1. ARB Phase III Reformulated Gasoline Auto Industry Comments Ann M. Schlenker DaimlerChrysler Representing the Alliance of Automobile Manufacturers September 28, 1999

2. The Success of California RFG LEV II Staff Report states, “ … tenet of the original LEV program is that the vehicle technology and fuels must be linked to achieve the greatest emission reductions”, i.e., improvements in vehicle hardware should be accompanied by improvements in fuel quality “Cleaner-burning gasoline is the single biggest smog- reduction measure in California since the introduction of the catalytic converter in 1975 … No single measure in our history has reduced pollution by such a large amount in such a short time. California gasoline now is the cleanest in the world.” -- ARB, October, 1996

3. ARB Adopted LEV II Standards “State and federal air quality standards continue to be exceeded in regions throughout California” SIP called for adoption of technology-based emission control strategies for light-duty vehicles beginning in 2004 MY –Emission reductions of 25 tpd ROG+NOX by 2010 in South Coast –Additional technology measures, mobile source “Black Box”, needs of 75 tpd –LEV II “make(s) progress on the Black Box” “Emission reductions are needed statewide.” “The exhaust standards proposed in this rulemaking present a significant challenge to automobile manufacturers over the next ten years.” ARB Staff Report: Initial Statement of Reasons, November 5, 1998

4. ARB LEV-II and RFG Proposals Depart from the Vehicle/Fuel System Approach The LEV-II vehicle emissions standards cut emissions from some vehicles by over 92%, and all tailpipe and evaporative standards are tightened. MDV 3 MDV 2 LDT 2 PC / LDT 1.043.035 NMOG Reduction 48% August 31 draft gasoline specification: –5 specifications relaxed, one held constant, and one codifies the status quo of today’s average gasoline. No improvements in air quality from Phase III gasoline MDV3 LEVI LDT2 LEV I MDV2 LEV I PC/LDT1 LEV I SULEV II LEV II ULEV II NOx Reduction 92%

5. Proposed Phase III Gasoline Specification Emission Effects RVP -- Relaxation of cap to 7.2 psi - Increased evaporative HC emissions T50 -- Relaxation of maximum by 5 degrees - Increased HC T90 -- Relaxation of average and maximum by 5 degrees - Increased NOx (directly plus CCD contribution) Aromatics -- Relaxation of cap by 5 % - Increased HC, toxics Sulfur -- Essentially codification of in-use average - Little real world benefit - negated by T90 relaxation Fuel specifications proposed represent an inconsistent policy with demonstrated need for air quality improvements from mobile sources for SIP and Black Box Per Governor EO, flexibility for MtBE phase-out, WHILE PRESERVING BENEFITS

6. Alliance Advocates 5 ppm S Cap Immediate air quality benefits from on-road fleet –12 tpd NOx + ROG in South Coast Air Basin (2010) –AIR modeling (Predictive model sulfur response curves) –Calculations based on a conservative estimate of sulfur response. Actual air quality benefits likely to be greater Enables advanced emission control technologies –Many manufacturers (VW, DC, GM, Honda, Toyota, Ford) have shown sulfur impacts on NOx adsorbers and lean NOx catalysts –Sulfur is a barrier to acceptable emissions performance

7. Summary New vehicle standards must be accompanied by improvements in fuel quality, both to enhance the performance of existing technology for air quality improvements and to enable new technologies. Statewide, ARB has acknowledged the need for further emission reductions. The current ARB fuel proposal represents a backsliding, which endangers what has been the most successful, exemplary clean fuels program in the world. The relaxation of CBG standards will lead to higher emissions, poorer vehicle driveability for California drivers and will be over the objections of the auto industry. The Alliance requires: 5 ppm S cap, max DI of 1200, tighter control T50, maintenance of current RVP and aromatic caps.