BILL ANALYSIS AB 1527 Page 1 Date of Hearing: April 27, 2009 ASSEMBLY COMMITTEE ON TRANSPORTATION Mike Eng, Chair AB 1527 (Lieu) - As Introduced: February 27, 2009 SUBJECT : Carl Moyer Program: multiple fund sources SUMMARY : Authorizes a motor vehicle emission reduction project to be funded from multiple air quality programs, including the Carl Moyer Memorial Air Quality Standards Attainment Program (Carl Moyer) and the Goods Movement Emission Reduction Program (GMERP). EXISTING LAW : 1)Establishes the California Air Resources Board (ARB) to set statewide air quality standards and regulate emissions from motor vehicles, fuels, and consumer products. ARB, along with the 35 local air quality districts that regulate other sources of air pollution, monitors air pollution and administers regulatory and incentive programs to improve air quality. Establishes ARB as the lead entity for implementation of the Global Warming Solutions Act of 2006. 2)Authorizes, through the enactment of Proposition 1B as approved by the statewide voters in November 2006, the state to sell approximately $20 billion of general obligation bonds to fund transportation projects. Of the $20 billion, allocates $1 billion into the GMERP to be administered by ARB to quickly reduce air pollution emissions, not otherwise required by law or regulation, and reduce the health risk from freight movement along California's priority trade corridors. The major sources eligible for bond funding include heavy-duty trucks, locomotives, shore side power for cargo ships, commercial harbor craft, cargo handling equipment, and infrastructure for electrification of truck stops, distribution centers, and other places trucks congregate. 3)Establishes Carl Moyer as a grant program to fund the incremental cost of cleaner-than required heavy-duty engines. Carl Moyer is an integral part of California's strategy to attain federal air quality standards by achieving emission reductions early or in excess of what is required by regulation. Carl Moyer has provided funding for the AB 1527 Page 2 incremental cost of a diverse range of project types, including purchase of new alternative-fuel heavy-duty vehicles (primarily transit buses and trash trucks) and engine replacements (repowers) for agricultural irrigation pumps, construction equipment, and marine vessels. These projects have reduced smog-forming nitrogen oxide (NOx) emissions by over 18 tons per day (tpd) and toxic diesel particulate matter (PM) emissions by almost 1 tpd, with a favorable cost-effectiveness of about $2,600 per ton of NOx reduced. 4)Pursuant to AB 118 (Nunez) Chapter 750, Statutes of 2007, develops funding programs for the reduction of greenhouse gases (GHG) and the development of clean fuel and vehicle technologies. AB 118 creates three distinct programs aimed at improving air quality and advancing alternative fuels and clean technologies. a) The Air Quality Improvement Programs administered by ARB is designed to fund air quality improvement projects related to fuel and vehicle technologies. ARB must consult with local air districts and work in coordination with the California Energy Commission (CEC); b) The Alternative and Renewable Fuel and Vehicle Technology Program administered by CEC. AB 118 directs that projects be evaluated on their proposed reduction of air pollutants, cost effectiveness, contribution to regional air quality improvement, and ability to promote alternative fuels or technologies; and, c) The Enhanced Fleet Modernization Program, administered by the Bureau of Automotive Repair, primarily directed at light-duty fleet vehicle replacements. FISCAL EFFECT : Unknown COMMENTS : According to the author, "Carl Moyer and GMERP are designed to reduce emissions throughout the state by providing incentives for projects that lead to air quality improvements. However, current law doesn't allow for a project using Carl Moyer and GMERP funds to be developed to increase air quality and reduce greenhouse gas emissions by adding additional state funding such as funds from AB 118." The author and sponsor have indicated that their intention of AB 1527 Page 3 introducing the bill is to seek GMERP and Carl Moyer funding flexibility so that any use of state AB 118 clean air/vehicle program funds would not detrimentally impact a project's competitiveness when the project is considered for funding through the GMERP or Carl Moyer. Further, they have indicated that they will not change funding processes and cost-effectiveness calculations in a way that would negatively compromise criteria pollutant or toxic air contaminant emission reductions. Arguments in Support : 1)By providing more flexibility in the administration of the air quality vehicle emission programs by facilitating the commingling of state program clean air vehicle funds, an enhanced project as funded by a specific program could be realized that otherwise could not be achieved if a project was not allowed supplemental funding from another program. 2)The California Dump Truck Owners Association indicates that "our industry has recently been negatively impacted by actions taken by ARB with promulgation of the Truck and Bus Rule. The trucking industry is experiencing the worst economic downturn since de-regulation with minimal work and high diesel prices. The small trucking businesses are truly struggling to survive at this point. These ill-conceived ARB air quality regulations will put the nail in the coffin of small trucking businesses in this state. This bill seeks to provide additional funding for our impacted membership." Arguments in Opposition : 1)Diesel PM emission reductions as anticipated from Carl Moyer and GMERP could be sacrificed should AB 118 funds be allowed to be commingled and the PM emission reductions are compromised. Although enactment of this bill could improve climate change through the reduction of GHG's, in the short term, this bill alternatively could increase public health risks, especially in areas around ports and railyards, possibly impacting the heart and lung diseases of lower income communities that disproportionately reside in these areas. 2)Substituting other state funds for private or local funds are counter to the fund match requirements of Carl Moyer and GMERP and can diminish the overall returns from the state's AB 1527 Page 4 investment of its moneys for emission reductions in terms of criteria pollutants or toxic air contaminants as well as GHG's. REGISTERED SUPPORT / OPPOSITION : Support CALSTART (sponsor) California Dump Truck Owners Association Opposition None on file Analysis Prepared by : Ed Imai / TRANS. / (916) 319-2093