win in this.

2 At the end of the day we all hope to win. But I am

3 concerned about things I hear.

4 I'm going to get off with this one comment. The

5 studies on premature deaths related to diesel

6 particulates, did they consider the guy in the cab with

7 his four packs a day of cigarettes, or obesity, you know,

8 and other health issues? I'm an asthmatic myself. You

9 know, I don't suck diesel particulates all day long. I

10 just hope that you use common sense and be reasonable.

11 Thank you.

12 BOARD MEMBER ROBERTS: Thank you.

13 Eric Bassett --

14 MR. BASSETT: Good evening. Thank you for your

15 time.

16 BOARD MEMBER ROBERTS: -- and followed by Michael

17 Mortensson.

18 Go ahead.

19 MR. BASSETT: My family owns and operates a heavy

20 truck dealership here in Sacramento. We've got 80-plus

21 employees.

22 Everybody here has talked tonight. We don't want

23 not to do a rule. We want to do a rule, but we want to do

24 it in a timely manner. If you look at the replacement

25 vehicles that are going on, these companies are replacing

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1 vehicles as needed. We'll continue to do that. We want

2 to do our part.

3 I've got a dealership, so I've got ability to

4 maybe profit from this and sell trucks. But on the other

5 hand, I've got a huge rental fleet that caters to a lot of

6 businesses in the Sacramento Valley. So 250-plus trucks

7 that all have to come into compliance as they go. They're

8 2005 or newer, so I'm not worried they're going to turn

9 them out. But when they come back, I expect to get good

10 dollars in the market.

11 What you're creating in California is taking the

12 value of these trucks when they come back and they're not

13 worth what they should be. You're unfair for the state

14 and the businesses in California because we're losing the

15 value of our assets. That's all we're doing right now, is

16 you guys are taking this rule and -- that used truck

17 that's a great asset for a new person that's trying to run

18 a business, he can't buy it because it's not going to be

19 worth what it should be.

20 So we're in favor of passing a rule, but it's got

21 to be in a timely manner where everybody can catch up,

22 take into account the economic problems that we're having

23 with the state, budget problems. Think of the state's

24 fleet. Can the state comply with this? I don't think so.

25 BOARD MEMBER ROBERTS: Thank you.

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1 Michael Mortensson, followed by Steve Sharp.

2 MR. MORTENSSON: Good evening, members of the

3 Board. I'm Mike Mortensson. I'm the Executive Director

4 of the California Groundwater Association, commonly known

5 as CGA.

6 CGA represents about 430 water well drilling and

7 pump installing contractors throughout the state. They

8 employ about 2400 people. So the industry is small in

9 numbers.

10 But its function is critical to the well being of

11 the state. In times of drought - and we're hearing about

12 that these days - groundwater supply is up to 50 percent

13 of the state's water needs.

14 Our members deal with complex conditions

15 throughout the state and they must have a wide variety of

16 equipment to develop groundwater supplies. And much of

17 that is quite specialized and is of limited or low usage.

18 For example, you could have a drill rig that's in good,

19 sound condition that is 25 years old and has less than

20 10,000 miles on it.

21 I was at the National Groundwater Association

22 Expo last week and saw a number of drill rigs. And some

23 new rigs will cost up to a million dollars. So keeping

24 this equipment in its long-term useful life is critical to

25 our rig owners.

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1 We have to comply to a large number of ARB rules,

2 and our members are trying to comply with the current

3 regulations. But many of the groundwater contractors in

4 the state are small and local operators, and they're being

5 forced to downsize or even close their doors.

6 We talked to one contractor who said he'd have to

7 cut his drill rig fleet in half. And another one said he

8 looks at the replacement costs for his equipment to come

9 up to standards, and it would cost two times his company's

10 net worth.

11 We are concerned that the potential loss of the

12 industry's capability to provide water will be -- because

13 of these regulations, could cripple the state. One can

14 live without many things, but water is essential.

15 Now, we know that there's a proposed regulation

16 that includes agriculture provisions. And certainly the

17 reasoning that resulted in those could definitely apply to

18 the groundwater industry, which provides water for ag,

19 domestic, municipal, and industrial uses.

20 Now, we've had an air emissions study done by a

21 manufacturer very recently. I just saw it last week. He

22 said that water well equipment in the United States --

23 CHAIRPERSON NICHOLS: Thank you, Steve.

24 MR. MORTENSSON: -- covered only 2/10 of 1

25 percent of the total emissions.

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1 BOARD MEMBER ROBERTS: Thank you.

2 MR. MORTENSSON: Thank you. And we ask that you

3 delay and ask for conditions for the groundwater industry.

4 BOARD MEMBER ROBERTS: Thank you.

5 Steve Sharp, followed by Joe Rosa.

6 Steve.

7 Joe Rosa.

8 MR. ROSA: Good evening. My name is Joe Rosa.

9 I'm the Operations Manager for Renner Petroleum. We're an

10 independent petroleum marketer in Eureka, California,

11 where the air is crisp and clean.

