1
UNITED
STATES
OF
AMERICA
ENVIRONMENTAL
PROTECTION
AGENCY
­
­
­
­
­
­
­
­
­
­
­
­
­
­
­
­
x
:
CALIFORNIA
STATE
MOTOR
VEHICLE
:
POLLUTION
CONTROL
STANDARDS;
:
WITHIN
THE
SCOPE
REQUESTS;
:
Docket
No.
OPPORTUNITY
FOR
PUBLIC
HEARING
:
OAR­
2004­
0437
AND
COMMENT
:
:
­
­
­
­
­
­
­
­
­
­
­
­
­
­
­
­
x
Thursday,
February
17,
2005
Environmental
Protection
Agency
1310
L
Street,
NW
Washington,
D.
C.

COMMENTS
OF
THE
ALLIANCE
OF
AUTOMOBILE
MANUFACTURERS
PARTICIPANTS:

EPA
Panel:

Merrilyn
Zaw­
Mon
Khesha
Jennings
Michael
Horowitz
David
Dickinson
Bob
Doyle
Presenters:

Tom
Jennings
Chuck
Shulock
Granta
Nakayama
2
P
R
O
C
E
E
D
I
N
G
S
MS.
ZAW­
MON:
I
want
to
welcome
everybody
on
behalf
of
the
Environmental
Protection
Agency
and
the
Office
of
Transportation
and
Air
Quality.

This
is
a
public
hearing
on
the
California
Air
Resources
Board's
request
for
confirmation
that
its
2003
through
2006
ZEV,
zero
emission
vehicle,

amendments
are
within
the
scope
of
an
existing
waiver,
and
requests
for
a
waiver
of
Federal
preemption
for
its
2007
and
subsequent
model
years
ZEV
requirements.

Federal
Register
notice
appeared
on
January
18th
this
year
at
volume
70,
Federal
Register,
page
2860,
which
announced
an
opportunity
for
a
public
hearing
and
comment
on
CARB's
request.

I
am
Merrilyn
Zaw­
Mon,
and
I
am
the
director
of
the
certification
and
compliance
division
within
EPA's
Office
of
Transportation
and
Air
Quality.
I
will
be
the
presiding
officer
for
today's
hearing.

On
the
panel
today
with
me
are
Khesha
Jennings,
who
is
the
manager
of
the
certification
3
and
compliance
division's
engines
programs
group;

David
Dickinson
and
Bob
Doyle,
both
attorney
advisers
within
the
certification
and
compliance
division;
and
Michael
Horowitz
from
the
Office
of
General
Counsel.

We
are
conducting
this
hearing
in
accordance
with
section
209(
b)
of
the
Clean
Air
Act
under
which
EPA
provides
interested
persons
with
the
opportunity
for
the
oral
presentation
of
views
and
arguments
as
well
as
the
opportunity
to
submit
written
submissions
relating
to
the
determination
to
be
made
by
the
administrator,
in
this
case
on
California's
ZEV
requirements.

This
hearing
provides
the
forum
for
these
oral
presentations.
As
noted
in
the
January
18th,

2005
Federal
Register
notice,
the
written
comment
period
for
this
matter
will
remain
open
until
March
the
29th,
2005.

Again,
the
written
comment
period
will
remain
open
until
March
29th,
2005.

The
administrator's
determination
regarding
the
action
to
be
taken
with
respect
to
4
California's
amendments
will
be
based
upon
the
record
of
this
hearing,
information
submitted
by
California,
relevant
written
submissions,
and
other
information
deemed
relevant.

The
hearing
will
be
conducted
informally,

and
formal
rules
of
evidence
do
not
apply.

However,
as
presiding
officer,
I
am
authorized
to
strike
from
the
record
statements
which
are
deemed
irrelevant
or
needlessly
repetitive,
and
also
to
enforce
reasonable
limits
on
the
duration
of
statements
of
any
witness.
And
I
don't
think
we
will
have
a
problem
with
that
today.

Witnesses
will
be
allowed
to
make
oral
statements,
which
they
may
later
expand
in
writing
for
the
record.
Witnesses
are
requested
to
state
their
names
and
affiliation
prior
to
making
their
oral
statements.
When
a
witness
has
finished
his
or
her
presentation,
members
of
this
panel
may
ask
the
person
questions
concerning
the
issues
raised
in
the
testimony.

We
have
received
two
requests
to
present
oral
testimony,
one
from
the
California
Air
5
Resources
Board
and
the
other
from
the
Alliance
of
Automobile
Manufacturers.
If
any
other
party
in
attendance
wishes
to
present
oral
testimony
at
this
hearing,
please
inform
us
now.

Okay.

At
the
conclusion
of
all
oral
presentations,
CARB
may
respond
briefly
to
the
oral
statements
of
other
parties.

We
are
having
this
hearing
recorded
and
the
transcript
will
be
available
for
public
inspection
and
copying
in
EPA's
Air
Docket
at
Docket
No.
OAR­
2004­
0437.

The
transcript
will
also
be
available
for
Internet
access
on
EPA's
E­
docket
Web
site.
Anyone
wishing
to
purchase
a
copy
of
the
transcript
may
do
so
directly
from
the
court
reporter.
Those
interested
should
make
individual
arrangements
with
the
court
reporter.

The
purpose
of
today's
hearing
is
to
hear
comments
on
California's
request
for
confirmation
that
its
2003
through
2006
ZEV
requirements
are
within
the
scope
of
an
existing
waiver,
and
to
6
request
for
waiver
of
Federal
preemption
for
its
2007
and
subsequent
model
years
ZEV
requirements.

Interested
parties
are
particularly
requested
to
comment
on
CARB's
request
regarding
the
following
issues:

With
regard
to
the
2003­
2006
ZEV
requirements,
we
ask
within
the
context
of
a
­­

within
the
scope
analysis
whether,
one,
such
amendments
undermine
California's
previous
determination
that
its
standards
are
in
the
aggregate
at
least
as
protective
of
public
health
and
welfare
as
applicable
Federal
standards;
and
two,
affect
the
consistency
of
California's
requirements
with
section
202(
a)
of
the
Clean
Air
Act;
and
three,
raise
any
new
issues
affecting
EPA's
previous
waiver
determinations.

With
regard
to
the
2007
and
subsequent
model
year
ZEV
requirements
and
to
the
extent
that
any
party
believes
that
the
2003
through
2006
ZEV
requirements
require
a
full
waiver,
whether,
one,

CARB's
determination
that
its
standards
in
the
aggregate
are
at
least
as
protective
of
public
7
health
and
welfare
as
applicable
Federal
standards
is
arbitrary
and
capricious;
two,
California
needs
separate
standards
to
meet
compelling
and
extraordinary
conditions;
and
three,
California's
standards
and
accompanying
enforcement
procedures
are
consistent
with
section
202(
a)
of
the
Clean
Air
Act.

With
that
introduction,
I
am
going
to
turn
it
over
to
David
Dickinson
who
will
brief
you
on
the
agenda
for
today's
hearing.

MR.
DICKINSON:
Good
morning.
Welcome
to
all
of
you.

It
sounds
as
though
we
have
a
pretty
short
agenda.
I
just
want
to
make
sure
that
the
rules
of
today's
hearing
are
clear,
and
they
are
that
the
California
Air
Resources
Board,
who
submitted
the
request,
will
go
first
with
their
presentation
and
they
will
introduce
themselves,
and
then
representatives
of
the
Alliance
of
Automobile
Manufacturers
will
go
second.
It
is
our
understanding
no
one
else
plans
to
submit
testimony
today.
8
After
the
alliance
presents,
the
California
Air
Resources
Board
will
have
an
opportunity
to
briefly
respond
if
it
chooses
to.

As
Merrilyn
indicated,
these
hearings
are
not
evidentiary
in
nature
and
are
not
meant
to
be
a
cross­
examination
of
each
other,
but
if
there
are
certain
issues
raised
and
people
choose
to
respond
to
those,
that
is
acceptable.
But
our
intent
and
hope
is
that
after
CARB's
rebuttal
period
that
that
will
essentially
be
the
close
of
the
hearing,

unless
there
are
points
of
clarification
sought.

With
that,
why
don't
we
start
with
the
California
Air
Resources
Board.

MR.
JENNINGS:
Good
morning.
My
name
is
Tom
Jennings.
I
am
a
senior
staff
counsel
with
the
California
Air
Resources
Board,
and
I
am
appearing
here
with
Chuck
Shulock
who
was
the
lead
staff
person
on
both
the
2001
and
2003
ZEV
amendments,

and
it
is
my
pleasure
to
present
our
within
the
scope
and
waiver
request
to
EPA
this
morning.

I
would
like
to
just
give
you
a
brief
outline
of
our
presentation,
and
it's
going
to
be
a
9
little
bit
of
a
tag
team
presentation,
if
that's
all
right.
I
am
going
to
start
out
and
describe
the
waiver
issues,
and
I
will
try
to
go
through
that
pretty
quickly,
because
they
were
included
in
Merrilyn's
presentation.

Chuck
is
then
going
to
describe
the
various
ZEV
amendments.
I
am
then
going
to
talk
about
how
the
criteria
for
within
the
scope
and
new
scope
apply
with
the
exception
of
technological
feasibility.
Chuck
then
will
provide
our
tech
feasibility
analysis,
and
our
summary.

So
there
are
actually
four
or
five
rulemakings
that
are
covered
by
our
request.
The
first
one
we
can
refer
to
as
the
1999
ZEV
amendments.
They
were
actually
a
limited
part
of
our
LEV
II
rulemaking
in
which
the
board
approved
the
amendments
with
some
modifications
in
a
November
1998
hearing,
and
then
those
were
finally
adopted
in
1999.

Secondly,
what
we
refer
to
as
the
2001
ZEV
amendments,
which
were
adopted
following
a
January
­­
March,
I
believe,
or
we'll
get
to
that,
hearing
10
in
2001,
and
then
they
finally
were
approved
by
the
Office
of
Administrative
Law
in
California
in
2002.

And
I
note
that
we
­­
there
were
three
lawsuits
filed
against
the
Air
Resources
Board
in
connection
with
these
2001
amendments,
and
there
was
an
injunction
issued
by
the
Federal
District
Court
in
June
2002
enjoining
our
enforcement
of
those
regulations
with
respect
to
the
2003
and
2004
model
years.

Then
we
are
going
to
describe
­­
it
also
covers
the
2003
ZEV
amendments
which
were
approved
by
our
board
in
April
2003,
and
then
finally
became
effective
in
early
2004.

There
was
also
another
rulemaking
that
we
will
just
touch
on
but
is
included
in
our
request,

which
imposed
requirements
for
charges
for
electric
vehicles
starting
in
2006,
and
talked
about
how
our
regulations
apply
to
small
volume
manufacturers
and
how
a
small
volume
manufacturer
is
determined
with
respect
to
the
ZEV
regs.

There
is
also
a
very
minor
part
of
our
follow­
up
LEV
II
amendments
that
Chuck
will
touch
11
on
very
briefly.

With
our
request,
which
we
submitted
on
September
23rd,
we
included
a
set
of
the
regulations
comparing
our
ZEV
amendments
or
ZEV
requirements
as
they
now
stand,
compared
to
what
the
requirements
were
before
the
1999
rulemaking
as
far
as
it
went
on
ZEVs,
and
that
is
the
entire
­­

those
are
the
ultimately
the
amendments
that
we
are
asking
within
the
scope
and
new
waiver
for.

Anything
that
was
done,
for
instance,
in
the
2001
amendments
that
didn't
get
carried
over
into
the
2003
would
not
be
covered
by
this
request
because
we
are
going
from
what
we
have
now
to
what
we
had
at
the
beginning.

And
as
Merrilyn
described,
we
are
asking
for
confirmation
that
the
amendments
affecting
model
years
before
2007
are
within
the
scope
of
a
previous
waiver,
and
that
we
got
a
new
waiver
of
preemption
for
model
years
2007
and
subsequent.

Very
quickly,
as
was
described,
Clean
Air
Act
section
209(
a)
preempts
state
emission
standards
for
new
motor
vehicles
and
section
209(
b)
12
authorizes
U.
S.
EPA
to
waive
preemption
for
California
standards
unless
EPA
makes
one
of
three
specified
findings.

And
of
the
findings,
the
first
is
that
EPA
can
deny
a
waiver
request
if
California
has
been
arbitrary
and
capricious
in
determining
that
the
California
standards
are
in
the
aggregate
as
protective
of
the
public
welfare
as
applicable
Federal
standards.

Very
briefly,
secondly,
a
waiver
can
be
denied
if
EPA
determines
that
California
does
not
need
standards
to
meet
compelling
and
extraordinary
conditions.

And
thirdly,
EPA
can
deny
a
waiver
if
California
standards
and
accompanying
enforcement
procedures
are
inconsistent
with
section
202(
a).

And
this
last
consistency
requirement
really
has
two
prongs
that
have
been
historically
identified
by
EPA
in
its
prior
waiver
decisions.

One
is
the
basic
lead
time
requirement
that
exists
in
section
202(
a),
and
that
is
that
Federal
emission
standards
must
take
effect
after
13
the
period
necessary
to
permit
development
and
application
of
the
requisite
technology,
giving
appropriate
consideration
to
the
cost
of
compliance,
and
the
same
criteria
that
applies
to
EPA
there
is
the
standard
that
California
standards
are
measured
against.

And
secondly
is
the
consistency
of
test
procedures
that
the
Federal
and
state
test
procedures
should
not
preclude
a
manufacturer
from
meeting
both
sets
of
requirements,
testing
requirements,
with
the
same
vehicle,
so
that
totally
separate
test
sequences
don't
have
to
be
conducted
to
determine
compliance
with
the
Federal
and
the
state
requirements.

Now
I
would
like
to
just
talk
a
little
bit
about
the
within
the
scope
process
and
what
we
believe
the
issues
are
there.

First,
the
concept
of
determining
that
amendments
are
within
the
scope
of
previous
waivers
rather
than
always
having
to
have
a
new
waiver
is
something
that
has
been
followed
by
EPA
for
over
30
years
now.
I
believe
the
first
time
it
was
done
14
was
in
1972,
and
we
provide
the
citation
on
the
slide.

