BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 787
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          CONCURRENCE IN SENATE AMENDMENTS
          AB 787 (Hill)
          As Amended  August 20, 2010
          Majority vote
           
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          |ASSEMBLY:  |     |(June 2, 2009)  |SENATE: |27-5 |(August 25,    |
          |           |     |                |        |     |2010)          |
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                     (vote not relevant)

          Original Committee Reference:   E. & R.  

           SUMMARY :  Revises the income eligibility level for vehicle  
          owners requesting assistance from the California Department of  
          Consumer Affairs, Bureau of Automotive Repair (BAR) and the  
          amount a person can receive to retire their vehicle.  

           The Senate amendments  deleted the Assembly version of this bill,  
          and instead:  

          1)Establish the amount BAR is required to pay a low-income  
            vehicle owner to retire their vehicle at $1,500, if their  
            vehicle fails smog inspection and the vehicle has been  
            continuously registered in the state for at least two years  
            prior to vehicle retirement.  Establish the retirement  
            reimbursement amount at $1,000 for all other vehicle owners  
            who do not meet the low-income threshold as modified by this  
            bill.  

          2)Provide discretion to BAR to increase these amounts without  
            any upper limit considering criteria not limited to the  
            following:  

             a)   Age of the vehicle;  

             b)   Emission benefit of the vehicle's retirement; 

             c)   Emission impact of any retirement vehicle; and, 

             d)   Location of the vehicle in an area of the state with the  
               poorest air quality.  

          1)Delete the provision of law that allows repair assistance for  
            owners of directed vehicles who are not low-income earners.   








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            Direct any savings to the vehicle retirement program fund.  

          2)Increase the maximum income eligibility level from 185% to  
            225% of the federal poverty level for low-income motor vehicle  
            owners who may request vehicle repair consumer funding  
            assistance.   
           
           EXISTING LAW  :  

          1)Establishes the smog check program, administered by BAR and  
            the California Air Resources Board (ARB).  Requires,  
            generally, vehicles that are registered in non-attainment  
            areas for ozone or carbon monoxide pollutant emissions to  
            undergo biennial smog checks.  

          2)Authorizes BAR to enforce and administer the smog check  
            program to ensure the reduction of gaseous emissions of  
            hydrocarbons, carbon monoxide, and oxides of nitrogen.   
            Directs that a certain percentage of vehicles (directed  
            vehicles) deemed to be "high emitters" (currently about 42% of  
            vehicles subject to the program) to specified test-only  
            stations.  Test-only stations are those that test, but do not  
            repair, vehicles.  

          3)Authorizes a state consumer assistance program offering  
            eligible motorists to receive up to $450 to fix their vehicle  
            or $1,500 to retire it.  Authorizes BAR to increase its  
            contribution for motor vehicle repairs if it determines that  
            the expenditure is cost effective (accordingly, BAR has  
            increased the repair level to $500).  Authorizes BAR to pay an  
            owner of a motor vehicle who elects to retire the vehicle more  
            than $1,500 if it determines that the increased payment is  
            cost effective.  

          4)Establishes the maximum income level for eligible motorists to  
            qualify for the consumer assistance program, for vehicle  
            repairs, at 185% of the federal poverty level as published  
            quarterly in the "Federal Register."  Authorizes BAR, at its  
            discretion, to increase the maximum income level up to 225%.   
            However, authorizes an owner of a directed or test-only  
            vehicle, regardless of income level, to receive financial  
            assistance for repair of their directed vehicle if it failed  
            smog check inspection at a test-only facility.  Establishes no  
            income level for participation in the voluntary vehicle  
            retirement or "scrappage" program.  








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          5)Allows the use of specific air district motor vehicle funds to  
            be used for light-duty vehicle programs such as the voluntary  
            accelerated vehicle retirement program, that are optional for  
            local air districts that choose to administer them.  The  
            program is also known as the car scrappage or old vehicle buy  
            back program that provides monetary or other incentives to  
            vehicle owners to voluntarily retire their older, more  
            polluting vehicle that, unlike the BAR program, passes the  
            smog check program.  

