HEARING ON CARB'S REQUEST FOR EPA AUTHORIZATION OF ITS

OFF-ROAD COMPRESSION IGNITION IN-USE FLEETS REGULATION

Wednesday, April 14, 2010

10:16 a.m.

UNITED STATES ENVIRONMENTAL PROTECTION AGENCY

1310 L Street, N.W.

Washington, D.C.

PARTICIPANTS

JON CLOUD

WILLIAM DAVIS

DAVID DICKINSON

NICK GOLDSTEIN

MICHAEL HOROWITZ

MICHAEL KENNEDY

ANTHONY MICHAELS

TIMOTHY POHLE

GUY PRESCOTT

ANTONIO SANTOS

KARL SIMON

MICHAEL TERRIS

ERIK WHITE

P R O C E E D I N G S

		MR. SIMON:  Good morning, and welcome.

		On behalf of the EPA and the Office of Transportation and Air Quality,
I would like to welcome you to this public hearing on the California Air
Resources Board request for EPA authorization of its off-road
compression ignition in-use fleets regulation, otherwise known as the
off-road fleets regulation.

		My name is Karl Simon, the Director of the Compliance and Innovative
Strategies 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 David Dickinson, an attorney-adviser
within this division, and Michael Horowitz, from the Office of General
Counsel.

		EPA previously held a public hearing in Washington on October 27,
2008, based on CARB's initial authorization for its off-road fleets
regulation.  The written comment period for CARB's initial authorization
request remained open until December 19, 2008.  On March 12th of this
year, EPA published an additional Federal Register notice announcing
today's hearing.

		That notice was based on CARB's February 11, 2010, letter to EPA in
which they requested that their additional amendments to its off-road
fleets regulation be considered by EPA.  As EPA noted in its March 12,
2010, Federal Register notice, the new written comment period will close
on May 18, 2010.

		EPA plans to consider all comments received since it opened the
comment period on October 7, 2008, through to the close of the current
comment period, which again is May 18, 2010.  All comments received
either through EPA's two hearings or through written comment will be
treated equally within the context of the agency's authorization
criteria.  This includes all written comments received after the close
of the first comment period and before the reopening of the current
comment period.

		We are conducting this hearing in accordance with Section 209(e) of
the Clean Air Act under which EPA provides interested persons with the
opportunity for oral presentation of views and arguments, as well as the
opportunity to make written submissions relating to the determination to
be made by the Administrator; in this case, on California's off-road
compression ignition in-use fleets requirements.  This hearing provides
the forum for those oral presentations.

		The Administrator's determination regarding the action to be taken
with respect to California's regulation will be based upon the testimony
of this hearing and the testimony received at the prior EPA 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
repetitious and to enforce reasonable limits on the duration of
statements of any witness.

		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.
 And if you do have a written copy, we ask that you provide it to the
panel, but also to the court reporter as well.  When a witness has
finished his or her presentation, members of the panel may ask the
person questions regarding the issues raised in the testimony.

		This morning, we have received requests to present oral testimony from
the California Air Resources Board, the Associated General Contractors
of America, and Local 3 of the International Union of Operating
Engineers, the Manufacturers of Emission Controls Association, the
Southern California Contractors Association, the American Road and
Transportation Builders Association, and the Air Transport Association
of America.

		If any other party in attendance wishes to present oral testimony at
this hearing, let us know now or when we get to the last presentation
would be fine.  At the conclusion of all oral presentations, CARB may
respond briefly to the oral statements of other parties.

		As you duly noted, we are having this hearing recorded, and the
transcript will be available for public inspection and copying in the
EPA's Air and Radiation Docket at Docket Number EPA-HQ-OAR-2008-0691. 
The transcript will also be available for Internet access on the
Regulations.gov Web site.  Anyone wishing to purchase a copy of the
transcript may do so directly from the court reporter and should make
individual arrangements with the court reporter.

		The purpose of today's hearing is to hear comments on California's
request for authorization of its off-road compression ignition in-use
fleets regulation.  Interested parties are particularly requested to
comment on California's request regarding the following issues.

		With regard to California's off-road compression ignition in-use
fleets regulations, we ask whether, A, CARB's determination that its
standards are, in the aggregate, at least as protective of public health
and welfare as applicable Federal standards is arbitrary and capricious;
B, California needs separate standards to meet compelling and
extraordinary conditions; and, C, California's standards and
accompanying enforcement procedures are consistent with Section 209 of
the Clean Air Act.

		Are there any questions?

		[No response.]

		MR. SIMON:  Okay.  Let's get started then, and we'll start with the
California Air Resources Board.  Please.

		MR. TERRIS:  Good morning, panel.  It's nice to be back in Washington.

		I'm Michael Terris, and I'm here with Erik White.  We're representing
the California Air Resources Board and the State of California in this
hearing today.

		I'll be discussing the criteria EPA is required to consider when
reviewing a request for a nonroad engine authorization from California. 
I know that you all are very familiar with the issues, and I gave a
similar presentation in October 2008.

		I'll then describe California's in-use off-road regulation as recently
amended, followed by an evaluation of why the regulation meets the
conditions for granting California's authorization request.

		The in-use off-road regulation is the second in-use nonroad
authorization considered by EPA, the other being the Airborne Toxic
Control Measure for Transport Refrigeration Units, otherwise known as
the TRU ATCM.  EPA's granting authorization of the TRU ATCM to
California was recently upheld by the Court of Appeals for the District
of Columbia.

		The regulation before you addresses emissions from in-use off-road
diesel-fueled vehicles 25 horsepower and greater.  CARB adopted the
in-use off-road regulation under the authority granted to it by the
California Health and Safety Code to adopt all feasible measures to
address criteria pollutants affecting the State's health and welfare and
to adopt airborne toxic control measures to address pollutants
identified as toxic air contaminants.

		CARB has found diesel particulate matter to be a toxic air
contaminant.  Under California law, CARB is required to make every
effort to achieve maximum possible reductions in public exposure to the
identified air toxic using best available control technology.

		Also, under California and Federal Clean Air Acts, California is under
a mandate to meet State emission standards and National Ambient Air
Quality Standards.  The in-use off-road regulation is intended to
address these legal requirements.

		CARB approved the regulation in July 2007, and after being formally
adopted, the regulation was approved by the California Office of
Administrative Law on May 16, 2008.  In January and July 2009, CARB
approved amendments to the regulation intended to provide additional
flexibility and relief during the recession to affected fleets.  I will
describe these amendments in more detail after I discuss the primary
issues concerning authorization.

		CARB submitted this request for authorization to EPA on August 12,
2008, and has filed supplemental comments on June 12th and December 29,
2009, and February 11, 2010.  The authorization would allow CARB to
begin to enforce the in-use performance standards and associated
enforcement provisions of the regulation.

		Section 209(e)(1) expressly preempts all States, including California,
from adopting emission standards for new locomotive and new locomotive
engines and new engines under 175 horsepower primarily used in farm and
construction.  Section 209(e)(2) establishes an implied preemption that
further prohibits States other than California from adopting their own
emission standards and other emission-related control requirements for
other new and in-use nonroad engines.

		California, however, has been vested by Congress with the right to
adopt emission standards for these other nonroad engines, but must
obtain authorization from EPA.  EPA must grant California's
authorization request, unless it can make specific findings set forth in
Section 209(e)(2).

		First, California, in adopting the nonroad emission requirements, must
make a finding of protectiveness that its standards are, in the
aggregate, at least as stringent -- at least as protective of the public
health and welfare as applicable Federal standards.  Section 209(e)(2)
directs the Administrator to grant the authorization request unless she
finds that CARB, in making its protectiveness finding, acted arbitrarily
and capriciously.

		The Administrator may also deny authorization if she finds that
California does not need its emission program to meet compelling and
extraordinary conditions.

		Finally, the Administrator may deny authorization if the California
standards and accompanying enforcement procedures are inconsistent with
Section 209.  EPA has long held that consistent with 209 means the
regulation does not conflict with Section 209(a), (b)(3), and (e)(1). 
The D.C. Circuit in the TRU ATCM decision recently confirmed that it
also includes consistent with Section 209(e)(2)(B), the right of States
other than California to elect to adopt California's nonroad emission
standards after obtaining authorization from EPA.

		It is also well established that EPA may also consider -- may only
consider the three aforementioned criteria set forth in Section
209(e)(2), that EPA shall give substantial deference to California's
policy judgments, and that the burden is on those who oppose the
granting of the authorization to show why it should not be granted.

		I would now like to briefly describe the in-use off-road diesel-fueled
vehicle regulation and its current status.  As I stated earlier, the
in-use off-road regulation was originally approved in July 2007.  In our
presentation to EPA at the October 2008 hearing and in our written
submittals, CARB described in detail the specific provisions of the
adopted regulation.

		In brief, the regulation established in-use performance requirements
for off-road diesel-fueled vehicles to achieve NOx and PM emission
reductions from off-road diesel vehicles.  It applies to large fleets,
fleets with more than 5,000 total horsepower, starting in 2010; medium
fleets, those fleets with total combined horsepower greater than 2,500,
but less than or equal to 5,000 horsepower, starting in 2013; and small
fleets, those fleets having 2,500 or less combined horsepower, starting
in 2015.

		The fleet averages become increasingly stringent over a 10-year
period, and the alternative BACT requirements require annual fixed
actions by fleets to upgrade their vehicles to be cleaner operating for
NOx and PM.

		The regulation provides a number of different options for fleets to
meet the fleet average and BACT options and provide numerous other
flexibility provisions, including various exemptions from having to meet
the in-use performance requirements.

		The Surplus Off-Road Opt-In for NOx, otherwise known as the SOON
program, is aimed at getting more NOx reductions in nonattainment air
basins.  For SOON to be effective in a region, an air district's
governing board must opt in to the program and provide incentive funding
to fleets that fall under the program.  To date, only the South Coast
Air Quality Management District has chosen to opt in.

		CARB has amended the regulation twice since 2007.  The first changes
were approved in January 2009 and, most significantly, provide extended
double credits for fleets that take early compliance action.

		In July 2009, pursuant to California budget resolution AB 8 2X, CARB
adopted emission amendments to the regulation, which -- I'm sorry --
adopted amendments to the regulation, which provided economic relief to
fleets affected by the present economic recession.  The amendments
provide credits to fleets that have experienced drops in operational
activity and/or that have reduced their fleet size by selling or
retiring vehicles.

		Under the amendments, fleets can delay meeting the regulations in
these performance requirements in 2010, 2011, and beyond.  The
amendments also allow all fleets, regardless of whether they have
reduced activity or vehicle retirements, the option of reducing their
compliance obligations in 2011 and 2012.  The amendments are presently
operative under California law.

		In July 2009, CARB also approved additional amendments above and
beyond AB 8 2X to provide fleets with credits that encourage them to
take early action to install retrofits and repower vehicles with cleaner
engines.  These amendments have not yet completed California's
administrative review process and will be submitted to EPA for
consideration after final approval by the California Office of
Administrative Law.

		Now I would like to walk through how the regulation meets the criteria
for authorization.  The board made its protectiveness finding in
Resolution 07-19 at its July 2007 board hearing and has subsequently
confirmed its findings in January and July 2009, finding that the
adopted in-use standards for off-road diesel-fueled vehicles in the
aggregate were at least as stringent as applicable Federal emission
standards for comparable vehicles.

		As recognized by the D.C. Circuit in its 1996 decision in Engine
Manufacturers Association v. EPA and, more recently, by the court in the
TRU ATCM decision, Congress has not granted EPA authority to adopt
emission standards for in-use nonroad engines.  And by providing that
California is the only State that may obtain authorization from EPA to
adopt standards for in-use nonroad engines, Congress has effectively
provided that California is the only government agency with independent
authority to adopt and enforce its own emission standards and other
requirements for these engines.

		While other States may opt to adopt California standards, they may do
so only after California has received authorization, and the standards
must be identical to those adopted by California.

		EPA has long held that "compelling and extraordinary conditions"
refers to the factors that tend to cause pollution, the unique
geographical and climate conditions of the State, combined with the high
numbers and concentration of mobile sources.  California continues to
have the worst air quality of any of the 50 States.  The D.C. Circuit in
the TRU ATCM reaffirmed past decisions that statutory language, as well
as the detailed legislative history of the Clean Air Act, affords
California broad discretion in assessing the State's regulatory needs.

		The South Coast and San Joaquin Valley Air Basins continue, even in
the midst of the present serious economic recession, to have numerous
exceedances of the ozone and PM2.5 State and Federal standards.

		The regulation conflicts with neither Section 209(a) nor Section
209(e)(1).  It does not attempt to regulate new motor vehicles or
engines, new locomotives or locomotive engines, or new off-road engines
under 175 horsepower used in farm and construction vehicles and
equipment.  As to the last group of engines, the regulation does not
apply to agricultural vehicles and equipment.  The regulation also does
not adopt emission standards for new off-road engines primarily used in
construction vehicles and equipment.

		To the extent that the regulation requires BACT for NOx, the
regulation does not establish emission standards for new engines used in
cleaner vehicles.  These standards have been previously adopted by EPA
and CARB in other rules.  Additionally, the in-use off-road regulation
does not require turnover of any vehicle less than 10 years old or any
engine primarily used in construction vehicles or equipment be
retrofitted with a PM retrofit device until 5 years after the vehicle or
piece of equipment has been manufactured.

		Nothing in the regulation conflicts with Section 209(e)(2)(B).  It
does not force other States to adopt California's regulation, nor does
California seek to enforce the regulation against vehicles that do not
operate in the State.

		The regulation meets the first prong of the Section 202(a) test in
that it is technically feasible and provides significant lead time and
flexibility.  CARB, in 2007, fully considered the costs of compliance
and found the requirements to be cost effective and affordable for most
fleets.  And in response to the severe economic recession, the
amendments adopted in 2009 only relaxed the regulation by providing
compliance credits and delays.

		As initially adopted, the regulation provided sufficient lead time and
compliance flexibility.  Pending authorization, the requirements
commence in 2010 for large fleets and are phased in over many years. 
For example, fleet averages are gradually phased in over a 10-year
period.  And for fleets that cannot meet the fleet average PM targets,
they will be allowed to limit phase-in of retrofit devices over the
first 5 years after implementation starts.

		Those that cannot meet the NOx fleet average requirements may limit
turnover to cleaner vehicles to just 8 percent of the fleet for the
first 5 years and 10 percent thereafter.

		Fleets may choose among many compliance options -- retrofitting their
vehicles' exhaust systems with verified diesel emission control devices,
otherwise known as VDECS; replacing the engine in existing vehicles with
cleaner engines, otherwise known as repowering; replacing older
higher-emitting vehicles with newer vehicles equipped with cleaner
engines; retiring higher-emitting vehicles; and/or designating the
higher-emitting vehicles as low use, those that operate less than 100
hours per year.

		Compliance with the regulation is possible using existing technology. 
For example, the PM fleet average is phased in gradually and does not
require all vehicles to be equipped with VDECs immediately.  Fleet
owners are only required to install the highest-level VDECs available
for purposes of meeting the annual PM BACT requirements.  If VDECs are
not available or cannot be safely installed on certain vehicles, fleet
owners are exempted from complying with those requirements.

		The stringency of the NOx fleet average is also phased in over time
and requires that fleets meet the emission requirements only through the
use of existing certified off-road engines.  In the early years, the
fleet average can be met by phasing out the use of Tier 0 and Tier 1
engines and upgrading the fleets with Tier 2 nonroad certified engines. 
Only in later years will Tier 3 and Tier 4 engines be needed to meet the
fleet average requirements.  Fleets are not required to upgrade to Tier
3 or Tier 4 engines if the engines are not available.

		The SOON program is also feasible.  It affects few fleets and utilizes
incentive monies.  As stated, only the South Coast Air Quality
Management District has chosen to participate in the program.

		The regulation will push fleets to upgrade to newer engines and
vehicles.  In the Initial Statement of Reasons and Technical Support
Document, CARB fully described the state of technology for compliance
with both the NOx and PM requirements.  The Tier 3 engines are available
now, and interim Tier 4 engines started to become available in 2008 for
some horsepower groups.  And final Tier 4 engines will begin to be
available for some horsepower groups in 2013.

		There are currently 10 Level 3 PM retrofit devices verified for
off-road use.  Level 3 systems can reduce PM emissions by up to 85
percent -- by at least 85 percent.  Since the regulation was adopted,
the technology has been developing, and new choices are available for
fleets that were not available in 2007.

		When I last spoke to EPA regarding authorization in 2008, there were
only six Level 3 devices.  Now there are 10.  While there were no
passive devices verified before the regulation was adopted, there are
now five.

		The regulation includes numerous provisions that provide fleets with
flexibility in complying with the in-use performance requirements.  For
example, small fleets do not need to begin to reduce emissions until
2015 and are exempt from the NOx fleet average and BACT requirements. 
Similarly, fleets in counties that currently are in attainment with the
National Ambient Air Quality Standards and public fleets that reside in
rural counties with low populations do not have to comply with the
regulation's NOx performance requirements.

