BILL ANALYSIS                                                                                                                                                                                                    





                                                                AB 1527

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        GOVERNOR'S VETO
        AB 1527 (Lieu)
        As Amended  July 23, 2009
        2/3 vote

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        |ASSEMBLY:  |77-0 |(June 2, 2009)  |SENATE: |39-0 |(September 2,  |
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        |ASSEMBLY:  |79-0 |(September 8,   |        |     |               |
        |           |     |2009)           |        |     |               |
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         Original Committee Reference:   TRANS  .

         SUMMARY :  Authorizes a motor vehicle emission reduction project to  
        be jointly 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).  

         The Senate amendments  :

        1)Delete the requirement of the California Air Resources Board (ARB)  
          to consult with the Energy Commission (EC) in revising their  
          program guidelines.  

        2)Delete the use of funds from the Air Quality Improvement Program  
          for commingling with Carl Moyer or GMERP bond funds.  

        3)Restrict when federal funds are commingled, only those federal  
          funds that are designed to reduce greenhouse gas (GHG) emissions.   


        4)Prohibit ARB from excluding from the cost effectiveness  
          calculation funds from the cost-effectiveness calculation should  
          the exclusion result in less overall emission reductions.  

         EXISTING LAW  :  










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        1)Establishes 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 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.  

        4)Prohibits until January 1, 2015, project grants with a  
          cost-effectiveness value of more than $13,600 per ton of 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.  

        5)Develops, pursuant to AB 118 (Nunez) Chapter 750, Statutes of  










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          2007, funding programs for the reduction of greenhouse gases (GHG)  
          and the development of clean fuel and vehicle technologies.  AB  
          118 created three distinct programs aimed at improving air quality  
          and advancing alternative fuels and clean technologies:  

           a)   The Air Quality Improvement Program 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 EC;  

           b)   The Alternative and Renewable Fuel and Vehicle Technology  
             Program administered by the EC.  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.  

         AS PASSED BY THE ASSEMBLY  , this bill was substantially similar to  
        the version passed by the Senate.  

         FISCAL EFFECT  :  According to the Assembly Appropriations Committee,  
        pressure to allow bond proceeds or other monies to fund emissions  
        reduction and goods movement projects, but at no additional state  
        cost.  (Various special funds)
         
         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  
        simultaneously 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  
        introducing this 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  










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        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."  
         
        GOVERNOR'S VETO MESSAGE  :

             This bill requires the California Air Resources Board  
             (ARB) to revise the project guidelines for certain  
             existing emission reduction incentive programs to  
             allow the receipt of other state and federal funds to  
             be used for projects without those additional funds  
             being included in the cost-effectiveness calculations  
             that are used to determine ARB funding eligibility.  

             This bill is unnecessary.  ARB already has flexibility  
             in existing law to develop revisions to their funding  
             guidelines, and is currently developing revisions to  
             the Proposition 1B guidelines that will allow  
             selective use of funds from other programs to count as  










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             matching funds for eligible projects that achieve both  
             emission reduction and climate change benefits.  

             Additionally, the current language of the bill would  
             detrimentally relax the cost-effectiveness  
             calculations for ARB's existing emission reduction  
             incentive programs.  This results in limited state  
             funds for air quality improvements going towards fewer  
             and potentially more costly projects that do not  
             produce the quantity of air quality improvements we  
             could see under the existing program.  

             I recognize that the author worked diligently to try  
             to ensure that air quality improvements would not be  
             diminished by the bill.  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.  

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


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