12 Well, I'm here to tell you a little bit about our

13 business and how it's going to be affected by the

14 regulations that you're about to -- or are potentially

15 going to approve.

16 As a small business, we have a fleet of trucks

17 that about 95 percent of our trucks are local trucks.

18 They don't run more been about 30, 35,000 miles a year

19 making deliveries to our customers. There's no way in the

20 world that we can go out and spend the kind of money it

21 takes to buy these trucks and get our value out of these

22 trucks, our return on investment, in the six or seven

23 years that you're proposing here.

24 In the last three years we've spent over one and

25 a half million dollars upgrading our fleet. And in five

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1 years we've also spent somewhere in the neighborhood of

2 three and a half million dollars upgrading other portions

3 of our business for other recommendations from the state

4 that we were required to meet in our card lots.

5 The point I'm trying to make is there's a lot of

6 different things that are attacking these businesses in

7 all of our profits lines, our bottom lines, in many

8 different areas. This is just one of them. At some point

9 we just can't shoulder those burdens any longer. The

10 money that's being handed out here, the Prop 1B money

11 that's being available, is not made available to us up in

12 our neck of the woods, unfortunately. We have the same

13 costs to replace our trucks as anybody else does, but yet

14 we're not having the funding coming our way.

15 In real life -- one gentleman was talking about

16 the assets value. If you want to know a real-life

17 scenario, just Monday I signed a deal to pick up another

18 piece of equipment. I traded in six pieces of equipment

19 and I got $33,500. Now, one of those things with a tank

20 wagon that three years ago would have been worth about

21 $15,000, which is now worth $30,000, the replacement cost

22 of that piece of equipment, to get the new one that's

23 going to replace it, is $241,000. Those are just some of

24 the costs that we incur in our industry.

25 And with the impact it has on our business and

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1 all of our customers' business, pretty soon we're not

2 going to be able to meet any of those needs.

3 Thank you.

4 BOARD MEMBER ROBERTS: Thank you, Joe.

5 Doug Van Allen, followed by Allen Burmeister.

6 MR. VAN ALLEN: Doug Van Allen with BJ Services

7 Company.

8 BJ Services would like the Board to modify the

9 proposed rule to allowed body-load trucks to be included

10 in the special mileage limitations that were provided for

11 agricultural vehicles. This would allow the body-load

12 trucks that operate below 25,000 miles per year to be

13 exempt from the PM and NOx requirements until 2017.

14 Staff thought about body loads. I'm not sure

15 what they thought. Slide No. 45 is a picture of one of my

16 body loads in there, but there's nothing written about it.

17 A body-load truck is a truck that has specially

18 designed machinery built on to the back of the truck to

19 perform a specific job. They are not designed to haul a

20 load up and down the highway. The machinery that's on the

21 back is actually their load. The machinery may have its

22 own PERP engine or it could be operated from a PTO driven

23 by the road engine or both. And because the machinery

24 actually uses the truck frame as the backbone for the

25 machine, each component is mounted separately to the truck

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1 frame. And we do that so that -- it allows us to keep the

2 vehicle weight down, because they have to be DOT legal to

3 be on the highway for weight legal.

4 We're asking for this modification because of the

5 very large capital investment to manufacture a new

6 body-load truck. They range from $600,000 to $1.1

7 million, depending on the truck.

8 And, also, the additional expense to transfer the

9 machinery from an old truck frame to a new one normally

10 costs an additional 150 to $250,000 above the price of the

11 cost of the truck.

12 Due to a large capital investment for body-load

13 trucks, BJ Services would like the Board to ask staff to

14 give body loads the same consideration that they've given

15 to dual-engine cranes and sweepers, agricultural trucks

16 and school buses. And I've submitted a more detailed

17 letter in there.

18 And thank you for your time, and Merry Christmas

19 to everybody.

20 BOARD MEMBER ROBERTS: Thank you. And the same

21 to you. And we'll ask staff when we -- I was going to

22 hold it and have them comment.

23 BOARD MEMBER LOVERIDGE: Tonight or tomorrow?

24 BOARD MEMBER ROBERTS: Tonight -- well, we're

25 going to be done tonight.

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1 BOARD MEMBER LOVERIDGE: There's more testimony

2 tomorrow.

3 BOARD MEMBER ROBERTS: Well, I think we're going

4 to get through it.

5 BOARD MEMBER LOVERIDGE: No.

6 BOARD MEMBER ROBERTS: Well, okay. We're going

7 to get through the names that are in front of us.

8 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Yeah,

9 there are quite a few -- there's a large list of people

10 that signed up for tomorrow. And so that's still to come.

11 BOARD MEMBER ROBERTS: Okay. But you'll have

12 time for staff to comment tonight.

