BILL ANALYSIS                                                                                                                                                                                                    






           SENATE TRANSPORTATION COMMITTEE         BILL NO:  AB 2628
          SENATOR KEVIN MURRAY, CHAIRMAN         AUTHOR:   pavley
                                                 VERSION:  6/8/04
          Analysis by: Randall Henry                         
          FISCAL:yes







          SUBJECT:

          Hybrid vehicles: HOV lanes.

          DESCRIPTION:

          This bill would authorize single-occupancy hybrid motor  
          vehicles to use high-occupancy vehicle (HOV) lanes, pending  
          federal authorization. 

          ANALYSIS:

          Existing law permits the use of exclusive or high-occupancy  
          vehicle lanes by super ultra-low emission vehicles (SULEV),  
          that meet the federal ILEV emission standard, and that have  
          displayed a distinctive decal, label, or other identifier  
          issued by the Department of Motor Vehicles. 

           This   bill  would  : 

           Authorize a hybrid vehicle that meets California's  
            advanced technology partial zero-emission vehicle (AT  
            PZEV) standard for criteria pollutant emissions and has a  
            45 miles per gallon or greater fuel economy highway  
            rating.
           Authorize a hybrid vehicle that was manufactured during  
            the 2004 model year or earlier and has a 45 miles per  
            gallon or greater fuel economy highway rating and meets  
            California's ultra-low emission vehicle (ULEV), super  
            ultra-low emission vehicle (SULEV), or partial  
            zero-mission vehicle (PZEV) standards for exhaust  
            emissions, within the scope of vehicles permitted to be  
            issued a decal, label, or other identifier to use the  
            exclusive or preferential highway lanes.




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           Prohibit the implementation of the provision until the  
            federal government acts to approve the use of  
            high-occupancy vehicle lanes by these vehicles regardless  
            of the number of occupants.
           Prohibit the Department of Motor Vehicles from issuing  
            more than 75,000 decals, labels, or other identifiers.
           Require the Department of Motor Vehicles to discontinue  
            issuing those decals, labels, or other identifiers, if  
            the Department of Transportation makes a specified  
            determination after at least 50,000 of those decals,  
            labels, and identifiers are issued.
           Provide that this provision would remain in effect only  
            until January 1, 2008.

          Existing law authorizes the Governor to remove individual  
          high-occupancy vehicle lanes, or a portion of those lanes,  
          during periods of peak congestion from the ILEV and AT PZEV  
          access after certain findings are made by the Department of  
          Transportation.

           This   bill   would  :   

           Grant the department this authority rather than the  
            Governor.
          
          BACKGROUND:

          According to state law, the goal of high-occupancy vehicle  
          lanes is twofold: reduce congestion and improve air  
          quality.  State law further declares that the purpose of  
          these lanes is "to stimulate and encourage the development  
          of ways and means of relieving traffic congestion on  
          California highways and, at the same time, to encourage  
          individual citizens to pool their vehicular resources and  
          thereby conserve fuel and lessen the emission of air  
          pollutants."

          The California Department of Transportation has defined the  
          goals of high-occupancy vehicle lanes in the following  
          manner:

           Increase the people-moving capacity of the freeway  
            system.
           Reduce overall vehicular congestion and motorist delay by  
            encouraging carpooling.
           Provide time and commute cost savings to users of  




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            high-occupancy vehicle lanes.
           Increase the overall efficiency of the freeway system.
           Improve air quality by decreasing vehicular emissions.
          
          Regarding the specific operation of high-occupancy vehicle  
          lanes, federal law, Title 23 U.S.C. 102 (a)(1), provides  
          that a "state highway department shall establish the  
          occupancy requirements of vehicles operating in HOV lanes;  
          except that no fewer than 2 occupants per vehicle may be  
          required." 

          In addition, Section 102 (a)(2) notes that a "state may  
          permit a vehicle with fewer than 2 occupants to operate in  
          HOV lanes if the vehicle is properly labeled and certified  
          as an Inherently Low Emission Vehicle (ILEV)."

          In 1999, the Legislature enacted legislation, Assembly Bill  
          71 (Cunneen), which complied with the above provision and  
          permitted single-occupancy Zero-Emission (ZEV),  
          Ultra-Low-Emission (ULEV), and Super-Ultra-Low-Emission  
          (SULEV) vehicles to use HOV lanes.  Such vehicles, which  
          are issued a "Clean Air Vehicle" decal ($8) by the  
          Department of Motor Vehicles for traffic enforcement  
          purposes, include vehicles powered by electricity, liquid  
          petroleum gas, or compressed natural gas.  The Department  
          of Motor Vehicles indicates that approximately 6,000 clean  
          air decals have been issued to these types of vehicles  
          since the enactment of the implementing legislation.

