BILL ANALYSIS                                                                                                                                                                                                    

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

        |COMMITTEE VOTE:  |12-0 |(August 26, 2010)   |RECOMMENDATION: | concur   |
        |                 |     |                    |                |          |

        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.   
          Establishes the vehicle retirement reimbursement amount at $1,000  
          for all other vehicle owners who do not meet the low-income  
          threshold as modified by this bill.  Specifically extends these  
          provisions to the two separate BAR-administered vehicle  
          retirement programs.  

        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, 


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           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.   
          Directs any savings resulting from this new restriction 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.   

         3)Clarify existing law to allow people to retire their vehicle any  
          time they fail smog check (currently BAR regulations require  
          people to wait until their vehicle registration date).  

         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  

        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,  


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          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.  

        5)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.  

        6)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.  

        7)Pursuant to BAR regulations, requires vehicle owners to wait  
          until their registration is due before they can retire their  

         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  


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        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 225% of the federal poverty  

        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.   


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        Related bill:  This bill is very similar to AB 823 (Hill) which 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.  

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

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