13 BOARD MEMBER LOVERIDGE: Okay. Well, it seems to

14 me that was a reasonable question I would like --

15 BOARD MEMBER ROBERTS: I agree. Make a note.

16 Also from BJ Services, Allen Burmeister, I think.

17 Is he --

18 MR. BURMEISTER: Yes. Yeah, over here.

19 I'm Allen Burmeister

20 BOARD MEMBER ROBERTS: -- followed by James

21 Thomas.

22 Excuse me. Go ahead.

23 MR. BURMEISTER: My name's Allen Burmeister.

24 We would like to address the section relating to

25 adding vehicles to a fleet. The current draft states that

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1 before a fleet may operate a newly added vehicle in

2 California, we must file a report with the Executive

3 Officer within 30 days of adding the vehicle.

4 Fleet owners will receive the equipment all

5 during the year. So you could have to make 12 reports

6 then. And what we would -- the proposed regulation would

7 require fleet owners to file several reports to the

8 Executive Officer to remain in compliance with the

9 regulation. It's very labor intensive and costly.

10 What we suggest and would like to do is modify

11 the proposed regulation, stating that the addition of 2010

12 model trucks or newer would be reported in the annual

13 update to the Executive Officer. So report just once a

14 year.

15 The addition of new 2010 or newer model trucks to

16 a fleet is going to help the fleet move closer to

17 compliance anyway. They would be compliant engines.

18 This modification would reduce some of the

19 cost -- the administrative costs. It would reduce our

20 costs and your costs.

21 The other thing I'd like to talk about is, the

22 staff report states that fleets naturally replace their

23 vehicles on a regular basis that is faster than what the

24 regulation would require. I believe that statement refers

25 to long-distance cross-country trucks traveling 200,000 --

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1 approximately 200,000 miles a year.

2 However, many trucks, and almost all of ours, are

3 kept for 15 to 25 years because of low mileage. BJ

4 Services trucks may be on location for a few days to a few

5 weeks while the crews commute back and forth in vans or

6 pickups. And this results in low annual mileage for the

7 trucks.

8 BOARD MEMBER ROBERTS: Thank you, Mr. Burmeister.

9 MR. BURMEISTER: Thank you.

10 BOARD MEMBER ROBERTS: James Thomas, followed by

11 Chris Torres.

12 MR. THOMAS: My name is James Thomas with Nabors

13 Well Services out of Bakersfield, California.

14 We would like to propose the Board to make a

15 modification to the reg on the NOx requirements in the

16 proposed reg to reflect the current available technology.

17 The regulation requires the installation of

18 V-Decks that will reduce NOx from 40 to 85 percent. Today

19 there's only two technologies that will reduce NOx at all.

20 That's 25 percent and 40 percent on a small group of

21 engines.

22 Forty percent is far away from 85. Without the

23 development of an 85 percent V-Deck, that will limit the

24 life of our vehicles. Vehicles -- what we are proposing,

25 that whenever we have to start buying diesel particulate

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1 filters in 2010, why can't we buy diesel particulate

2 filters that has a NOx in it already. Might be 25

3 percent. Then we would be in compliance with the reg,

4 generating NOx reductions early.

5 And one of the Board members asked about what

6 will the economic impact have on the crisis that we

7 currently have. Well, due to the crisis, my company

8 reduced its capital budget for 2009 by 70 percent. My

9 company has repowered approximately 400 engines over the

10 past 12 years. Without this capital, that makes us put on

11 our brakes.

12 Thank you for your time.

13 BOARD MEMBER ROBERTS: Thank you.

14 Chris Torres, followed by Lee McCorkle.

15 MR. TORRES: Good evening. Thank you for your

16 time. I'm Chris Torres, President of F & L Farms

17 Trucking. We are an agricultural transports, also a

18 construction transporter. We've been in business for 28

19 years. We run 12 trucks, employ 15 people. We have an

20 annual payroll salary of a half a million dollars. We pay

21 approximately a million dollars to our outside vendors for

22 our product -- for fuel and the rest of our expenses.

23 In the past two years we've replaced four of our

24 trucks out of the 12, approximately $300,000 of capital

25 outlay. We have -- and these cost us approximately 1600

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1 to $1800 a month, which are way in excess of the $800 that

2 we heard earlier in the testimony.

3 We need to extend this timeline on this

4 regulation, on the implementation. This compacted

5 timeline is not going to -- it will not work for my

6 company or many others. We cannot continue -- I cannot

7 continue to replace two trucks a year and be in compliance

8 by the time you want for us folks to be there. It's just

9 impossible, especially with the economic situation.

10 You know, the agricultural end of our business is

11 possibly suffering this year because of the drought. We

12 don't know if all of our customers are going to get their

13 crops planted, so we don't know if we're going to be able

14 to haul their products.

15 The construction side of our business, we don't

16 know how many road projects they're going to allow this

17 year or anything.

18 So a whole lot of stuff's in the air. We don't

19 have contracts to go to a bank and say, "I have this

20 guaranteed income to come in," and so that I can guarantee

21 I will be able to pay the loan. So that's my point.

22 Thank you.

23 BOARD MEMBER ROBERTS: Thank you, Mr. Torres.

24 Mr. McCorkle, followed by Darlene Din.

25 MR. McCORKLE: Thank you very much. My name is

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1 Lee McCorkle. I live up in Glenn County, called McCorkle

2 Trucking. We're an ag carrier, and there's quite a bit of

3 our work is done seasonal. That means that those trucks

4 that are on seasonal-type work do not get a lot of miles,

5 maybe 25 or 30,000 miles per year. So it's going to be

6 difficult for us to meet these compliances.