          6)Establishes on January 2010, pursuant to AB 118 (Nunez),  
            Chapter 750, Statutes of 2007, an enhanced fleet modernization  
            program for the retirement of high polluting vehicles that  
            pass smog check to be administered by BAR pursuant to  
            guidelines adopted by the ARB.  Funding for the program from  
            motor vehicle registration fees would sunset on January 1,  
            2016.  

           AS PASSED BY THE ASSEMBLY  , this bill pertained to election  
          procedures related to mail-in ballots.  

           FISCAL EFFECT  :  According to the Assembly Appropriations  
          Committee, annual savings of approximately $4 million resulting  
          from elimination of financial assistance repair of non  
          low-income vehicle owners.  

           COMMENTS  :  According to the author, ARB estimates that 75% of  
          vehicular pollution is caused by just 25% of the oldest  
          vehicles.  Unfortunately, BAR's vehicle retirement program fund  
          is continually raided for state General Fund expenditures  
          instead of being used to retire high polluting vehicles.  Over  
          the last six years, about $140 million has been taken.  In  
          addition, not enough Californians are utilizing the vehicle  
          retirement program.  There are three million vehicles over 15  
          years old in California yet only about 20,000 people participate  
          in the program annually.  

          The author further contends that BAR's vehicle repair program  
          currently allows millionaires to receive financial assistance  
          for their high polluting vehicle.  The millionaire has to pay  
          $100 towards the repair and BAR will pay up to $400.  AB 787  
          closes this loophole.  The bill would limit financial assistance  
          to Californians whose income level is 300% of the federal  
          poverty level.  








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          Vehicle retirement (scrappage):  Scrappage is an important  
          component of California's State Implementation Plan, as the  
          state's clean air plan acknowledges the need to continue  
          pursuing funding for future car scrappage programs.  It has been  
          documented that the cost-effectiveness of local air district  
          scrappage programs varies, with estimates of current  
          cost-effectiveness ranging between $1.50 and $4.50 per pound of  
          smog-forming pollutants.  Further, according to the American  
          Council for an Energy-Efficient Economy, "if a new vehicle uses  
          half the fuel use by the vehicle if replaces, it will take only  
          3.3 years to offset the energy costs of producing the new  
          vehicle."  However, some have indicated that there could be  
          unintended consequences relative to the vehicle retirement  
          program.  For example, scrapping a high percentage of older  
          vehicles in a particular region may induce migration of older  
          vehicles, possibly even those from out-of-state vehicles.  

          This bill makes adjustments to vehicle retirement programs  
          administered by BAR by decreasing the amount paid to owners of  
          vehicles who do not qualify as low-income vehicle owners from  
          $1,500 to $1,000.  

          Vehicle repair assistance:  Currently, BAR's consumer assistance  
          program (CAP) provides financial assistance for qualified  
          consumers whose vehicles fail the biennial smog check.  The  
          statutory authority for CAP is implemented through regulations  
          adopted by BAR.  Participation in CAP is limited to available  
          funds and subject to specific requirements, including income  
          eligibility.  

          The bill establishes 225% as the upper income qualification  
          limit for owners wishing to receive financial assistance for  
          repairs.  Also, this bill closes a loophole in statute that  
          allows persons of upper income levels to receive repair  
          assistance from the state if their vehicle fails smog check if  
          directed to a test-only station.  

          Related bill:  This bill is very similar to AB 823 (Hill) that  
          was approved by the Assembly Transportation Committee but was  
          subsequently vetoed by the Governor.  In his veto message, the  
          Governor encouraged the author to direct any savings achieved by  
          the bill to the vehicle retirement program, which this bill  
          does.  
           








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          Analysis Prepared by  :   Ed Imai / TRANS. / (916) 319-2093 


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