          Specifically concerning the eligibility of single-occupancy  
          hybrid vehicles for use of HOV lanes, the Federal Highway  
          Administration has stated the following (December 13, 2001  
          policy memorandum):

               In the early 1990's, the Environmental Protection  
               Agency established the ILEV concept to recognize  
               vehicles with no fuel vapor (hydrocarbon) emissions.   
               The emissions from an ILEV are generally lower than  
               those vehicles that use gasoline since they have  
               evaporative emissions.  Zero emission vehicles  
               (electric powered vehicles) that have no vehicle  
               emissions are the only other type of clean fuel  
               vehicles that are allowed to use HOV lanes.  EPA is  
               the only entity with the authority to certify ILEVs.

               None of the hybrid vehicles have qualified as ILEVs  




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               because their engines have fuel vapor emissions.   
               Hybrid vehicles draw propulsion energy from onboard  
               sources of stored energy that include a combustion  
               engine that uses fuel and a rechargeable electric  
               energy storage system.  Hybrid vehicles have not  
               certified by the EPA as meeting the emissions  
               requirements that have been established for vehicles  
               to be classified as an ILEV.  As a result,  
               (single-occupancy) hybrid vehicles are not allowed to  
               use HOV lanes.    

          Last year, Governor Davis wrote to the federal Department  
          of Transportation requesting permission to authorize  
          single-occupancy hybrid vehicles to use high-occupancy  
          vehicle lanes.  This request was denied.

          The federal Congress is currently considering  
          reauthorization of the six-year federal surface  
          transportation act, "Transportation Equity Act for the 21st  
          Century," which has now expired.  Both the house version  
          and the senate version contain provisions that grant the  
          states option of allowing "qualifying low emission and  
          energy-efficient vehicles to use high-occupancy vehicle  
          lanes without satisfying the vehicle occupancy  
          requirements."  The states would be required "to establish  
          a program that addresses the selection and certification  
          process of qualifying vehicles, identifies labeling and  
          enforcing components of the program, continually monitors  
          and reports program performance, and outlines the policies  
          and procedures governing the limitations or restrictions of  
          the program." 

          Lastly, state law permits motorcycles and mass transit  
          vehicles (such as transit buses and paratransit  
          vehicles--passenger vehicles which provide transportation  
          services for handicapped persons, persons with  
          developmental disabilities, disabled persons, and senior  
          citizens) to operate in HOV lanes without passengers.  Mass  
          transit and paratransit vehicles generally operate without  
          passengers when returning to a terminal facility after  
          completing a designated route or returning passengers to a  
          facility or home location.  Specifically, Vehicle Code  
          Section 21655.5(b) provides the following:

               The Department of Transportation and local  
               authorities, with respect to 




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               highways under their respective jurisdictions, shall  
               place and maintain, or 
               cause to be placed and maintained, signs and other  
               official traffic control 
               devices to designate the exclusive or preferential  
               lanes, to advise motorists 
               of the applicable vehicle occupancy levels, and,  
               except where ramp metering 
               and bypass lanes are regulated with the activation of  
               traffic signals, to advise motorists of the hours of  
               high-occupancy vehicle usage.  No person shall drive a  
               vehicle upon those lanes except in conformity with the  
               instructions imparted by the official traffic control  
               devices.   A motorcycle or a mass transit vehicle may  
               be operated upon those exclusive or preferential use  
               lanes unless specifically   prohibited by a traffic  
               control device  .  (Underlining added)

          The Department of Transportation indicates there are  
          currently 1,112 miles of high occupancy vehicle lanes in  
          California, and more 1,000 miles of such lanes are  
          scheduled to be constructed by 2030.
          


          COMMENTS:

          1.Hybrid electric vehicles are motor vehicles that are  
            propelled by a combination of an internal combustion  
            engine with a battery and electric motor of an electric  
            vehicle which significantly increases the fuel economy of  
            these vehicles over conventional vehicles.  This engine  
            and electric motor combination provides the extended  
            mileage range and rapid refueling that motorists have  
            grown to expect from conventional vehicles and the  
            impressive energy and environmental benefits of an  
            electric vehicle, particularly lower emissions when  
            compared to conventional vehicles.