7 Now, we certainly understand the people that are

8 concerned about the air quality. That's important. Gosh,

9 we've heard people talk about that here this afternoon,

10 and I can understand that that's certainly a big potential

11 problem -- or it is a problem.

12 So, anyway, we've got bad economic times

13 surrounding us all over the place. The economy's in very

14 bad shape. People are losing jobs. Just not very good

15 timing.

16 And I've heard all kinds of facts and figures

17 from the Air Resources Board, plus all the people that's

18 been testifying as far as facts and figures. And there's

19 certainly one big discrepancy in a lot of those. So where

20 are we with all those discrepancies that we have? Are any

21 of them right? Are they somewhere in the middle? Or what

22 is going on? And I'm not that much up on this whole

23 thing. I've been trying to catch up here the last few

24 days. And so I can't answer those questions. But

25 something's wrong with the figures.

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1 So, anyway, I think that the Air Resources Board

2 at this time is probably, even though I'm sure you'd like

3 to be on schedule, you're probably really not on schedule

4 as far as the reality of the real world is.

5 So I'm going to ask that you please very strongly

6 consider the recommendations from the DTCC coalition. And

7 let's give ourselves a little bit more time. And

8 hopefully --

9 BOARD MEMBER ROBERTS: Thank you, Mr. McCorkle.

10 MR. TORRES: -- in the end we'll come out right.

11 Thank you.

12 BOARD MEMBER ROBERTS: Thank you.

13 Darlene Dinn.

14 Is Darlene here?

15 Tracy Roberts.

16 Is Tracy Roberts here?

17 With that last hand I was going to give her an

18 extra minute. But --

19 (Laughter.)

20 BOARD MEMBER ROBERTS: David Norris.

21 We're doing great now.

22 Kevin Abernathy.

23 Come on up here, Kevin.

24 Followed by Christopher Valadez.

25 MR. ABERNATHY: Good evening. My name is Kevin

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1 Abernathy. I'm the Executive Director with the California

2 Diary Campaign.

3 Appreciate the fact that you folks have been able

4 to sit up there for this amount of hours and you're

5 getting close to the end.

6 Real quickly, on behalf of the numerous diary

7 families and family businesses that support our farms in

8 the State of California, I would like the Board to -- or I

9 basically have a simple request. And it gets real

10 specific on to page A-13 of section 2025, Item No. 64.

11 And I would hope that it's just an oversight on the

12 staff's part. But I would like to see a broader

13 definition of specialty agricultural vehicles that is more

14 inclusive to the dollars that have to be spent to

15 specially retrofit certain types of equipment for

16 specialty uses on farm.

17 And specifically under B, we've got cotton

18 modules that are listed, which I respect the fact that

19 that is a significant investment on the grower's -- or the

20 harvester's part. But we also have the same cost for

21 something as simple as a silage truck. We cannot simply

22 take a replaced highway truck and use it to collect silage

23 in the field. It requires anywhere from -- most of the

24 time around $45,000 to upgrade that to where it will

25 actually last in the field.

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1 Secondly, Item D. Hey, guys, a feed truck is a

2 feed truck and livestock is livestock. And if I was to go

3 home tonight and see my cows and they looked at me and I

4 didn't make the comment that, "Hey, we're livestock too.

5 We're also a bovine species," and the fact of the matter

6 they might kick the hell out of me in the milk barn the

7 next day without bringing that up to the Board's

8 knowledge.

9 (Laughter.)

10 MR. ABERNATHY: You know, my heart really goes

11 out to everybody in this room because we in the diary

12 industry and agriculture, we rely on everybody that's

13 behind me and all these other industries that are going to

14 be severely economically hit.

15 BOARD MEMBER ROBERTS: Thank you, Kevin.

16 MR. ABERNATHY: Thank you.

17 BOARD MEMBER ROBERTS: Mr. Valadez, followed by

18 Andy Acott.

19 MR. VALADEZ: Good evening, Mr. Chair, members of

20 the Board. Chris Valadez here representing our membership

21 for the California Grape and Tree Fruit League. We're a

22 statewide public policy organization representing the

23 table grape and tree fruit growers and shippers, again, up

24 and down the state.

25 Our bottom-line concern with the rule is this:

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1 That all trucks -- agricultural trucks will have to be

2 replaced under this rule. That's the reality, as we see

3 it, as this rule's progressing as discussed here today.

4 As we've discussed, and as you may know,

5 financing options even for those in agriculture are a grim

6 reality. And the reality is it's not likely.

