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. AB 2628 (PAVLEY) Page 2 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 AB 2628 (PAVLEY) Page 3 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 AB 2628 (PAVLEY) Page 4 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 AB 2628 (PAVLEY) Page 5 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 AB 2628 (PAVLEY) Page 6 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 AB 2628 (PAVLEY) Page 7 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.) AB 2628 (PAVLEY) Page 8 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 AB 2628 (PAVLEY) Page 9 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 AB 2628 (PAVLEY) Page 10 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 AB 2628 (PAVLEY) Page 11 (Support, if amended)