BILL ANALYSIS                                                                                                                                                                                                    



                                                                       



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          |SENATE RULES COMMITTEE            |                  AB 1507|
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                                 THIRD READING


          Bill No:  AB 1507
          Author:   Lieu (D)
          Amended:  7/15/10 in Senate
          Vote:     21

           
           SENATE ENVIROMENTAL QUALITY COMMITTEE  :  7-0, 6/14/10
          AYES:  Simitian, Runner, Corbett, Hancock, Lowenthal,  
            Pavley, Strickland

           SENATE APPROPRIATIONS COMMITTEE  : 7-3, 08/02/10
          AYES: Kehoe, Alquist, Corbett, Leno, Price, Wolk, Yee
          NOES: Ashburn, Emmerson, Wyland
          NO VOTE RECORDED: Walters

           ASSEMBLY FLOOR  :  70-6, 6/1/09 - See last page for vote


           SUBJECT :    Motor vehicle emission reduction projects

           SOURCE  :     CalStart


           DIGEST  :    This bill requires the State Air Resources  
          Board, by July 1, 2011, to revise project guidelines for a  
          project that reduces greenhouse gas emissions to allow  
          funds from specified programs and funding sources to be  
          used for a project also funded under the Carl Moyer  
          Memorial Air Quality Standards Attainment Program or the  
          goods Movement Emission Reduction Program without those  
          additional public funds being factored into the criteria  
          emission reduction cost-effectiveness calculations under  
          either of those programs.
                                                           CONTINUED





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           ANALYSIS  :    

           Existing law  

          1. Under the Carl Moyer Air Quality Standards Attainment  
             Program (Carl Moyer Program):

             A.    Provides grants to offset the incremental cost  
                of projects that reduce covered emissions from  
                covered sources in the state, and eligible projects  
                include new very low or zero-emission covered  
                vehicles or covered heavy-duty engines,  
                emission-reducing retrofit of covered engines,  
                purchase and use of emission-reducing add-on  
                equipment, development and demonstration of  
                low-emission retrofit technologies and repower  
                options, and light- and medium-duty vehicle  
                projects.

             B.    Until January 1, 2015, prohibits project grants  
                with a cost-effectiveness value of more than  
                $13,600 per ton of oxides of nitrogen (NOx) reduced  
                in the state.  On and after January 1, 2015,  
                project grants are prohibited with a  
                cost-effectiveness value of more than $12,000 per  
                ton of NOx reduced in the state.  Both of these  
                amounts may be higher to reflect state consumer  
                price index adjustments on or after January 1,  
                2006, as determined by the California Air Resources  
                Board (ARB).

             C.    Defines "cost effectiveness" to mean the dollars  
                provided to a project for each ton of covered  
                emission reduction attributed to a project, and  
                provides that the cost of covered emission  
                reduction is the amount of the program grant,  
                including certain matching funds, plus any other  
                state funds, or funds under an air pollution  
                control district's control, provided toward the  
                project.

          2. Under the Goods Movement Emission Reduction Program  
             (GMERP) Law.







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             A.    Provides that projects eligible for funding  
                include replacement, repower, or retrofit of  
                heavy-duty diesel trucks, diesel locomotive  
                engines, harbor craft, and cargo handling  
                equipment; on-shore electrical power; mobile or  
                portable shoreside distributed power generation;  
                and infrastructure electrification to reduce engine  
                idling.

             B.    Requires the ARB to consider certain criteria in  
                evaluating projects (e.g., emission reduction  
                magnitude; public health benefits;  
                cost-effectiveness; reduction in greenhouse gases  
                (GHGs); degree to which funds are leveraged from  
                other sources; total emission reductions a project  
                would achieve over its lifetime per state dollar  
                invested).

          3. Under the Alternative and Renewable Fuel and Vehicle  
             Technology Program Law.

             A.    Requires the State Energy Resources Conservation  
                and Development Commission (CEC) to provide  
                competitive grants, revolving loans, loan  
                guarantees, or loans to certain interests (e.g.,  
                public agencies, businesses, fleet owners,  
                consumers) to develop and deploy innovative  
                technologies  that change the state's fuel and  
                vehicle types to help attain the state's climate  
                change policies.

             B.    Requires the CEC to provide preferences to those  
                projects maximizing the program goals based on  
                certain project criteria (e.g., consistency with  
                climate change policy, ability to reduce criteria  
                air pollutants and air toxics, provide nonstate  
                matching funds). 

          This bill:

          1. Requires the ARB to revise project guidelines by July 1,  
             2011, to allow funds from the following programs or  
             funding sources to be used for a project also funded  







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             under the Carl Moyer Program or the GMERP Law without  
             those additional funds being factored into the criteria  
             emission reduction cost-effectiveness calculations under  
             either of those programs:

             A.  Federal funding from programs designated to reduce  
             GHG 
                   emissions.

             B.  Alternative and Renewable Fuel and Vehicle  
             Technology Program
                   Law. 

          2. Provides that nothing in the above provision (# 1  
             above):

             A.  Authorizes expenditure of funds for a project that  
             does not meet all 
                      of the requirements of the Carl Moyer Program  
             or the GMERP Law, 
                      including requirements that require cost  
             sharing or matching funds.