7 In tree fruit this year it's been -- this year,

8 last year, and projected into the next year, very

9 significant ramifications for the industry. A reduction

10 of tree fruit plantings will likely occur. In going

11 forward, that industry specifically is going to be

12 economically impacted. Therefore, their decisions to go

13 forward, whether or not, and to purchase new trucks in an

14 aggravated or aggrieviated time schedule is going to

15 impact and weigh on them greatly.

16 For us in agriculture, the reality is we are just

17 consumed about what is before us today. We saw a video

18 that Chairwoman Nichols put out, an informational video,

19 and we think she put the issue before you today very

20 succinctly. ARB's role is to find solutions.

21 With that, to us the solution should be both

22 reasonable and practical. In sum, we acknowledge that the

23 Board will likely move forward with a recommendation from

24 staff on what a rule is going to look like for the future

25 and how it's going to impact us all. Everybody in here

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1 will be impacted.

2 But as you move forward and take your

3 considerations, we hope that you acknowledge the

4 maintenance of ag-specific and for specific sectors those

5 proposals with which they will -- which they will need in

6 order to make sure that they can have enough time to adapt

7 to this rule as it affects them given their proportionate

8 size in relation to the rule and the scheme.

9 Thank you. And we do appreciate this opportunity

10 to provide testimony.

11 CHAIRPERSON NICHOLS: Thank you.

12 Andy Acott.

13 Lan Dahn.

14 Steve Lopes, followed by Daniel Del Moro.

15 MR. LOPES: Good evening. I'm a principal with

16 Western States Oil Company.

17 CHAIRPERSON NICHOLS: Please speak in -- thank

18 you.

19 MR. LOPES: I'm a principal with Western States

20 Oil Company. We're based in San Jose. We've been there

21 since 1956. And I'm here to oppose the CARB rule as you

22 guys currently have it written. And I'd like to see

23 supported the DTCC's alternative.

24 I'm really overwhelmed by the testimony I've

25 heard in opposition to this rule. I can't imagine how you

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1 guys could go forward and pass it after hearing all the

2 various arguments from the people that actually make this

3 state work.

4 Bottom line is CARB is mandating companies like

5 mine and these people to replace assets and trucks before

6 they need to be replaced. And it just doesn't make any

7 sense.

8 And for our company, unfortunately -- and I've

9 got about 200 other members. I'm also a member of

10 California Independent Oil Marketers. We have a double

11 hit upon us, because next year in April due to CARB's regs

12 we have to spend huge amounts of money in upgrading our

13 service stations with EVR and ISD compliance. And we just

14 took possession of a brand-new tank truck, about $230,000,

15 two weeks ago, and replaced a couple of smaller trucks

16 last year. But all these mandates are really starting to

17 hurt us.

18 And luckily we'll be able to -- we think we might

19 be able to make the timeline. But I know there's other

20 people, some of my competitors, other people in our

21 association and surely a lot of people out here that just

22 won't be able to find the financing to make these

23 upgrades.

24 CHAIRPERSON NICHOLS: Thank you, sir.

25 MR. LOPES: Thank you.

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1 CHAIRPERSON NICHOLS: Daniel Del Moro, if you are

2 here. And you are the last speaker. Unless somebody

3 stands up and says we missed them, that is it.

4 MR. DEL MORO: Thank you very much for the

5 opportunity. Yes, my name is Daniel Del Moro. I'm with

6 PVM Transportation out of Fontana, California.

7 I think by now you've pretty much heard it all.

8 And, yes, a lot of the concerns being expressed here by a

9 lot my industry fellow members are the same concerns that

10 we're dealing with.

11 So I will echo one of the issues -- or one of the

12 main issues that we are dealing with right now. And, that

13 is, the fact that -- we kind of saw this coming some years

14 back. So we'll begin changing our business model by

15 basically, you know, starting to buy brand-new equipment.

16 And I believe that us by doing that have gotten -- being a

17 small company, you know, we got into so much trouble

18 because, yes, our monthly payment per truck is 2400 bucks

19 on the average. That's one thing.

20 The next thing is that these trucks have so much

21 issues. I mean it's very ironic to see a 2008 truck being

22 breaking down so much, and all of these failures being

23 related to all the new technology or results of the new

24 technology that these trucks are equipped with, you know.

25 Some of this new technology, I just think that

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1 it's not working.

2 So I will say it again. You know, I think we are

3 into some deep trouble, by us making this investment into

4 our company and because of the way we all know the economy

5 is and such, you know, being able to really pull it off.

6 So, again, and as a lot of people have said

7 tonight, you know, I ask for time. I ask for some

8 leniency with this regulation, because I'm a perfect

9 example of that second generation whose parents' business

10 has been passed on to me and I really don't know if I'm

11 going to make it. You know, my father says, you know, I'm

12 young and I'll be able to pull it off. But I feel tired

13 already.

14 Thank you very much.

15 CHAIRPERSON NICHOLS: Well, it's a little late in

16 the evening. That could have something to do with it.

17 MR. DEL MORO: Well, you know what I mean.

18 Thank you very much for the opportunity to talk

19 to you.

20 CHAIRPERSON NICHOLS: Thank you. Thank you for

21 spending the day with us.