		As a result of the AB 8 2X amendments, many large fleets have
accumulated significant credits that will allow them to be in compliance
through the regulation's first years.  To date, approximately 50 percent
of large fleets have claimed fleet reduction credits and that fleets on
average have downsized active vehicles by approximately 35 percent,
which will allow them to delay PM retrofitting of vehicles for 2 years
and upgrading of vehicles for NOx reductions for up to 4 years.

		The regulation also exempts from in-use performance requirements
low-use vehicles that operate less than 100 hours per year, emergency
vehicles, vehicles engaged exclusively in agricultural operations, as
well as other types of vehicles.

		Finally, the regulation allows compliance extensions if there are
manufacturer delays in making retrofits or new vehicles or engines
available.

		The regulation exempts the following vehicles from the NOx turnover
requirements -- vehicles less than 10 years old, specialty vehicles for
which no used equipment or repowers are available, and vehicles equipped
with interim and final Tier 4 engines.  The regulation, as adopted in
2007, does not require fleets to turn over vehicles that have been
retrofitted with the best available PM retrofit technology within the
past 6 years.

		And the board in July 2009 amended the regulation to provide a
lifetime exemption from turnover for vehicles that install retrofits
early.  That amendment will be forwarded to EPA for consideration after
final approval of the amendments in California.

		Similar exemptions from the PM retrofit requirements exist for the
following engines -- engines in vehicles less than 5 years old, engines
for which there is no retrofit available or for which a retrofit cannot
be safely installed, new engines that come with an original equipment
manufacturer diesel particulate filter, and engines that have been
previously retrofitted with the best available VDECS at the time of
installation.

		In summary, the regulation is technically feasible and provides
significant compliance flexibility.

		As the regulation was being developed, stakeholders raised concerns
that some exhaust retrofits could present safety hazards by impairing
operator visibility.  Therefore, the regulation provides an exemption
for vehicles that cannot be retrofitted safely.  The California Division
of Occupational Safety and Health, Cal/OSHA, is currently in the process
of developing more detailed standards for retrofit impacts on the
operator's view to the front, rear, and sides of vehicles.

		CARB and Cal/OSHA staff have been working together to quantify the
extent to which the alterations to a vehicle may impair operator
visibility.  Cal/OSHA intends to incorporate this data as it updates
standards for retrofit visibility, which plans -- and plans to present
its proposals to its board later this year.

		To avoid conflict with a future Cal/OSHA regulation, CARB has
committed that while the final regulation is pending, it will not
require fleets to install retrofits that cannot be installed without
impairing visibility.  CARB has stated that it will accept safety
determinations from State and Federal agencies that have authority to
interpret and apply vehicular or worksite safety laws, including the
Federal Aviation Administration.  At its July 2009 hearing, the CARB
board approved amendments to broaden the applicability of the
regulation's safety exemption.  These amendments are also going through
the California regulatory process right now and will be submitted to EPA
once that is completed.

		As indicated in previous slides, sufficient lead time exists to permit
manufacturers of engines and retrofit devices to develop the technology
necessary to meet the standards and other requirements, giving
appropriate consideration to the cost of compliance.  The reference to
"cost of compliance" in the Clean Air Act, Section 202(a), refers to the
economic costs of motor vehicle emission standards and accompanying
enforcement procedures and the timing of a particular emission control
regulation rather than to its social implications.

		EPA has applied the same analysis to new and in-use nonroad engines. 
In the context of in-use regulations, the crux of the analysis is
whether sufficient lead time exists for development of the technology by
manufacturers that would allow fleet operators to comply with the
regulation.

		Thus, the costs passed on to purchasers by manufacturers have been
largely subsumed in the initial consideration of the costs to
manufacturers when ARB and EPA adopted its new engine rules.  EPA and
CARB have respectively determined that manufacturers of off-road engines
will be able to comply within the time provided for compliance.

		CARB has further considered as part of the regulation the costs of
complying with the PM retrofit requirements and found that the
requirements are technologically feasible for VDEC manufacturers to
produce their products, given appropriate consideration to costs. 
Additionally, CARB, in adopting the regulation in 2007, considered
whether such costs could then be passed on by fleet operators to their
customers and determined that fleets would largely be able to absorb or
pass on the costs.

		As discussed below, to the extent that the recession has intervened
since 2007, the California legislature and CARB have addressed and will
continue to address the compliance affordability of the regulation.

		Cost was one of the issues that CARB carefully considered and analyzed
during development and adoption of the in-use off-road regulation in
2007.  Staff conducted a 3-year-long public process discussing various
proposals for the regulation in over a dozen public workshops and held
two specific workshops that focused solely on how the cost of the
regulation was estimated and whether compliance was affordable.

		Moreover, the January and July 2009 amendments have provided fleets
with significant compliance credits that will allow fleets to
significantly reduce their compliance costs in the early years of the
regulation.

		When the regulation was adopted in 2007, CARB estimated that the total
cost of the regulation to be $3 billion to $3.4 billion, which we
recognize is significant.  But the regulation is expected to result in
thousands of lives being saved and numerous other health benefits, as
well as billions of dollars in health and premature death cost
avoidance.  We determined that most fleets would be able to comply
without significantly impacting profitability.

		There is no dispute that we are in the midst of the most serious
economic recession since the Great Depression, but this should not
change the analysis that EPA applies when considering CARB's
authorization request.  First, there is no dispute that the technology
to comply presently exists in the timeframe provided for compliance.

		Second, the objective compliance costs per vehicle and engine has not
changed.  What has changed is the financial wherewithal of some
companies to afford the cost of compliance, the size of fleets that have
responded to the recession by downsizing through retirement or parking
of vehicles, and because of the smaller active vehicle inventory, fewer
total emissions from the off-road fleet as a whole.

		Questions of how best to address the impact of the recession on
off-road fleets and how to delicately balance the health and welfare
needs of the State against the financial costs of the regulation and the
ability of fleets to do business in California are best left for the
State to decide.

		The recession and its economic impacts raise social cost concerns as
opposed to technological feasibility questions.  The impact of the
recession on the total costs of the regulation and its effect on the
emissions inventory are questions related to cost effectiveness, a
question that EPA has long deferred to California's judgment.

		As previously stated, EPA has long deferred to California's economic
policy judgments.  Quoting from former Administrator Ruckelshaus, "The
issue of whether a proposed California requirement is likely to result
in only marginal improvement in California air quality not commensurate
with its cost is otherwise an arguably unwise exercise of regulatory
power -- or is otherwise an arguably unwise exercise of regulatory power
is not legally pertinent to my decision under Section 209."

		In a similar vein, former Administrator Train stated, "The structure
and history of the California waiver provision clearly indicate both a
congressional intent and an EPA practice of leaving the decision on
ambiguous and controversial public policy to California's judgment."

		Here, California has made a public policy determination that the State
must achieve reductions in the toxic air contaminant diesel PM as
expeditiously as possible in order to reduce the public health risk to
its citizens.  The State has also determined that it must come into
compliance with the National Ambient Air Quality Standards for PM2.5 and
ozone in the timeframes prescribed by the Federal Clean Air Act.

		California has determined that compliance with these mandates and the
costs associated with compliance are necessary and cost effective.  EPA
should defer to California's policy judgments and not disturb the
findings.

		The second prong of the EPA adopted test for consistency under
Sections 209(b)(1)(C) and 202(a) requires that Federal and State test
procedures be able to use the same test unit or engine.  This test for
consistency is satisfied because there is no issue as to whether the
same in-use engine can meet both Federal and State procedures since
Federal regulations for in-use nonroad engines do not exist.

		To the extent that new engines are used to meet fleet average or BACT
requirements, the State certification test procedures are set forth in a
different regulation for which authorization has been granted and are in
basic alignment with Federal new engine test procedures.

		In summary, CARB firmly believes that the Administrator is required
under Section 209(e)(2) to grant the authorization.  There should be no
dispute that the three guiding criteria for denial of an authorization
cannot be met.  Protectiveness has been clearly established. 
California's compelling and extraordinary need for its own in-use
off-road emissions program is unquestionable.  Finally, as discussed
above, the regulation is consistent with Section 209 and is technically
feasible.

	Accordingly, California requests that EPA act expeditiously to grant
the authorization.  Delay has caused uncertainty for stakeholders who
would be required to comply with the regulation, as well as for retrofit
manufacturers, both of which need certainty to make business plans and
decisions.  I think that the D.C. Circuit's affirmance of the TRU ATCM
authorization this month was a big step forward toward providing
certainty that California may adopt in-use regulations requiring
retrofits and accelerated upgrading of engines and that EPA's quick
action here would build on that certainty to the benefit of all
stakeholders.

		That concludes our presentation, and we're more than happy to take
questions.

		MR. SIMON:  Thank you, Mr. Terris.

		I had one question.  Earlier, about midway through your presentation,
you talked about exemptions and flexibilities here, and you talked about
emergency vehicles.  Can you tell me how you define "emergency vehicle"
in this context?

		MR. TERRIS:  Basically, it's defined in the California Vehicle Code,
and we specifically apply that in this vehicle code.  So it's for
specific types of vehicles that are considered to be emergency.

		MR. SIMON:  Okay.

		MR. DICKINSON:  I have one question.  You mentioned that there were a
series of amendments in 2009 to the regulation, including a set of
amendments from July 2009 that have not yet been finalized by your State
Office of Administrative Law.  And I think, just for the record, you
stated that you would submit those to the EPA once they were approved. 
Is that correct?

		MR. TERRIS:  That's correct.

		MR. DICKINSON:  Similarly, I would assume that most people in the
audience and I are aware that California is continuing to look at these
regulations, and any subsequent amendments that happen this year or any
other future model years or calendar years would also be submitted to
the EPA and that, therefore, you are really just taking the current law
as it exists today and asking EPA to take action on it?

		MR. TERRIS:  Correct.  We've issued a notice just the other day that
there is going to be a hearing on April 22nd, and we are further going
to be looking at the question of the emissions inventory for off-road
engines.  We're going to be looking at the question of on-road trucks,
in-use on-road trucks and vehicles.  We're looking at the question of
where we stand with the State implementation plan.

		And basically, it's not a rulemaking.  The board is going to decide
how it's going to proceed.  We're anticipating that there will be a
board hearing to address further needed amendments around the September
timeframe.  And yes, of course, what we believe, if there is any action
that is going to be taken, it will be to provide additional relief and
flexibility to both the on-road in-use trucks program and also the
off-road in-use program.

		And we believe that by providing relaxation and flexibility and not
creating more stringent standards, that those changes, if EPA were to
grant the authorization before those amendments could be finalized, that
they would be submitted to you for consideration.

		MR. DICKINSON:  Thank you.

		MR. SIMON:  Okay.  Thank you.

		Why don't have -- let's see, we have Michael Kennedy and -- oh, Jon
Cloud and Guy Prescott come on up from AGC and Local 3.

		[Pause.]

		MR. SIMON:  When you're ready.

		MR. PRESCOTT:  Thank you.

		My name is Guy Prescott.  I'm currently the Executive Director for the
Employee Assistance Program for Operating Engineers Local Union Number
3.  Prior to that, I was the Director of Safety for Operating Engineers
Local 3.

		I'm a 25-plus year safety and health professional.  I've worked with
Sandia National Laboratories, part of the Department of Energy.  I've
owned my own consulting firm, Common Sense Safety, Inc., working with
numerous construction and general industry clients.  And I've had the
privilege of being an instructor with the University of California
Occupational Safety and Health facility, as well as with the University
of Washington and the University of Michigan.

		I am here today on behalf of Operating Engineers Local Union Number 3.
 I have recently been appointed by Governor Schwarzenegger to the
Cal/OSHA Standards Board, which Mr. White mentioned earlier.  But I am
here today on Operating Engineers' behalf, not on the standards board's
behalf.  I wanted to make that clear.

		Local 3 represents over 37,000 members.  These are the men and women
who operate this what is being called off-road heavy equipment every
day.  Not only do we represent the operators themselves, but the
surveyors, the grade checkers, and the mechanics who work on the ground
and on this equipment around it while it is operating.

		The safety and health of these members is imperative to Operating
Engineers.  Every working man and woman has a right to go home to their
families at the end of the day.  That's the bottom line for occupational
safety, and we are seeing major problems with that being capable of
being done because of these filters.

		According to the U.S. Department of Labor, over 500 construction
workers lost their lives every year to "struck-by" accidents.  This has
been since 1992 when I've been looking at statistics.  It has been as
high as 600 in one year in that timeframe.  These accidents have also
caused operators to suffer from post traumatic syndrome.  We lose almost
as many operators as we lose people on the ground.

		When somebody has had the unfortunate ability of operating a piece of
equipment when they have run over someone, the traumatic effects are
such that rarely are we able to get that person back into the controls
of that equipment again.

		The obstruction of the operator's line of sight is almost always a
contributing, if not a primary cause of these fatalities.  This is very
large equipment.  It has a lot of heavy metal on it, and it does, even
though the manufacturers try their best to give us as much visibility as
they can, structurally, this isn't always possible.

		It isn't possible to have 100 percent visibility, but the
manufacturers are working forward in maximizing visibility for the
operator's seat.  There has been a tremendous amount of effort put in by
the manufacturers over the years to improve our visibility, and we are
very fortunate that our manufacturers are working with us in this area.

		California's off-road rule threatens to take this away.  It's going to
send us in the opposite direction.  This rule requires fleet owners to
install PM filters on equipment that was never designed to have these
filters placed on it.  It reduces the operator's visibility from the
operator seat in the overwhelming majority of installations that we have
seen.

		These rules will create additional fatalities.  It is not a matter of
if it will happen.  It is a matter of when it will happen.  And
gentlemen, I feel if it had not been for the downturn of the economy, I
would probably have fatalities to show you today.

		In late 2006 and early 2007, Local 3 sought to meet with the CARB
staff to talk about the worksite hazards that its retrofit program would
require.  The staff canceled the first three meetings on us.  The staff
member showed up over 2 hours late to our fourth meeting.  We were
literally locking the doors when he showed up.

		The staff then proceeded to tell us that they had already completed
the rule that they were going to present to their board, and they would
not be making any additional changes to that time.  Safety was never
considered in this rule.  You cannot consider feasibility without
considering safety of the final application.

		Local 3 then was forced to launch an all-out safety campaign.  I
brought in our safety -- I brought in our director from our political
branch.  I brought in all of our political power, and we started an
all-out I will call it a war to get safety brought to the front page of
this issue.

		CARB ultimately did agree that filter installation should not violate
OSHA standards but refused to make any reference to visible and reserved
the right to decide for itself what would be unsafe.  CARB does not have
safety professionals on its site.  Yet they are the ones who are going
to make, by their rule, the determination of what is and is not safe.

		CARB also insisted that retrofits would remain a centerpiece of its
off-road rule and continues to pressure fleet operators to err on the
side of creating a hazard.  Currently, they have extended the
two-for-one credit on mounting these filters on equipment already.  Buy
one, get the second one free as far as your emission standards.  And in
doing so, this continues to encourage employers who are under financial
pressure to go forward with retrofits, even though they may be unsafe.

		CARB's approach falls way short, and the rule continues to threaten
construction workers.  CARB does not have either the expertise or the
legal authority to determine what is and is not a hazard to construction
workers, and CARB is extremely biased in favor of retrofits and
incapable of making a decision in regards to the hazards presented to
the working men and women.

		This rule may exempt individual pieces of equipment from retrofits if
they are unsafe.  However, it continues to count that piece of equipment
in the inventory.  The horsepower and the emissions stay with that
fleet.  The standard for granting or denying a limited exemption for
even an individual piece of equipment has, to date, not been
established.  There is no establishment within CARB that I can apply for
an exemption to date.  The policy does not exist.  They haven't written
it.

		Even if they did exempt a piece of equipment, the owner still has to
account for the horsepower and the emissions it does.  This leaves them
eventually a very small fleet to make very major changes with.  It once
again destroys the feasibility of getting to where they want to be.

		In August of 2008, Local 3 petitioned the Cal/OSHA Standards Board to
clarify the Cal/OSHA standards and specifically address the hazards
inherent to retrofitting off-road equipment with PM filters.  This
petition was filed jointly with the AGC of California and Operating
Engineers Local 3.

		Gentlemen, I talked with the executive officer of the board, and she
told me that when that petition hit the floor, that you could hear jaws
drop, the fact that you saw Local 3 and the AGC's logos on the same
piece of paper, requesting the same identical wording to be changed. 
Never before in history have those two agencies joined in such an
effort.

		In November 2008, the Occupational Safety and Health Standards Board
anonymously granted the petition to move forward towards a new
rulemaking.  CARB was at that hearing.  They opposed our petition.  And
since that standard board granted it, CARB has continuously interfered
with the board's decision-making process, which has delayed and
postponed this rulemaking.  This rule still has not been yet made.

		After that hearing in November, one of CARB's staff was upset about
the board's decision, talking on her cell phone at the airport, ranting
back and forth and said, while standing in front of Dr. Frisch, a seated
member of the California Occupational Safety and Health Standards Board,
"We will not let this penny-ante board stop us," referring to the
Occupational Safety and Health Standards Board.  A penny-ante board.