EPA
by
this
time
has
used
this
mechanism
well
over
30
times,
and
it
is
something
that
can
be
applied,
where
appropriate,
both
to
amendments
to
standards
and
amendments
to
accompanying
enforcement
procedures.

The
criteria
for
within
the
scope
were
also
identified
in
the
opening
statement.
There
are
three
standards.
The
amendments
cannot
undermine
CARB's
prior
protectiveness
determination;
they
can't
affect
consistency
with
section
202(
a);
and
they
can't
raise
new
issues
affecting
EPA's
prior
waiver
determinations.

Now
I
would
like
to
touch
on
three
key
principles
that
apply
in
waiver
proceedings.

The
first
is
that
EPA's
consideration
is
limited
to
the
three
elements
identified
in
section
209(
b).

Secondly,
that
EPA
should
give
substantial
deference
to
California's
policy
judgments.

And
third,
that
the
burden
is
on
opponents
15
of
the
waiver.

On
the
first
question
of
limited
issues,

we
have
a
quote
on
this
slide
from
a
waiver
decision
issued
by
the
former
Administrator
Ruckelshaus
in
1971,
and
he
said
there
that
the
law
makes
it
clear
that
the
waiver
request
cannot
be
denied
unless
the
specific
findings
designated
in
the
statute
can
properly
be
made.
"
The
issue
of
whether
proposed
California
requirements
are
likely
to
result
in
only
marginal
improvement
in
California
air
quality,
not
commensurate
with
its
cost
or
is
otherwise
an
arguably
unwise
exercise
of
regulatory
power
is
not
legally
pertinent
to
my
decision
under
section
209."

Secondly,
in
terms
of
according
deference
to
California,
that
has
been
well
established
over
the
years
in
EPA
waiver
decisions,
and
here
we
have
a
quote
from
former
Administrator
Train
in
1975,

who
said
that
the
structure
and
history
of
the
California
waiver
provision
clearly
indicates
or
indicate
both
a
congressional
intent
and
an
EPA
practice
of
leaving
the
decision
on
ambiguous
and
16
controversial
public
policy
to
California's
judgment.

And
finally,
the
point
that
the
burden
is
on
opponents
of
a
waiver,
the
Federal
District
Court
for
the
D.
C.
Circuit
in
the
1979
NEMA
I
case
said
that
the
language
of
the
statute
and
its
legislative
history
indicate
that
California's
determination
that
they
comply
with
the
statute
when
presented
to
the
administrator
are
presumed
to
satisfy
the
waiver
requirements
and
that
the
burden
of
proving
otherwise
is
on
whoever
attacks
them.

So
with
that
opening
setting
of
the
stage
for
the
criteria
for
a
waiver,
Chuck
is
now
going
to
describe
the
various
ZEV
amendments.

MR.
SHULOCK:
Good
morning.
Chuck
Shulock
with
the
California
Air
Resources
Board,
and
as
Tom
mentioned,
I
will
walk
through
very
briefly
the
sequence
of
amendments
that
bring
us
to
the
program
today
for
which
the
waiver
is
being
sought.

The
starting
point
against
which
we
are
measuring
this
will
be
the
1996
program.
I
will
go
through
the
modifications
since
then,
but
wanted
to
17
very
briefly
describe
what
the
program
looked
like
in
1996.
At
that
point
10
percent
of
the
passenger
cars
and
the
smallest
light­
duty
trucks,
which
we
refer
to
as
LDT
1,
must
be
ZEVs
in
model
year
2003
and
beyond.

There
were
additional
credits
available
for
some
of
these
vehicles
through
model
year
2002
based
on
the
range
of
the
vehicle
or
the
specific
energy
of
the
battery,
and
those
credits
were
in
the
two
to
three
multiplier
range.

So,
in
other
words,
one
ZEV
could
be
the
equivalent
of
two
or
three
vehicles
if
it
had
those
characteristics
of
range
or
battery
energy.

In
1999,
this
program
was
amended
as
part
of
our
LEV
II
rulemaking.
The
major
change
at
that
point
was
the
addition
of
what
were
called
partial
zero
emission
vehicles,
or
PZEVs,
that
could
be
used
to
meet
a
portion
of
the
ZEV
requirements.

In
a
minute
I
will
talk
a
little
bit
more
about
the
criteria
for
PZEVs.

Large
manufacturers
were
allowed
to
use
PZEVs
to
meet
up
to
60
percent
of
their
ZEV
18
obligation.
Intermediate
manufacturers
could
meet
their
entire
obligation
with
these
partial
zero
emission
vehicles.

A
partial
zero
emission
vehicle,
or
PZEV,

is
an
extremely
clean,
conventional
gasoline
vehicles.
The
criteria
are
listed
here.
It
needs
to
meet
our
SULEV,
which
are
our
most
stringent
exhaust
standards.

It
must
also
have
zero
evaporative
emissions.

One
key
point
is
that
the
emission
warranty
for
these
vehicles
is
extended
out
to
15
years,
or
150,000
miles.

It
also
needs
to
meet
all
of
the
onboard
diagnostics.

So
it
is
a
SULEV
vehicle
with
reduced
levels
of
evaporative
emissions
and
a
longer
emission
warranty.

In
ZEV
credit
terms,
the
vehicle
is
worth
0.2,
meaning
that
you
would
need
five
of
these
to
make
up
for
one
ZEV
credit.
And
as
I
mentioned
before,
some
ZEVs
are
worth
more
than
one
credit.
19
So
you
need
large
numbers
of
these
vehicles
to
meet
an
equivalent
number
of
ZEVs.

Next
we
modified
the
program
in
2001.

This
was
brought
about
by
findings
and
evaluation
during
the
September
2000
biennial
review.

When
the
ZEV
program
was
first
adopted
in
1990,
one
of
the
things
that
our
board
said
is
that
they
wanted
to
have
biennial
reviews
of
the
status
of
the
technology
because
these
technologies
were
emerging
and
they
wanted
to
be
brought
up
to
speed
as
to
what
was
the
status.

We
had
a
major
review
in
September
of
2000
based
upon
18
months
of
staff
work,
and
that
talked
about
the
status
at
that
point,
and
that
led
our
board
to
amend
the
program.
It
did
a
couple
of
things,
a
number
of
things.
The
highlights
are
shown
here.

First
of
all,
it
phased
in
the
ZEV
and
PZEV
requirements,
so
that
rather
than
having
to
provide
the
entire
number
of
vehicles
in
the
first
year,
there
was
a
ramp­
up
over
a
period
of
four
years.
20
It
provided
additional
credits
for
ZEVs
based
on
the
range
of
the
vehicle
or
the
efficiency
of
the
vehicle,
and
there
was
a
complicated
set
of
calculations
involved
in
doing
that.

Then
there
was
also
a
new
vehicle
type
introduced
at
this
point
in
the
amendments
called
an
advanced
technology
PZEV
or
AT
PZEV,
and
I
will
talk
a
little
bit
about
what
that
means.
But
in
this
rulemaking,
these
AT
PZEVs
were
allowed
to
be
used
to
meet
up
to
one­
half
of
the
pure
ZEV
requirement,
and
I'll
show
some
slides
that
will
make
clear
how
that
works.

The
other
thing
in
­­
a
couple
of
other
things
in
2001.
LDT2
vehicles,
which
are
the
heavier
of
the
light
trucks,
were
added
to
the
sales
base,
phased
in
beginning
in
model
year
2007.

So
the
amount
of
sales
against
which
this
10
percent
and
the
various
ZEV
obligations
are
assessed,
these
LDT2
vehicles
previously
had
not
been
counted.
Now,
after
this
amendment,
those
were
added
into
the
base
on
a
phased­
in
basis,

fully
phased
in
by
model
year
2012.
So
there
was
a
21
five­
year
phase
in.

Then
the
other
thing
that
was
done
in
this
rulemaking
was
that
the
ZEV
requirement
for
model
year
2009
and
beyond
was
actually
increased.
So
there
was
some
relaxation
and
phase­
in
at
the
front
end,
and
then
a
ramp­
up
at
the
back
end.
So
rather
than
having
sort
of
a
level
program,
it
looked
like
more
of
a
phase­
in.

That
requirement
was
raised
ultimately
to
16
percent
rather
than
10
percent.

I
had
mentioned
AT
PZEVs,
or
advanced
technology
PZEVs.
These
are
PZEVs
that
have
in
addition
to
the
PZEV
characteristics
mentioned
earlier,
ZEV­
enabling
technology,
and
there
are
a
couple
of
ways
in
which
ZEV­
enabling
technology
can
be
exhibited.
They
are
defined
in
the
regulation.

The
first
of
these
is
what
we
refer
to
as
zero
emission
range,
so
that
is
the
ability
to
operate
in
a
zero
emission
mode
for
some
portion
of
the
vehicle's
operating
cycle.

There's
a
couple
of
different
ways
it
can
be
zero
emission,
or
in
the
regulation
we
allowed
22
if
it
was
zero
emission
for
one
pollutant
for
not
for
others,
it
could
get
partial
credit.
But
the
concept
here
is
that
the
vehicle
does
have
some
zero
emission
capability.

We
also
give
credit
for
low
fuel
cycle
emissions.
This
recognizes
CNG,
for
instance,

which
has
very
low
evaporative
upstream
emissions
­­
no
evaporative
emissions,
obviously,
and
also
hydrogen
vehicles,
although
they
are
not
commercialized
at
this
point,
they
get
extra
credit
under
this
low
fuel
cycle
emission
component
of
the
regulation,
and
that's
part
of
what
we
mean
by
ZEV­
enabling,

because
advancement
of
hydrogen
storage
technology
certainly
will
smooth
the
pathway
for
ZEVs.

And
then
finally,
there
is
something
called
advanced
ZEV
componentry,
and
the
next
­­
I
guess
a
couple
slides
later
I
talk
more
specifically
about
what
we
mean
by
advanced
ZEV
componentry.
But
this
is
where
hybrid
vehicles
which
have
drive
trains
and
power
control
electronics
and
things
like
that
that
are
very
23
useful
for
ZEVs,
they
come
in
here.

After
2001,
there
was
a
need
for
further
changes
brought
about
by
a
couple
of
things.
As
Tom
mentioned,
there
had
been
litigation
on
aspects
of
the
2001
amendments,
and
then
the
technology
continues
to
evolve.
We
continue
to
pay
attention
to
that,
and
so
because
of
new
information
on
technology
status,
our
board
felt
a
need
to
amend
the
program
additionally
in
2003.
The
major
features
are
listed
here.
The
start
of
the
program
was
delayed
from
model
year
2003
until
model
year
2005.

We
established
in
the
regulation
what
we
referred
to
as
base
and
alternative
paths.
I
will
speak
to
that
more
in
a
minute.

The
way
in
which
the
amount
of
credit
earned
by
all
these
various
vehicle
types
was
modified
and
substantially
simplified
in
2003.

A
provision
was
added
which
affects
other
states
which
have
adopted
the
California
program
under
section
177
of
the
Clean
Air
Act,
commonly
referred
to
as
TRAVEL.
24
In
brief,
and
I
won't
speak
to
this
anymore
later,
what
this
provision
allowed
was
for
fuel
cell
vehicles,
which
are
in
a
developmental
phase,
a
fuel
cell
vehicle
placed
in
any
LEV
II
state,
or
California,
New
York,
Massachusetts.
A
vehicle
placed
in
one
of
those
states
counts
for
compliance
purposes
in
any
of
those
states.
And
this
was
done
so
that
we
didn't
have
­­
we
came
to
a
determination
what
seemed
to
be
a
reasonable
number
of
fuel
cell
vehicles,
given
the
state
of
the
technology,
and
once
you
have
established
that,

then
it
didn't
seem
to
make
sense
to
have
other
numbers
piled
on
top
of
the
California
number.

So
one
vehicle
can
satisfy
the
fuel
cell
obligation
in
any
state.

And
then
finally,
in
2003,
we
reaffirmed
the
addition
of
the
LDT2
vehicles
to
the
sales
base,
phased
in
beginning
in
model
year
2007.

So
given
all
of
those
changes,
that
brought
us
to
the
regulation
as
it
currently
exists.
I'll
walk
briefly
through
how
it
works,

and
the
key
features.
It's
a
complicated
25
regulation
so
this
is
really
the
highlights.

The
sales
volume
categories,
the
different
types
of
manufacturers
that
are
affected
here.

These
are
small
defined
as
less
than
4,500
sales
in
California
and
independent
small,
which
are
less
than
10,000
sales,
and
they
are
not
part
of
another
manufacturing
group.

Those
manufacturers
are
not
subject
to
the
regulation
at
all.

We
have
then
a
category
called
intermediate
volume,
which
is
between
the
4,500
up
to
60,000.
They
are
subject
to
regulation,
and
they
are
allowed
to
meet
the
entire
obligation
with
what
we
call
PZEVs.

And
then
finally,
there
are
the
large
manufacturers
greater
than
60,000.
As
of
now,

there
are
six
such
manufacturers
in
California,

which
are
the
Big
Three
­­
Ford,
General
Motors,

and
Daimler­
Chrysler,
and
then
Honda,
Toyota,
and
Nissan.
Those
are
the
manufacturers
that
are
subject
today.

We
expect
Volkswagen
to
cross
this
26
threshold,
and
we
allow
significant
lead
time
for
manufacturers
that
change
categories,
so
actually
Volkswagen
sales
today
I
think
are
greater
than
60,000
in
California.
But
they
will
become
subject
to
these
requirements
we
believe
in
2008
or
2009.

BMW
may
come
in
several
years
after
that,

but
as
of
now
it's
the
Six
Bigs,
and
they
are
subject
to
all
features
of
the
regulation.
They
are
allowed
to
meet
up
to
6
percent
of
their
requirement
with
PZEVs.

We
have
shorthand
that
we
use
to
talk
about
the
categories
­­
that's
gold,
silver,
and
bronze.
Gold
are
the
pure
ZEVs,
and
in
terms
of
the
types
of
vehicles
that
are
­­
those
are
battery
EVs
or
hydrogen
fuel
cells.
These
are
vehicles
with
no
emissions.