22 Thanks to all of you. I know you're here

23 because -- not because you didn't have better things to

24 do.

25 Yes.

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1 BOARD MEMBER LOVERIDGE: There's one technical

2 question that staff was going to respond to, that there

3 was a reasonable -- there was a body-load vehicle that

4 struck me as a reasonable question. So what's the staff

5 answer?

6 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF

7 WHITE: Well, I think it's twofold. First, we've had some

8 conversations around those -- especially those particular

9 vehicles that we had the picture for and with that

10 particular fleet about how that fleet would likely comply

11 with the proposed regulations in terms of for all of the

12 vehicles they had in their fleet. And the feedback we had

13 gotten back from them was was that by looking at their

14 other vehicles first, they were going to be able to do

15 those towards the end of the program and be able then to

16 replace those with new vehicles.

17 Now, that said, we also have the unique vehicle

18 provisions in there which would allow for retaining

19 vehicles that cannot be purchased used with the 2000 -- a

20 cleaner engine amendment in them, and then they can hold

21 on to those vehicles as long as till 2020. So we felt we

22 had addressed the issues with -- between that with that

23 particular fleet in particular and more broadly with

24 unique vehicle provisions that are already in the

25 regulation.

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1 CHAIRPERSON NICHOLS: For tonight, are we ready

2 to call it a day?

3 One more question.

4 BOARD MEMBER ROBERTS: Yeah, one of the things

5 that's been a reoccurring theme -- and I'm not sure how

6 it's been factored in or if it's been factored in. But

7 when we talk about the economy and we talk about the cost

8 and the purchase price of new vehicles, there seems to be

9 something operating where there's now the older

10 vehicles -- any used vehicle is now only a fraction of

11 what it might have been worth a year or two ago. And I

12 don't know if we've taken that into account, but it's been

13 one of the things that I know that I've heard.

14 CHAIRPERSON NICHOLS: The resale value.

15 BOARD MEMBER ROBERTS: Yeah, the retail value --

16 CHAIRPERSON NICHOLS: Resale.

17 BOARD MEMBER ROBERTS: I mean people who would

18 otherwise like to sell, take that value and even put it --

19 they have a lot less of an asset, which has exacerbated

20 anything we've asked them to do. And I don't know -- it

21 doesn't seem to me that we've acknowledged that.

22 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF

23 WHITE: Well, actually we have. And I very much believe

24 that the phenomena we've seen is real, that these vehicles

25 are not worth as much today as they were. And, you know,

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1 part of that may be due to the economy and part of that

2 may be due in fact to anticipation for the rule.

3 When we estimated the cost and we came up with

4 our $5.5 billion number, it took into account both reduced

5 costs -- reduced value of existing vehicles, that the

6 vehicles that they have today would be worth less simply

7 because they would not be compliant.

8 We also factored into that compliant vehicles,

9 the ones that they would need to be buying on the used

10 truck market, would be more expensive than they are today.

11 And that was reflected by -- you know, as the market's

12 supply and demand would dictate that those vehicles would

13 be more valuable since more people were seeking them.

14 So we did account for both. I haven't heard any

15 of the comments with stakeholders since we put our

16 economic assessment out whether our estimates were on

17 target or we missed the mark on either end. But we did

18 make an effort to do just that.

19 CHAIRPERSON NICHOLS: Everybody wants things to

20 chew on overnight.

21 BOARD MEMBER TELLES: Yeah. One of the recurring

22 themes here is the cost of buying a new truck and the

23 monthly payment. You know, from the trucking industry

24 we're hearing it's more in the range of 2,000, 2400. And

25 from the rule it's 800.

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1 Myself, I don't understand how you could have

2 $800 for a month for a $115,000 asset. To go out and buy

3 a new car for $35,000 and you have a five-year payment,

4 you're saying about six to seven hundred dollars a month

5 if you're not leasing it.

6 Are these real numbers we're talking about or are

7 we way -- are we way off on the estimate of the cost of

8 this thing?

9 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF

10 WHITE: No, I don't think that we are. The numbers that

11 we showed in terms of an $800 monthly payment to get a

12 compliant truck, I think two things have to be remembered

13 in that. First, we are financing the cost of a used

14 truck. And, again, it gets to the fact that the

15 regulation never requires new and is really set up to

16 allow used trucks to be a viable compliance option for

17 fleets. And some of the chart -- the chart we had showed

18 just how important that is in terms of how the prices come

19 down in time. Four or five years the value of the truck

20 is about half of what it was new.

21 The second is is that one of the attractive

22 things about the low interest loan program is just that.

23 It can offer loans and rates that are significantly less

24 than what they could get on the open market today. And

25 that's part of ARB using its money to reduce the risk to

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1 the lenders that they're able to offer those lower rates.

2 So I think when you look at both of those, we

3 feel pretty strongly that the numbers we've run, about

4 $800 a month, are pretty good figures.

5 CHAIRPERSON NICHOLS: Not as to what it would

6 take if you were to go buy a truck today. And certainly

7 not what it would take to buy a new construct.