		The constant belligerent denial of safety has been something we have
been fighting for years.  In October of '09, Governor Schwarzenegger was
finally forced to step in between two bickering agencies and brought to
a halt the retrofits that impair visibility and directed CARB to do what
it should have done long ago, which was undertake a study of the
feasibility of the safe installation of PM filters on off-road equipment
that this rule covers.

		CARB has yet to report the results of such a study.  Indeed, it has
yet to produce any evidence that fleet owners can safely retrofit their
equipment to anywhere near the extent that the rule contemplates.  The
Governor made a 6-month stay back in mid-October.  That's up this month.

		The other thing that was done by this that I don't have here is the
Governor also, in doing this, told the Cal/OSHA Standards Board that we
could not go forward with rulemaking for the 6-month period of time.

		Local 3 remains extremely concerned in regards to the safety of our
membership.  As noted earlier, CARB has no expertise in construction
safety or health, and it remains biased in favor of the retrofits that
lie at the heart of its off-road rule.  The very fact that CARB did not
conduct such a study that they are now supposed to be conducting during
the rulemaking processes raises enormous questions about its
understanding of construction work and the safety required in
construction work.

		Safety has always been and must continue to be a fundamental part of
any discussion as to the technology and its feasibility and/or the lead
time that the Clean Air Act requires EPA to consider.  We cannot call
something feasible when it is going to kill people.

		If California is not provided enough time for equipment manufacturers
and/or others to develop the technology necessary to safely retrofit the
off-road equipment in the construction industry, then EPA must deny
California's request for Federal approval to enforce its rule. 
Retrofits must be safe.  Otherwise, they are and should be unacceptable.

		This regulated equipment ranges from as small as 25 horse to over
1,000 horsepower, from a few pounds to several tons.  It can travel from
mere feet per minute to over 45 miles an hour.  It is not an industry
that one shoe fits all will ever be appropriate technology.  It is not
for CARB to study a few pieces of equipment and say that this is typical
of what the industry has.  Such limited research cannot begin to justify
broad consideration of the feasibility of compliance with the off-road
rule.  We can't look at four or five different pieces of equipment.  I
can't even take the same exact piece of equipment, gentlemen, and say
that it will be operated in the same manner on five or six different
jobs.

		This equipment is very diverse, very specialized, and can be
ultimately put to service in many different ways.  CARB and the EPA also
have to account for the many different applications that I'm talking
about that this equipment has to go through.  There is different
attachments that can be put on or removed from the equipment.  The list
goes on and on.

		I've brought some photographs, as a picture says 1,000 words, of some
of the different equipment that we're talking about.  These are 988
CATs.  They are front loaders.  On front and just outside of the picture
there to the right is a large scoop, which will pick up material.

		This piece of equipment will then back up, turn, move forward to a
dump truck or other conveyance, unload that material into it, back up
again, turn, go back to the pile, and repeat this operation.  It's used
for loading.  You will see that the one on the right has been
retrofitted with the CARB-required filters, while the one on the left is
standard.  From this distance and angle, it doesn't look like it's that
big of a deal.

		From the driver's seat, however, the retrofit on the right, you can
barely see the individual through the exhaust system who you can clearly
see standing on the left.  From going from this vehicle having about a
50-foot blind spot behind it, which is a tremendous kill zone, it has
gone to well over 120 feet because of the filter installation.  For a
piece of equipment that spends as much time in reverse as it does
forward, this will kill someone.

		The current OSHA regulations in both Federal and State require that
you do not block visibility in any way, shape, or form to the forward or
sides of the equipment.  Neither the Federal OSHA or Cal/OSHA has ever
considered the rear vision because nobody has ever tried this before.

		This is a rubber-tired dozer.  Once again, a vehicle that spends a
fair amount of time in reverse, not probably as much as it does forward,
but nevertheless, probably 25, 30 percent of its time in reverse.  You
can see the tremendous blockage that these filters have done once again
to that rear visibility.

		This is just absolutely unacceptable from safety and makes this
absolutely unfeasible technically.  Just because of the fact that they
work on the workbench in a test laboratory does not make it feasible to
put them to work in reality.  This is not feasible, gentlemen.

		If you notice -- let's see if this pointer works -- on this
instrumentation here is the acknowledging system, the electronics for
those filters.  It has been placed right on top of the instrument panel,
right in the operator's line of visibility, blocking visibility forward
and to the side as well as the filters out the side window there.

		This is in current violation of both California and Federal OSHA. 
This would be cited as a violation of OSHA.  Yet, here again, with the
early credits, the Moyer funding, et cetera, these are being installed.

		This is a scraper.  We have maintenance on this equipment, a lot of
maintenance.  This ladder access up here, as you see without the
filters, is so that you can walk across this area to maintain all of
this hydraulics.  As you notice where the filters are now, my access is
blocked to the maintenance area.  If those filters are recycling at the
time somebody does maintenance -- and when these filters cycle, the
equipment is parked.  It can't be run during this time.  I have
personally measured the outside of those cans to hit over 1,200 degrees
Fahrenheit during recycling.

		You put it right in the middle of a walkway, when this thing is parked
is when somebody is going to want to do maintenance on that.  We can't
have it sit to recycle, then sit to do maintenance later on.  This
equipment has to move, or it doesn't make money.  And quite frankly, if
it's not moving, our members don't have jobs.

		Another issue not thought of by the installers or CARB as a fact that
this does destroy, making fall hazards, trip hazards, burn hazards, not
only visible hazards.  Here again, side vision being blocked.  This
violates current OSHA standards.  However, once again, it is being done.
 You can see the tremendous blockage there to the side.

		This particular piece of equipment can travel up to 45 miles an hour
and makes turns at those speeds.  This side blockage can be extremely
dangerous as well.

		Heat and high-pressure hydraulic lines is not something you want to
mention.  These hydraulic lines that you see in this photograph on the
left here are in the 3,000 to 5,000 psi range.  A pinhole leak in one of
those is going to put a fine mist of highly aerated combustible material
across a canister that can be up to 1,200 degrees Fahrenheit.  We have
completed the fire triangle.  We will have ignition.

		On the picture to the left, and I apologize for the poor lighting
here, this is part of the HUSS installation, which needs fuel to be
taken to it for when it afterburns.  They've used an automotive-grade T,
and this particular pipe that's in the hand here is actually a plastic,
not a reinforced pipe to run that fuel line over.  And this sits in the
engine compartment of a large piece of equipment.

		I seriously doubt under regular operation that T and pipe will last 18
months before you have fuel leakage in the engine compartment from this
retrofit, another fire hazard to the people operating this equipment,
people on the ground around it.

		Just here again, people are working on this equipment who are not
familiar with it, who have no idea what it takes to safely operate this
equipment so that our members can go home to their families at the end
of the day.

		Additional installation hazards, here we've cut through the metal to
make a groove to run the wiring for the instruction.  This structural
metal is part of this upper deck walking surface.  It now fluctuates
when you walk on it.  Eventually, that will fatigue.  It's not a big
enough piece of structure that's going to cause the piece of equipment
to break in half, but it will create maintenance problems, costs that
aren't associated for, and could be a safety hazard down the road as
well.

		This installation was actually done by the filter manufacturer
themselves.  This is the hand rail used for when you're walking around
servicing the piece of equipment.  They cut right through it and mounted
the filters.  If somebody, once again, is maintaining that piece of
equipment while those are recycling, where my hand used to go, there is
now 1,200 degrees Fahrenheit.

		Even if those are cold, early morning, and I'm walking around that
piece of equipment to do oil, equipment checks, I no longer have
something to hold onto when my feet could be muddy, wet, covered in
dirt, whatever.  A safety hazard once again because of lack of knowledge
of what this equipment is required to do.

		There is no evidence that it is feasible to safely install these PM
filters on off-road construction equipment to the extent that the CARB
off-road rule is contemplating.  CARB is predicting more than 100,000 of
these retrofit filters out there.  There is abundant and undeniable
evidence existing that retrofits can easily pose a grave risk of severe
bodily harm and death to employees.

		In addition to the risk that a piece of equipment will strike a
construction worker from these retrofits blocking visibility, there is
increased risk of falls, burns, and may even risk the structural failure
of a piece of equipment because of the way these retrofits are being
installed.

		Operating Engineers Local 3 urges the EPA to deny California's request
for Federal authority to enforce its off-road rule.  This is the only
way to protect the men and women working in California's construction
industry from a new and grave risk of injury and even death.  Not even
in the name of the environment and protecting the environment should EPA
or anyone consider putting working men and women at risk to the nature
that these filters will incorporate to our membership.

		Once again, I thank you for your time, and on behalf of the 37,000
members of Operating Engineers and their family, I hope that you do deny
this so that they can go home safely.  This is not feasible.

		Thank you.

		MR. SIMON:  Thank you, Mr. Prescott.

		It would be helpful maybe in your written comments, your supplemental
comments, you talked about standards from both the Federal and
California OSHA in terms of sight line and visibility, if you could
provide those as well?

		MR. PRESCOTT:  I can do that, yes.  As I said, the 6-month stay that
the Governor gave is up this month.  I do know the Cal/OSHA Standards
Board is meeting tomorrow.  I'm flying back this evening to be there,
and I do know that this is going to come up as a subject there tomorrow,
too.

		I do hope that they will press forward in making changes to this.  But
at this point in time, the politics have been extremely difficult in
moving forward and doing what is right, which is why we, once again,
request that you deny this waiver so that we can move on safely.

		Thanks.  Any other questions, gentlemen?

		MR. SIMON:  I think we're good.

		MR. DICKINSON:  Building on Karl's request, to the extent that it's
not already in the record, if you can submit any information relating
back to your petition to California in August of 2008, as well as more
of the background of the Governor's action in October of last year, it
would probably be helpful.

		MR. PRESCOTT:  I would be glad to summarize that and send it to you.

		MR. DICKINSON:  As well as your presentation today.

		MR. PRESCOTT:  Yes.  I think you have a copy of this already. 
Correct?  No?  I will get that to you.

		MR. DICKINSON:  I have a copy of --

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

		MR. SIMON:  All right.  Thank you.

		Mr. Jon Cloud, come on down.

		MR. CLOUD:  Good morning, gentlemen.  Thank you for the opportunity of
being able to speak to you.

		First, I've got to tell you, your city is absolutely beautiful.  It's
my first time to Washington, D.C., and just by a fluke, I happened to be
here this week with my daughter's eighth grade class on a civics tour
that we did on the east coast.  It started in Boston, New York,
Philadelphia, and D.C.

		She and her 75 classmates got put on the plane on Friday and -- or on
Monday, and I stayed a couple of extra days to be able to do this
hearing.

		MR. SIMON:  It would have been nice to have them here.  We could have
shown them civics in action.

		[Laughter.]

		MR. CLOUD:  Maybe so.  Sorry about that.

		MALE SPEAKER:  I hope they saw the cherry blossoms.

		MR. CLOUD:  All right.  First off, good morning.  My name is Jon
Cloud.  I'm treasurer of our family-owned business named J. Cloud --
called J. Cloud, Inc.  We started the family business in 1993 with my
father, Joel; my brother Joel; my brother James, and myself, Jon.  So
it's J. Cloud, Inc.

		We've been in business since 1993.  My father has been in heavy
construction in one way or another for over 50 years and at 71 years old
is still the hardest-working man that I know.

		Over the years, our company has become a leading supplier of recycled
concrete and asphalt.  If there is a demolition job and someone tears
down an office building, a parking lot, or some type of a structure, we
take the broken asphalt and concrete and recycle it, and we make
rock-based materials out of it that we sell to the community, to
operators including AGC members, and we construct, as I said, road-based
materials.  We do a lot of water, sewer, and pipeline jobs and things of
this sort.

		Our company is a relatively small company.  It has annual sales of
approximately $3 million.  We have 18 employees.  It is, however, big
enough to recycle approximately 200,000 tons of concrete and asphalt
that would otherwise find itself in San Diego County's landfills.  We
are, indeed, a very green business, and we've been doing what we've been
doing since '93, and we've got heavily into recycling about 8 years ago
and actually have done a few innovations in southern California as far
as recycling is concerned.

		I am here today to speak on behalf of the Associated General
Contractors, which has been and remains strongly opposed to California's
request for Federal approval to enforce its off-road rule.  Our firm is
a member of the Associated General Contractors, and I am pleased to tell
you that I'm actually on the board of the San Diego Chapter.

		AGC was founded in 1918 at the express request of President Woodrow
Wilson.  It currently represents more than 33,000 firms and has over 100
chapters in the United States.  Among the association's members are
approximately 7,500 of the Nation's leading general contractors and more
than 12,500 specialty contractors, and more than 13,000 material
suppliers and service providers are members of the AGC.

		These firms engage in the construction of both public and private
works, from infrastructure including highways, roads, bridges, transit
systems, airports, office buildings, your kids' schools, the hospitals
you go to when you're sick.  And more than likely, an AGC member more
than likely built this building that we're sitting in.  It's a pretty
strong force.  AGC members also prepare home sites for installation of
utilities in housing developments where basically people live.

		Like my firm, most AGC members, believe it or not, are family-owned
businesses, and many of them across the Nation are vested heavily in
off-road equipment.  So this is a very, very big issue to us.

		AGC has already provided the EPA with detailed comments on
California's request for approval to enforce its off-road rule.  AGC
wrote two letters to the EPA in October of 2008 and made an extremely
detailed, 183-page report in December of the same year.  AGC wrote the
EPA again in March and August of 2009, and in January of this year. 
Included in several of these submissions are sworn statements and other
evidence of fact that California requests the EPA to consider.

		In advance of the May deadline, AGC will also provide written comments
and additional evidence for the record of the current proceedings.  AGC
continues to research California's original emissions inventory and
other underpinnings of the off-road rule.  The CARB board will entertain
proposals for further amendments of that rule later this month.  The
results of both the research and the board's next meeting are among the
many factors that EPA can and should consider.

		Today, I will try to emphasize the AGC's central reasons for asking
the EPA to delay or deny California's request for Federal authorization
and then try to provide some context of what these rules are going to do
and show you that, indeed, they will affect real people, real families,
and businesses.  And we counting, California is counting on the Federal
EPA to make the right decision in this choice.

		First, I would like to emphasize that the off-road rule is not yet
ripe for Federal review, meaning it has been and remains a moving
target.  And this rule is a highly moving target.  AGC has filed two
petitions to amend the rule, and as of today, the California Air
Resources Board has neither granted nor denied either of them.

		Since August of 2008, when it had made its request for Federal
approval to enforce the rule, California has revisited the rule on three
separate occasions and has twice amended it . In apparent response to
the petitions that AGC filed, the California Air Resources Board has
also made it clear that other amendments are on the way.  Yet they still
want the waiver.

		Just over a month ago, the board held another public hearing on the
rule, gathering additional facts for the better part of the day.  Two
experts and several construction contractors spoke on behalf of the AGC.
 I happened to be one of them.  Thirty-seven others also testified,
including me.

		The board and staff confirmed that they were already making plans to
provide additional regulatory relief to the construction industry.  The
rule is not passed.  Yet they are telling us, "Just trust us.  We'll
pass the rule.  Then we'll fix it."  This has been going on for the
better part of 3 years.

		In this regard, it is one thing to accept that California might amend
a particular rule at some point in the future and quite another point to
know that things, as I said, it's a moving target and they will make a
change after the rule is in effect.  Why don't we have the change
before, and let's review the rule?  That kind of information provides a
clear and sound basis for EPA to defer any action on the California
request for Federal authorization and, indeed, would be imprudent for
the EPA to disregard it.

		Second, the State's emissions inventory, which served as the starting
point for the off-road rule, there are some issues with it.  The State
emissions inventory has proven to be wide off the mark.  New and better
data collected in 2009 and new research into the emissions that
California -- reveal that California simply does not need the rule in
any form approaching -- in any way approaching its current form.

		The new data reveals that the population of off-road equipment is both
smaller -- and when I say "smaller," meaning the fleet is at least 45
percent smaller than was anticipated when CARB set up the rules -- and
is also newer.  CARB anticipated that there was a lot more older fleet
in the inventory, and it is certainly newer than the State believed at
the time it developed the rule.

		In addition, in a recently published article, two professors at
UC-Berkeley have demonstrated that California's computer model is
irreconcilable with the historical data on diesel fuel consumption --
maybe later on, I'll touch on that in a bit, in a minute -- and
therefore requires adjustment.  While AGC is still waiting for final
results of its own research, the association is already confident that
the PM and NOx emissions from California's construction industry are
well within and will remain under CARB's set targets for the emission
rules.

		Third, the cost of compliance is clearly excessive.  And I've got a
note here someplace.  In CARB's report talking that -- stating that they
believe that companies can basically absorb the cost, to be honest with
you, they haven't a clue as to what it is actually going to cost us,
particularly in this market.

		In April of 2007, when it issued the Initial Statement of Reasons, the
State conceded that the cost had reached "the economic limit of what
industry could bear."  That statement was made in 2007 based off of
historical information from the strength of our industry from 2005 and
2006, well before California's construction industry, quite frankly, is
in a depression.

