BILL ANALYSIS                                                                                                                                                                                                    

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          SB 535 (Yee)
          As Amended  June 24, 2010
          Majority vote

           SENATE VOTE  :29-5  
           TRANSPORTATION      9-2              APPROPRIATIONS               
          |Ayes:|Eng, Blumenfield, Conway,   |Ayes:|De Leon, Conway,        |
          |     |Brownley, Galgiani, Bonnie  |     |Ammiano,                |
          |     |Lowenthal, Miller, Solorio, |     |Charles Calderon, Coto, |
          |     |Torlakson                   |     |Davis, Duvall, Hall,    |
          |     |                            |     |Harkey, Miller,         |
          |     |                            |     |John A. Perez, Solorio, |
          |     |                            |     |                        |
          |     |                            |     |Audra Strickland,       |
          |     |                            |     |Torlakson, Hill         |
          |Nays:|Jeffries, Niello            |     |                        |
          |     |                            |     |                        |
           SUMMARY  :  Allows certain highly fuel-efficient vehicles to  
          travel in high-occupancy vehicle (HOV) lanes without the  
          required number of passengers, beginning in 2011.  Specifically,  
           this bill  :  

          1)Requires the Department of Motor Vehicles (DMV), upon request  
            and payment of the required fee, to issue distinctive decals,  
            labels, and other identifiers (i.e., stickers) to the owners  
            of vehicles that meet the state's enhanced advanced technology  
            partial zero-emission vehicle (enhanced AT PZEV) standard.  

          2)Allows vehicles displaying these stickers to travel in HOV  
            lanes, regardless of whether they meet the lanes' occupancy  

          3)Provides that, notwithstanding provision 2) above,  
            stickered-vehicles are not exempt from toll charges when  
            traveling in high occupancy toll (HOT) lanes that are part of  
            a federally supported value-pricing and transit development  
            demonstration program on State Route 110 and Interstate 10 in  
            Los Angeles County.  


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          4)Limits the number of such stickers to a cumulative total of  

          5)Allows DMV additionally to issue replacement stickers in the  
            instance where a vehicle with a sticker becomes nonrepairable  
            or a total salvage loss and the vehicle owner, within six  
            months, obtains another qualifying vehicle.  

          6)Makes the above provisions effective on January 1, 2012 and  
            sunsets them on January 1, 2015, or at any time that the  
            Secretary of State (SOS) receives notice from the California  
            Department of Transportation (Caltrans) that federal law does  
            not authorize HOV lane access for single-occupant vehicles  
            with such stickers.  

          7)Extends until January 1, 2015, the sunset date for current HOV  
            lane privileges for vehicles that meet the state's super  
            ultra-low emission vehicle (SULEV) standard for exhaust  
            emissions and the federal inherently low-emission vehicle  
            (ILEV) evaporative emission standard unless the SOS first  
            receives notice from Caltrans that federal law does not  
            authorize HOV lane access for single-occupant vehicles that  
            meet those standards.  

          8)Extends until July 1, 2011, the sunset date for current HOV  
            lane privileges for hybrid vehicles that meet specified  
            emission criteria and have a fuel economy rating of at least  
            45 miles per gallon (mpg), unless the SOS first receives  
            notice from Caltrans that federal law does not authorize HOV  
            lane access for single-occupant vehicles that meet those  

           EXISTING LAW  :  

          1)Allows Caltrans and local authorities to reserve highway lanes  
            within their respective jurisdictions for the exclusive use of  

          2)Prohibits the operation of single occupant vehicles in HOV  
            lanes, with the exception of motorcycles and stickered Clean  
            Air vehicles.  

          3)Allows DMV to issue 85,000 Clean Air stickers to hybrid  
            vehicles that meet specified emission criteria and have a fuel  


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            economy rating of at least 45 mpg.  

          4)Allows a vehicle that meets California's super ultra-low  
            emission vehicle standard for exhaust emissions and the  
            federal inherently low-emission vehicle evaporative emission  
            standard, or a vehicle that was produced during the 2004  
            model-year or earlier and meets California ultra-low emission  
            vehicle standard for exhaust emissions and the federal  
            inherently low-emission vehicle evaporative emission standard,  
            to operate in an HOV lane without regard to occupancy levels.   
            (As a practical matter, this means electric and natural  
            gas-powered vehicles.)  