Then
we
have
what
we
call
the
silver,
or
AT
PZEVs.
Those
are
CNG,
hybrids,
hydrogen,

internal
combustion,
grid
connect
hybrids,
methanol
fuel
cells.
There's
a
variety
of
technology
types
that
can
earn
advanced
technology
PZEV
credit.

And
then
finally,
as
I
mentioned,
the
27
PZEV,
which
is
an
extremely
clean
gasoline
vehicle.

This
shows
the
percentage
categories
as
they
exist.
I
mention
that
they
had
been
ramped
up
over
time,
so
there's
10
percent
in
2005
for
the
first
several
years,
and
the
colors
show
how
this
is
divided
up
amongst
the
various
categories
ramps
up
over
time
to
a
total
of
16
percent
by
2017.

One
thing
you
will
notice
is
that
the
PZEV
percentage
stays
constant
so
there's
no
growth
in
the
PZEV
category
as
it
ramps
up.
All
of
that
growth
is
in
what
are
the
AT
PZEV
and
ZEV
categories.

This
slide
just
gives
an
example
of
how
these
obligations
play
out
in
terms
of
actual
vehicles
and
it
shows
the
difference
between
the
1996
amendments
and
where
we
are
today.

In
1996,
it
was
pretty
straightforward.

And
this
example
is
for
the
2005
model
year.
Under
1996
ZEV
program,
in
model
year
2005
a
manufacturer
who
sells
100,000
cars
would
have
a
credit
obligation
of
10,000
ZEV
credits,
and
that
would
equate
to
10,000
ZEVs,
because
these
multipliers
28
that
I
talked
about
under
the
1996
program
would
be
gone
by
that
time.
So
it's
sort
of
one
vehicle
per
credit,
and
10
percent
ZEVs.

Under
2003,
as
I
mentioned,
there's
the
three
different
categories.
This
is
broken
out
in
the
sort
of
20
percent,
20
percent,
60
percent
ratio
that
I
talked
about.

I
will
note
that
the
bottom
two
categories
are
options.
If
a
manufacturer
chooses
to
meet
the
entire
obligation
with
ZEVs,
they
could,
so
they
are
not
required
to
build
a
PZEV,
they
are
not
required
to
build
an
AT
PZEV.
They
are
given
that
option.
But
based
on
the
status
of
the
technology,

the
manufacturers
are
certainly
pursuing
those
options.

So
in
2003,
2,000
credits
for
the
gold
program,
that
would
equate
when
you
take
into
account
all
of
the
multipliers,
that
would
equate
to
50
vehicles
if
they
are
fuel
cell
vehicles,

about
167
vehicles
if
they
are
battery
vehicles.

That
reflects
the
fact
that
our
credit
weighting
gives
a
higher
number
of
credits
for
a
fuel
cell
29
vehicle,
and
that
reflects
the
relative
stage
of
development.

In
the
AT
PZEV
category,
they
would
have
the
option
to
fulfill
2,000
credits
in
that
category.
For
a
2005
Prius,
the
way
that
we
grant
credit,
that
would
turn
out
to
be
about
3,000
vehicles.

And
then
finally,
they
have
the
option
to
generate
6,000
PZEV
credits.
As
I
mentioned,
those
are
worth
0.2,
so
you
multiply
by
five,
that
turns
out
to
be
30,000
vehicles.

So
under
the
2003
amendments,
there
is
a
very,
very
significantly
reduced
number
of
ZEVS
and
then
greater
numbers
of
these
alternative
types
of
vehicles.

I
mentioned
that
we
also
created
what
we
refer
to
as
the
base
and
the
alternative
paths.
I
would
like
to
talk
a
little
bit
about
how
we
got
there
or
what
was
going
on
that
led
us
to
do
this.

There
were
a
couple
of
developments
that
led
to
the
creation
of
these
options.
The
first
was
the
existence
of
significant
numbers
of
what
we
30
called
banked
credits.
Manufacturers
had
put
out
neighborhood
electric
vehicles
in
large
quantities
and
had
generated
a
large
number
of
ZEV
credits
under
the
regulation.
For
some
of
the
manufacturers,
the
number
of
credits
they
generated
were
sufficient
to
fully
satisfy
their
ZEV
obligation
for
a
number
of
years.
This
was
done
in
accordance
with
the
regulation,
but
environmental
groups
and
our
board,
actually,
when
they
took
a
look
at
the
existence
of
these
banked
credits,
that
created
some
concern
about
the
possibility
of
what
was
called
a
ZEV
blackout,
that
basically
there
would
be
a
big
pile
of
banked
credits.
Those
would
be
paid
out
over
time
and
there
would
no
further
development
in
the
ZEV
world
for
a
number
of
years.

So
that
was
of
some
concern.

Another
thing
that
was
going
on
is
that
it
was
becoming
very
clear
from
the
manufacturers'

standpoint
that
they
had
a
significant
interest
in
fuel
cell
vehicles
and
relatively
speaking
very
little
interest
in
the
battery
vehicles,
and
very
great
interest
in
trying
to
meet
the
ZEV
31
requirement
with
a
fuel
cell
strategy.

Given
the
relative
differences
in
the
state
of
the
technology,
the
way
that
the
program
worked
at
that
time,
it
didn't
make
sense
for
a
pure
fuel
cell
strategy,
so
we
wanted
to
provide
an
option
such
that
a
manufacturer
that
was
aggressively
pursuing
commercialization
of
fuel
cells
had
a
reasonable
and
viable
path
towards
complying
with
our
regulation.

So
we
were
also
interested
in
that,
so
we
began
to
informally
have
discussions
about
the
notion
of
what
we
called
fresh
credits,
meaning
that
new
vehicles
rather
than
banked
credits,
new
vehicles
could
be
used
to
comply
with
the
program,

provided
that
new
vehicles
under
certain
circumstances
could
comply
with
the
program.

As
we
further
discussed
this,
there
was
a
little
bit
of
concern
raised
by
manufacturers
who
had
been
proceeding
under
the
2001
structure,

saying,
well,
don't
change
the
rules
in
midstream.

If
we
have
proceeded
and
we
have
a
strategy
that's
working
for
us,
don't
take
away
that
option.
And
32
we
actually
got
a
letter
from
Toyota
in
which
they
said
they
would
look
with
great
concern
over
a
strategy
that
took
away
options
that
had
been
available
to
them
under
the
2001
program.

So
taking
all
that
into
account,
that's
why
we
ended
up
with
what
we
called
the
base
and
the
alternative
paths.
The
base
path
preserves
the
2001
regulatory
structure.
It
was
put
there
so
that
we
were
not
changing
the
rules
in
midstream,

and
if
someone
wanted
to
proceed
on
that
basis,

they
could.
So
it
maintained
the
percentage
of
requirements
and
it
allows
the
use
of
banked
credits.
So
in
some
senses,
with
some
modifications,
it's
basically
2001
continued
forward.
And
what
that
looks
like
is
shown
here
­­

I
guess
this
comes
up
in
pieces.
Okay.

We've
got
a
10
percent
mandate,
2
percent
for
the
ZEVs,
2
percent
option
for
AT
PZEVs,
and
6
percent
for
the
PZEVs.

We
also
then
created
what
we
call
this
alternative
compliance
path,
and
this,
as
I
mentioned,
was
put
in
place
to
provide
a
mechanism
33
such
that
a
manufacturer
that
is
aggressively
pursuing
the
commercialization
of
fuel
cells
could
meet
our
requirements
simply
with
the
fuel
cell
strategy.
The
manufacturers
had
argued
that
if
they
were
required
to
pursue
battery
vehicles
and
fuel
cells
at
the
same
time,
that
would
dilute
their
efforts
and
could
actually
slow
down
the
commercialization
of
fuel
cells
which
they
were
and
are
aggressively
pursuing,
and
we
thought
that
made
some
sense,
so
this
was
put
in
place.

So
what
the
alternative
path
says
is
it
requires
each
manufacturer
that
wants
to
be
on
the
alternative
path
to
produce
and
place
its
market
share
of
certain
numbers
of
fuel
cell
vehicles
for
this
initial
period,
which
is
2005
through
2008.

The
number
of
fuel
cells
collectively
across
the
manufacturers
is
250.
So
based
on
market
share,

that
works
out
to
about
50
for
the
largest
manufacturers,
a
little
bit
in
some
cases,
and
then
smaller
numbers
for
the
smaller
manufacturers.

That
required
share
bumps
up
over
time
for
the
2009
through
2011
period.
It's
10
times
that,
34
or
2,500
vehicles
multiplied
by
10
again
in
the
2012
to
2014.
So
there's
a
ramp­
up.
The
price
of
entry
to
the
alternative
path
gets
steeper
over
time,
but
that
option
always
remains.

And
one
key
feature
of
this
alternative
path
is
that
if
a
manufacturer
places
the
required
number
of
fuel
cell
vehicles,
the
remainder
of
their
ZEV
obligation
can
be
met
with
alternative
technology
PZEVs,
and
this
is
illustrated
­­
I've
got
to
go
back
here.
Sorry.

Do
you
know
how
to
go
backwards
on
this
thing?
I'm
trying,
but
it's
just
bringing
everything
in.
Oh,
here
we
go.
Great.
Sorry.

So
now
the
way
it
works,
there's
a
4
percent,
under
the
alternative
compliance
path,

there's
a
4
percent
obligation.
The
left
side
is
the
manufacturers
what
are
called
type
3
ZEVs
of
fuel
cell
vehicles,
and
I'll
talk
a
little
bit
about
that
in
a
second.
But
they
need
to
meet
their
market
share
of
that
4
percent,
of
the
250
vehicles.

Then
the
remainder
of
that
4
percent,
35
which
will
be
different,
depending
on
the
manufacturer,
but
basically
the
entire
remainder
can
be
made
up
with
AT
PZEVs
and
then
the
6
percent
ZEV
requirement
stays
the
same.

I
had
been
talking
­­
I
mentioned
the
ZEV
types.
Another
thing
that
we
did
in
2003
was
created
a
series
of
types
of
ZEVs.
This
was
part
of
the
simplification
of
the
credit
calculation.

These
show
some
illustrations
of
what
the
vehicles
look
like.

The
next
slide
actually
gives
a
little
bit
more
of
a
definition.
We
have
neighborhood
electric
vehicle
or
low­
speed
vehicle.
There's
no
range
requirement
there.

Then
there's
a
type
zero,
or
a
utility
vehicle,
and
there
aren't
any
of
these
in
existence.
It
was
really
filling
a
gap
that
existed
between
the
NEV
and
the
type
1,
but
for
completeness,
we
defined
it
type
zero.

A
type
1
is
a
city
EV.
For
those
of
you
that
have
followed
this,
there
is
a
Nissan
Hypermini,
there
is
a
Ford
Think
City.
There
are
36
vehicles
which
have
been
built
which
meet
these
requirements.
They
are
small
commuter
type
vehicles.
This
would
have
a
range
between
50
and
100
miles,
and
they
were
given
lesser
amounts
of
credit
under
the
program.

A
type
2
is
what
we
refer
to
as
a
full
function
EV.
These
are
highway
capable
with
a
range
greater
than
100
miles.
Examples
of
this
would
be
a
RAV4
Toyota
or
the
Honda
EV
Plus
vehicle,
such
as
that.
There
were
a
number
of
such
vehicles
that
were
built
by
manufacturers.

And
then
finally
a
type
3,
which
in
practical
terms
as
a
fuel
cell
is
really
a
type
2
full
function
vehicle
that
has
a
range
greater
than
100
miles,
but
also
is
capable
of
fast
refueling,

reaching
90
percent
of
its
capacity
in
10
minutes
or
less.
And
this,
in
practical
terms,

differentiates
fuel
cell
vehicles
which
can
be
refueled
rapidly
from
the
battery
vehicles
which
have
an
extended
recharging
time.

This
­­
and
I'm
not
going
to
go
through
it,
but
it
just
shows
how
we
structured
the
credit
37
requirements.
I'm
just
looking
for
2003
as
an
example.
You
can
see
that
the
value
of
the
different
types
of
vehicles
goes
up
as
you
move
down
the
list
from
the
NEV
to
a
type
3.

Going
to
the
right,
moving
forward
in
time,
the
value
of
the
various
vehicles
ramps
down,

so
there
is
just
a
structure
here
that
says
the
different
vehicles
are
worth
different
amounts
relative
to
each
other,
and
different
amounts
over
time.

For
AT
PZEVs,
such
vehicles
earned
the
base
PZEV
credit,
which
is
0.2
plus
anything
they
get
for
these
additional
characteristics
which
are
needed
for
a
vehicle
to
be
an
AT
PZEV.
The
characteristics
are
zero
emission
range,
low
fuel
cell
emissions,
and
advanced
ZEV
componentry.

The
most
relevant
here
I
wanted
to
touch
on
is
advanced
componentry.
This
is
the
mechanism
under
which
the
hybrid
vehicles
are
qualifying
for
credit.

The
concept
here
is
really,
as
I
mentioned,
this
is
a
bridge
towards
ZEV
technology.
38
These
are
components
that
are
really
ZEV
enabling,

and
what
we
are
trying
to
accomplish
here
is
to
provide
a
pathway
for
large
scale
production
and
therefore
price
decreases
and
engineering
advancement
on
many
of
these
components
that
are
necessary
for
zero
emission
vehicles.

To
qualify,
there
are
certain
things
that
all
of
these
vehicles
must
have.
They
must
have
regenerative
braking,
traction
drive,
boost,
so
some
electric
boost
to
the
drive
capability.
Also
idle
start
and
stop.
The
actual
credit
that
they
earn
varies
on
two
dimensions,
one
of
which
is
peak
power,
and
the
other
of
which
is
the
voltage
of
the
system.

My
next
slide
gives
some
examples.

Also
if
there
is
compressed
fuel
storage,

which
we
see
as
hydrogen
enabling,
they
get
additional
credit
for
that.