		So, in 2007, the statement was made that they had already reached the
limit of which the industry could bear.  When it comes to profits, when
it comes to volume, we are basically in a depression compared to those
numbers.

		At the same time, the California construction industry has gone into
the worst depression in the memory of anyone still in business can
remember.  As I said, my father has been in heavy construction for over
50 years, and I know some people in San Diego County who have been in it
over 65 years, and this is the worst they've seen it.  Over the last 4
years, one-third of California's construction industry has completely
disappeared.  Those who are still there are somewhat hanging on a
thread.  There are some areas in which people are doing well, but they
are few and far between.

		In the record at the hearing that California held on March 11th, the
EPA will find abundant evidence that the State's construction
contractors cannot generate the earnings that they would need to
self-finance this.  And as far as going to a bank and borrowing the
money?  Very, very thin options in doing that.  Basically, nonexistence.

		California adopted the rule in April of 2007, and the first of several
deadlines for compliance of that rule, the fleet average requirements,
came and went in March of 2010.  As the lead time expired, the
technology necessary to comply with anything approaching an affordable
cost has yet to be developed.  Retrofits, repowers, replacements remain
economically infeasible.

		For most contractors, the only option was to downsize their fleet and
then limit their earning capacity to basically working their way out of
a hole.  Particularly when you have old equipment, like our company
does, that's paid for, and you have to downsize and get rid of it, and
then you're going to get hit with the burden of retrofits in the future,
you're going to do that with what money?  You've already lost a large
part of your capital because, in our instance, we had to downsize.

		Fourth, the cost of compliance remains only one of several reasons for
questioning the technology.  When it adopted the rule, California
acknowledged that the rule would ultimately require fleet owners to
retrofit more than 100,000 pieces of equipment.  By March of 2010, only
1,000 such units had been retrofitted.  The goal was 100,000, and they
basically got 1,000 March of this year.

		To this day, the technical feasibility of installing verified devices,
it hasn't been done, and the regulated equipment remains a great
unknown.  You saw the HUSS filters up there.  Those that are able to be
installed, there is all kinds of problems with them, and I doubt that
anyone from the CARB staff has ever run a 988.

		We have pieces of equipment that run from skiploaders to that size of
equipment, and I run them from time to time when I'm filling in for
somebody.  And I'm telling you, as pointed out, the sight distance
visibility, when it used to be 55 feet, and now you just -- it's out to
the point of over 120 feet of a blind spot, someone is going to get hurt
or killed in this industry based off of those filters.

		Fifth, the fleet owners have to retrofit their off-road equipment far
more carefully than CARB anticipated.  As Cal/OSHA has discovered, the
technology on which the rule so heavily depends can impair visibility
and create other risks in the construction industry as you saw.  AGC
continues to support incentives for contractors to voluntarily retrofit
their equipment or otherwise reduce their emissions.

		The off-road rule is, however, so broad and aggressive that it is
nearly certain to put construction workers at risk of injury or death. 
By CARB's own admission, appropriate safety standards would threaten the
viability of major portions of the rule.

		On a personal note, our own company -- I touched on this -- could not
even begin to afford the retrofits on this, and at one point, we
actually thought we were safe because we have a lot of Tier 0 equipment.
 And we thought we were safe within the limits that CARB set for the
fleet sizes.  And then in our equipment at Tier 0, there is not
verified, certified T -- well, I still call them T backs, but the diesel
particulate filters that are certified for the Tier 0 for the type of
work that we do.

		As the first deadline approached to register your equipment, our only
option in dealing with the rule was to downsize our fleet.  And when I
say downsize it, it gets interesting in that rule Section 209, the word
was mentioned "arbitrary and capricious."  I was sitting in an audience
wondering, what exactly does arbitrary and capricious mean when it comes
to this rule?  Because at one point in time, CARB had a large fleet set
at 10,000 horsepower.  When the fleet was 10,000 horsepower, I'm sitting
in the audience going, wow, well, the crosshairs aren't on me.  I'm kind
of safe here.  I'm doing all right.

		And then overnight, I say overnight, about 4 months later, there was
another meeting in California that I went to, and CARB staff, just like
basically saying they're changing a light bulb from a 100-watt light
bulb to a 75-watt light bulb, in that meeting said, oh, by the way, we
reduced the fleet, large fleet to 7,500 horsepower.  Well, a whole bunch
of people that weren't captured at 10,000 horsepower got captured at
7,500 horsepower, and we started thinking, "What's going on here?"  Why,
it had been set at 10,000 for so long, and arbitrary and capricious.

		A couple of months later, we're at another meeting, and CARB says, by
the way, the new floor for a large fleet is 5,000 horsepower.  Well,
that got my attention because we weren't 10,000 horsepower, and we
weren't 7,500.  But we were well over 5,000 horsepower.

		So our fleet of equipment that a lot of it is old.  It's paid for. 
Well, it's not paid for.  It's certainly not as expensive as the new
equipment, I'll tell you that, but it is financed.  Basically, we're a
large fleet.  So now we're subject to a rule that the Granite
Constructions, the Vulcans, and the Hansons and the big boys are subject
to, so now the crosshairs are on us.

		And I've got to tell you, it had been trying to figure out why CARB
staff had dropped the cap from 10,000 to 7,500 to 5,000, been trying to
figure it out for a while.  And just so happens to be last month, I'm
glad I went to the meeting in Sacramento because the answer came out.

		It was pointed out that there was a study written by a Professor
Harley from UC-Berkeley.  He actually did an update last year, but his
first report was written in the year 2000.  It's a 12-page report that
basically goes through -- and he is from UC-Berkeley, and I happened to
talk to him Tuesday, 2 weeks from yesterday.  Put a call into him.  He
returned my call, and we talked for 47 minutes.  We went over both of
his reports.

		You don't have to be a rocket scientist to figure out that his first
report that was written in the year 2000, he has the implication box in
the lower left-hand corner.  His implication box states of CARB's
off-road regulations, "Implication:  The contribution of off-road diesel
equipment to the total emissions of NOx and PM may be lower than
suggested by current emissions inventories.  As a consequence, the
control of these sources may not lead to the air quality benefits that
are as large as expected."

		Do you think maybe that's the reason they dropped the cap from 10,000
horsepower to 7,500 and to 5,000?  The reason why it was dropped is to
actually capture more people to have more benefit.  The problem is, as
Professor Harley points out in his report, our industry, where CARB had
originally anticipated it being 25 percent of the problem, his
calculations are that we're 10 percent of the problem.

		Fact of the matter is, you can regulate us out of business, you're
only going to fix 10 percent of the NOx problem.  That's a problem.  So
the question comes up, what percentage of the problem are we in our
industry?  Are we 10 percent of the problem?  Are we 7 percent of the
problem?

		And I would venture to say if we're 10 to 7 percent of the problem,
we're probably getting 40 percent of the burden.  Is that fair to our
industry?  I know fair has nothing to do with this.

		One of you talked about bringing my daughter here for a civics
lessons.  It would be interesting to see, particularly since we just
spent time in Philadelphia at Freedom Hall.

		Our company -- keep in mind "arbitrary and capricious."  I would like
to know if those changes actually touch on that.  We have absolutely no
reason to believe that the technology necessary to come into compliance
will be anything approaching affordable cost or is going to be developed
in the little time remaining.  And as I stated earlier, CARB hadn't a
clue as to what this is really going to cost us.

		I am reminded at a meeting -- I don't need a script for this.  I was
reminded at a meeting the first time that I was blessed with Mr. Erik
White's presence at a meeting in San Diego County.  It's about 2 and 1/2
years ago, maybe 3.  We were talking about the cost of compliance, and I
mentioned at that meeting in front of somewhere between 275 and 300
angry operators and business owners that the cost of compliance was
going to be excessive to us.

		Mr. White looked at me, looked at the audience, and said, "Some of you
will just have to go out of business and find something else to do."  I
find that comment abhorrent.  I find it callous.  And I find it rather
flippant.

		Many people, including me, have a dream in this country to do things,
to build things.  My dad built a company that he wanted his sons to
join.  We did so.  And to have a regulator be so callous as to look at
people like me who have an investment of my life in this and say some of
you will have to go out of business and find something else to do, Erik,
I'll ask you again, and do what?  Become a State regulator and find
another industry to run out of California?  That was a callous comment,
and I will remember it forever.

		In closing, let me join AGC in urging the EPA also to hold hearings in
California.  The vast majority of the affected construction suppliers
simply cannot come here to testify.  I told you guys I just happened to
be here on a fluke because of my daughter's trip, and it was quite a
lesson.

		At some point, maybe I put a little bit of a face to this, you will
see the need and the fear of those of us and the frustration in this
industry that this is really going to cost real people a lot of time, a
lot of money, and a lot of energy.  And the cost of compliance, I will
say once again the State of California hadn't a clue as to what it would
be.

		And we would look at the Federal EPA in helping the State of
California.  We know you can't protect them from themselves.  But there
are some of us out there asking for protection from them.  And before I
close, I just want to make a couple of comments off my written ones.

		When we were in Philadelphia, we were walking through where the
Liberty Bell is, and we walked through the Freedom Hall, signing of the
Declaration of Independence and the Constitution.  And it was very
interesting in looking at what was there, and the kids -- I mean, I'm
somewhat of a history buff and have never been out here to the east
coast.  But I wondered what the Founders were thinking when they wrote,
"We the people of the United States, in order to form a more perfect
union, establish justice, ensure domestic tranquility, provide for the
common defense, promote the general welfare, and secure the blessings of
liberty to ourselves and our posterity, do ordain and establish this
Constitution."

		It made me think "to secure the blessings of liberty to ourselves and
our posterity."  Did liberty include my right to use the equipment that
we've paid for?  Does it include my right to a dream of building the
dream for my family that my kids can join?

		Because I'll tell you what, my children and my nephews, they're not
going to come to the construction industry.  They're going to have to
find something else to do because it's basically unbearable to be able
to do it.

		And I also wondered if the Founders would think "to secure the
blessings of liberty to ourselves and our posterity," would they
consider a statement from a regulator like Mr. White, "Some of you will
just have to go out of business and find something else to do," would
they consider that a taking?  But I have protection from that.  It's an
interesting thought.

		Before I close up, to this bill, to me, their regulations are a dream
killer because they're basically killing not only my family's American
dream, but many other people in California's American dream.  It's going
down the tubes with this.

		One other thing.  Cost of compliance.  Not sure if someone is going to
bring this up again, but it was stated by CARB that the cost of
compliance was a $3 billion to $3.4 billion problem.  Interesting thing
is since I've been involved in this for over 3 years, the industry has
been telling the State that this isn't a $3 billion problem.  It's a $9
billion to $12 billion problem.

		And the State puts out a number, and at one of the meetings, it was
the second meeting that we had in San Diego that was in Mission Valley,
and they came up with a $3 billion problem.  And they said your industry
kills 1,300 -- diesel emissions kill 1,300 people a year.  What's a life
worth to you guys?

		Now I just find that statement incredulous.  What's a life worth to
you guys?  And the reason why they balance the $3 billion number against
the State for 1,000 or 1,300 people's death, they balance it at $3
billion as opposed to taking a more realistic number at $9 billion to
$12 billion is because they can say it's not costing you guys that much.

		But if they took the real number of $9 billion to $12 billion, at some
point in time, you've got to start weighing things out.  And, quite
frankly, they haven't a clue as to how many people die from diesel
emissions.  As far as I'm concerned, it's a made-up number, and in
closed rooms, they would probably say so.

		Let me just close with this, I will say this.  As far as them not
knowing what it is, and I'm not sure if Mr. Kennedy is going to touch on
this, but I hope I don't steal any of his thunder.  California
Department of Transportation, CALTRANS, has its own fleet of equipment. 
CARB told CALTRANS that that fleet of equipment was going to cost $60
million to retrofit.

		When CALTRANS got the report and went through their inventory of
equipment, the actual calculation that CALTRANS came up with is not $60
million.  It's $260 million.  Now take $60 million to $260 million, and
then you take them telling us that it's a $3 billion problem, and we
have been saying it's a $9 billion to $12 billion problem, the ratios
are about the same.  Their cost is off by probably a factor of four, if
not greater.

		And I've said "lastly" twice, and I apologize for this, but let me
tell you guys this.  I would hope that someone on this board would take
the time to Google his name, like I did 2 weeks ago, and put a phone
call into Professor Harley from UC-Berkeley.

		The gentleman was gracious enough to call me back, and we ended up
having a 45-minute conversation, 47 minutes actually.  And at the end of
a 47-minute conversation, we wrapped it up as following.  He said, "Jon,
I can tell you this.  The way I did the reports I can't tell you it's
the only way to do it, and I can't tell you that it's the best way to do
it.  But it's far more accurate than the way CARB has done the reports."

		And I brought up the issue, well, I think CARB is just far more
comfortable with having an on-staff, mail-order guy with a Ph.D. to
review the reports than actually having a real scientist like you.  And
he said, "Well, I don't really want to get into the politics of that,
but it would seem to be the case."

		But I would ask you or how he finished our conversation in a nutshell,
he said the problem with CARB's reports are this.  I actually use real
numbers.  CARB has a black box for their model, and within that black
box, their black box, there is at least four factors in that black box
that are wrong.  One of them is the inventory of the fleet that we know
is over exaggerated by at least 45 percent.

		The other is the actual fuel that's burned in the State of California
that Dr. Harley anticipates is overestimated by at least 360 percent. 
The number might be 270, depending on how you base it, but it's 2.7
times to 3.6 times over exaggerated.

		The engine use rate when it comes to load factor is overestimated by
at least 80 percent, and the hours of operations are overestimated by at
least 40 percent.  So Dr. Harley wrapped up and he said, "Jon, do you
know what happens when you multiply an exaggerated number by an
exaggerated number by an exaggerated by an exaggerated number?  You come
out with an exponentially wrong answer."

		He said, "I can't tell you the way I did my calculation is the only
way or the best way, but it's certainly better than the way that CARB
did them."  And I would ask you guys from the EPA to pick up the phone
and call the man.  It would be greatly appreciated.

		Thank you for your time.

		MR. SIMON:  Thank you, Mr. Cloud, for your testimony, and I can assure
you we will be looking at all the record on the ground.

		MR. CLOUD:  Thank you, gentlemen.

		MR. SIMON:  Thank you very much.

		And I will note for the record we do understand and appreciate the
emotion that's involved in this particular authorization.  So we'd like
to focus in on the record that you all are presenting to us today.

		Thank you.

		Mike, are you going to speak?

		MR. KENNEDY:  I'm not.

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

		Tim Pohle and Anthony Michaels, you guys are up next.

		MR. POHLE:  Good morning.

		I'm Tim Pohle from the Air Transport Association of America.  With me
is Anthony Michaels, Tony, from Beveridge & Diamond.  They are our
outside counsel on this issue.

		The Air Transport Association, ATA, is the principal trade and service
organization representing the country's major airlines.  Together, our
members account for about 90 percent of passenger and cargo carried in
the United States.  ATA represents our members on types of issues before
you today on a regular basis, and we're glad to be able to do it today.

		Our interest in the rule is that it regulates airport ground service
equipment, or GSE, and that's basically all the stuff you see running
around the tarmac to service aircraft as they are coming in -- after
they've come in, as they're preparing to go out.  They are catering
trucks, drinking water trucks, fueling trucks, baggage tows, cargo
loaders, all of those types of equipment.

		These pieces of equipment are really critical to air travel.  You just
think of air travel as coming in on an aircraft, getting off the
aircraft, and don't really notice what else is going on.  But coming in,
getting out in a timely, efficient way is really critical to our
business.

		You read about delays all the time.  You read about some of the
problems the air transport system incurs from time to time.  A lot of
that is the result of delays rippling through the system.  So being able
to get aircraft in, get them out, and serviced properly is very
important to the smooth operation of the system.

		GSE is incredibly specialized.  I think that if my numbers are
correct, we account for about 1 percent of the population of vehicles
that are regulated under this rule.  So ARB's estimate, I believe, is
that we've got about 1,400 pieces of equipment out there.

		Within that, we've got about 30 different types of equipment, highly
specialized equipment, as I've already gone through.  So we've got a
very small market.  It's really a niche within a niche for each type of
equipment to try to get the retrofits and try to get all the things that
we would need to comply with this rule.

		I want to emphasize from the beginning that ATA has always supported
the emissions reductions targets at issue here.  We do not believe that
CARB has the authority under law to regulate us in the manner that it is
regulating us.  But we've always supported the targets.  We've worked
with them cooperatively, and the thing that we've really taken issue
with is the mechanisms that they've chosen to deploy to try to reach
these targeted reductions.

		So my role today, I'm just going to go through some introductory
remarks and general observations, and then Tony really is the guy who
really understands the Clean Air Act.  He actually was counsel to the
other ATA there, the American Trucking Association in the TRU case that
you heard about somewhat today.  So he's the real expert.