          2.The author notes that "California has the most polluted  
            air in the country.  Ozone exposure decreases lung growth  
            and increases asthma in kids while excess particulate  
            matter leads to respiratory and cardiac disease and  
            premature death.  Motor vehicles are a substantial  
            contributor and will be for the foreseeable future.   
            Hybrid vehicles use the same advanced technology  




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            components as battery and hydrogen fuel cell vehicles,  
            thereby offering a bridge to a zero emissions future."

          3.In light of these environmental and energy efficiency  
            advantages of hybrid electric vehicles, the author  
            contends that the State of California should take steps  
            to encourage the purchase of these vehicles, and in that  
            regard this bill would do the following:

                 Authorize qualifying hybrid vehicles that have a 45  
               miles per gallon or greater fuel economy highway  
               rating to use high occupancy vehicle lanes with fewer  
               than two occupants.
                 Provide that the qualifying vehicles would be  
               issued a distinctive decal or label for identification  
               purposes.
                 Specify that not more than 75,000 decals or labels  
               shall be issued.  (However, after issuing at least  
               50,000, the Department of Transportation determines  
               "that a significant high-occupancy vehicle lane  
               breakdown has occurred throughout the state, the  
               department shall stop issuing the (decals or labels)."
                 Authorize the Department of Transportation to  
               remove specific high-occupancy vehicle lanes, or  
               portions of lanes, from the access provisions of this  
               measure based on certain findings made by the  
               department regarding traffic congestion levels.  The  
               department would be required to consider the following  
               factors in determining a "lane breakdown": reduction  
               in level of service; sustained stop-and-go conditions;  
               slower than average speed than the adjacent mixed flow  
               lanes; and consistent increase in travel time.
                 Provide that these provisions would not become  
               effective until "the federal government acts to  
               approve the use of high occupancy vehicle lanes by  
               (hybrid ) vehicles, regardless of the number of  
               occupants." 
                 Terminate the provisions of this measure on January  
               1, 2008.

          4.The interest and receptivity of hybrid vehicles has been  
            widespread, and media accounts and automobile industry  
            and other sources note the following regarding these  
            vehicles:

                 The California Environmental Protection Agency  




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               reports that approximately 20,000 hybrid vehicles have  
               been sold in California since 1999, and it estimates  
               that there will 110,00 such vehicles by 2007 (55,000  
               will meet the mileage threshold required by this  
               legislation).
                 Nearly 45,000 hybrid vehicles were sold in the U.S.  
               last year.
                 Sales of hybrid vehicles have increased at an  
               average of 88.6 percent since 2000.
                 As of now, these vehicles are limited to three  
               passenger vehicles: Toyota Prius and Honda's Civic  
               Hybrid and Insight.
                 However, hybrid versions of the Ford Escape, Honda  
               Accord and Lexus SUV will be introduced in the U.S.  
               market this year, and a Toyota Highlander Hybrid is  
               scheduled to be manufactured in significant numbers in  
               2005.  By 2007, General Motors plans to have a hybrid  
               version of the Chevrolet Silverado available for  
               purchase.
                 Sales of the 2004 Toyota Prius increased by 62  
               percent in the first quarter of this year compared  
               with sales in the first three months of 2003.
                 The following advisory is posted on the Toyota  
               Corporation website: "If you are in the market for a  
               new 2004 Prius, we appreciate your patience.  There is  
               currently a waiting last at many dealerships across  
               the country.  Toyota is making every effort to  
               increase production to try and respond to the current  
               high levels of demand."
                 In March, Honda sold a record number of Honda Civic  
               hybrids.
                 The Toyota Camry hybrid version is expected to sell  
               100,000 vehicles when released in 2006.
                 The Ford Corporation reports a customer waiting  
               list of 30,000 for the hybrid-version of the Escape  
               SUV, which will be available in August.
                 Auto industry experts expect up to 30 hybrid models  
               to be available to consumers by 2009.
                 King County Metro Transit in Seattle, Washington  
               recently announced that it will begin using 60-foot  
               mass transit hybrid vehicles later this month. 

            (It can be anticipated, however, that a number of these  
            vehicles will not achieve a 45 miles per gallon rating.)






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          1.Under current federal law, a purchaser of a hybrid  
            vehicle is eligible for a "Clean-Fuel" vehicle tax  
            deduction of $1,500.  Initially the deduction was $2,000,  
            but it is being phased out in a graduated fashion, ending  
            in 2006 ($500 deduction).