Again,
I
won't
go
through
all
the
details,

but
this
chart
illustrates,
we
set
up
five
types
of
vehicles
earning
advanced
componentry
credit
differentiated
according
to
the
engine
power,
the
39
motor
power,
rather,
and
the
voltage,
so
you
can
think
of
it
sort
of
there's
a
low
power,
low
voltage
at
one
end
of
the
spectrum,
high
power,

high
voltage
at
the
other,
and
then
there's
various
things
in
between,
and
they
get
different
amounts
of
credit
based
on
those
characteristics.

Just
to
illustrate
how
today's
vehicles
come
out
against
these
criteria,
the
Honda
Civic
is
an
example
of
a
vehicle
that's
high
voltage.
You
can
see
it's
greater
than
60
volts,
but
its
motor,

given
their
design
philosophy
and
how
they
executed
that
vehicle,
the
motor
power
is
actually
relatively
small
compared
to
some
other
vehicles,

so
it's
got
a
motor
that's
greater
than
10
kilowatts,
but
it's
less
than
the
50.
So
the
Honda
Civic
hybrid
would
be
what
we
call
type
D.

The
type
E
is
also
high
voltage,
but
a
higher
power
motor,
and
examples
of
this
are
today's
Prius
and
the
Ford
Escape.

There
are
also
some
additional
ways
to
earn
credit
under
the
regulation
that
were
put
in
for
various
reasons.
One
is
to
just
keep
existing
40
ZEVs
on
the
road.
There
are
a
number
of
ZEVs
that
were
marketed
in
California
under
an
agreement
with
the
manufacturers
in
previous
years,
and
they
have
loyal
drivers
and
there's
great
interest
in
trying
to
keep
those
vehicles
on
the
road.
So
we
put
in
incentives
to
do
that.

The
same
thing
with
offering
the
ZEVs
for
sale
or
extended
lease.
Manufacturers
also
can
place
vehicles
in
what
are
called
advanced
technology
demonstration
programs.
This
accommodates
things
like
fuel
cells
today,
where
some
of
the
manufacturers,
they've
got
them,
but
they're
not
ready
to
actually
certify
them
and
have
them
in
commerce,
so
they
are
­­
they
can
put
those
in
these
advanced
technology
programs.

There
is
also
a
whole
system
where
we
reward
the
placement
of
vehicles
in
what
are
called
transportation
systems
programs.
This
is
car­
sharing
types
of
applications,
and
there's
been
some
interest
in
that
those
applications
provide
a
good
market
niche
for
ZEVs
and
we
reward
that.

Tom
said
there
were
some
additional
41
amendments
that
I
will
just
touch
on
very
briefly.

In
2001,
the
regulation
was
amended
such
that
model
year
2006
and
newer
battery
EVs
need
to
use
a
conductive
charger.
This
was
done
for
standardization
purposes
so
that
infrastructure
could
be
simplified.

Also
the
way
in
which
the
sales
base
was
calculated
was
clarified
and
modified
to
include
in
the
major
manufacturers'
numbers
any
subsidiaries
over
which
it
has
more
than
50
percent
control.

We
also
had
another
separate
amendment
which
added
language
to
address
bi­
fuel,
fuel­
flexible,
and
dual­
fuel
vehicles
more
clearly,
and
this
was
just
a
very
simple
language
change
in
the
2001
amendments.

So
that
is
the
program
as
it
now
exists,

and
Tom
will
talk
about
how
the
program
meets
the
various
criteria.

MS.
ZAW­
MON:
Tom,
you'll
have
to
speed
it
up
a
little
bit,
please.

MR.
JENNINGS:
Okay.
I'm
going
to
talk
about
the
issues
for
within
the
scope,
42
confirmation,
and
new
waiver.
I
would
like
to
first
mention
that
we
have
distributed
what
we
call
the
time
line
for
the
1999
to
2003
ZEV
amendments,

and
that's
just
to
give
you
a
perspective
of
all
the
events
that
were
going
on
that
affected
the
rulemakings
that
we
were
doing
and
that
affected
the
waiver
requests.

You
will
see
there
that
we
first
start
out
and
talk
about
the
LEV
II
hearing,
and
the
board
­­

the
LEV
II
regulations
were
actually
approved
by
our
Office
of
Administrative
Law
in
October
1999.

Just
on
the
heels
of
that
was
EPA's
adoption
of
the
Federal
tier
2
regulations,
and
there
were
some
significant
changes
between
the
final
tier
2
regs
and
the
original
proposal.

Those
changes,
particularly
those
affecting
the
phase­
in
periods
for
your
heavier
medium­
duty
vehicles
or
what
California
calls
medium­
duty
vehicles,
meant
that
there
was
some
question
about
whether
for
certain
earlier
phase­
in
years,
whether
the
LEV
II
regulations
were
more
protective
or
not
than
the
tier
2
regulations.
43
So
what
we
decided
to
do
was
that
since
the
manufacturers
essentially
were
proving
the
technological
feasibility
of
any
clean
or
medium­
duty
vehicles
that
they
were
producing
to
meet
the
tier
2
regulations,
that
we
adopted
amendments
at
a
December
2000
hearing
which
we
call
our
cleaner
Federal
vehicle
amendments,
and
what
that
said
is
that
if
a
manufacturer
has
a
particular
model
that's
certified
federally
to
a
standard
that
is
more
stringent
than
the
standard
that
they
might
otherwise
certify
the
California
model
to,
that
in
that
case
the
manufacturer
would
have
to
market
the
federally
certified
vehicle
in
California.

We
adopted
those
regulations
in
December
2000
and
they
were
approved
by
our
Office
of
Administrative
Law
on
March
19th,
2001.
We
tried
to
expedite
that
rulemaking,
and
you
will
see
pretty
soon
afterwards
we
submitted
our
waiver
request,
and
the
waiver
request
for
LEV
II
covered
both
the
original
LEV
II
waiver
hearing
and
this
cleaner
Federal
vehicle
amendments,
and
that's
why
we
waited
until
May
2001
to
make
that
request.
But
44
we
feel
we
made
it
pretty
soon
after
the
second
set
of
amendments
was
adopted.

Then
we
submitted
that
on
May
30th,
2001.

Because
of
litigation
that
was
going
on
that
was
filed
in
January
2002,
there
were
issues
about
whether
California
could
be
enforcing
the
ZEV
elements
of
the
LEV
II
rulemaking
and
as
a
result
we
concluded
that
while
we
had
originally
asked
for
a
new
waiver
for
all
of
the
LEV
II
amendments,
that
actually
the
amendments
that
affected
just
ZEVs
were
really
within
the
scope
of
the
previous
LEV
I
rulemaking
and
didn't
need
a
new
waiver,
and
at
that
time
in
February
2002,
we
sent
a
letter
to
EPA
asking
that
the
ZEV
elements
be
determined
to
be
within
the
scope
of
the
previous
waiver.

During
the
time
between
May
30th,
2001,

when
we
did
the
original
LEV
II
waiver
request
and
February
7th,
there
had
then
been
yet
no
action
by
EPA.
There
had
not
yet
been
a
notice
for
a
hearing
on
our
original
waiver
request.

We
are
pleased
that
pretty
soon
after
that
in
May
2002,
EPA
did
issue
a
notice
for
the
LEV
II
45
waiver
request
and
covering
as
well
the
request
for
the
ZEV
element
being
found
within
the
scope
of
previous
waivers.

You
will
see
that
we
adopted
the
amendment,
the
2001
amendments
ultimately,
I
believe,
in
April
and
they
were
approved
by
our
Office
of
Administrative
Law
in
May
21st,
2002
­­

excuse
me,
on
May
24th,
2002,
and
actually
three
days
before
that
we
sent
in
our
within
the
scope
request
for
the
2001
amendment.
So
we
really
were
trying
to
process
that
particularly
quickly.

Is
this
a
test
for
a
smoke
alarm
or
­­

MR.
DICKINSON:
Sorry,
Tom,
we're
just
taking
pictures.

MR.
JENNINGS:
Okay.
I'm
not
looking
in
the
rear.

So
we
made
the
within
the
scope
request
in
May
2002.
In
June
2002,
the
Federal
District
Court
in
what
we
call
the
Federal
ZEV
lawsuit,
the
Central
Valley
Chrysler
Plymouth
suit,
issued
an
injunction
against
enforcing
the
2001
ZEV
amendments
as
they
affected
the
2003
and
2004
model
46
years.
And
those
were
the
first
two
model
years
where
the
10
percent
ZEV
requirement
applied.

MR.
DICKINSON:
Tom.

MR.
JENNINGS:
Yes.

MR.
DICKINSON:
I
know
we
are
supposed
to
reserve
our
questions
to
the
end.
I
think
we
are
trying
to
accelerate
this.
Is
the
message
that
you
are
trying
to
give
to
EPA
by
going
through
this
chronology
that,
one,
you
were
being
responsive
to
industry
and
doing
these
rulemakings
fairly
quickly
and
getting
them
in
to
EPA,
and
then
there
was
concurrently
this
litigation,
and
so
that,
you
know,
you
ultimately
withdrew
these
within
the
scope
requests,
and
now
they
are
in
front
of
EPA,

or
­­

MR.
JENNINGS:
That's
right.
The
reason
we
withheld
the
request
on
the
2001
amendments
is
that
there
was
an
injunction
saying
that
we
couldn't
enforce
them
for
2003
and
2004,
so
we
knew
we
were
going
to
have
to
go
back
to
the
board
and
make
changes,
and
we
decided
it
was
appropriate
to
wait
until
we
made
those
changes,
which
included
47
doing
away
with
the
percentage
ZEV
requirements
for
the
first
two
model
years,
2003
and
2004.

Going
back
to
the
regular
presentation,
I
just
want
to
emphasize
that
you
can
see
that
what
started
out
as
a
very
straightforward,
simple
regard,
which
the
alliance
sometimes
likes
to
note
even
existed
just
in
a
footnote
of
a
standards
table
when
we
first
adopted
it
in
1990,
has
evolved
into
a
pretty
complex
regulation
that
has
a
lot
of
elements
other
than
just
pure
zero
emission
vehicles.

But
we
want
to
emphasize
that
while
that
has
happened,
we
believe
we
have
ended
up
with
a
very
successful
program
which
has
brought
a
lot
of
very
advanced
technology
vehicles
to
the
marketplace
earlier
than
would
have
occurred
without
the
regulation,
and
I
think
also
has
a
sensible,
long­
term
plan
to
get
the
introduction
of
more
zero
emission
vehicles.

And
one
of
the
main
reasons
we
want
zero
emission
vehicles
is
that
we
know
that
they
will
never
experience
emissions
deterioration
because
if
48
you
are
starting
out
with
nothing,
you
aren't
going
to
have
a
malfunction
or
a
gross
malfunction
that
results
in
emissions
coming
out
of
a
car
that
were
never
intended
to
occur.

Okay.
I
want
to
go
over
the
three
standards
for
within
the
scope,
the
protectiveness
and
consistency,
and
new
issues.

First,
on
the
effect
of
the
prior
protectiveness
determination,
that
when
EPA
issued
the
LEV
II
waiver
in
2003,
that
waiver
did
not
take
into
account
any
emission
reductions
that
would
have
been
achieved
by
the
ZEV
regulation.
So
basically
EPA
found
that
our
regulations
were
at
least
as
protective,
even
without
having
any
ZEV
regulation,
and
as
you
can
see
from
Chuck's
description,
our
amendments
do
away
with
the
ZEV
requirements
for
the
first
couple
of
model
years,

and
then
allow
manufacturers
to
meet
them
with
far
fewer
vehicles
in
the
next
several
years,
and
that
doesn't
undermine
the
protectiveness
determination
because
we
didn't
need
a
ZEV
regulation
at
all.

That's
also
I
think
shown
by
the
fact
that
49
EPA
issued
the
within
the
scope
for
amendments
that
did
away
with
ZEV
requirement
for
model
years
1998
through
2002,
finding
that
without
those
requirements,
our
overall
light­
duty
program
was
as
protective
or
more
protective
than
the
Federal
requirement.

Okay,
now
I
want
to
talk
a
little
about
consistency
with
section
202(
a)
and
the
effect
on
consistency.

For
2003
and
2004
model
years,
since
we
removed
all
percentage
ZEV
requirements,
there's
obviously
no
technological
feasibility
lead
time
concern
that
manufacturers
are
going
to
have.

For
the
2005
model
year,
we
do
have
the
nominal
10
percent
ZEV
requirement,
but
we
added
a
whole
lot
of
options
that
enable
manufacturers
to
meet
our
requirements
with
fewer
ZEVs
than
they
would
have
under
the
preexisting
requirement
and
as
we
went
over
the
regulation,
there's
only
one
respect
out
of
everything
where
we
made
it
harder
to
meet
the
requirements,
and
that
is
that
for
model
year
2005,
a
NEV
only
qualifies
for
a
.625
50
multiplier
rather
than
being
treated
as
1
under
the
preexisting
regulation.

But
the
other
elements
such
as
a
full
function
vehicle
receiving
12
credits
rather
than
one
credit
that
had
been
previously
envisioned
made
it
clear
that
it
was
easier,
it
was
more
technologically
feasible
to
meet
our
amendments
than
to
meet
the
original
ZEV
requirement.

And
the
same
goes
for
model
year
2006.
To
avoid
a
totally
NEV­
oriented
regulation,
we
indicated
that
starting
in
2006
a
NEV
would
only
qualify
for
a
.015
multiplier,
but
again
that
is
the
only
way
in
which
it
was
made
more
stringent
and
all
of
the
other
elements
that
Chuck
has
described
we
think
clearly
show
that
it
was
more
technologically
feasible
to
meet
the
amendments
than
the
original
proposal.

In
terms
of
test
procedure
­­

MR.
DICKINSON:
Tom.

MR.
JENNINGS:
Yes.