		I want to give you a little bit of background on the commercial
aviation industry and talk about our emissions record, and our emissions
record to just give you some context of our contribution to the economy
vis-a-vis the contribution to the emissions inventories.  Keep in mind
that this is really -- most of our emissions, obviously, come from
aircraft.  But on the national stage, the recent greenhouse gas
inventory from EPA shows that our emissions are 10 percent below 1990
levels already, and it's less than 2 percent of those emissions.

		And obviously, emissions are -- greenhouse gas emissions are a
function of fuel burn.  So, and NOx is a very, very, very small portion
of what is produced by aircraft engines.  So we're below 1990 levels. 
We're less than 2 percent of the greenhouse gas emissions, and we drive
about 5.6 percent of GDP in the United States, generating about $1.3
trillion, about 12 million jobs.  And we carry about 27 percent of the
value of mercantile trade in this country, exports and imports.

		The trends are also consistent with what's happening in California. 
Our emissions are actually below 1990 levels when you include
interstate, intrastate, and international operations out of California. 
We're 11 percent below the 1990 levels according to California's own
inventory.  And we there drive about 4.6 percent of the GDP, account for
about 1 million jobs, and about 50 percent of the value of the State's
export trade.

		So it's just the juxtaposition between our lowering emissions and the
contribution between -- to the economy and the fact that certainly from
1990, we're carrying far more passengers, far more cargo, and at the
same time have experienced an absolute reduction in emissions.  I think
it's a rather impressive record and one that I've wanted to highlight
here.

		And I just want to also say that we haven't -- we're not planning on
resting on those laurels.  We've made a lot of aggressive, have a lot of
aggressive targets for further improving our emissions profile.  But as
I said, the focus here is on GSE, and we've been proactive on the GSE
front as well, investing in a lot of new equipment, particularly
electric.  There's a lot of penetration of electric equipment, GSE in
the south coast where California I know needs it the most.

		And you should also know that we are very proactive early on, entering
a memorandum of understanding with ARB to voluntarily reduce emissions
before the regulations started coming out of ARB, which when that
happened, the MOU just went by the wayside.  We've been actively
involved with CARB throughout this process, working with them, and CARB
has made a number of improvements to the rule throughout this process,
which they've gone through, and we've been appreciative of their
willingness to listen to us in certain respects.

		And we appreciate that, but we still have some major concerns about
the rule.  I think they've really boiled down to two major concerns, and
one is that the emissions, every indication is that the emissions are
really far below the projected levels that are put out in justification
of this rule.  The recent Berkeley study has been alluded to.  I don't
want to run through the results of that.  But it suggests that the
models are overstating the emissions.

		I'd also point out that CARB projected growth in our GSE from 2000 to
2009 that it would be about 21 percent, that our fleet would grow by
that much.  We don't have specific figures on the GSE equipment as yet,
and we hope to develop that for not only this proceeding, but for the
further proceedings at CARB.  But juxtaposed with that 21 percent
projection of growth, and I'm not denigrating CARB here because, in that
time period, people would have thought there would be growth.  But
there's a projection of 21 percent growth.  Our analysis shows that our
emissions have or our operations have actually declined in that period.

		At LAX, for instance, from LAX's own data shows that, and it's
obviously one of the largest airports in the country, the largest in
California.  Certainly, it dwarfs operations in the south coast.   But
it declined 29 percent operations from 2000 to 2009.  Cargo --
passengers are down 19 percent.  Cargo is down 25 percent from 2000.

		So it's just juxtaposed with the growth that was projected and the
reality that we're facing today.  I think this is especially true in the
areas that are most in need of the reductions, and I think everybody
knows that the south coast is one of the most affected areas in the
country, and we understand that.

		Here, I've got a little bit of a different figure because we've got
data from 2000 to 2008.  And over that period, CARB projected that our
growth would be about 19 percent from 2000 to 2008, but the south coast
or -- I'm sorry, the Southern California Association of Governments data
shows that our aircraft movements are down about 15 percent in the south
coast in the airports that are part of the south coast, and our
passenger levels are down 8 percent and cargo down 18 percent,
respectively.

		So this is, again, juxtaposing the projected growth with the reality
on the ground.  I think it's particularly important when you look at the
SOON program that was mentioned, and that component which, again, the
south coast has opted into is the only place, the only air district that
has opted into that program.  We don't believe that the SOON program is
necessary, at least as to our equipment because our emissions not only
are nowhere near where they were projected to be, they're below --
they've probably actually contracted.

		So the bottom line is that juxtaposition between the projected growth
and the actual contraction of the industry.  And keep in mind that even
as we've been contracting, our fleet has gotten cleaner.  We have gotten
more electric equipment into the State, and we've been investing in
cleaner equipment over this period.  Just the natural progression of
replacing equipment over that time would have reduced or cleaned up the
fleet.

		So the apart from the emissions just being much lower than were
projected, our main concern and the concern that is a second main
concern and one that we've been talking about for a very long time is
that ARB's approach to this rule, it just remains flawed.  Here, we just
think it's unnecessarily complicated.  There are these ever-changing
targets, and the rule is very intrusive in the way that it goes about
trying to achieve the reductions.

		And you've heard a lot about retrofits, we have many of the same
concerns.  I am not aware of retrofits being used on ground support
equipment in California for purposes of complying with this rule.  I
know on the much larger pieces of equipment, it is extremely difficult
for us to find manufacturers willing to invest the time and the effort
to look at the niches within the niches to make the retrofits work with
our particular pieces of equipment.

		You've heard references to the huge temperatures that are generated by
this equipment.  We have hydraulic lines, too.  We also have aviation
fuel around the area as well, and visibility is an issue for us as well.
 So we have many of the same concerns, and I don't want to over
emphasize that, but to kind of build on what the construction folks were
talking about before.

		There is this other issue about the shifting annual requirements. 
It's a function not only of the fleet that you have and the changes that
might be made to accommodate the various vagaries of the airline
industry, but also the manufacturers of the engines that we use to
comply with the rule, we're not always sure exactly what the horsepower
is going to be for a particular application.  So it's difficult to plan
and deploy equipment in a manner that makes compliance with the fleet
averages a realistic option.

		Another big problem that we face is what we call "double control," the
idea that we've got to retrofit equipment or buy the best equipment
that's available at a certain stage of the rule only to be told that
within long before the useful life of that piece of equipment is gone --
is over that we've got to reinvest and deploy new equipment to reach the
various requirements.

		In terms of the retrofits, I did want to mention that CARB, they
talked about that the rule does not require deployment of technology
that does not already exist.  Well, these retrofits may exist on a
shelf, but for us, it means being able to take that off the shelf and
put it on our specific types of equipment, finding folks that are
willing to make the investments to help us do that, and it's just not
happening, to be honest with you.  It's just that existing technology on
the shelf is not being deployed, does not exist in the reality that my
members operate in.

		Turning to this proceeding and our main concern about this proceeding,
I think it's that we feel that it is premature for you all to really be
considering whether to grant authorization of this rule.  I think the
principal issue here is the need, the supposed need for this rule at
this time.

		Again, we've supported the emissions reductions, but that's in a
context of actually needing the emissions reductions.  ARB itself is
undergoing -- is reviewing what the emissions levels are and, as you
heard, in the coming months will be considering again essentially
whether this rule is needed because it relates to the level of emissions
that actually exist.

		And as we understand it, that is an issue that's still in question and
that ARB is still questioning.  So we question the need or we question
whether, as it was put earlier, that issue is ripe for your
consideration, to use a lawyer's word.

		So, in conclusion for me, we're going to continue working with CARB,
and we're looking forward to understanding what they might envision for
further modifications to this rule.  We'll continue doing what we've
been doing, which is showing up, providing the information that they ask
for, trying to help out as much as we can while trying to ensure that
this is a reasonable approach.

		As of now, as you've heard from me, we don't think that this is a
reasonable approach.  We think the targets were reasonable.  We don't
think the approach is reasonable.  The other major point is that we just
don't think it's appropriate for you all to be making this decision at
this time, given the flux on the emissions issue that I talked about.

		My colleague Tony is going to take over now and really run through
some of the more, shall we say, nitty-gritty issues around the three
compliance or the three criteria that you're here to consider today.

		MR. MICHAELS:  Thanks, Tim.

		As Tim mentioned, I'm Tony Michaels of Beveridge & Diamond, outside
counsel to the Air Transport Association.

		Picking up on something that Tim just mentioned, one of the reasons
why I think the errors in the emissions model and the emissions
projections that CARB had made may be very relevant to what EPA is doing
in its role as deciding whether to authorize the rule is that it does
seem that CARB is starting to come around to recognizing that their
model is very wrong and also starting to come around to the reductions
in emissions that have occurred through the recession and some other
issues.

		And so, when they say they're planning some changes, they may relax or
make the rule more flexible.  So I understand that CARB has said this,
and I don't think it's changed, that they're opening the thing up
completely to any kind of change in the approach.  It's not, as far as I
understand it, limited to, well, let's see if we delay the thing by a
few months or something like that.

		So as you're considering the record and the comments today, there are
some very serious authorization issues that be raised by the rule as
currently written.  It may be that the rule that's final doesn't pose
those issues at all.  And so, from EPA's perspective, it may very well
not make sense at all to at this point, a couple of years after the
initial request, delve in and make its determination and wade through
all these issues, when 4 months from now, in August, CARB has said they
plan to be done.  They plan to go through workshops over the next couple
of months and propose a revision for August.

		If that's changed and if CARB is not -- is no longer planning to do
that or is no longer considering any options that may be out there, it
would be incumbent on CARB to tell us that, but that's not my
understanding is that's what's going to happen.  And we're looking
forward to -- ATA is looking forward to hopefully meeting with staff and
coming up with ways to achieve the same emission reductions from GSE,
but in a way that's a bit more efficient and more compatible with the
industry.  And I'm sure the construction industry and other industries
affected are, too.

		So turning to the rule as it's written that's before you now.  ATA
submitted very detailed written comments in December of 2008.  We plan
to submit supplemental comments next month in writing, and those will go
into much more detail.

		Today, I wanted to touch upon just a few of the issues, particularly
technical feasibility, useful life, which is part of the consistency
with Section 202(a), and need.  So that's two of the three criteria, the
need and the consistency.

		With respect to technical feasibility, I think it's very critical not
to lose sight -- and from CARB's presentation today, they've clearly
lost sight -- of the fact that technical feasibility includes
installation of the technology, as Tim alluded to, and it's in the
statute.  202(a) refers to the technical feasibility needed for the "the
development and application of the requisite technology and
application."

		It's not enough that a retrofit maker has developed a nice filter.  It
needs to be integrated into the vehicle.  And not only has CARB not made
any determinations on that with respect to the real cost burden, lead
time needed, particularly for GSE, but they've conceded that.  And the
rule doesn't -- provides really no consideration of that either, and
CARB has said it expects the end-user to figure that out.  To figure out
whether or not it's technically feasible to install the retrofits upon
which this rule depends.  And that's a real issue.

		In terms of the experience recently, as others have alluded to, there
are about 180,000 vehicles projected to be subject to this rule.  GSE is
probably less than 1 percent of that, but that's the State-wide total. 
About 100,000 of those were soon to be retrofit by CARB in adopting this
rule that that's how they would achieve compliance and that by this
year, 35,000 would be successfully retrofit.  As we understand it from
CARB, the number is 1,000 to date that have been successfully retrofit. 
Many through demonstration projects.  None of those are GSE.

		No GSE, to our knowledge, has ever been successfully retrofit with a
Level 3 filter of the kind that CARB is requiring.  And airlines have
tried.  They've tried in the past, and they've tried leading up to this
rule, and it's simply not been found to be possible or feasible.

		We understand that at least two of those installations have already
caused fires that destroyed the equipment.  That's 2 out of 1,000.  And
as you can appreciate, nobody wants that equipment under their fully
fueled aircraft when they're sitting on the tarmac.  It's just not --
it's not going to work for any industry, if that's the case, but
certainly for aviation that's not feasible.  And I completely agree with
Mr. Prescott's point that feasibility has to include safety.  It's not
feasible if it catches on fire.  That's got to be part of the technical
feasibility criteria.

		And as I mentioned, CARB has said that verification, this is a quote,
verification "does not address the feasibility of installation."  And
CARB has identified a number of the issues that would have to be
addressed.  They've identified them and left it for the end-user to try
to address them.  CARB hasn't made any attempt to address them.

		The rules does, as CARB mentioned, there are 10 now, 10 Level 3
verified filters, 5 of which are passive.  The active ones require you
to pull over and maybe take the filter out and put it in the oven or do
something else where you actively burn out the soot that builds up.  The
passive ones burn it out installed, which is what I think Mr. Prescott
again was referring to the 1,200-degree temperature that these can
reach.  That's because they burn off the soot as installed on the
vehicle.  They don't have to be taken off.  Those are the passive ones.

		But the CARB verification doesn't mean anything about whether that
unit is technically feasible to be installed on any particular vehicle
at all.  That's just they have admitted that as well.  The verification
process has nothing to do with that.  It's mounted on a test engine, and
what they test is durability and whether the exhaust emissions are
removed or not to the level specified.

		But the rule requires installation based on what's verified, subject
then to this after the fact potential for exemption, which is
problematic in many respects, and we've addressed some in the written
comments and others have addressed some of the issues with it.  But I
would say, and there are a number of legal problems with that approach.

		One is that the exemption is limited to where the retrofit cannot be
safely installed or operated.  It's an impossibility standard, which is
not the same as the technical feasibility with consideration of cost
that the agency must consider.  It's technical feasibility within
economic parameters is the test under -- for authorization.

		But another problem with that, obviously, is it assigns to CARB that
determination.  That's your determination.  That's EPA's assignment
under the statute.  You have to determine is this rule consistent with
Section 209, which incorporates the technical feasibility criteria. 
CARB can't reserve that to itself, and it certainly can't reserve it to
itself to do later on a case-by-case basis.

		In addition, as others have pointed out, CARB does not have safety
expertise, and certainly not on an airport environment.  And they've
again attempted to give themselves the authority to determine is that
safe or not?  What does that mean?  Zero risk?  We don't know what CARB
would think safety means.

		Others have mentioned the visibility issue.  That's one issue that
came up after the rule was finalized and that CARB has tried to -- spent
a year trying to deal with.  And as a policy matter, they've -- for the
time being, they have, I guess, exempted in the sense of they've said
they're not going to enforce against, as a matter of enforcement
discretion, people who if the retrofit would cause any visibility
impairment.  So it's sort of a zero standard.

		But that's not necessarily going to be the final standard, and that's
not in the rule that you're being asked to review.  You've got to review
this rule as it's written, and there's no visibility provisions in there
at all.  I mean, we don't know what the final provisions are going to
be, and Cal/OSHA doesn't necessarily have jurisdiction over GSE even if
it does over construction equipment.

		Moreover, the exemption, as others have mentioned, it doesn't really
do anything.  It exempts that unit and that VDECS.  The end-user is
expected to go through what has been characterized I believe previously
as an engineering application exercise for each one.  It's going to take
some time.  And obviously, it could have costs associated with it even
if it fails, and we would expect it to fail for GSE.

		But even if you get to the end of that and you can have the
documentation you might need to get the exemption from CARB, and they're
limited, limits on that as well, what does that get you?  It just means
you don't have to retrofit that unit.  Well, you didn't have to anyway. 
You have to retrofit 20 percent.  It's up to you to pick.  So now you
just have to go to the next one.  You don't get any extra time.

		CARB's verifying units on an ongoing basis are going to continue to do
that.  If there is a new one that comes out, you have 10 months you have
to install it, and that's it.  That's the lead time.  CARB hasn't taken
into account this trial and error approach, how much time that's going
to take, and it certainly hasn't taken into account the cost of that.

		The exemption doesn't take into account any other operational
deficiencies that could result.  For example, you mentioned for the
retrofits the need to regenerate them.  For passive, it does require the
vehicle to stop in the middle of its job.  And for some applications,
that may be okay.  But at an airport, they've got to be ready when the
plane lands, and it doesn't always land exactly on time.

		And particularly for, just as an example, the cargo loaders that load
and unload the cargo planes, if you're talking about an overnight
delivery, absolutely positively has to be there overnight.  They've got
to be ready immediately.  They've got to work through the 3-hour cycle
of loading and unloading this heavy cargo.  They can't hold up the whole
operation to wait for that, and it does have safety implications for the
national air space system if there is a wait.

		As Tim alluded to, it's a key cornerstone of the system is to make
sure -- is to try to avoid wherever possible compressing the schedule. 
You don't want to have an instance where you need to bring in for a
landing a larger number of planes in a shorter period of time.  It's
pushing the risk envelope.  FAA doesn't want that to happen.

		And if there is GSE that has to sit there and regenerate and all the
planes have to wait or the plane has to wait, that means that it delays
the planes all down the queue, and it can cause real issues for the
system.  So --

		MR. POHLE:  Just to be clear, those are generally -- those are
economic and efficiency issues.  I can assure you that we'd never
operate unsafely.  The one that is our core mission, to provide safe air
transportation.  So I can tell you we are not going to deploy anything
on our GSE that's going to compromise safety, and we're not going to do
anything that would lead to any kind of unsafe operation of any sort.