8 HEAVY-DUTY DIESEL IN-USE STRATEGIES BRANCH CHIEF

9 WHITE: Correct.

10 CHAIRPERSON NICHOLS: But what you're saying is

11 that for the kinds of trucks that you believe would

12 comply, that people should be buying at the rates that we

13 think we can get them using the state's money, that that's

14 a realistic number. And of course there's a lot of doubt

15 about that. Clearly not -- most of the people in the

16 audience that aren't convinced that that's real.

17 But one of the things that I think is interesting

18 about this whole discussion is that, you know, everybody

19 wants a new truck. Nobody wants a used truck, you know.

20 We're suggesting that people do things that are

21 economically rational to do the minimum amount that's

22 required to comply and still keep running your business.

23 And we've run numbers accordingly.

24 But, you know, if you ask people what would they

25 rather do, it would be something completely different,

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1 right? They'd rather wait longer and then get a brand new

2 truck because that's clearly a more attractive option from

3 their perspective.

4 ON-ROAD CONTROL REGULATIONS BRANCH CHIEF

5 KITOWSKI: Excuse me, Ms. Chairwoman.

6 CHAIRPERSON NICHOLS: Yes.

7 ON-ROAD CONTROL REGULATIONS BRANCH CHIEF

8 KITOWSKI: I believe it's important -- I wasn't sure if it

9 was clear. The times when we've mentioned 800, it was

10 always in the context of the incentive programs in terms

11 of the grants. So it is assuming that folks are taking

12 advantage of the grants in addition to the loans and the

13 whole package. And if they were not able to get a Moyer

14 or a Prop 1B grant, again that dollar amount would be

15 higher.

16 CHAIRPERSON NICHOLS: Yeah.

17 MR. BRASIL: And just not to confuse matters. I

18 mean the $800 also coincidentally is what it would cost to

19 buy a five-year-old truck and have a 12 percent interest

20 payment. So those numbers just coincidently come out to a

21 similar place. So --

22 BOARD MEMBER TELLES: If you use the grants that

23 you just mentioned and if you use the amount of money

24 that's available for the grants, that's like a billion and

25 a half dollars. And so a billion and a half dollars of

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1 trucks you can get an $800 payment and the other four and

2 a half billion is going to be a $2,000 payment?

3 ON-ROAD CONTROL REGULATIONS BRANCH CHIEF

4 KITOWSKI: It doesn't quite work out that way. It's never

5 quite clean. There are different grant amounts. And so,

6 again, it depends if you're using that.

7 The maximum grant amount you could get for a 2010

8 truck might be as high as 75,000. And then you could have

9 a very modest payment. You might take advantage of the

10 voucher program and have a down payment of $30,000. The

11 dollar amounts will vary, so it does not come out that

12 clean. It's not going to be an on-off switch, you're

13 going to be 800 or you're going to be 2,000. There's

14 going to be a lot in between depending on the price of the

15 truck, the age of the truck you buy, the available grant

16 incentive for your --

17 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Dr.

18 Telles, I think the biggest difference is that everybody

19 that said the 2400 said, "I bought a new truck and it cost

20 $2400 a month." In the scenario we have, putting aside

21 the interest rates and all that other thing, it's a

22 four-year-old truck, which we showed was about half the

23 price of a new truck. So right there your 2400 is divided

24 roughly in half. Then easy numbers here as to what it

25 would be even without a low interest loan or without extra

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1 grants.

2 So the big difference is whether you buy the new

3 truck, because that's what you want to for the other

4 reasons, or whether you go with the low cost option -- the

5 minimum cost option, which is to buy a four-year-old

6 truck.

7 BOARD MEMBER TELLES: If you buy a four-year-old

8 truck, when do you have to replace it?

9 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Well,

10 if you buy a four-year-old truck in this period of

11 2013-2014, you don't. It will have all the stuff on it.

12 And if you buy it earlier than that, then it's going to be

13 at least 12 years before you have to replace it under the

14 program, which will put it out near 2020 or so.

15 CHAIRPERSON NICHOLS: But the only reason for

16 doing that is that you're trying to take advantage of the

17 incentive program, right?

18 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Right.

19 CHAIRPERSON NICHOLS: Otherwise why would you

20 bother? You'd wait until the 2013 period.

21 Supervisor Roberts and then Dr. Balmes.

22 BOARD MEMBER ROBERTS: Just stick with the big

23 aggregate numbers. When we started off today I thought we

24 were talking about, you know, the cost of the -- is like

25 five and a half billion dollars. And then do you subtract

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1 about a billion and a half off of that? So that the real

2 cost -- I mean the industries that we're talking about,

3 there's a four billion dollar bill somebody's going to

4 have to pay?

5 Okay. I mean that's a lot of money. And it

6 doesn't spread itself out evenly. So that the fact that

7 there are some people concerned who may be on the edge of

8 a new career probably have good reason to think that.