                 Is the current federal tax benefit a more  
               significant incentive than the proposed HOV lane  
               exclusion?  Should this bill propose a similar state  
               tax benefit?

          1.The Department of Motor Vehicles reports that in 2003  
            there were 20,344,923 automobiles registered in the State  
            of California (26,997,133 total vehicles).  The  
            department provides the following projections of  
            anticipated automobile registrations:

                              Automobiles                        Total  
          Vehicles                 
          2004            20,654,273                          
          27,307,611  
          2005            20,968,327                          
          27,704,989
          2006            21,287,156                          
          29,562,271
          2007            21,610,833                          
          30,380,197

                 In light of the anticipated increase in the number  
               automobile vehicles over next several years, should  
               the Legislature be cautious in creating new exceptions  
               in the vehicle occupancy requirements for  
               high-occupancy vehicle lanes?  

          1.Consumer Reports, the widely respected consumer testing  
            organization, recently reported that mileage tests  
            (test-track conditions) conducted by organization staff  
            "found the (Toyota) Prius and the hybrid (Honda) Civic's  
            actual mileage performance is 20 to 25 percent lower than  
            the Environmental Protection Agency's lab-tested results.  
             In fact, the two sedans fall as short of EPA claims as  
            almost any vehicle Consumer Reports has tested in  
            decades."  

                                                Environmental  
          Protection Agency                      Consumer Reports




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           Toyota Prius                     55 miles per gallon (mpg)   
                                           44 mpg 
          Honda Civic Hybrid         47.5 miles per gallon             
                                         36 mpg

          2.Writing in opposition to this measure ("oppose, unless  
            amended"), the Transportation and Land Use Coalition  
            contends that essentially "this bill rewards those who  
            have already purchased these vehicles and many people who  
            would have purchased them without the incentive.   
            Consequently, this legislation would not significantly  
            shift demand or induce carmakers to expedite their  
            transition to hybrid technology."

           3.Policy questions  

                 In light of the current robust sales and apparent  
               receptivity of hybrid vehicles, is this bill  
               necessary?
                 Is there any discernable evidence that the  
               advantage provided by this bill will actually spur  
               sales of these vehicles in a significant way?  Will it  
               be a prime motivating factor for a prospective vehicle  
               purchaser or simply a possible afterthought  
               consideration?  Is there more than just anecdotal  
               evidence supporting the enactment of this incentive?    

                 Should the Legislature be reasonably assured that  
               this measure will actually accomplish what it is  
               intended before enacting the major policy changed  
               proposed by this bill?
                 Will this measure in any way cause a reduction in  
               traffic congestion?  If the purpose of high-occupancy  
               vehicle lanes is to reduce traffic congestion, is this  
               bill justified?   
                 Will this bill possibly cause confusion for  
               commuters traveling in free-flow lanes and observing  
               potentially large numbers of single-occupancy vehicles  
               using the HOV lane?  Could it inadvertently result in  
               motorists violating the law after observing these  
               vehicles?

           10.  Related legislation  
           
                 Assembly Joint Resolution 74 (Pavley  )-Memorializes  
               the President and Congress to take legislative action  




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               to allow single-occupant hybrid vehicles that achieve  
               a fuel economy highway rating of at least 45 miles per  
               gallon to travel in the state's high-occupancy vehicle  
               lanes.  (Pending hearing in the Senate Transportation  
               Committee)
          
           1.Author's amendment  
           
                  The author indicates that she intends to request  
               the adoption of an author's amendment at the hearing  
               that will correct a drafting error in the latest  
               amendments to the bill (June 8, 2004).
          
          Assembly Votes:
               Floor:    60-13
               Appr: 19-1
               Trans:    12-1
          
          POSITIONS:  (Communicated to the Committee before noon on  
          Wednesday,
                     June 9, 2004)

               SUPPORT:  State Treasurer Phil Angelides (sponsor)
                                              California  
          Environmental Protection Agency (sponsor)
                                              State Air Resources  
          Board
                                              South Coast Air Quality  
          Management District
                                              Prius Club of San Diego
                                              Planning and  
          Conservation League
                                              East Bay Municipal  
          Utilities District
                              Global Green USA
                                              Natural Resources  
          Defense Council
                                              California Energy  
          Commission

               OPPOSED:  Alameda County Congestion Management Agency
                                              California Association  
          of Council of Governments 
                                              Transportation and Land  
          Use Coalition (Oppose, unless amended)
                                              Toyota Corporation  




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          (Support, if amended)