BILL ANALYSIS ------------------------------------------------------------ |SENATE RULES COMMITTEE | AB 1507| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ 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 AB 1507 Page 2 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. AB 1507 Page 3 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 AB 1507 Page 4 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. AB 1507 Page 5 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. AB 1507 Page 6 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 AB 1507 Page 7 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 **** END ****