9 CHAIRPERSON NICHOLS: No. Well, I think you're

10 right. I was just going to say though that, you know, my

11 experience with government funding is in the resources

12 side of things where we've raised money through bonds time

13 and time again for water projects, land purchases, parks,

14 et cetera. And the only way you get more money is to

15 spend all the money you've got. So I would never advocate

16 that we sort of hold on to the money and try to parcel it

17 out. I mean if we go this route, I think we should try to

18 use the money as quickly as we can to solve as much -- to

19 do as much as we can.

20 BOARD MEMBER ROBERTS: Yeah, but I could see

21 somebody who's got a business being nervous that we're

22 sort of rolling the dice with their business.

23 CHAIRPERSON NICHOLS: Understood.

24 Yes.

25 BOARD MEMBER BALMES: Well, it's a somewhat

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1 related.

2 So I've been impressed with the testimony from

3 individuals in the rural counties where a) the air is

4 cleaner so there's less of an immediate health impact; and

5 there's relatively low miles so that there's not likely to

6 be as -- it's not likely to be as easy to qualify for the

7 incentive programs. And I'm a little troubled with one

8 size fits all. I mean what do we do about the folks that

9 aren't going to be able to qualify for those funds?

10 CHAIRPERSON NICHOLS: Well, I think we're sort of

11 getting into the discussion of the vote here.

12 But one of the things I would say is that I

13 believe we're in the process of talking about redoing the

14 Moyer program so it is less focused on just getting tons

15 per dollar spent, which was our sole purpose before, and

16 more focused on dealing with some of these other equity

17 issues. But I think our resident Moyer expert here might

18 want to add something.

19 BOARD MEMBER BERG: Well, we are looking at that.

20 I think Jack would be able to address that better than I.

21 But I think we still have the issue that we're

22 oversubscribed. So we still have more people in need of

23 the funding than we have funding dollars even if we do

24 change some of the requirements. So the concern is valid.

25 And one of the things I'd like staff to take a

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1 look at is in these rural areas that are in compliance, it

2 seems to me that the NOx turnover is the way to go. And

3 so at the end of the day, we have new trucks, but they

4 aren't going through the added expense of the PM. And so

5 if you could take a look at that and how that would affect

6 the overall numbers, I'd appreciate that.

7 CHAIRPERSON NICHOLS: I guess I'm going to be a

8 grinch here on that issue. It would be nice if we could

9 just divide the state into rural and urban. And it does

10 divide itself somewhat by counties. But if I lived in the

11 small town where I had logging trucks rolling by every

12 day, even if it was only a small truck -- I mean a small

13 town and, you know, we didn't violate the air quality

14 standards except -- you know, my exposures were regular, I

15 don't think I'd be content to think that, you know, this

16 was only happening in the big city. And I think it's a

17 little more complicated than just dividing up into the

18 rural versus urban.

19 Mayor Loveridge has some wisdom to add here.

20 BOARD MEMBER LOVERIDGE: I'm ready to engage that

21 argument tomorrow. I don't think I agree with you. So

22 let's talk about it tomorrow.

23 CHAIRPERSON NICHOLS: Okay. Fair enough. Yeah,

24 and I'm prepared to argue about it too.

25 (Laughter.)

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1 CHAIRPERSON NICHOLS: We could argue about that

2 for a while.

3 Okay. We are, however, going to call it quits

4 because we've had enough fun for one day, and also because

5 we do have to come back tomorrow. And at 8:30 we're going

6 to look at some trucks out on the street on the 11th

7 Street side of the building. And then we're going to come

8 back here at 9 and start the meeting.

9 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: Well,

10 we're going to come in here I think first to --

11 CHAIRPERSON NICHOLS: Oh, start first here. I'm

12 sorry.

13 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE:

14 -- actually --

15 CHAIRPERSON NICHOLS: We'll actually be here at

16 8:30.

17 CHIEF DEPUTY EXECUTIVE OFFICER CACKETTE: -- to

18 convene and then walk out.

19 CHAIRPERSON NICHOLS: Ah, Okay. I apologize. I

20 was confused. 8:30.

21 Good night, everybody.

22 (Thereupon the California Air Resources Board

23 recessed at 8:47 p.m.)

24

25

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1 CERTIFICATE OF REPORTER

2 I, TIFFANY C. KRAFT, a Certified Shorthand

3 Reporter of the State of California, and Registered

4 Professional Reporter, do hereby certify:

5 That I am a disinterested person herein; that the

6 foregoing hearing was reported in shorthand by me,

7 Tiffany C. Kraft, a Certified Shorthand Reporter of the

8 State of California, and thereafter transcribed into

9 typewriting.

10 I further certify that I am not of counsel or

11 attorney for any of the parties to said hearing nor in any

12 way interested in the outcome of said hearing.

13 IN WITNESS WHEREOF, I have hereunto set my hand

14 this 18th day of December, 2008.

15

16

17

18

19

20

21

22 TIFFANY C. KRAFT, CSR, RPR

23 Certified Shorthand Reporter

24 License No. 12277

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