MR.
DICKINSON:
That
slide
will
be
in
the
record.
You
can
just
go
on
to
the
"
no
new
issues."
51
MR.
JENNINGS:
Okay.
We
also
think
that
there
are
no
new
issues.
The
last
prong.
And
we
want
to
emphasize
that
we
believe
that
within
the
scope,
the
issue
is
the
effect
of
the
amendments
on
the
original
waiver.
It
is
not
looking
at
the
amendments
in
the
vacuum
and
determining
whether
independently
they
meet
all
the
criteria
because
that
would
be
the
test
for
a
new
waiver,
and
the
test
for
a
within
the
scope
is
a
more
streamlined
mechanism.

We
believe
that
while
manufacturers
may
challenge
whether
the
regulation
is
overall
technologically
feasible,
that
when
you
are
comparing
the
regulation
now
to
what
we
had
before,

we
clearly
do
meet
those
within
the
scope
criteria.

Going
now
to
the
issues
for
a
new
waiver
for
2007,
and
as
Chuck
indicated,
the
reason
we
decided
to
ask
for
a
new
waiver
starting
with
model
year
2007
was
that
is
when
the
requirement
that
some
­­
that
we
started
phasing
in
the
requirement
that
light­
duty
2
trucks,
the
heavier
light
trucks,

would
have
to
meet
the
percentage
ZEV
request
as
52
well
as
the
lighter
trucks,
the
LDT1s.

We
have
made
the
protectiveness
determination.
That
is
contained
in
an
executive
order
we
submitted.
We
have
calculated
the
emission
reductions
that
the
ZEV
regulation
achieves,
and
those
are
shown
on
this
slide.

Quite
frankly,
that
is
primarily
from
the
emission
reductions
generated
by
the
AT
PZEVS
and
particularly
the
PZEVs,
and
not
just
the
ZEVs,

although
ZEVs
have
no
evaporative
emissions
and
you
are
not
going
to
have
deterioration
in
the
short
run
or
the
long
run
with
the
ZEVs.

Secondly,
I
want
to
mention
the
manufacturer
had
argued
what
they
characterized
as
the
fleet
turnover
effect,
that
the
cost
of
new
vehicles
would
go
up
so
much
that
older,
dirtier
vehicles
would
stay
on
the
road
longer.
We
spent
a
lot
of
time
trying
to
analyze
that
and
I
think
you
will
find
in
the
record
there
is
a
good
deal
of
support
from
our
conclusion
that
in
the
long
run
you
would
not
have
emission
losses
due
to
this
fleet
turnover
effect.
53
MR.
HOROWITZ:
Can
I
ask
you
a
question?

MR.
JENNINGS:
Yes.

MR.
HOROWITZ:
On
the
protectiveness.
The
terms
per
day
you
are
suggesting
are
reduced,
is
that
from
the
program
as
a
whole,
or
that's
not
talking
about
the
changes
from
1996
to
now?
That's
a
program
brand
new,
basically,
starting
in
2007
compared
to
a
no­
ZEV
program;
is
that
right?

MR.
JENNINGS:
Yes.
Although
I
want
to
emphasize
that
we
determined
that
the
program
that
we
adopted
in
2003
compared
to
the
2001
preexisting
ZEV
requirements
was
more
protective
and
did
achieve
emission
reductions.
There
were
a
lot
of
claims
by
EV
supporters
that
we
were
doing
away
with
a
regulation
that
was
absolutely
essential
for
breathers,
although
they
didn't
specify
exactly
what
emission
losses
they
thought
we
were
­­
our
program
was
going
to
result
in,
and
there's
an
analysis
in
the
final
statement
of
reasons
showing
that
once
you
get
past
the
first
two
years,
what
we
have
adopted
is
more
protective
than
the
10
percent
ZEV
requirement.
54
Very
quickly,
on
the
compelling
and
extraordinary
need
issue,
what
EPA
has
determined
is
whether
we
meet
a
program
­­

MS.
ZAW­
MON:
We're
okay
with
that.

MR.
JENNINGS:
Okay.
And
consistency
of
test
procedures
I
already
touched
on.
So
now
we
are
going
to
talk
about
tech
feasibility
and
very
quickly,
you
are
probably
familiar
with
the
three
tests
in
the
NRDC
case.
We
list
them
on
slide
34,

and
I
want
to
emphasize
on
slide
21
that
­­
on
slide
35,
that
the
NRDC
noted
that
one
important
element
is
the
amount
of
lead
time
because
substantial
lead
time
gives
the
regulators
an
opportunity
to
modify
the
regulation
if
it
turns
out
that
there
need
to
be
changes
before
you
go
into
mass
production.

That
element
doesn't
require
any
kind
of
institutionalized
mechanism
for
review,
but
as
we
are
going
to
show,
we
have
an
independent
review
panel
that
the
board
has
committed
to
appointing
that
will
take
a
look
at
what
kind
of
requirements
we
need
for
particularly
the
second
stage
of
the
55
alternative
path,
and
we
believe
that
although
we
are
hopeful
that
the
regulation
is
going
to
work
in
the
long
term,
we
will
take
a
look
at
that
again.

We
had
the
same
kind
of
mechanism
when
we
did
the
original
LEV
regulations,
and
it
turned
out
that
for
other
than
ZEVs,
the
manufacturers
were
more
successful
than
we
were
expecting.
And
we
had
that
mechanism
to
be
able
to
evaluate
it,
and
we
want
to
make
sure
we
have
that
again.

So
with
that,
Chuck
is
going
to
do
a
presentation
on
tech
feasibility,
which
will
be
the
last
element
of
this
presentation.

MR.
SHULOCK:
Yes,
and
I
will
talk
about
this
first
slide,
and
in
the
interest
of
time,
this
is
sort
of
an
overview.
In
the
interest
of
time
I
will
go
through
the
subsequent
slides
pretty
quickly.
But
this
really
gives
an
overview
of
the
tech
feasibility
reality
as
it
exists
today.

And
that
is
that
PZEVs
and
AT
PZEVs
are
mainstream
technologies.
I
got
from
our
compliance
and
certification
staff
some
numbers.
These
are
actual
deliveries
model
year
2000
through
2003,
and
56
manufacturer
projections
that
they
provide
to
us
for
2004
and
2005.
And
so
these
are
numbers
from
the
manufacturers
themselves
showing
an
aggregate.

There
would
be
535,000
PZEVs
and
24,000
­­

this
should
be
AT
PZEVs,
excuse
me,
certified
through
­­
cumulatively
through
model
year
2005.

So
they
are
in
the
showrooms,
they
are
on
the
road,

they
are
being
built.

MR.
HOROWITZ:
Is
it
national?

MR.
SHULOCK:
This
is
in
California.

California
sales.
And
there
are,
as
you
aware,
I'm
sure,
there
are
also
vehicles
being
sold
in
other
states.
This
is
strictly
California
numbers.

On
the
ZEV
side,
there's
clearly
a
manufacturer
commitment
to
pursue
field
cells.

Significant
progress
being
made.
You
know,
a
lot
of
uncertainty,
certainly,
but
the
manufacturers
continue
to
push
on
this
as
a
viable
business
strategy.

And
then
finally,
there
are
significant
numbers
of
banked
credits
still
available
to
the
manufacturers
that
provide
additional
flexibility.
57
I
have
some
slides
here
on
the
technology
used
to
meet
PZEV.
They
will
be
in
the
record
for
the
tailpipe
and
the
evaporative
technology.

This
slide,
again,
just
reinforces
the
point
of
being
mainstream.
Thirteen
manufacturers,

more
than
20
models
of
PZEVs
being
sold
in
California
today.
No
performance
problems,
no
real
issues.

On
AT
PZEVs,
this
just
lists
the
approaches.
I
have
gone
over
it
already
as
far
as
what
needs
to
be
done
to
make
a
vehicle
an
AT
PZEV.

As
far
as
where
is
the
marketplace
today,

there
are
several
AT
PZEVs
currently
certified.

They
are
shown
and
listed
here,
the
Ford
Escape,

the
Honda
Civic
natural
gas
vehicle,
the
Honda
Civic
hybrid,
the
Toyota
Prius
hybrid,
and
as
I
am
sure
you
are
aware,
there
are
other
vehicles
in
the
pipeline.
Some
additional
hybrids
coming
through.

Not
clear
which
of
those
will
be
AT
PZEVs
right
away.

For
instance,
the
Honda
Accord
hybrid
that
is
currently
sold
is
not
an
AT
PZEV
because
it's
58
not
SULEV
from
the
tailpipe
at
this
point,
but
we
expect
that
ultimately
like
the
Civic,
that
vehicle
will
be
certified.

So
there
is
a
lot
of
progress
on
the
AT
PZEV
front.

With
respect
to
ZEVs,
there
are
demonstrations
underway.
We
have
a
significant
program
called
the
California
Fuel
Cell
Partnership,
that's
all
the
manufacturers
plus
fuel
providers.
We
have
the
California
Hydrogen
Highway,
looking
at
infrastructure.
So
there
is
a
tremendous
amount
of
effort
underway,
not
only
on
the
state
side,
but
much
more
so
from
the
manufacturers
and
the
fuel
providers.

Tom
mentioned
one
key
feature
here
is
this
independent
expert
review
panel.
This
was
established
during
the
2003
board
action.
It's
not
in
our
regulation,
it's
rather
in
the
resolution
that
was
adopted
by
the
board.
So
this
is
not
a
regulatory
feature,
but
it's
important
from
the
standpoint
of
the
whole
program.

These
will
be
independent
experts,
59
knowledgeable
about
the
technology,
but
not
employed
by
the
automotive
industry.

This
is
modeled
after
similar
panels
we
have
had
in
the
past
that
have
been
very
successful.
They
will
look
at
ZEV
and
also
the
AT
PZEV
technologies,
fuel
cells,
batteries,
hybrids,

et
cetera.
They
will
look
at
the
technology,
they
will
look
at
the
market­
readiness.
They
will
provide
information
to
the
board
to
support
the
review
of
ZEV
requirements
for
future
years.

This
independent
panel
is
not
a
decisionmaking
body.
They
will
not
make
a
recommendation
to
the
board
as
to
are
the
requirements
sound
or
not,
but
rather
they
are
a
data
provider.
They
will
provide
an
assessment
of
the
technology.
Our
board
will
review
that
assessment
and
come
to
its
judgment
as
to
the
status
of
the
regulation
in
light
of
this
new
information.

So
we
have
covered
the
various
issues;
we
have
covered
the
state
of
the
technology;
and
our
summary
here
is
that
the
1999
through
2003
60
amendments
clearly
satisfy
the
within
the
scope,

and
the
new
waiver
for
that
one
piece
that
we
are
seeking.
Protectiveness
has
been
clearly
established.
Compelling
need,
you
said
you
have
no
issue.
Technological
feasibility,
there
are
vehicles
on
the
road
today,
PZEVs
and
AT
PZEVs,
and
considerable
lead
time
and
work
underway
for
the
fuel
cell
technologies.

That
concludes
our
position.
Thank
you.

MS.
ZAW­
MON:
Okay.
Well,
thank
you,

Chuck
and
Tom.

MR.
DICKINSON:
David
Dickinson.
I
have
a
few
questions.
I
just
want
to
make
sure
that
California
understands
on
the
compelling
need
issue,
that
EPA
hasn't
decided
that
issue,
but
that
we
understand
California's
position
on
that.

MR.
JENNINGS:
That
was
one
of
the
elements
in
the
1984
particulate
­­
light­
duty
particulate
rulemaking.
EPA
did
specifically
state
that
one
need
just
look
at
the
program,
the
need
for
program
overall
rather
than
the
particular
regulations
in
question.
61
MR.
DICKINSON:
Sure.
No,
I
appreciate
that.

On
slide
5,
I
believe,
I
just
wanted
for
the
record
to
make
sure
that
everyone
understands
that
first
bullet
on
slide
5
is
2003
through
2006,

not
2000
through
2006.
Is
that
correct?

MR.
JENNINGS:
Well,
that's
essentially
what
we
said
in
the
waiver
request,
and
there
was
­­
2003
was
the
first
time
that
we
had
a
percentage
ZEV
requirement.
There
were
a
couple
of
vehicles,

vehicle
models
that
were
certified
and
treated
as
PZEVs
before
the
2003
model
year,
although
I
think
really
there
were
only
the
Nissan
Sentra
CA
and
the
Honda
natural
gas.
But
however
it
works,
we
want
to
make
sure
that
that's
­­
those
were
considered
within
the
scope
as
well.

MR.
DICKINSON:
And
I
assume
you
may
be
submitting
written
follow­
up.
If
you
could
clarify
that
for
us
­­

MR.
JENNINGS:
Yes,
we
will
do
that.

MR.
DICKINSON:
­­
that
would
be
appreciated.
62
I
want
to
understand
the
position
on
why
you
think
a
waiver
is
required
commencing
in
2007
because
of
the
addition
of
the
light­
duty
truck
2s,

and
yet
you
still
retain
the
10
percent
overall
ZEV
requirement
through
2008.
Is
there
an
argument
to
be
made
that
but
for
the
light­
duty
truck
addition,

the
requirements
through
2008
are
within
the
scope
of
EPA's
1993
LEV
ZEV
I
waiver?

MR.
JENNINGS:
I
think
they
probably
are.

Quite
frankly,
with
adding
the
LDT2s,
there
was
one
manufacturer,
Isuzu,
that
didn't
make
any
passenger
cars
or
light­
duty
truck
1s,
and
therefore
wasn't
subject
to
the
ZEV
regulation
at
all
before,
and
they
get
captured
by
the
LDT2s
coming
in.

So
I
mean
we
are
not
going
to
say
that
we
absolutely
believe
that
the
amendments
starting
at
that
point
can't
be
within
the
scope,
but
we
think
it
is
appropriate
for
the
board
­­
for
EPA
to
evaluate
those
regulations
starting
in
2007
as
if
they
were
a
new
waiver.

MR.
DICKINSON:
Point
of
clarification.

It
is
the
2003
amendments
rather
than
the
2001
63
amendments
that
delay
the
phase­
in
until
2005?

MR.
JENNINGS:
That's
correct.

MR.
DICKINSON:
Okay.
Question
on
your
independent
panel.
When
are
they
meeting,
and
when
are
they
making
recommendations
to
your
board?