             B.  Applies if the additional expenditure would not  
             provide an                                              
             incremental air quality or GHG emission benefit greater  
             than what                                               
             would otherwise be achieved by the program.  Also, ARB  
             cannot                                                  
             exclude funds from the cost-effectiveness calculation  
             pursuant to the                                         
             above provision if it would reduce emission reduction  
             benefits                                                
             expected to be achieved from the Carl Moyer Program, the  
             GMERP,                                                  
             the Alternative and Renewable Fuel and Vehicle  
             Technology                                              
             Program, or federal GHG emission reduction programs.

          3. Under the Carl Moyer Program, provides that federal  
             funding from programs to reduce GHG emissions, and  
             funding under the Alternative and Renewable Fuel and  
             Vehicle Technology Program, are not included in the cost  
             of covered emission reduction.







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           Background
           
          The Carl Moyer Program, the GMERP Law (enacted to set  
          standards and procedures to implement Proposition 1B,  
          approved by voters November 2006), and the Alternative and  
          Renewable Fuel and Vehicle Technology Program Law (enacted  
          by AB 118 (Nunez) Chapter 750, Statutes of 2007), provide  
          funding for certain eligible projects.

          Under the Carl Moyer Program, grants cannot be made for  
          projects with a cost-effectiveness of more than $13,600 per  
          ton.  The cost of the covered emission reduction is the  
          amount of the grant, including matching funds, plus any  
          other state funds provided to the project.

          Under the GMERP Law, criteria include total emission  
          reductions a project would achieve over its lifetime per  
          state dollar invested.

          AB 1507 allows certain federal funds and funding from the  
          Alternative and Renewable Fuel and Vehicle Technology  
          Program Law to be used for projects funded under the Carl  
          Moyer Program or the GMERP Law without being factored into  
          criteria emission reduction cost-effectiveness.  While this  
          may reduce funding under each of those programs, the intent  
          is to ensure that this new provision cannot apply unless  
          the air quality and GHG emission benefit is greater than  
          would otherwise be achieved by the programs.

           Prior/Related Legislation
           
          AB 1527 (Lieu) of 2009, a nearly identical bill passed the  
          Senate Floor 39-0, on 9/2/09 but was vetoed by the  
          Governor.  According to Governor Schwarzenegger in vetoing  
          AB 1527 (Lieu) of 2009, "I encourage the author to work  
          with ARB as they undergo their current review of the  
          Proposition 1B and Carl Moyer guidelines and, if additional  
          legislation is needed, introduce a bill in the next session  
          that achieves both ARB and the author's shared goals."

          According to the author's office, this bill is needed  
          because ARB was able to address issues relating to the  
          GMERP, but not issues relating to the Carl Moyer Program.







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           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  Yes    
          Local:  No

          According to the Senate Appropriations Committee analysis:

                          Fiscal Impact (in thousands)

           Major Provisions         2010-11      2011-12       2012-13     
           Fund
           
          Updating guidelines    $43        $85         Special * 

          * Carl Moyer Fund. 


           SUPPORT  :   (Verified 8/4/10)   unable to verify

          CalStart (source)

           OPPOSITION  :    (Verified 8/4/10)  unable to verify


           ARGUMENTS IN SUPPORT  :    According to the author's office,  
          "AB 1507 is "designed to promote better coordination  
          between state funding programs for clean transportation.   
          The bill would allow federal and AB 118 funds to be paired  
          with Carl Moyer or Proposition 1B funds to 'upgrade'  
          projects to achieve even greater air quality benefits and  
          greenhouse gas emission reductions.  Current guidelines  
          make this difficult or impossible.  While ARB staff has  
          recommended amending guidelines for Prop 1B to allow for  
          limited co-funding, these new guidelines have not yet been  
          adopted and do not apply to Carl Moyer."

          The author's office also notes that "If the funds can be  
          combined, there is an incentive to 'upgrade' to a more  
          advanced vehicle technology that provides additional  
          benefits, in the form of petroleum and GHG emissions  
          reduction."


           ASSEMBLY FLOOR : 
          AYES:  Adams, Ammiano, Arambula, Beall, Bill Berryhill, Tom  







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            Berryhill, Blakeslee, Blumenfield, Brownley, Buchanan,  
            Caballero, Charles Calderon, Carter, Chesbro, Conway,  
            Cook, Coto, Davis, De La Torre, De Leon, Emmerson, Eng,  
            Evans, Feuer, Fletcher, Fong, Fuentes, Fuller, Galgiani,  
            Garrick, Gilmore, Hagman, Hall, Hayashi, Hernandez, Hill,  
            Huber, Huffman, Jeffries, Jones, Knight, Krekorian, Lieu,  
            Logue, Bonnie Lowenthal, Ma, Mendoza, Miller, Monning,  
            Nava, Nestande, John A. Perez, V. Manuel Perez,  
            Portantino, Price, Ruskin, Salas, Saldana, Silva,  
            Skinner, Smyth, Solorio, Audra Strickland, Swanson,  
            Torlakson, Torres, Torrico, Tran, Yamada, Bass
          NOES:  Anderson, DeVore, Gaines, Niello, Nielsen, Villines
          NO VOTE RECORDED:  Block, Duvall, Furutani, Harkey


          TSM:do  8/4/10   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  SEE ABOVE

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