          5)Requires DMV to issue Clean Air stickers to vehicles meeting  
            those standards.  

          6)Allows single-occupant Clean Air vehicles to operate in HOV  
            lanes until such time as Caltrans determines that federal law  
            does not authorize the state to allow such vehicles to use  
            those lanes.  

          7)Requires Caltrans to submit a notice of such a determination  
            to SOS, at which time HOV lane access privileges for single  
            occupant Clean Air vehicles would be terminated.  

          8)Requires Caltrans to remove individual HOV lanes, or HOV lane  
            segments, during periods of peak congestion from these access  
            provisions if it finds that the lane or lane segment exceeds a  
            level of service C, and that the operation or projected  
            operation of Clean Air vehicles will significantly increase  
            HOV lane congestion.  

          9)Sunsets HOV lane access privileges for Clean Air vehicles when  
            the SOS receives Caltrans' notification of a federal ban, or  
            on January 1, 2011, whichever occurs first.  

           FISCAL EFFECT  :  According to the Assembly Appropriations  
          Committee, minor costs to DMV to issue permits and those costs  
          will be fully offset by fees charged to vehicle owners.  

           COMMENTS :  An HOV lane, commonly referred to as a "carpool" or  
          "diamond" lane, is part of a traffic management strategy  
          designed to reduce the number of single occupancy vehicles  
          during peak periods of traffic congestion.  These lanes are  
          intended to provide an incentive for commuters to form carpools  


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          by offering reduced travel times.  The declared legislative  
          intent in establishing these lanes is to relieve traffic  
          congestion, conserve fuel, and reduce vehicular emissions.  Over  
          the years, advocates for many groups have suggested using HOV  
          lane access to reward certain behaviors or to ease the commute  
          for one class of motorists or another.  Historically, HOV lane  
          access has been proposed for doctors, seniors, veterans, the  
          disabled, and others.  These proposals were rejected as being  
          inconsistent with the original intent of establishing the lanes,  
          which is to reduce congestion.  

          Subsequently, AB 71 (Cunneen), Chapter 330, Statutes of 1999,  
          extended to certain "Clean Air" vehicles the privilege of using  
          HOV lanes even when required occupancy levels are not met.   
          Vehicles meeting AB 71's standard are generally limited to  
          battery-powered vehicles and those operating on compressed  
          natural gas, neither of which is especially prevalent in  
          California's vehicle fleet.  Proponents of AB 71 contended that  
          that this bill would induce the purchase and investment in clean  
          air vehicles, consistent with at least a part of the legislative  
          intent in authorizing HOV lanes.  In light of the relatively  
          small number of these vehicles, it was felt that this bill's  
          exemption would have negligible impact on the timesaving benefit  
          of HOV lanes.  

          Hybrid vehicles, which have become a popular means by which  
          vehicle manufacturers may meet consumer demand for fuel  
          efficiency, did not meet the clean air standard established by  
          AB 71; consequently, their owners and advocates were dismayed  
          that they were not allowed into HOV lanes.  In 2004, therefore,  
          the Legislature enacted AB 2628 (Pavley), Chapter 725, Statutes  
          of 2004, extending the Clean Air provisions of AB 71 to hybrid  
          vehicles that achieve 45 miles per gallon fuel economy.  Since  
          allowing large numbers of hybrids into HOV lanes would reduce  
          the effectiveness of the lanes by compromising their ability to  
          offer a quicker commute than adjacent mixed-flow lanes, AB 2628  
          limited the aggregate number of stickers for hybrids to 75,000  
          and allowed Caltrans to suspend HOV lane privileges for hybrids  
          on any particular lane that reaches a specified level of  
          congestion.  AB 2600 (Lieu), Chapter 614, Statutes of 2006,  
          increased the limit on hybrid stickers to 85,000 and extended AB  
          2628's 2008 sunset date to 2011.  (DMV reached the 85,000  
          sticker cap for hybrids in February 2007 and is no longer  
          issuing new hybrid stickers.)  