MR.
SHULOCK:
We
have
not
set
the
firm
schedule
for
the
conduct
of
their
work.
The
board
resolution
called
for
this
information
to
be
available
such
that
when
the
requirements
ramped
up
in
2009,
the
board
would
have
that
information
available
and
could
have
considered
that
information
prior
to
the
2009
model
year.

So
very
roughly
speaking,
you
know,
we
have
talked
about
the
board
conclusions
in
2006,

2007,
sometime
in
that
timeframe,
but
we
have
very
carefully,
actually,
not
specified
a
particular
schedule
yet.
We
are
in
the
process
of
developing
that.

MR.
DICKINSON:
Thank
you.

MR.
DOYLE:
Just
a
couple
questions,

technological
feasibility.
Your
two
slides
on
the
PZEV
technology,
are
those
all
technologies
that
64
are
in
place
in
cars
on
the
road
now?
Or
is
any
of
that
projected?

MR.
SHULOCK:
If
they
are
not
in
use
it
is
because
a
manufacturer
decided
that
they
weren't
needed.
I
can't
answer
if
they
are
all
represented
on
cars
today.
None
of
them
are
things
that
need
further
development.

Have
I
made
myself
clear?
The
technologies
are
all
currently
feasible.
I'm
not
sure
if
they
are
all
actually
used
on
vehicles.

MR.
DOYLE:
But
some
of
them
are?

MR.
SHULOCK:
Oh,
certainly.

MR.
JENNINGS:
Most
of
them.
Just
to
follow
up
on
that,
to
show
how
far
technology
has
advanced,
when
we
did
the
original
LEV
regulations,

we
projected
that
the
only
way
you
would
be
able
to
make
a
gasoline
ULEV
was
with
an
electrically
heated
catalyst,
and
you
will
see
that
an
electrically
heated
catalyst
isn't
even
on
this
list
now
of
things
that
would
be
used
for
PZEVs.

MR.
SHULOCK:
And
just
the
reason
for
my
hesitation,
this
slide
was
actually
prepared
for
a
65
sort
of
tutorial
that
we
did
in
December
of
­­

about
a
year
and
a
half
ago,
and
at
that
time
­­

I'm
not
sure
of
the
status
between
that
time
and
today,
so
I
can't
tell
you
that
they
are
all
actually
in
use.
But
these
are
all
well
demonstrated.

MR.
DOYLE:
Okay.
And
let
me
ask
something
relative
to
durability.
There
was
an
ambitious
warranty
period
you
had
in
here,
and
do
you
have
any
observations
or
data
of
some
of
the
early
PZEVs,
how
are
they
holding
up?
Or
is
it
too
soon
to
tell?

MR.
SHULOCK:
I
can't
answer
that
question.
We
can
send
you
additional
information.

I
would
need
to
talk
to
our
engineering
staff.

MR.
JENNINGS:
I
have
had
one
for
a
little
less
than
two
years
and
it's
holding
up
pretty
well.

MR.
HOROWITZ:
Does
it
meet
the
standards?

MR.
JENNINGS:
Oh,
yes.

MS.
ZAW­
MON:
How
many
miles
have
you
got
on
it?
66
MR.
JENNINGS:
Thirty
thousand.
It's
a
Volvo
V­
70.

MR.
SHULOCK:
I
guess
one
thing
that
I
could
say
is
that
our
technical
staff
have
noticed
some
minor
design
changes,
certainly,
to
make
it
to
150,000
miles
additional
catalyst
loading,
those
sorts
of
things,
and
so
there
is
certainly
every
reason
to
expect
that
the
vehicles
as
designed
will
last
longer
than
the
ones
without
that
warranty.

MR.
HOROWITZ:
Question
about
especially
in
the
outyears,
can
you
meet
the
entire
ZEV
requirement
just
with
PZEVs
and
AT
PZEVs?
Is
there
ever
a
requirement
to
build
pure
ZEVs?

MR.
JENNINGS:
Yes.

MR.
HOROWITZ:
So
there
is
a
2
percent
requirement?

MR.
JENNINGS:
Well,
for
the
base
path,

there's
a
2
percent
requirement,
and
frankly
that
starts
going
up
in
the
outyears.
Chuck
has
a
better
handle
on
that
than
I
do.

On
the
alternative
path,
you
do
have
to
meet
the
floor
requirements
that
we
have
listed
67
there,
either
with
fuel
cell
vehicles
or
battery
EVs.
So,
yes,
there
do
have
to
be
some
ZEVs
on
an
ongoing
basis.

Do
you
want
to
add
to
that
at
all?

MR.
HOROWITZ:
And
when
does
the
pure
ZEV
requirement
start?
2005?

MR.
SHULOCK:
Yes.

MR.
HOROWITZ:
How
is
that
doing?

MR.
SHULOCK:
Manufacturers
have
different
strategies.
Some
manufacturers
­­
and
they
have
not
yet
submitted
an
actual
demonstration
of
compliance,
but
just
observing
what
they
are
doing,

several
of
the
manufacturers
have
enough
banked
credits
to
readily
meet
the
2005
requirement.

Others
look
like
they
are
placing
fuel
cells
that
will
get
them
on
this
alternative
path,
and
that
would
satisfy
their
requirement.

MR.
DICKINSON:
Let
me
clarify.
There's
the
base
path
and
the
alternative
compliance
path.

And
the
alternative
compliance
path
to
meet
the
pure
ZEV
requirement,
if
you
will,
you
have
to
produce
a
certain
market
share
of
the
250
fuel
cell
68
vehicles
for
the
stage
1
of
2005
through
2008.
So
if
a
manufacturer
is
not
currently
certifying
or
introducing
into
the
market
fuel
cell
vehicles,

they
have
a
three­
year
or
four­
year
period
to
do
that.
So
if
they
are
not
doing
it
this
year,
that
doesn't
mean
necessarily
that
they
won't
in
the
next
two,
three
years
and
meet
their
requirements.

Conversely,
I
think
Michael
Horowitz
was
asking
on
the
BEV
side
or
the
traditional
path
or
path
1,
how
is
that
coming
along?
How
many
manufacturers
are
certifying
BEV
vehicles
or
battery
electric
vehicles
at
this
point?

MR.
SHULOCK:
Well,
the
way
it
plays
out
is
that
the
manufacturers
that
will
be
on
the
base
path
will
be
making
use
of
banked
credits
rather
than
building
new
battery
electric
vehicles.
And
so
there
are
­­
as
far
as
I
am
aware,
there
are
no
manufacturers
that
are
producing
or
certifying
new
battery
vehicles
at
this
point.

Really,
it
goes
two
ways.
It's
a
banked
credit
approach
for
these
early
years,
or
the
fuel
cell
demo
approach
that
puts
them
on
the
69
alternative
path.
And
they
don't
need
­­

MR.
DICKINSON:
Would
you
anticipate
that
manufacturers
would
switch
over
then
to
the
fuel
cell
path
ultimately?
That
they
will
use
their
banked
credits
in
the
near
term
and
then
switch
over
to
the
fuel
cell?
You
made
a
statement
earlier
that
there
is
a
harder
­­
there
is
more
of
a
barrier
to
entry
in
the
outyears,
so
how
does
a
manufacturer
switch
over?
If
they
are
going
to
do
that.

MR.
SHULOCK:
It
proceeds
in
periods,
so
there
is
a
2000
­­
the
first
period
ends
in
2008,

and
they
have
until
2008,
as
you
had
mentioned,
to
build
the
required
number
of
fuel
cells.
That's
a
self­
contained
period.

Then
we
go
to
2009,
'
10
and
'
11.
During
that
period
they
likewise
can
elect
am
I
on
the
alternative
path
for
that
period,
or
am
I
on
the
base
path
for
that
period.
In
order
to
get
on
the
alternative
path
for
2009
through
'
11,
they
would
need
to
do
their
market
share
of
the
2,500
vehicles.
But
they
can
make
that
determination
70
actually
as
late
as
2011.
They
have
until
the
end
of
­­
the
way
the
thing
is
structured,
you
are
on
the
base
path
unless
you
elect
to
be
on
the
alternative
path,
and
you
don't
have
to
elect
until
the
end
of
the
period.

MR.
DICKINSON:
Thank
you.

MR.
JENNINGS:
Just
to
supplement
that
a
little,
I
think
that
the
Toyota
RAV
4
EV
was
the
last
major
manufacturer
battery
electric
vehicle
that
has
been
sold
in
California,
and
was
that
ended
with
­­
that
was
not
2003
model
year;
right?

MR.
SHULOCK:
No,
they
have
2003,
I
believe.

MR.
JENNINGS:
Okay,
they
had
a
2002
and
2003
model
year
RAV
4
EV.
Every
one
of
those
­­

each
one
of
those
vehicles
generated
12
ZEV
credits.
So
even
though
their
sales
weren't
that
high,
they
generated
a
lot
of
credits
with
those
vehicles.

MR.
NAKAYAMA:
Are
there
any
utility
vehicles?

MR.
JENNINGS:
There
has
never
been
any
71
utility
vehicles
made.
We
just
­­
as
Chuck
indicated,
we
created
that
slot
so
there
wasn't
a
gap.

MR.
HOROWITZ:
And
the
City
EVs?

MR.
SHULOCK:
There
were
City
EVs
produced
as
demonstration
vehicles
and
there
were
demonstration
fleets.
There
were
not
any
actually
marketed.

But
actually
let
me
clarify
as
I'm
thinking
about
this.
GEM
Corporation,
which
is
a
portion
of
Daimler­
Chrysler,
they
produce
a
neighborhood
electric
vehicle,
the
GEM
neighborhood
vehicle,
and
actually
that
vehicle
is
still
being
marketed
in
California.
The
Ford
and
the
General
Motors
entries
into
the
neighborhood
electric
vehicle
world,
those
went
away,
but
GEM
has
concluded
that
there
is
an
ongoing
self­
sustaining
market
for
these
neighborhood
electric
vehicles
in
California,
and
actually
in
other
states
as
well.

Gated
communities
typically.

So
they
have
a
small
number,
and
I
think
it
is
on
the
order
of,
you
know,
less
than
3,000.
72
They
have
a
small
number
of
these
neighborhood
electric
vehicles,
but
those
are
actively
being
sold
today.

The
larger
and
more
functional,
more
high
speed
vehicles,
there
are
none
of
those
being
sold.

MS.
ZAW­
MON:
Okay.
Let's
do
a
time
check.
So
thank
you
very
much
again,
and
let's
move
on
to
the
next
presenter.

MR.
DICKINSON:
The
Alliance
of
Automobile
Manufacturers.

MR.
NAKAYAMA:
Good
morning.
My
name
is
Grant
Nakayama.
I'm
speaking
today
on
behalf
of
the
Alliance
of
Automobile
Manufacturers,
the
Alliance,
regarding
the
request
by
the
Air
Resources
Board,
ARB,
that
the
U.
S.
Environmental
Protection
Agency,
EPA,
waive
Federal
preemption
as
it
relates
to
the
ARB's
zero
emission
vehicle,
ZEV,

regulations.

Now
that
I
have
all
the
acronyms
out
of
the
way,
I
want
to
assure
the
board
that
I
will
try
to
be
­­
the
panel
that
I
will
try
to
be
very
brief
in
the
interest
of
time,
and
note
that
the
Alliance
73
also
intends
to
submit
written
comments
that
provide
further
support
in
detail
regarding
our
concerns
with
the
waiver
request.

The
Alliance
is
speaking
today
to
address
three
major
issues
of
concern
regarding
the
ZEV
waiver
requests:

First,
the
Alliance
is
concerned
that
the
waiver
requests
are
not
being
submitted
in
a
timely
manner.
The
repeated
submittal
of
waiver
requests
after
the
effective
date
for
regulation
represents
a
violation
of
the
Clean
Air
Act's
clear
requirements
that
a
waiver
be
issued
before
enforcing
a
regulation.

The
Alliance
believes
it
is
incumbent
upon
the
agency
to
ensure
that
the
regulated
community,

including
California,
share
a
clear
understanding
of
the
legal
requirement
for
waiver.

Second,
the
Alliance
is
concerned
that
the
ZEV
regulations
be
properly
analyzed
under
Clean
Air
Act's
waiver
criteria.
It
is
not
sufficient
to
simply
state
that
a
newly
issued
regulation
is
merely
an
amendment
to
an
existing
regulation,
and
74
therefore
the
new
regulation
is
"
within
the
scope"

of
a
prior
waiver.

When
the
new
regulation
involves
a
significant
modification
or
redirection
of
a
prior
regulation,
a
new
waiver
analysis
is
appropriate
and
required.

Finally,
when
the
appropriate
criteria
applicable
to
the
issuance
of
a
waiver
are
applied,

the
Alliance
believes
a
waiver
should
not
be
issued
by
EPA
for
the
ZEV
regulations.

Full
analysis
reveals
that
the
ZEV
regulations
do
not
meet
the
required
criteria
under
section
209(
b),
in
part
because
it
will
not
result
in
overall
emissions
decrease,
but
rather
will
result
in
an
emissions
increase.

The
Alliance
concludes
that
the
ARB
waiver
request
therefore
should
be
denied.

Our
first
concern
is
that
the
Clean
Air
Act
mandates
timely
action
on
preemption
waiver
requests.
Section
209(
a)
of
the
Clean
Air
Act
prohibits
any
state
or
political
subdivision
from
adopting
or
attempting
to
enforce
"
any
standard"
75
relating
to
the
control
of
emissions.
EPA
can
waive
this
broad
preemption
for
California,
but
only
if
certain
specified
conditions
are
met.

In
this
regard,
section
209(
b)(
1)
of
the
Clean
Air
Act
provides
that
California
standards
must
"
be
in
the
aggregate
at
least
as
protective
of
public
health
and
welfare
as
applicable
Federal
standards."

And,
"
No
such
waiver
shall
be
granted
if
the
administrator
finds,
A,
the
determination
of
the
state
is
arbitrary
and
capricious;
B,
such
state
does
not
need
such
state
standards
to
meet
compelling
and
extraordinary
conditions;
or
C,
such
state
standards
and
accompanying
enforcement
procedures
are
not
consistent
with
section
202(
a)

of
this
part."