		MR. MICHAELS:  Certainly.  And that's -- safety does have to be part
of technical feasibility.  These are the reasons why it's not
technically feasible to install these units, particularly for GSE, and
that's our focus.

		I also wanted to make the point that in our view that the Clean Air
Act doesn't allow imposing technology-forcing regulations on the
end-user, and this is a technology-forcing regulation because the
installation has not been done.  It's not been proven, demonstrated how
it's going to be done.  It's yet to be figured out.

		There are a number of technical issues that will exist that would have
to be addressed in doing that.  And so, while the filter exists, what
the end product is is a filter successfully installed into a vehicle,
and that technology doesn't exist yet.  And the end-user is expected to
do that under this rule.

		In our view, that runs counter to the statutory scheme as a whole. 
And when you are applying a technical feasibility standard to this rule,
you've got to interpret in the context of the statute as a whole as to
what that means.  In the Sierra Club v. EPA case, the court made clear
that Title II, which is the whole mobile source scheme, is directed
towards having technology-forcing standards imposed on vehicle
manufacturers, not owners.

		Interestingly, CARB elected in 2003 not to adopt a Tier 3 particulate
matter standard for these engines, apparently because it found it not
technically feasible to make the OEMs do that, the original engine
manufacturers.  They've not come out with any formal public explanation
for that decision.  We've tried to get documents related to it, and
they've said they're confidential.

		But if that's the case, it's not clear how CARB can say it's
technically feasible now to ask someone who happens to own a piece of
equipment to do what the engine maker couldn't do in designing it into
the new equipment, which is what the statute really contemplates.  We're
seeing the results of a lot of these issues now with very few successful
retrofits.

		Briefly, two other quick --

		MR. SIMON:  Tony, I would ask you to kind of --

		MR. MICHAELS:  Okay.  The useful life requirement of 202(a), which is
also part of the consistency criteria.  It's the same section that has
technical feasibility in it, requires that standards be applicable to
vehicles and engines for their useful life.  The useful life of these --
the equipment subject to the rule is 10 years or 7 years depending on
horsepower.  The rule requires changes well before that and violates
that useful life requirement.

		Tim alluded to the need criteria, and I do think it's -- CARB is
reassessing the need for this rule right now.  To me, it doesn't really
make sense for EPA to even try to make that determination right now. 
But if it were to try to do it, it's unclear how they could reach that
conclusion if CARB isn't sure.

		So, basically, given the serious issues that are presented by the rule
as it's written, it seems to make sense to focus on the rule as it is
going to actually be and, in fact, to notice and comment and have a
hearing about the rule as it's going to actually be in place.  Now, EPA
can legally act on this rule, but it just may not end up being relevant,
considering if the rule changes, then you've wasted your time.

		If there are any questions, I'm happy to --

		MR. SIMON:  Gentlemen, thank you both for your testimony.  I look
forward to your written comments.

		MALE SPEAKER:  Thank you.  Appreciate it.

		MR. SIMON:  Next up is William Davis from the Southern California
Contractors Association.

		MR. DAVIS:  This must be the short person's microphone.

		[Laughter.]

		MR. DAVIS:  I had written "good morning," but good afternoon.  And
thanks for the time to talk with you fellows.

		I am Bill Davis.  I'm the executive vice president of the Southern
California Contractors Association, which represents the interests of
union-signatory heavy construction contractors in the 12 counties of
southern California.  It's served by Local 12 of the Operating
Engineers, and their members are also concerned about the visibility and
safety issues that were presented so ably by Mr. Prescott.

		Our trade area is a land area that's larger than all the New England
States combined, and our contractors serve the highway, road, bridge,
and other infrastructure needs of about 18 million citizens in our area.

		I am also a member of the Board of Directors of the Construction
Industry Air Quality Coalition, which SCCA helped to form in 1989 to
promote the adoption and implementation of emission reduction measures
which are cost effective and efficient while minimizing unacceptable
impacts on its construction and building industry members.

		This coalition is comprised of several major construction and building
industry groups in California.  In addition to SCCA, CIAQC's membership
includes the Associated General Contractors of California and of San
Diego, the Building Industry Association of Southern California, the
General Engineering Contractors Association, the Engineering and General
Contractors Association, Engineering and Utility Contractors
Association, Construction and Industrial Materials Association, the
California Rental Association, and the California Dump Truck Owners
Association.  In all, CIAQC represents several thousand construction and
home-building companies that perform work, operate equipment in
California.

		SCCA requests that the U.S. Environmental Protection Agency postpone
any action on the State of California's request for waiver of Federal
preemption of standards for off-road diesel emission in in-use fleets --
whew, what a bunch -- submitted by the California Air Resources Board
until several conditions are met, including you guys having hearings in
our State, CARB producing a final and feasible version of the
regulation, and the underlying science and public health questions
related to the regulation are revisited.

		SCCA and the construction industry has been disappointed that EPA has
yet to schedule a hearing on a waiver for the off-road rule in
California.  We've requested it since your first waiver hearing notice
came out.  This CARB rule affects only contractors in California and
working fleet operators in California like the airline folks, which are
actually less than 0.1 percent of the total fleet.

		For most of those businesses, it is impossible or burdensome to travel
the 3,000 miles from California to Washington -- my arms are still sore
from the flight yesterday -- and to discuss a strictly California rule. 
We find it more than ironic that EPA staff was able to schedule a
hearing in California on the proposed new nationwide ozone standard this
February in Sacramento but remains insistent that California contractors
travel here.

		We hope if it's a question of finance, we can work out some
arrangement to pay your airfare.  But is there any other reason why you
guys won't come to our State and hold a hearing?  That's a question.

		MR. SIMON:  Keep going.

		MR. DAVIS:  Okay.  That's an answer.

		California contractors and fleet owners recognize the impact that the
CARB off-road regulation will have on the construction industry and its
ability to remain viable in the future.  In fact, it's calling into
question our ability to remain viable in the present.

		This point has been repeatedly demonstrated at each of the three CARB
hearings where the off-road regulation was before the board where
several hundred contractors and equipment owners attended the meetings
and provided testimony.  If EPA truly wishes to fully hear from those
that will be impacted by this regulation, it should schedule at least
three waiver hearings in California -- we're a large State -- north,
central, and south.

		We find this particularly important, given the special nature of the
California regulation as a possible solution for other nonattainment
areas in the United States under the Clean Air Act.  We do understand
this rule has impact beyond our borders.  So it's important you really
understand the rule from on the ground from the real people involved.

		There are many other problems inherent with this rule.  We'd like to
focus on a few that we believe are relevant to your consideration of the
waiver.  First, the rule is in flux, as we have heard.  There is going
to be a hearing next Thursday that we're going to get to hear from Erik
and his compatriots on the investigation that they've done about the
impact that the economy has had on California's diesel fleets, both
on-road and off-road.

		Even the portable rule, which is still pending a waiver from you guys
is still in flux and has been amended again and will be amended probably
an additional time before it's ready for prime time.  It will be several
months before CARB completes the review of this.  We think, what,
August, September, maybe you'll be back?  You've talked about workshops
this summer.  You've talked about going to a special board meeting in
August to consider additional changes to the regulation.

		Our friends at AGC brought petitions forward to the agency twice. 
Their most recent petition has made the very significant points
concerning the emissions modeling and the actual emissions of the
industry that would require severe changes in this regulation.  And we
think it's inappropriate for you guys or, hopefully, you'll find
yourselves unwilling to grant a waiver to a rule that's still not ready
for prime time.  We would recommend that you not grant a waiver until
the rule is final and complete once and for all.

		Second, there is insufficient technology available for contractors to
comply with this rule.  CARB has argued that if a device is not
available to install on a specific equipment, the rule does not require
it.  However, it does require the owner of that equipment to keep going
through his fleet until he finds out either there is something
available, there is nothing available for their entire unit.

		The logic forces every contractor into what's called the best
available control technology compliance path.  It eliminates other
compliance options that are available under the rule.  It is a circular
argument at best.  It's very cleverly written to force retrofitting in
the shortest time possible.

		CARB has failed in their promise to have an adequate number of
particulate filters or traps verified and available to provide retrofit
options for contractors.  One only needs to look at the results of the
CARB-sponsored Diesel Retrofit Showcase program in which contractors
have volunteered 177 pieces of equipment for retrofits.  Any device may
be used whether or not it is verified under the CARB standards. 
Millions of dollars are available for the installation.  In nearly 3
years, only 35 vehicles have been retrofitted in this program.

		The rule calls for, well, I think on the 20 percent rule on 180,000
pieces of equipment, about 32,000 units were supposed to be retrofit
every year over the next 5 years.  As you've heard already, that number
is at 1,000 for the first year and is unlikely to gain any traction with
the variety of relief measures that are already in place.

		The safety issues that are well before you, and the fact that the
equipment, while verified, has to be specifically engineered for every
single piece of equipment that it's put on.  It's not like a car, where
you've got one size filter fits one model of car.  Construction
equipment is almost universally unique in its operation.

		In previous comments to EPA, SCCA and CIAQC have outlined several
challenges to contractors facing compliance with the regulation.  These
also include issues surrounding the requirement to install retrofit
devices that were not originally designed to accommodate them.  And
since October 20, 2008, our letter, that last letter to you, these
concerns have not been resolved, still represent a significant barrier.

		And to reiterate the concerns, we ask that you consider this.  The
dramatic downturn in California's construction sector has affected the
revenue required to pay for retrofits and equipment upgrades necessary
to comply with the regulation.  People have just called it a
construction depression.  People have called it the "great recession."

		Here is the reality in our industry right now.  Construction activity
is down 50 percent from where it was in 2005, mostly because of the
housing bubble.  In 2005, we built 155,000 housing units in the State of
California.  This past year, we built fewer than 40,000.  That is a
horrendous drop.

		And what has happened is that it's forced all the contractors that
were involved in the residential construction industry into the only
other segment that's still active, and that's public works construction,
the building of highways and bridges and roads, the money that came from
the stimulus and that sort of thing.  Instead of having 2 to 5 bidders
on a highway project in California, we now have 20 to 30.  Instead of
those projects coming in or near what are known as engineer's estimates
of cost, which CALTRANS, the Transportation Department, provides,
they're coming in between 25 and 40 percent below engineer's estimates.

		And CALTRANS every quarter backs their engineer's estimates down. 
They're still coming in 20 to 40 percent below those engineer's
estimates.  Our industry is literally on its knees.  Unemployment, in
the construction industry in California in 2005, there were 942,000
construction workers.  Good jobs, too.  You know, the union jobs like
the operating engineers, when you're in good times, they make $100,000,
$125,000 a year.

		Currently, the unemployment level or the employment level in
California's construction industry is 613,000.  That means we've lost a
full third of the industry.  That also means that those employers have
lost the ability to keep those workers gainfully employed and,
consequently, don't have the money to operate their businesses and to
meet the requirements of this regulation.

		In addition, even if they are an active and effective contractor, this
rule will require the purchase of new equipment to meet the standards. 
Tier 3 equipment that's available now.  Tier 4 equipment, from your
standards, which will not truly be available until 2014, '15, and later,
they'll have to borrow the money.

		Have any of you been to a bank lately?  They're not loaning money for
construction equipment.  They are, in fact, one of the almost prohibited
loans has been for these diesel retrofit devices because they are not
something -- they're an add-on product.  They're an after-market
product.  They're not collateral that the banks will recognize for
financing purposes.

		The diesel emission control strategies technology is much more
expensive to purchase and install than the agencies anticipated, and the
availability of these products is irregular at best.  We actually had an
experience where a salesman for one of the diesel retrofit companies
appeared before the Air Resources Board at the meeting in I think it was
in July of 2007.  The meeting where they adopted this rule?  And
promised them that they had fully available equipment for any product in
our marketplace.

		That was very good of him to do so.  However, we found out later that
he was operating out of a garage in Palm Springs, and he had no
equipment available for our industry.  And this was one of the world's
largest manufacturers of this equipment.  And they plain-out lied to the
agency about the availability of these products.

		It brings up a piece, and that is that I don't consider Erik or -- I'm
sorry?

		MR. TERRIS:  Mike.

		MR. DAVIS:  Mike.  We've met, but I couldn't remember -- to be evil or
even arrogant, except Erik's way too cute for most people's taste.  But
they were misinformed about these products.  They bought the idea that
these products would provide solutions, and we have demonstrated over
the last 2 years that these things are simply not what they were
advertised to be.

		I've worked with the agency as a member of a thing called their
off-road implementation advisory group.  This discussion about VDECS has
been a part of virtually every single meeting that that organization has
had with CARB staff.  I think you guys are much better informed about
the nature of these products and, hopefully, when in the measure of
fullness of time, the technology catches up with the promises, it will
be something that will benefit us all, agency and industry.

		We also believe that the State-wide fleet has shrunk to meet the
compliance requirements and that the device manufacturers will continue
to abandon the off-road equipment marketplace as more equipment becomes
available on OEM solutions, original equipment manufacturer solutions. 
I know from personal experience.  I talked with the vice president of
Caterpillar this last fall.  They're spending 60 percent of their R&D
money on developing Tier 4 engines for their heavy equipment.  They
haven't got it solved yet.

		And until mighty Caterpillar gets this issue solved and meets your
standards, it's impossible to expect our industry to -- our owners of
this equipment, the people that will ultimately have to purchase this
equipment, to meet a compliance standard which isn't resolvable until
people can find a way to make emissions of both NOx and PM lower than
they are today with the Tier 3 machines.

		Finally, we need to bring to your attention some serious flaws in the
science underlying this rule.  I know that you guys essentially are
almost prohibited from considering cost in relation to public health
benefit.  We've discovered that the lead author of the CARB science
review, one Hien Tran, deliberately falsified his credentials to perform
the work required, claiming a doctorate from UC-Davis when, in fact, he
could only produce a mail-order Ph.D. from a UPS store in New York City.

		"Dr." Tran's report was used as the scientific justification for
public health reasons on both the off-road and on-road diesel
regulations in California.  Then, on February 26th at a CARB-sponsored
scientific symposium, we discovered that the health effects claimed for
particulate matter has no scientifically provable consequences in
California, based on three different studies from two different
scientists -- one paid by the agency -- with real credentials, real
Ph.D.s.  Clearly, more effort needs to be made before ordering the
replacement of the entire California construction equipment fleet.

		For these reasons, SCCA believes the EPA should not approve the CARB
request for a waiver on the off-road regulation or the portable
regulation at this time.  EPA should also provide the opportunity for
interested parties to orally comment on the off-road regulation by
scheduling public hearings in southern, central, and northern
California.  And to provide for this, if the May 18th comment deadlines
need to be extended, SCCA would make that recommendation as well.

		Now there were a few statements during the CARB presentation that I
took note of that are not part of my formal remarks.  But the question
of worst air quality in America came up.  And as you all know, from your
own studies, that's only because we keep tightening down the air quality
standards.

		Actually, California's air quality is 85 percent better than it was
when the Clean Air Act was enacted under the Nixon administration.  Only
2 of the State's 58 counties, or 2 areas involving the State's 58
counties are severe nonattainment areas in California.

		That's the San Joaquin Valley, which is a prisoner of its geography. 
It's surrounded by mountains.  It's a bowl filled up with the pollution
from Sacramento and San Francisco and L.A.  Poor farmers there and their
cows are about the only activity that could generate any kind of
emissions in San Joaquin.

		And the other is the massive South Coast Air Quality Management
District, which includes Los Angeles and Orange and Riverside and San
Bernardino Counties, where those 18 million people we talked about live.
 Even there, even there, our air quality is much better today than it
was when the Clean Air Act was originally envisioned, passed, and is
continuing to get better on an ongoing basis.

		The second piece, and this has been one that's been ongoing on every
rule that CARB has adopted in the last several years, is their cost
considerations.  They are simply laughable.  The industry estimates of
cost, as Jon pointed out, are around -- well, it's actually $12.9
billion.

		This agency has no concept of the economics of operating businesses,
and that $12.9 billion doesn't come out of the bid that a contractor
makes on a project.  It comes out of the profit that's left after the
project is done.  And that's in an industry like ours right now where
there is virtually no margin, there is no ability to financially address
these requirements of this regulation.  It is not financially feasible.

		We honestly think that, and we said this, I've been involved in this
thing since 2003.  We have told the agency during that period of time
and continue to make this case that our industry will, in fact, and does
and is, in fact, cleaning up its emissions at a rapid pace, but it's
entirely dependent on the OEM manufacturers who have to meet your
standards.

		And we think that the Tier 4 machines, if they can be officially
developed, and you guys would know better than we are where they are on
that, but we see an announcement every day or so about Komatsu has a
Tier 4 interim, and John Deere has a Tier 4 for one tiny segment of
their engine families.  When those are fully available, we think that
this agency and our industry can cooperatively demonstrate that the
emissions from our equipment will be reduced to the levels required by
this rule within a period that's maybe 5 years beyond what the current
rule standard is.

		We've said that all along.  We still believe 2025 to be the deadline
for our industry to meet these requirements, and we think it's doable. 
We don't think this depression is going to continue forever, but we do
know that the housing industry is not going to engage in another bubble.
 And so, it will be a long, slow climb out of this hole.