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          In June of 2007, the Federal Highway Administration (FHWA)  
          requested Caltrans to submit a plan to address "HOV lane  
          degradation" on California freeways.  Caltrans' analysis had  
          indicated that 54% of its HOV lanes had experienced such  
          degradation (i.e., the lane does not maintain 45 mph or greater  
          operating speed during peak commute hours for 90% or more of 180  
          consecutive workdays).  Recognizing that one component of HOV  
          lane congestion may be the presence of hybrid vehicles, one of  
          the options that Caltrans has considered is banning hybrids in  
          certain HOV lanes, as it is already authorized to do.  

          This bill would allow DMV to issue up to 40,000 Clean Air  
          stickers to "enhanced AT-PZEV" vehicles effective January 1,  
          2012.  Pending that authorization, the bill would extend for six  
          months the expiring authority for 85,000 stickered  
          fuel-efficient hybrids to operate in HOV lanes.  

          According to the author, there are at least five new vehicles  
          poised to enter the market that will meet this bill's standard:  
          the Chevy Volt, Fisker Karma, and Chrysler ReEV "range extended  
          electric vehicles" and the Ford Escape and Toyota Prius plug-in  
          hybrids, although Toyota is not certain this is the case, given  
          that no methodology has yet been established to measure the fuel  
          economy of plug-ins.  (These vehicles typically operate  
          primarily on stored battery power for 40 to 50 miles and then  
          use a gasoline engine to recharge the battery or to power to the  
          drive-train.)  Given the potential for such vehicles to reduce  
          oil dependency, reduce air pollution and counter the emission of  
          greenhouse gasses, the author believes the granting of HOV lanes  
          privileges is appropriate.  "Due to this being first generation  
          of technology, vehicle costs will be high but it is hoped that  
          with federal tax incentives, potential fuel savings, and state  
          policies such as HOV lane access would provide a value  
          proposition to consumers to accept this first generation of  
          technology and the associated higher cost of the vehicle."  

          The Metropolitan Transportation Commission (MTC), noting the  
          growing trend for the establishment of high occupancy toll (HOT)  
          lanes -- which sell excess HOV lane capacity to single-occupant  
          vehicles upon payment of a toll -- opposes this bill.  MTC fears  
          that continued HOV lane access for stickered vehicles will  
          foster lane congestion, present enforcement challenges, and  
          reduce the capacity of the lanes to accommodate toll-paying  


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          Along those lines, as noted above, Caltrans is already  
          struggling to ameliorate HOV lane congestion.  The 2011 sunset  
          of HOV lane access privileges for conventional gas-electric  
          hybrids will remove 85,000 vehicles from those lanes, thereby  
          making Caltrans' job significantly easier.  Replacing those  
          85,000 conventional hybrids with as many as 40,000  
          second-generation hybrids will bring Caltrans substantially back  
          to the current situation.  This operational challenge must be  
          balanced against the clear environmental and economic benefit of  
          transitioning the state's vehicle fleet to one that achieves, by  
          historical standards, a stunning improvement in fuel efficiency.  

          Additionally, the state's experience with hybrids would seem to  
          indicate that gasoline prices already provide a powerful  
          stimulus to the sale of fuel-efficient vehicles, even when those  
          vehicles are significantly more expensive than their  
          conventional counterparts.  The Toyota Prius had a waiting list  
          of purchasers before they were granted HOV lane privileges and  
          well in advance of the 2008 run-up in gasoline prices to over $4  
          a gallon.  At such time as the economy rebounds from the current  
          recession, it is likely that gasoline prices will again reach  
          that level, if not substantially higher.  A vehicle that  
          potentially can avoid the gasoline pump altogether should sell  
          quite well in such an environment.  

          Finally, it should be noted that the state implicitly made a  
          deal with the owners of currently stickered hybrids: buy a  
          hybrid and gain HOV lane privileges until 2008.  Upon fulfilling  
          that deal, the state unilaterally granted another three years of  
          HOV lane privileges to those owners.  This bill grants yet  
          another six months of that privilege, with no identifiable  
          benefit to the state.  

          Related legislation:  AB 1500 (Lieu) would extend, until January  
          1, 2015, the sunset date for the statute that allows SULEV,  
          ULEV, and ILEV vehicles to operate in HOV lanes, whether or not  
          they have the required number of occupants.  That bill currently  
          is currently on the Assembly Floor, awaiting concurrence in  
          Senate amendments.  

          Analysis Prepared by :   Howard Posner / TRANS. / (916) 319-2093 


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