Thus,
under
the
clear
terms
of
the
Clean
Air
Act,
California
emission
regulations
applicable
to
new
motor
vehicles
are
expressly
preempted
under
section
209(
a)
until
such
time
as
EPA
affirmatively
grants
a
waiver
under
section
209(
b).

In
turn,
the
waiver
of
Federal
preemption
76
may
not
be
granted
unless
and
until
EPA
makes
the
finding
specified
in
section
209(
b)(
1).

Consequently,
the
notice
and
comment
process
mandated
under
section
209(
b)
is
required
to
come
prior
to
the
enforcement
of
any
ARB
emission
standard
for
new
motor
vehicles,
not
years
after
the
fact.

In
actual
practice,
California
submits
a
preemption
waiver
request
to
EPA
often
after
considerable
time
has
passed.
California
then
proceeds
to
implement
its
new
emission
control
regulations
without
waiting
for
a
waiver
to
be
considered,
let
alone
granted.

This
current
practice
is
not
consistent
with
the
letter
and
intent
of
the
Clean
Air
Act,

and
it
deprives
manufacturers
and
others
of
an
opportunity
to
participate
in
a
meaningful
public
process
on
the
waiver
issue.

In
order
to
be
meaningful,
an
opportunity
to
comment
must
be
timely.
Clearly
an
opportunity
to
comment
after
a
decision
has
been
made
or
a
regulation
has
been
implemented
is
not
sufficient.
77
The
failure
to
submit
waiver
requests
prior
to
the
effective
date
of
the
underlying
standards
can
also
render
the
requirements
of
Clean
Air
Act
section
177
a
nullity.

Under
section
177,
other
states
may
adopt
and
enforce
only
those
California
standards
for
which
a
waiver
has
been
granted.
When
other
states
attempt
to
adopt
and
enforce
California
emission
standards
prior
to
agency
action
on
a
waiver
request,
they
are
effectively
ignoring
section
177
statutory
requirement.

Perhaps
the
most
troublesome
examples
of
after
the
fact
waiver
proceedings
are
those
in
which
California
requested
a
determination
that
a
new
emission
regulation
is
"
within
the
scope"
of
a
prior
waiver.
This
situation
is
particularly
troubling
because
it
suggests
the
possibility
that
new
ARB
emission
regulations
can
be
retroactively
enforced
if
they
are
later,
perhaps
years
later,

deemed
by
EPA
to
be
within
the
scope
of
a
prior
waiver.

The
retroactive
approach
to
the
waiver
78
process
is
contrary
to
the
intent
of
section
209
and
177'
s
lead
time
and
waiver
approval
requirements.
Under
this
regime,
California
has
no
incentive
to
proceed
in
a
timely
manner.
And
by
delaying
waiver
submissions
to
EPA,
it
can
avoid
effective
administrative
review
of
its
actions.

I
want
to
clarify
that
the
Alliance's
analysis
of
the
current
requests
from
ARB
assumes
that
EPA
intends
to
apply
its
existing
analytical
framework.
The
Alliance
does
not
necessarily
endorse
that
framework
as
consistent
with
the
Clean
Air
Act,
and
we
note
that
the
Clean
Air
Act
provides
no
textual
basis
for
"
within
the
scope"

reviews
of
California
standards
different
from
the
types
of
review
that
would
be
required
under
other
circumstances.

It
is
the
Alliance's
position
that
under
the
Clean
Air
Act's
clear
statutory
language,
a
waiver
or
within
the
scope
determination
must
be
issued
prior
to
the
enforcement
of
any
state
standards.

Further,
there
can
be
no
retroactive
79
application
of
the
agency
decision
upon
the
issuance
of
a
waiver
or
a
within
the
scope
determination.

Enforcement
of
the
standards
begins
after
the
agency
has
acted
and
made
the
determinations
required
under
the
Clean
Air
Act
section
209(
b).

I
urge
the
panel
members
today
to
take
the
opportunity
to
discuss
these
issues
with
ARB's
representative
here
today.
In
particular,
it
would
be
useful
to
know
whether
California
believes
that
a
waiver
or
a
"
within
the
scope"
determination
must
be
made
by
EPA
before
California
may
enforce
an
emissions
standard.

The
second
major
Alliance
concern
relates
to
the
full
analysis
required
under
the
agency's
criteria.
The
amendments
at
issue
are
significant,

and
they
include
every
modification
to
the
ZEV
regulations
since
the
prior
waiver
request.
Thus,

all
amendments
to
the
ARB
ZEV
regulations
since
the
prior
waiver,
which
covered
amendments
approved
through
the
March
1996
board
hearing,
are
subject
to
analysis
under
the
waiver
criteria.
80
During
the
decade
that
has
elapsed
since
ARB
amended
the
ZEV
regulations
in
1996,
there
have
been
significant
and
numerous
changes
to
the
regulations.
The
breadth
and
significance
of
the
ZEV
regulatory
changes
raise
new
issues
regarding
previous
EPA
waiver
decisions
and
are
inconsistent
with
section
202(
a)
of
the
act.

Thus,
a
full
waiver
analysis
is
required.

Amendments
are
significant
changes
that
affected
the
cost
and
expected
emission
benefits.

Indeed,
as
ARB
has
acknowledged,
"
There
is
no
doubt
that
circumstances
have
changed
substantially
since
adoption
of
the
original
ZEV
requirements
in
issuance
of
the
waiver
covering
those
requirements
in
1993.
Circumstances
have
also
changed
since
adoption
of
the
LEV
II
regulations
in
1998
to
1999.

Those
changes
were
the
driving
force
behind
the
substantial
changes
ARB
has
made
to
the
ZEV
requirements
in
the
1999
to
2003
ZEV
amendments."

That's
page
20
of
the
document
that
ARB
submitted,
entitled
"
Basis
for
California's
Request
for
Clean
Air
Act
Section
209
Within
The
Scope
and
81
New
Waiver
Determinations."

These
changes
include
a
recognition
that
a
10
percent
battery
powered
ZEV
sales
mandate
was
unworkable,
and
that
battery
technology
was
unlikely
to
provide
the
necessary
technical
and
cost
advances
required
to
meet
the
regulation.

In
the
intervening
decade,
it
has
also
become
apparent
that
emission
levels
achievable
with
modern
internal
combustion
engines
are
much
lower
than
previously
imagined
and
approach
the
levels
associated
with
the
upstream
emissions,
that
is
the
electrical
generation
emissions,
associated
with
pure
battery
powered
ZEVs.

Finally,
there
has
been
the
emergence
of
hydrogen
fuel
cell
technology
as
a
leading
contender
to
serve
post­
internal
combustion
vehicles.

None
of
these
changes
had
yet
occurred,

and
therefore
none
could
have
been
considered
at
the
time
of
the
board's
action
in
1996,
approving
the
last
set
of
amendments
for
which
a
waiver
has
been
granted.
82
The
magnitude
of
these
changes
directly
affects
the
cost
and
technical
feasibility
of
the
ZEV
regulations,
and
therefore
their
consistency
with
section
202(
a)
of
the
Clean
Air
Act.

Indeed,
as
ARB
has
acknowledged,
these
changes
provide
the
very
basis
for
the
subsequent
amendments
to
the
ZEV
regulations
that
are
the
subject
of
this
waiver
hearing.

Because
these
major
developments
could
not
have
been
considered
at
the
time
of
ARB's
earlier
ZEV
amendments,
or
considered
in
EPA's
earlier
waiver
proceedings,
the
changes
necessarily
raise
new
issues
as
to
the
earlier
waivers.

Indeed,
ARB
acknowledges
that
the
ZEV
regulations
that
apply
to
2007
and
later
model
year
vehicles
require
a
new
waiver.

The
second
ARB
waiver
request
therefore
requests
a
new
waiver
for
these
same
ZEV
regulations
when
applied
to
LDT2
vehicles
because
LDT2
vehicles
were
not
originally
included
in
the
ZEV
regulations.

While
the
Alliance
agrees
with
ARB's
83
conclusions
that
a
new
waiver
is
required,
it
is
not
simply
or
merely
because
the
regulations
now
apply
to
LDT2
vehicles
beginning
in
model
year
2007.
This
change
is
merely
one
of
the
myriad
of
major
changes
that
have
resulted
in
completely
overhauled
and
redirected
ZEV
programs.
It
is
a
complete
overhaul
of
the
ZEV
program
that
raises
new
issues
and
mandates
the
agency's
full
review
of
the
regulation.
Not
merely
the
phased­
in
applicability
of
the
ZEV
regulations
to
LDT2
vehicles
beginning
in
2007.

ARB
has
asserted
that
a
within
the
scope
waiver
determination
is
all
that
is
required
because
some
portions
of
the
regulations
are
in
California's
view
less
stringent
than
the
prior
version
of
the
ZEV
regulation.
Under
that
view
of
the
waiver
process,
once
a
waiver
has
been
granted,

any
subsequent
developments
that
affect
the
technical
feasibility,
cost,
or
lead
time
would
never
require
a
new
waiver
so
long
as
the
amended
regulations
were
deemed
to
be
a
"
relaxation"

compared
to
the
original
requirement.
84
This
approach
would
provide
no
forum
for
determining
if
the
amended
application
is
cost
effective,
technically
feasible,
or
compliant
with
the
requirements
of
section
202(
a)
of
the
Clean
Air
Act.

Such
an
interpretation
trivializes
the
agency's
duties
under
the
waiver
process
and
would
ensure
that
virtually
any
amendment
to
California's
regulations,
even
a
major
overhaul
like
this
one,

could
evade
full
waiver
review
so
long
as
the
changes
were
characterized
as
a
relaxation.

The
fact
that
ARB
has
found
it
necessary
to
repeatedly
change
and
modify
significant
portions
of
the
ZEV
regulations
is
an
indication
and,
in
fact,
a
tacit
admission
that
the
original
requirements
were
not
feasible,
they
were
not
cost
effective,
and
they
were
therefore
inconsistent
with
the
requirements
of
202(
a)
of
the
Clean
Air
Act.

The
revised
regulations
should
be
evaluated
based
on
the
information
available
now,

not
the
outdated
or
limited
information
that
was
85
available
10
years
ago.

Our
third
major
concern
is
that
the
ZEV
amendments
are
not
consistent
with
section
202(
a).

Consistency
with
202(
a)
is
required
for
EPA
to
grant
a
section
209(
b)
waiver.
No
such
waiver
shall
be
granted
if
the
administrator
finds
that
such
state
standards
and
accompanying
enforcement
procedures
are
not
consistent
with
section
202(
a)

of
this
part.

However,
as
adopted,
the
ZEV
standards
are
not
consistent
with
section
202(
a)
of
the
Clean
Air
Act
because
they
do
not
provide
an
emissions
benefit.
The
ZEV
regulations
will
result
in
an
expenditure
of
significant
resources
to
produce
a
limited
number
of
pure
ZEV
units,
termed
gold
standard
vehicles
by
ARB.

The
cost
impact
on
the
price
of
California
vehicles
that
results
from
the
ZEV
regulations
will
be
significant.
This
price
increase
will
cause
reduced
sales
of
new
vehicles
in
California
relative
to
the
absence
of
a
price
increase.

Thus,
the
rate
of
fleet
turnover
will
be
86
reduced
and
older,
higher
emitting
vehicles
will
remain
in
the
California
fleet
longer
than
they
otherwise
would.
Because
today's
new
state
of
the
art
LEV
II
vehicles
have
very
low
emissions,
the
incremental
emissions
reduction
associated
with
ZEVs
is
overwhelmed
by
the
emissions
increase
due
to
even
a
slight
slowdown
in
the
turnover
of
older,

higher
emitting
vehicles.

When
the
fleet
turnover
effect
is
evaluated,
the
net
result
is
that
the
overall
emissions
from
the
vehicle
fleet
will
increase,
not
decrease,
as
a
result
of
the
ZEV
regulations.
That
basic
fact
means
that
the
ZEV
regulations
cannot
be
cost
effective
or
indeed
even
necessary
in
order
to
meet
California's
"
compelling
and
extraordinary
conditions."

It
is
not
sufficient
for
ARB
to
simply
state
that
"
the
asserted
fleet
turnover
effect
from
a
10
percent
ZEV
sales
requirement
would
necessarily
be
greater
than
the
fleet
turnover
effect
from
the
ZEV
requirements
as
amended
in
2003."
87
That
is
from
page
22
of
their
document
outlining
the
basis
for
their
ZEV
request.

The
issue
facing
the
agency
is
whether
the
revised
regulations
meet
the
substantive
criteria
for
a
waiver,
not
whether
they
fail
to
meet
those
criteria
to
a
lesser
degree
than
the
original
regulation.

The
Alliance
plans
to
submit
additional
information
relating
to
the
fleet
turnover
effect
in
our
written
comments.

Another
element
of
the
ZEV
regulation
that
requires
EPA's
review
is
the
requirement
for
so­
called
advanced
technology
PZEVs,
or
AT
PZEVs.
An
AT
PZEV
is
a
vehicle
certified
to
California's
PZEV
emission
standards
that
also
has
advanced
componentry
as
defined
by
ARB,
such
as
a
hybrid
electric
system
that
meets
certain
criteria.

AT
PZEVs
have
the
potential
to
earn
substantially
more
ZEV
credits
than
regular
PZEVs.

The
regulations
are
designed
in
such
a
way
as
to
make
it
difficult,
if
not
impossible,
for
manufacturers
to
comply
over
the
long
term
without
88
producing
substantial
numbers
of
AT
PZEVs.

However,
the
AT
PZEV
provisions
are
clearly
not
needed
to
address
any
compelling
and
extraordinary
conditions
in
California.
Since
regular
PZEVs
are
certified
to
the
same
emission
standards
as
AT
PZEVs,
there
is
no
emission­
related
reason
for
allotting
fewer
credits
to
regular
PZEVs
than
AT
PZEVs.

Moreover,
the
AT
PZEV
provisions
have
no
basis
in
the
Clean
Air
Act.
Section
202(
a)
of
the
Clean
Air
Act
authorizes
"
standards
applicable
to
the
emission
of
any
air
pollutant."
Not
standards
based
on
the
type
of
technology
used
in
the
vehicle.