		Any questions, guys?

		MR. SIMON:  A couple of comments maybe.

		MR. DAVIS:  Sure.

		MR. SIMON:  And maybe a question.  Thank you for your testimony, Mr.
Davis.

		In response to your first question on the hearings in California, we
did note -- I just want to note, and I don't know if you've got a copy
through CIAQC or not, but we did send a letter back last week to CIAQC
and I think a number of other companies that are represented ---
organizations that were looking for a hearing in California.

		Really don't think it's practical or needed.  So I think our decision
right now currently is that this will be the hearing for the waiver.  So
you should get a copy of that letter, and we're happy to talk about
that.  But as of right now, we're having this here.  So we did -- I
didn't want to leave you hanging on that one.

		MR. DAVIS:  Larry, did you get a copy of that?

		MALE SPEAKER:  Yes.

		MR. DAVIS:  Okay.  We'll talk later then.

		MR. SIMON:  And then, secondly, on the Tier 4 status, I note that that
is coming, and it is coming.  I mean, we certainly think it's --

		MR. DAVIS:  We firmly believe that it's coming.  We just think it's
going to -- as with many of your regulations, they do compel the
manufacturers to meet the standards.  It's just unfortunate that the
burden for compliance in the California case is not placed on the
manufacturers, but placed on the end-users.  And those end-users do not
have the capability of meeting the requirements on their own.  They
absolutely depend on the manufacturers to supply the products.

		MR. SIMON:  Thank you.

		MR. DAVIS:  Thank you.

		MR. DICKINSON:  Mr. Davis, you made a comment about EPA's
consideration of the portable equipment?

		MR. DAVIS:  Yes.

		MR. DICKINSON:  I would invite you to submit separate comment on that.

		MR. DAVIS:  We'll be happy to.

		MR. DICKINSON:  So we can keep the record straight on each.

		MR. DAVIS:  Right.

		MR. DICKINSON:  Also, with regard to the cost estimates of compliance
with the rule overall, whether it's $3 billion or $12 billion, and this
comment goes to the other people that have testified today.  It would be
helpful to understand how that cost --

		MR. DAVIS:  The financial underpinnings?

		MR. DICKINSON:  Well, whether that -- the financial underpinnings,
thank you.

		MR. DAVIS:  We can supply that data.

		MR. DICKINSON:  Whether that's the economic burden or whether that's a
cost per unit or whatever the underpinnings are of that.

		MR. DAVIS:  We can absolutely supply that data.  We actually hired a
real Ph.D. from UC-Davis, who developed that information, and we'll be
glad to provide it to you.

		MR. DICKINSON:  Thank you.  Great.

		MR. DAVIS:  A card or some person that I can address things to?

		MR. SIMON:  Thanks.  While we're doing this, next up is Antonio Santos
from MECA.

		[Pause.]

		MR. SANTOS:  My name is Antonio Santos.  Once again, Director of
Special Projects at the Manufacturers of Emission Controls Association,
based here in Washington, D.C.

		Just wanted to extend apologies from Joe Kubsh, Executive Director of
MECA, who wanted to be here but is traveling in Detroit this week,
meeting with the EPA actually as it is.

		The presentation today will cover, once again, from the technical
perspective generally retrofit emission controls for off-road diesel
engines.  MECA in the past has provided comments to ARB regarding their
off-road rulemaking, both early on, before 2007, as well as comments
last year when they did the amendment process.  Once again, the summary
here basically is that MECA supports ARB in its waiver request, and
hopefully, after this presentation, you get a better sense of the
technologies that are available and that they are feasible and safe.

		Just a quick who we are.  Many of you probably already know about MECA
and its member companies.  MECA does represent the world's leading
manufacturers of emission control technology.  So we're talking, of
course, here about Level 3 verified devices, encompasses many of the
MECA members.  They represent catalyst manufacturers, substrate
manufacturers which the catalyst goes on, other exhaust component
manufacturers, as well as the integrators that bring all of these
technologies together.

		MECA members have extensive experience, both technical and
manufacturing and installation wise, for the application of emission
control technologies for both on- and off-road vehicles and equipment. 
And MECA members have verified many of the on-road and off-road
technologies listed by EPA, ARB, and also in Europe, the VERT process in
Switzerland.

		Just a quick comment, too, about ARB.  I mentioned earlier about the
number of verified devices that are available and the change over the
past couple of years.  Obviously, one of the concerns is about the
number of available off-road technologies.  As I will note in the
presentation, there are currently 10 available retrofit technologies,
which is an increase from when the rule was first proposed of about 6
back in 2007.  And that number, although it seems small, is not
insignificant.  The process and the cost that's involved with verifying
technologies or, in some cases, re-verifying technologies is not a small
number.  We're talking upwards of some $500,000 to $1 million, depending
on the type of technology that you're going after.

		So in the same way that the other industries have been affected by the
current economic climate, in the same way, MECA members have as well. 
And as ARB pointed out in their presentation, MECA does look for in its
members that regulatory certainty that comes from establishing a
rulemaking with definitive timelines.  And in turn, of course, the MECA
members have jobs, as well as economic benefits, as well as the health
benefits that come from promulgating the rulemaking.

		So the next couple of slides we're just going to quickly go through. 
Obviously, we've talked about this stuff in a broad brush from other
presentations about the nature of the different technologies that are
available, the Level 3 technologies that are available for off-road. 
This slide just points out that wall-flow diesel particulate filters
offer the highest PM reduction efficiency.  These are ARB Level 3
devices, meaning greater than 85 percent PM reduction.

		They also get large reduction in air toxics from the catalyzed DPFs in
the same way that DOCs also get high reductions in toxics, the
catalyzing action gets the large reduction in toxics as well, in
addition to PM.  Greater than 250,000 retrofits already worldwide. 
Greater than 6 million OE applications, and as we've noted, this is the
same technology that's currently on on-road model year 2007 and newer
trucks.  So a large experience base here with the effectiveness of DPFs.

		In this case, specifically for this slide, talking about passive DPFs,
which use catalysts and the available heat coming out of the engine to
burn the captured soot.  Of course, in order for that to work, you need
these specified exhaust temperature requirements coming out of the
engine, a certain duty, a certain time, and temperature in order to burn
off that soot.  And as we noted earlier, the number of verified
technologies.  Currently, there are five passive DPFs verified by ARB
for off-road.

		Just the next few slides just have a couple of pictures of some
passive DPF installations.  Obviously, we saw earlier some similar
installations that had safety issues, which I'll talk a little bit more
in detail later.  But this just points out at least pictures of
successful installations that have been done.

		Here you have an excavator, a drill, two drills.  I think all of these
were in New York for -- we'll talk a little bit about this Croton water
treatment project.  But once again, pointing out that we're well aware
of the policy currently going on in California in terms of their interim
policy for safety with Cal/OSHA.

		Obviously, some of these, given the current interim policy, may not
actually be allowable now because of the zero masking that's being
allowed currently.  But the point here is showing that in the past, all
of these technologies were installed and were done safely and
successfully over a certain defined period of time for these retrofit
projects.

		Same here, more passive DPF installations – rubber-tired loader, a
Caterpillar excavator, and a wheel loader as well.

		Besides passive DPFs, there are also active DPFs, typically suited for
off-road applications or on-road as well with low exhaust temperatures
or very high PM out.  There are typically two kinds right now that are
available out there.  There is catalyzed wall-flow filter with
electrical regeneration and uncatalyzed wall-flow filters with fuel
burners for regeneration.

		The catalyzed wall-flow with electrical regeneration is one of the
newer ones that just got verified within the past few months.  Once
again, there are five DPFs, active DPFs currently verified by ARB for
off-road engines.

		And just some installations here as well.  This is forklifts, cranes,
bulldozers, a cherrypicker-type piece of construction equipment, all
installed with the active DPFs.  Go ahead.  Sorry.

		MR. HOROWITZ:  I'm just wondering, can you point that -- do you have a
pointer?  Can you point them out?

		MR. DICKINSON:  Yes, just point at the screen with it.

		MR. SANTOS:  Oh, here.  You have one here.  Here, down in here. 
Typically, these are -- the original muffler may have been in there, the
replacements.

		Also, you have NOx and PM combined integrated solutions emerging as
well.  One currently verified by ARB, the DPF Lean NOx Catalyst by one
of the MECA members was verified in the past year for at least 25
percent NOx reduction.  Nothing yet for DPF plus SCR, which would get
greater than 70 percent NOx reduction, but there are MECA members
currently in the process of looking to verify technologies, off-road
devices, integrated devices for DPF and urea SCR.

		Here are a couple here as well.  Here.  There.  Here.  Here, these
three here are all lean NOx catalysts plus DPFs.  This here is an SCR
plus DPF.  All as part of demonstration projects.

		Once again, the issue of safety and visibility is something here that
would need to be discussed.  Obviously, MECA believes as part of what's
going on in the current process, the Cal/OSHA and ARB and MECA is also
involved in that, that some level of masking should be allowed.  In
fact, some international standards like ISO 5006 allows for the use of
mirrors and/or cameras to consider to be safe.

		So, at the end of the day, of course, MECA will have to adhere to
whatever comes out of that process.  And as it stands right now, any
level of masking is not currently acceptable, and we understand that. 
But it's part of the discussions that are going on and the measurements
that are going on, we believe that some level of masking is still
considered to be safe.

		The next slide just touches on some of the construction retrofit
experience that is out there.  MECA member companies have extensive
experience with the construction retrofit project.  Really just put this
one up here to show that these two projects, the Boston "big dig"
project demonstration and NESCAUM/MECA off-road were done in the late
'90s.  So the Boston big dig only used DOCs.  The NESCAUM/MECA one did
do DOCs, active DPFs, and passive DPFs.  But the point being that this
was done in the late '90s.  So the volume of experience that has been
accumulated by MECA members in terms of retrofitting construction
equipment.

		More currently, the New York City local law, which requires use of
low-sulfur diesel and best available control technology for off-road
equipment used in all city construction projects.  This New York City
Croton construction project, which some of those pictures showed, falls
under this.

		It's a $1.5 billion water treatment plant in the north Bronx. 
Twenty-five to 30 off-road pieces of equipment were retrofitted, mostly
Tier 2 and Tier 3 engines, all with ARB or EPA verified retrofits --
passive, active DPFs, as well as the DPF plus SCR system.  As well as
overall some of these projects in Manhattan down at Ground Zero, as well
as around Manhattan in general is another 118 Tier 1 and Tier 2 engines
have been retrofit with DPFs.

		As talked about earlier, sort of in a negative context, but the
off-road showcase program.  There are a number of vehicles that were
planned to be retrofit.  Currently, they have not retrofit all of them. 
But once again, it is yet another piece of a target for retrofit
experience.  As well as LAX, 73 vehicles retrofitted with Level 3
devices, both passive and active DPFs.

		Texas, new technology research development funding, just to point out
that there are other construction retrofit experience, things going on
that are not directly tied to PM, which is what's driving the California
rule.  Three manufacturers were funded to demonstrate retrofit PM plus
SCR systems for on- and off-road applications.

		And in Europe as well, as we noted a MECA member as having verified
technology in Europe.  There is an online database of over 7,000 pieces
of construction equipment that have been fitted with DPFs showing little
to no safety or other issues.

		This slide basically talks about the challenges for off-road
retrofits.  Obviously, what's been brought up today talks a lot about
the comparison of retrofit technologies both for on-road versus
off-road, and it's an obviously conclusion that off-road retrofits pose
more challenges for retrofit vendors when it comes to installing them on
pieces of equipment.  First and foremost, obviously, if you're talking
about some of these Tier 0 pieces of equipment, higher emissions for
off-road engines -- off-road engines especially before 1996, when the
Tier 1 standards kicked in -- higher engine PM out obviously will cause
more issues.

		More diverse equipment and equipment applications than on-road, yet
another clear and obvious point about the nature of construction
equipment.  More older equipment.  You get wide horsepower ranges.  As
small as 50 horsepower, up to greater than 1,000 horsepower.  Obviously,
the bigger the horsepower, the bigger the engine.  You might need
multiple filters.  So that, obviously, will increase the cost.

		Obviously, by putting on some of these pieces of equipment, you do run
into issues of equipment stability.  Emissions profile can change with
the application.  Obviously, on a given project, you might data log a
vehicle and it has a certain emissions profile for that application or
for that project, and then that same piece of equipment has a different
duty cycle for a different project, it can change the emissions profile.
 And that's another issue that has to be taken into account.  So that
DPF that might have been appropriate for that current project might not
be appropriate for a different project.

		Just in general, of course, more rigorous operating environment.  I
don't know if anybody's ever been on a construction site -- vibrations,
dust, uneven surfaces.  Obviously are going to require use of high-grade
vibration isolators, especially with track drive equipment like
bulldozers, which obviously could increase the cost as well.

		And then packaging constraints, which is probably the number-one thing
that's been brought up today in terms of maintaining driver visibility
and safety, and I have a couple of slides after this that will touch on
that more specifically.

		And then equipment operators can vary by day.  This sort of just ties
into the whole potential training issue.  So you have one piece of
equipment that on one given day or a given week or a given project might
be one person operating that piece of equipment who understands that
there is a control technology installed, but then somebody else on
another project or another week or another day comes on and does not
quite understand that.

		So there has to be a level of understanding and training and for every
end-user about how the emission control technology works on the piece of
equipment.

		So retrofits can be installed safely.  Obviously, once again, as we've
talked about many times already today for many of the speakers, as well
as from ARB, safety is a big issue when it comes to retrofit technology
and even more so when we're talking about off-road.

		Just wanted to point out clearly that, to date, we've talked
specifically about off-road retrofits, to date that there has been an
excellent safety record.  The pictures that I have showed you earlier or
even the ones that you saw earlier from other presentations, there have
been no record of any specific death or fatality or injury due to a poor
installation for off-roads, for off-road technologies.

		And retrofit manufacturers, our members, the installers, the companies
that are under MECA member companies who actually install the
technologies, of course, are using best engineering judgment,
installation practice to ensure the safe installation of devices.  Most
of these things listed out here are pretty common that you would find on
any instruction, per instruction manual when installing a retrofit on an
off-road piece of equipment.

		Number one obviously a big one.  Do not obstruct operator line of
sight.  Do not obstruct the equipment operation, operator access,
mounting on safety cages.  I think that was potentially considered as a
way to potentially install a retrofit as to elevate it above so that the
line of sight of the driver could see straight through, and you elevate
it high enough, you could see through.  Obviously, if you're going to do
something like that, that the mount can actually support the weight of
the emission control device.

		Heat shields, that was also brought up as well.  Obviously, heat is a
very important issue when it comes to installation of these new
technologies.  A lot of the studies that have been done by MECA not just
for diesel vehicles and DPFs, but other emission control technologies
have shown that the heat that comes from the emission control device is
the same, if not lower, than the original muffler that it replaced.

		And if not, obviously, you would want to measure this in advance.  You
can use proper heat shields to help with diminishing the heat exposure.

		And of course, last, inspect per manufacturer's instructions on a
regular basis.  So after you've installed the piece of equipment, on a
regular basis you're going out into the field and checking that the
retrofit is operating as it was installed.

		And once again, ARB's current regulation provides for this process for
retrofit safety oversight, and as we're all well aware now that ARB is
currently in the midst of discussions with Cal/OSHA to come up with some
sort of amendments that will address what is considered to be safe. 
Once again, MECA believes that some level of masking should be allowed
when we're talking about the sides or the front or the back and that
mirrors could be used to help address this.  But at the end of the day,
of course, whatever comes out of that process MECA will abide by.

		And this is just my last slide.  Retrofits have been proven for
off-road applications.  I think partly what we're talking here today a
lot about, are these retrofits technically feasible in some sort of
theoretical.  I think we're trying to state here that not just in
California, but outside of California and the U.S. where retrofits are
not mandated, that there has been experience installing retrofits on
off-road pieces of equipment.

		These technical considerations for successful off-road retrofit
projects basically applies to all retrofits.  But just as important, if
not more important on the off-road side, the application engineering up
front, matching the right technology to the specific vehicle or piece of
equipment.  This is the data logging that's done up in advance to ensure
that when you look at this piece of equipment, does it run hot enough to
allow for you to use that passive DPF, or does it require an active DPF?

		A lot of the times when you see a lot of these or hear about stories
about failures, whether it be in the off-road or on-road arena, it's not
due to the technology itself, which is sound, it's more about the
installation of it itself.  Was there -- did somebody not do the work up
front to know that the duty cycle of this vehicle did not allow it to
get hot enough to be able to burn off the soot so that DPF would work
properly?

		So application engineering very important up front to determine
whether or not what retrofit device can go on or even if one should be
put on that vehicle.  And then, of course, having that proper
professional installation.  A lot of the MECA member companies
themselves manufacture the devices, but there are other companies out
there who actually do the installation.  So, obviously, having not a
fly-by-night type of person to go out there to install these devices,
but somebody who's certified and does it correctly.

		On-vehicle monitors as well.  So after the device has been installed,
any Level 3 device will come with a monitoring kit for both back
pressure and temperature.  So it's very important that those are
installed correctly.  They provide important user feedback on
performance.