For
these
reasons,
we
believe
that
the
AT
PZEV
provisions
of
the
ZEV
mandate
fail
to
meet
the
waiver
criteria
in
section
209(
b)(
1)
of
the
Clean
Air
Act.

The
Alliance
and
its
members
also
have
concerns
regarding
the
technical
feasibility
of
other
requirements
in
the
ZEV
regulations.
For
some
requirements,
there
are
significant
doubts
as
89
to
the
feasibility
of
producing
the
required
vehicles.

For
example,
it
is
unclear
how
the
requirement
to
produce
fuel
cell
vehicles
in
significant
quantities
in
the
later
years
of
the
regulation
will
be
met.

As
of
today,
the
technology
and
infrastructure
do
not
exist
to
meet
the
new
requirements.
The
Alliance
will
address
these
issues
in
our
written
comments.

So
let
me
conclude.

In
conclusion,
let
me
recap
the
three
main
elements
of
these
comments:

One,
the
clear
terms
of
the
Clean
Air
Act's
waiver
provisions
require
a
finding
by
EPA
that
California's
new
ZEV
regulations
meet
all
the
section
209(
b)(
1)
criteria
before
those
rules
are
implemented.

The
Alliance
believes
that
California
is
precluded
from
enforcing
or
attempting
to
enforce
any
of
its
rules
that
are
subject
to
a
pending
waiver
request.
90
Two,
the
amendments
at
issue
in
this
waiver
request
represent
a
fundamental
redirection
of
the
ZEV
program.
The
Alliance
concludes
that
a
full
waiver
review
is
therefore
required
for
the
ZEV
regulations,
and
not
just
with
respect
to
those
regulations
as
they
are
applied
to
model
year
2007
LDT2
vehicles.

Three,
finally,
the
current
ZEV
mandate
will
result
in
an
increase,
not
a
decrease,
in
overall
emissions.

Moreover,
some
of
the
requirements
in
the
new
ZEV
mandate
are
not
related
to
emissions.

In
addition,
for
some
requirements,
there
are
significant
doubts
as
to
the
feasibility
of
meeting
the
requirements.
The
Alliance
concludes,

therefore,
that
the
current
mandate
fails
to
meet
the
criteria
set
forth
in
Clean
Air
Act
section
209(
b)(
1),
and
therefore
California's
request
for
a
waiver
should
be
denied.

Thank
you
for
the
opportunity
to
address
the
agency
at
this
hearing.
I
would
be
happy
to
take
any
questions,
but
first
let
me
put
in
the
91
record
some
questions
that
I
think
would
be
appropriate
to
ask
the
representatives
from
California,
because
we
have
convened
this
hearing
and
they
have
traveled
several
thousand
miles,
and
I
don't
think
we
should
avoid
this
opportunity
to
frankly
resolve
some
of
these
issues.

The
Alliance
has
concerns,
as
I
mentioned,

about
the
timing
of
the
waiver
process,
and
we
think
it
would
be
appropriate
for
California
to
address
whether
a
waiver
is
required
before
California
may
enforce
an
emissions
standard;

whether
a
within
the
scope
determination
is
required
before
California
may
enforce
an
emissions
standard;
whether
California
has
ever
submitted
a
waiver
request
or
a
within
the
scope
determination
request
after
the
effective
date
of
a
standard;

whether
California
has
ever
begun
enforcing
a
standard
before
EPA
action
on
a
waiver
request
or
a
within
the
scope
determination.

Thank
you.
I
would
be
happy
to
take
any
questions.

MR.
HOROWITZ:
I've
got
a
few.
Now
92
correct
me
if
I'm
wrong,
but
I'm
under
the
impression
that
most
of
the
changes
that
the
ZEV
­­

in
these
ZEV
amendments
are
designed
to
give
manufacturers
more
options
to
meeting
the
requirements
than
you
originally
had,
the
set
straight
ZEV
requirement,
10
percentage.
And
this
helps
you
out.
But
what
you
are
talking
about
seems
to
require
that
California
be
much
more
hesitant
before
they
would
ever
make
any
changes
to
help
the
manufacturers
ever
again
once
they
get
a
waiver.

We
do,
EPA,
all
the
time,
and
I'm
sure
California
does
all
the
time
hear
complaints
from
manufacturers
of
existing
rules
that
they
don't
like,
and
we
try
very
hard
to
get
those
out
quickly.
But
you
can't
get
them
out
today
­­

tomorrow
if
you
hear
about
them
today,
and
sometimes
these
are
regulations
that
exist
right
now.

Are
you
saying
that
they
can't
enforce
things
that
even
that
help
the
manufacturers,
that
provide
less
stringent
requirements
or
more
93
flexibility
to
manufacturers
until
EPA
gets
a
waiver,
even
for
something
­­
well,
I'll
just
ask
that
question.

MR.
NAKAYAMA:
I
think
what
we
are
saying
here,
and
I
understand
­­
I
think
I
understand
your
question,
Michael.
To
term
a
regulation
or
an
amendment
a
relaxation,
I
don't
think
ends
the
inquiry,
whether
it
meets
the
waiver
criteria.
I
mean
if
there
is
a
criteria
that
is
originally
set
back
in
1990,
and
they
say
it's
10
percent
straight
ZEVs
and
it
turns
out
that
that's,
you
know,
not
feasible,
for
whatever
reason,
technically
or
whatever
the
technical
assumptions
made
when
that
requirement
was
established
or
no
longer
appear
to
be
true,
and
they
would
reduce
that
requirement
to
8
percent,
does
that
mean
that
necessarily
because
the
8
percent
requirement
is
less
stringent
than
1
0
percent
requirement
that
in
fact
8
percent
is
technically
feasible?

No.
I
mean
I
think
it
requires
a
deeper
look
by
the
agency,
and
I
think
that
is
what
the
waiver
process
is
all
about.
94
Obviously
if
there
is
a
change
to
make
in
a
regulation,
one
that
the
manufacturers
can
and
will
comply
with
because
the
original
regulation
is
not
something
that
they
could
comply
with,
I
think
they
have
every
interest
in
getting
that
waiver
approved
quickly,
and
I
am
sure
they
would
not
object
if
they
thought
the
waiver
process
was
the
only
impediment
to
making
an
amended
regulation
effective.

MR.
HOROWITZ:
Similar
question.
You
have
some
complaints
about
the
AT
PZEV
requirements
or
provisions.
It
is
my
understanding
that
AT
PZEVs
get
greater
emissions
value
or
ZEV
value
than
the
PZEV,
the
regular
PZEV
requirements.
Are
you
saying
that
it's
the
position
of
the
Alliance
that
we
should
not
include
the
­­
we
should
not
grant
the
waiver
for
the
AT
PZEVs
even
though
what
that
would
in
effect
do
is
make
the
ZEV
requirements
more
stringent?

MR.
NAKAYAMA:
Well,
I
think
what
we
are
saying
with
respect
to
the
AT
PZEVs
is
here
you
have
a
requirement
for
emissions
value,
and
I'm
not
95
sure
what
you
mean
by
value.
They
get
more
credit.

MR.
HOROWITZ:
That's
what
I'm
talking
about.

MR.
NAKAYAMA:
They
don't
provide
any
more
emissions
benefit,
though.
So
I
mean,
you
know,
in
substance
we
find
that
very
arbitrary.
It's
very
design
or
technology
driven.
It's
sort
of
designing
a
vehicle
to
­­
you
know,
I
don't
want
to
be
too
cavalier
about
it,
but
I
mean
you
can
imagine
somebody
saying,
well,
I
like
green
cars.

I
think
everyone
should
make
green
cars.
And
if
you
paint
your
car
green,
you
get
more
credits.

But
it
doesn't
have
anything
to
do
with
emissions.

MR.
DICKINSON:
Grant,
let
me
follow
up
on
that.
If
there
is
an
emission
component
to
an
AT
PZEV
and
then
a
nonemission
component
to
it
­­
for
example,
painting
a
car
green
gives
you
more
credit
­­
is
the
painting
the
car
green
provision
preempted
under
209
or
should
the
agency
even
be
looking
at
that?

MR.
NAKAYAMA:
I
think
the
agency
should
look
at
that
if
the
green
paint
is
particularly
96
expensive
and
requires,
you
know,
basically
cars
to
be
more
expensive
in
California.
That
slows
the
fleet
turnover.
I
think
those
are
things,
you
know,
that
the
agency
needs
to
look
at.

Now
I
don't
tend
to
­­
I
will
not
attempt
to
address,
you
know,
everything
that
the
agency
should
look
at,
but
I
think
certainly
the
waiver
process
­­
I
think
it
was
in
the
statute
for
a
reason,
and
I
think
it
gives
EPA
the
statutory
basis
for
that
inquiry
into
whether
­­
not
whether
in
the
first
instance
they
would
have
agreed
with
every
policy
decision
that
California
made,
but
whether
some
of
these
requirements
really
pass
the
test
as
far
as
the
202(
a),
you
know,
criteria
for
cost,
lead
time,
et
cetera.

MS.
ZAW­
MON:
Are
you
done
with
your
questions?

MR.
DICKINSON:
Yeah.

MS.
ZAW­
MON:
Okay.
I
guess
the
Alliance
has
raised
some
questions
for
California.
It's
up
to
you
whether
you
want
to
answer
them
or
not,
and
we
don't
have
a
whole
lot
of
time
left,
but
I
would
97
like
to
invite
you
back
to
the
podium
to
make
your
final
remarks.

MR.
JENNINGS:
Thank
you.

MR.
DICKINSON:
Excuse
me,
Tom.
I
think
Merrilyn
characterized
it
as
brief
final
remarks.

Try
to
limit
it
to
five,
10
minutes,
if
that's
­­

MR.
JENNINGS:
Okay.

MR.
DICKINSON:
Thank
you.

MR.
JENNINGS:
I
definitely
will.

I
think
I
would
like
to
answer
two
of
the
four
questions
that
Grant
posed.
Those
are
the
­­

the
questions
I
don't
want
to
address
right
now
are
what
we
can
do
in
the
absence
of
a
new
waiver
because
I
don't
think
that
is
really
an
issue
in
this
proceeding.
We
have
asked
for
a
new
waiver
starting
with
the
2007
model
year.
We
expect
the
action
that
you
take
will
result
in
that
action
well
before
the
start
of
the
2007
model
year,
so
I
don't
think
it
is
an
issue
here.

In
terms
of
within
the
scope,
I
think
I
want
to
say
very
clearly
that
we
do
believe
that
the
Air
Resources
Board
can
continue
to
enforce
an
98
amended
regulation
where
there
has
been
a
waiver
of
preemption
for
that
regulation,
and
then
the
board
makes
amendments
that
are
within
the
scope.
And
I
think
that
we
can
address
that
more
fully
in
our
written
comments,
but
I
think
that
that
is
an
important
part
of
the
waiver
process,
and
to
make
the
waiver
process
work
in
a
practical
kind
of
way.

We
talked
during
our
presentation
about
how
the
fact
that
the
NRDC
case
says
that
a
significant
amount
of
lead
time
can
weigh
on
the
side
of
meeting
the
technological
feasibility
standard
requirement
because
there
is
an
opportunity
to
make
midcourse
changes
if
they
are
necessary.
And
I
think
that
if
absolutely
every
time
the
Air
Resources
Board
wanted
to
amend
a
regulation
that
we
could
only
do
that
after
an
entire
waiver
process
had
been
concluded
and
EPA
had
issued
a
new
waiver
of
preemption,
that
that
would
just
make
things
impractical
and
would
really
operate
against
the
sense
of
the
Clean
Air
Act
in
terms
of
the
NRDC
standard
that
was
applied.

Having
said
that,
I
do
want
to
commit
that
99
Air
Resources
Board
intends
to
submit
waiver
requests,
within
the
scope
requests
in
a
timely
manner.
I
think
that
the
manufacturers
have
a
right
to
expect
that
that
happens,
and
I
think
that
there
have
been
some
instances
where
either
the
ARB
has
not
submitted
the
request
as
quickly
as
it
could
be,
or
EPA
has
not
acted
as
quickly
as
EPA
should,
and
I
think
that
we
should
both
work
to
try
to
catch
up
and
to
have
the
process
working
in
a
prompt
manner.

And
I
think
that
regardless
of
the
issue
about
when
you
can
enforce
within
the
scope,
that
if
we
both
did
that,
that
would
resolve
a
lot
of
the
concerns
that
the
manufacturers
have.

Just
a
couple
more
points.
Grant,
I
thought
he
said
that
there
weren't
any
actions
since
1996
and
we
are
going
way
back.
I
want
to
make
clear
that
for
that
in
1996
we
amended
the
regulation
to
drop
out
the
requirement
for
the
first
five
model
years,
and
we
requested
a
within
the
scope
for
that
action
in
a
timely
manner.
I
think
in
February
1997.
Action
wasn't
taken
until
100
January
2001,
but
we
certainly
took
the
steps
that
we
felt
were
necessary
to
do
that.

And
I
think
that
it
is
inappropriate
to
claim
that
we
are
trivializing
the
process
when
I
think
that
you
can
see
that
we
are
trying
to
address
this
is
a
very
serious
manner.

Let
me
just
check.
I
think
that
was
the
­­
those
are
the
main
points
I
wanted
to
make,
and
we
will
address
them
more
fully
in
the
written
comments.

MS.
ZAW­
MON:
Okay.
All
right.
So
if
no
other
party
wishes
to
present
testimony
to
this
hearing
panel,
and
there
are
no
other
comments
to
be
presented,
we
will
proceed
to
close
this
hearing.

I
want
to
remind
everybody
that
the
public
comment
period
will
remain
open
until
March
the
29th,
2005.
So
you
are
all
encouraged
to
provide
written
comments
on
CARB's
waiver
requests,
and
any
of
the
comments,
information,
data
presented
today
will
also
be
considered.

So
thank
you
all.
101
[
Whereupon,
at
12:
00
noon,
the
hearing
was
concluded.]