		And then maintenance.  This is not like DOCs in the past, where you
install it and forget about it.  You cannot forget it.  Once you decide
to go down this route of installing a Level 3 device, a diesel
particulate filter, active or even a Level 2, there is some level of
maintenance that needs to be done and followed through with.  So all of
these vehicle equipment and retrofit devices require some level of
frequent inspection and maintenance.

		And then just last, the successful retrofits require a cooperative
effort between fleet owners, operators, and technology providers.  At
the end of the day, it's not just about the device itself.  You have to
get understanding and cooperation between the fleet owner, the end-user
and operator themselves, and the technology providers.  Up front, you
have to have the discussions to understand what your fleet looks like
and what emission control devices are appropriate.

		And just last, MECA strongly supports ARB's waiver request.  We in the
past, like I said, have supported ARB in its other ATCMs, in-use ATCMS,
not just for off-road, and we'll be providing more written and detailed
comments by the May 18th deadline.

		MR. SIMON:  Thank you, Mr. Santos.  Appreciate your testimony, and we
look forward to your written comments as well.

		Nick Goldstein?

		MR. GOLDSTEIN:  Good afternoon.  I am Nick Goldstein, the assistant
general counsel for the American Road and Transportation Builders
Association, or ARTBA.  ARTBA represents more than 5,000 members
nationwide involved in all sectors of the U.S. transportation design and
the construction industry.

		I'd like to begin my statement by thanking the U.S. Environmental
Protection Agency for the opportunity to speak at today's public hearing
regarding the consideration of the California Air Resources Board's
request for a Federal waiver from the EPA allowing the implementation of
ARB's regulations for in-use off-road diesel vehicles.

		ARTBA's many California members rely heavily on off-road construction
equipment to perform core business functions and would be directly
impacted by ARB's in-use off-road diesel equipment regulation. 
Similarly, if ARB's regulation is eventually adopted by other States,
ARTBA's members nationwide would also be impacted.

		The Clean Air Act grants special status to California due to the
State's unique air quality problems, allowing California to set its own
air quality standards in many areas, subject to Federal approval.  If
approved, this Clean Air Act then gives other States the choice to
either stay with existing Federal standards or opt in to those passed by
California.

		Transportation improvement projects often, by necessity, involve
moving construction equipment across State lines.  A patchwork approach
to State regulation could lead to a scenario where equipment becomes
usable on one portion of a project, but prohibited in another.  The
Clean Air Act does not give California complete authority to enact its
own standards.  There are limitations.

		Among these limitations, California may not set its own standards or
impose other emission-related requirements for new engines which are
used in construction equipment or vehicles or used in farm equipment or
vehicles which are smaller than 175 horsepower.  This preemption lasts
throughout the useful life of the equipment.

		The ARB regulations would apply to apply to all in-use off-road diesel
construction equipment with a rating of 24 horsepower or more and are
thus not allowed by the Clean Air Act.  Further, the Clean Air Act
states that any proposed California standards must be "at least as
protective of the public health" as those on the Federal level.

		Protecting the public health is a commendable objective and one shared
by ARTBA.  EPA, however, must be cognizant of the impact that ARB's
proposed standards would have on public health both within California,
as well as any other States that chose to opt in to the standards if
they are enacted.  Due to the enormous expense of replacing the affected
in-use off-road construction equipment -- in some cases, more than $1
million for each machine -- the cost of sorely needed transportation and
infrastructure improvement projects will likely increase.  This means
that either fewer roads, schools, housing, and levees will be built or
project owners will have to spend more.

		For those projects that go forward, the pace at which they can be
completed could be significantly slowed because the pool of construction
equipment -- of construction firms, I'm sorry, with the proper equipment
to do the jobs will likely be diminished.

		Further, nearly 36,000 people die each year on the U.S. highways, and
many federally funded highway improvements in these States are designed
specifically to address safety issues.  As such, allowing ARB's rule to
go forward could lead to highway improvements being denied and, in turn,
delaying needed safety enhancements that would improve the public
health.

		Also, the Clean Air Act states that California's standards should not
be adopted if California's public health protectiveness determination
for the ARB rule is "arbitrary and capricious" or if "California does
not need such standards to meet compelling and extraordinary
conditions."

		In considering whether or not ARB's rule is arbitrary and capricious,
ARTBA respectfully submits that ARB's failure to consider collateral
negative public health impacts of the off-road diesel rule make the
public health protectiveness determination arbitrary and capricious. 
While ARTBA is very supportive of both the EPA and ARB's goal of
reducing particulate matter and NOx emissions, ARTBA does not believe
that ARB has considered fully some of the air quality improvements
already occurring in California and the Nation.  These improvements in
air quality undercut the need for a measure as severe as the ARB
proposal.

		EPA should recognize that reductions in PM and NOx levels will occur
as a direct result of existing Federal regulations.  Dramatic
improvements in emissions levels will come from implementation of
regulations on sulfur levels in gasoline, as well as measures affecting
heavy-duty diesel engines and highway vehicles.

		In fact, regulations took effect in 2006 requiring refiners to meet a
30 parts per million average sulfur level for gasoline with a cap of 80
parts per million.  This fuel will enable vehicles to use emissions
controls which are projected to reduce tailpipe emissions of NOx by 77
percent from passenger cars and as much as 95 percent from pickup
trucks, vans, and sports utility vehicles.  When fully implemented,
these regulations will have the effect of removing 164 million cars from
our Nation's roadways.

		In addition, the EPA will continue implementation of its rule to make
heavy-duty trucks and buses run cleaner.  Pollution from heavy-duty
highway vehicles will be reduced more than 90 percent, resulting in an
additional reduction in NOx levels of 2.6 million tons per year, while
PM will be reduced by 110,000 tons per year.

		EPA has also begun implementation of its rule to regulate emissions
from nonroad diesel engines by integrating engine and fuel controls as a
system to gain the greatest emission reductions.  This is estimated to
result in an additional reduction of 738,000 tons of NOx per year.

		All of these reductions, coupled with EPA's own findings that between
1980 and 2008, gross domestic production increased 126 percent, vehicle
miles traveled increased 91 percent, energy consumption increased 34
percent, population increased 29 percent, while at the same time,
emissions of all 6 principle air pollutants, including NOx and
particulate matter, decreased by 54 percent, show that the air quality
is significantly improving across the Nation and in California without
the ARB rule.

		Finally, the Clean Air Act requires that California standards comply
with the "feasibility constraints" when implementing its rule.  ARTBA
has serious concerns, many of which have been gone over already today,
regarding the specifics and feasibility of ARB's off-road diesel rule.

		ARB's regulation requires the use of technology which, in some cases,
may not available for purchase until 2014.  Further, where technology is
available, the sudden increase in demand caused by the ARB rule could
cause supplies to be exhausted.  Contractors simply may not be able to
purchase the necessary equipment and could be barred from continuing
their work.

		If ARB's rule is fully implemented, there could be profound, negative
impacts on California's infrastructure rebuilding efforts, the health of
the State's construction industry, and its overall economy.  Instead,
ARB must allow technology to catch up to its regulatory goals by
allowing industry more time to develop equipment clean enough and
available enough to meet the standards mandated by the demand created by
its regulation.

		Many of California's larger construction companies have already begun
the process of repowering or retrofitting their fleets in anticipation
of these regulations.  However, smaller companies with less than five
employees, which make up 55 percent of California's industry, will be
severely hampered by the costs of repowering and retrofitting equipment
that, in some cases, are the sole assets of their family-owned
businesses.

		Additionally, many of these smaller companies simply do not have the
resources or access to capital to repower or retrofit their engines and
may be forced to park the equipment, ultimately costing jobs and revenue
to the State's economy.

		Under the annual emission reduction targets required in the ARB
regulation, many contractors will be required to first repower or
retrofit an engine, only to have to turn around a few years later and
replace the entire piece of equipment when the technology to do the job
right finally hits the marketplace.

		In conclusion, ARB's rule does not satisfy the requirements of the
Clean Air Act because it attempts to regulate equipment below 175
horsepower, could lead to public health concerns, and is arbitrary and
capricious.  EPA should recognize this and deny ARB's request for a
Federal waiver.

		ARTBA looks forward to continuing to work with both the EPA and ARB in
encouraging voluntary diesel retrofitting at an attainable pace, rather
than maintaining retrofits at a pace many companies will not be able to
meet.

		Thank you very much.

		MR. SIMON:  Thank you, Mr. Goldstein, for your testimony.  Appreciate
it.  Thank you.

		Anyone else wishing to testify?  We've heard from pretty much
everybody in the room.

		Given that California is -- as we have in previous waiver practice,
California is given the opportunity, if they so choose, to make any
closing remarks or --

		I'm saying California is given a chance to, if they would choose, they
have a chance to come and make any closing remarks, and it's completely
optional.

		MR. WHITE:  Yes.  We would like to make a couple responses.

		MR. SIMON:  Okay.  Please, come on up.

		MR. TERRIS:  Again, this is Michael Terris and Erik White,
representing CARB.

		We'd like to just make a couple responses to some of the comments that
were made today.  First, with regard to Mr. Prescott's comments and his
statement that CARB has no experience in dealing with the construction
industry and safety and that it shouldn't be making determinations
regarding safety.  The way the regulation is drafted, the decisions,
basically CARB will have a review process, but will accept statements
and comments from, first, the installers and the retrofit manufacturers
as to whether the equipment can be safely installed on a specific
application.

		Second, the end-user, the contractor, can submit other documentation
to the executive officer to consider in making his determination after
evaluating all the facts from comments, documentation from engine
manufacturers, from equipment manufacturers, from independent
laboratories.  All of that will be evaluated by the executive officer. 
And if there is disagreement with the executive officer's decision,
there is an entire appeals process that can be gone through to make a
final determination.

		And third, CARB has made it very clear that it will accept any
determination by any Federal or State agency that is responsible for
making safety determinations, including the Federal Aviation
Administration and as well as Cal/OSHA, the Mining Administrations, and
any determination by them that the retrofit installation would violate
their rules or regulations CARB would accept.

		Second thing with regard to Mr. Prescott made the point that present
Cal/OSHA rules do not consider rear visibility issues.  CARB has
basically agreed with Cal/OSHA that rear visibility should be a factor
and considered, and in CARB's interim period where it's looking at
visibility impairment and whether or not a retrofit should be installed
is taking that into consideration.  And if rear visibility is impaired,
there is no requirement that it be installed at this point.

		With regard to Mr. Cloud's statement and the AGC petitions, I just
wanted to clarify that AGC did file a petition in December 2008
basically asking for CARB to review the rule and to repeal it.  At AGC's
suggestion, the petition was put into abeyance.  It's an agreement
between the parties and that neither party to date has exercised the
condition of the abeyance agreement to give 2 weeks' notice to sort of
revive the petition and have it addressed.

		Regarding the January 2009 petition, AGC requested that there be a
2-year delay in implementing the fleet average requirements of the
regulation.  CARB did respond to that petition, granting it in part,
denying it in part.  The granting of it basically said that CARB would
review its regulations and hold an executive officer fact-finding
hearing, which it did hold in March of this year, and that it would
present its findings to the board at the April hearing.

		One of the big issues that was raised by just about all the commenters
is the technical feasibility of VDECS, and we want to make it -- it was
basically set forth in our previous submittals to EPA and it was
restated today.  The regulation provides for an exemption.  When a VDEC
is unavailable, then there is no requirement that it be installed.  The
same is true for Tier 3 and Tier 4 engines and vehicles.  If they are
not available, they do not have to be installed.

		The ATA --- I'm sorry, yes, ATA basically indicated that that is not
-- should not be considered by EPA in granting, making its tech
feasibility considerations.  And I just want to basically state that in
the International Harvester, the court recognized that a regulation can
be extremely stringent so long as there is an escape clause, escape
hatch available to the industry.

		We believe that an exemption, which is one of the examples given by
the court in that case, is such an escape hatch and that a second escape
hatch would be that CARB's continuing review of the regulation.  And
that CARB will be able to address issues that if they come up in
appropriate amount of time to allow the industry to fully comply with
the regulation, without being in violation of it.

		And basically, another point that I want to mention lastly is the
mention of the recession.  The recession, as we stated today in our
initial opening presentation, is real.  We don't deny that, and we are
continuing to look at it.  We just believe that for decisions that deal
with how best to address the business in California that EPA should
defer to the policy judgments of the State.

		And lastly, with regard to the recession, I just in the flight out
here yesterday, I was reading about the recession and impact on CSX
railroad company, and basically, they mention that they had a
significant downturn over the last several years.  But in the past
quarter, their business is up 6 percent.  So although this is a severe
economic recession, things do rebound, and that's a consideration that
the CARB will be considering.

		Erik?

		MR. WHITE:  I think Mike hit on -- this is Erik White with the Air
Resources Board.  Mike hit on, I think, many of the issues that were
raised today regarding the technical feasibility surrounding retrofits,
and I think that as you look at that, I think we've seen many examples
of successful retrofits, not only in California, but nationwide and
around the world, particularly in Europe.

		And one of the things that wasn't mentioned here is there was a lot of
focus about retrofits that necessarily need to happen on the outside of
the vehicle.  What wasn't mentioned is one of the things we're seeing is
that as issues with safety have been raised by the regulated industry
and as the retrofit industry has looked to respond to our regulatory
requirements, what we've seen is a significant amount of innovation in
terms of where those devices can be mounted.

		And what we're beginning to see is a significant number of those being
installed under the hood, where there are no visibility impacts, issues
around heat exposure to workers are eliminated because they are under
the cowling.  So I think, as we've looked at the technical feasibility
of our rule, what we have seen is that not only have the number of
retrofits that have been verified greatly expanded from what was
available when the rule was first approved by our board, is that you're
seeing a greater variety in terms of the ability to retrofit these
vehicles.

		And in fact, the OEMs are involved, whether it's the Caterpillars,
whether it's the John Deeres who have taken and looked at this rule and
seen an opportunity to upgrade older equipment to provide more useful
life to that for the end-user and are working with the retrofit industry
to provide workable, safe retrofit solutions for their products.

		I just wanted to add that to Mike's comments.

		The other comment I wanted to make is in regards to cost because I
think we've heard a lot about the significant costs associated with this
regulation.  And throughout its development and throughout the board's
consideration of this, there was a clear recognition that this is a very
expensive regulation.

		In fact, as the board debated and evaluated the need for this, cost
was certainly one of the most important considerations, along with the
air quality needs or benefits that it provided, as it looked for and
ultimately made that policy decision.  That while an expensive
regulation was clearly a needed regulation -- and during the
development, certainly there was a great deal of evaluation of ARB's
cost numbers.  And in fact, ARB did look at many of the cost numbers
that were developed, including the one that was cited today about a
$12.9 billion cost and held a special workshop specifically to look at
and address that matter.

		And as we looked at those cost estimates, what we found is that they
were significantly biased to the high side and that they presumed
activities that were not required under the regulation or they looked at
not necessarily the least cost compliance option available to fleets and
not taking advantage of the full amount of flexibility that the
regulation required.

		So, again, even after doing that, ARB presented to the board and the
board accepted the numbers that Mike talked about earlier, the $3
billion to $3.6 billion as, in fact, the direct regulatory costs
associated with this regulation.

		Now, clearly, I think we all recognize the world has changed since
2007.  And I think the California Air Resources Board has shown a clear
willingness to relook at the requirements and the economic impacts on
that, whether that's through direct action of the Air Resources Board or
through direct action of the California legislature, to look at
opportunities to still meet our clean air goals, but do it in a way that
provides greater flexibility, additional time, lower cost to end-users. 
And in fact, that work continues to go on.

		But because of that, I think it's very clear that California feels
very strongly that those types of decisions should -- are best left to
California to make and working directly with affected stakeholders in
California to understand how what relief is appropriate to balance the
economic impacts of the regulation relative to the environmental
benefits that the regulation provides.

		While we spent a lot of time today talking about the needs to meet
National Ambient Air Quality Standards, what we haven't discussed a lot
is the need to meet State Ambient Air Quality Standards as well, as well
as to address the needs to meet California's diesel risk reduction plan,
which targets significant and early emission reductions of directly
emitted diesel PM.

		So as we look at the benefits of the rule, I think we need to remain
mindful that we need to look broadly in that while National Ambient Air
Quality Standards are certainly one important aspect and goal of the
environmental benefits that the regulation will provide, they are not
the only environmental benefit that California is looking to achieve
with this regulation.

		So, with that, we will close our comments.

		MR. SIMON:  Great.  Thank you.

		Given that, then I will declare this hearing closed.

		As we noted at the outset, the public comment period will remain open
until May 18,2010.  All interested parties are encouraged to provide
their written comments on CARB's authorization request and any comments,
information, data, and evidence presented by persons who testify at
today's hearing, these written comments should be submitted in
accordance with the March 12, 2010, Federal Register notice.

		And I thank everyone for coming, and your testimony today I think has
been very helpful from our perspective.

		Thank you, and good day.

		[Whereupon, at 1:34 p.m., the meeting was concluded.]

 

 

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