BILL ANALYSIS                                                                                                                                                                                                    






           SENATE TRANSPORTATION & HOUSING COMMITTEE       BILL NO: SB 535
          SENATOR ALAN LOWENTHAL, CHAIRMAN               AUTHOR:  yee
                                                         VERSION: 6/24/10
          Analysis by:  Jennifer Gress                   FISCAL:  yes
          Hearing date:  August 10, 2010








          SUBJECT:

          High-occupancy vehicle (HOV) lanes:  low-emission vehicles

          DESCRIPTION:

          This bill expands the types of and lengths of time that  
          specified low-emission vehicles may use HOV lanes. 

          ANALYSIS:

          In 1999, the Legislature passed and the governor signed AB 71  
          (Cunneen), Chapter 330, to allow the following low-emission  
          vehicles to access HOV lanes, regardless of vehicle occupancy:

           A vehicle that meets the state's super ultra-low emission  
            vehicle (SULEV) standard for exhaust emissions and the federal  
            inherently low-emission vehicle (ILEV) standard for  
            evaporative emissions (e.g., all-electric vehicles such as the  
            Tesla Roadster or the RAV 4 EV).

           A vehicle that was produced during the 2004 model year or  
            earlier that meets the state's ultra-low emission vehicle  
            (ULEV) standard for exhaust emissions and the federal ILEV  
            standard.
          
          To differentiate these vehicles, the Department of Motor  
          Vehicles (DMV) issues white stickers to be affixed on the  
          vehicle.  There is no limit on the number of these vehicles that  
          may be issued white stickers.  As of March of this year, DMV has  
          issued 10,082 sets of white stickers.  White-sticker vehicles  
          are eligible for free or reduce-passage toll rates on Bay Area  
          toll bridges, regardless of their occupancy, if those rates are  




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          offered to high-occupancy vehicles.

          In 2004, AB 2628 (Pavley), Chapter 725, allowed the following  
          hybrid vehicles to access HOV lanes, pending approval by the  
          federal government:

           A hybrid vehicle or an alternative fuel vehicle that meets the  
            state's advanced technology partial zero-emission standard (AT  
            PZEV) standard for criteria pollutant emissions and has a 45  
            miles per gallon (mpg) or greater fuel economy highway rating.  


           A hybrid vehicle that was produced during the 2004 model year  
            or earlier that has a 45 mpg or greater fuel economy highway  
            rating and meets the state's ULEV, SULEV, or partial  
            zero-emission vehicle (PZEV) standards. 

          The DMV issues these vehicles yellow stickers.  The Legislature  
          ultimately capped the number of vehicles that may be issued  
          yellow stickers at 85,000, a limit which was reached in 2007.   
          Yellow-sticker vehicles are not eligible for free or  
          reduced-passage toll rates on Bay Area toll bridges.

          The authority to access HOV lanes expires for all four types of  
          vehicles on January 1, 2011.   
          
          Existing law requires the California Department of  
          Transportation (Caltrans) to assess, according to a specified  
          timeframe, whether HOV lanes have experienced significant  
          degradation due to access by hybrid vehicles with yellow  
          stickers.  Caltrans is authorized to restrict single-occupant  
          vehicles with either white or yellow stickers from accessing  
          segments of HOV lanes during periods of peak congestion if it  
          finds that the lane has a specified level of service, the  
          operation of these vehicles will significantly increase  
          congestion, and it is not feasible to alleviate congestion by  
          other means.  

           This bill  :

           Extends the authority for white-sticker vehicles to use HOV  
            lanes from January 1, 2011 until January 1, 2015.

           Extends the authority for yellow-sticker vehicles to use HOV  
            lanes from January 1, 2011 until June 30, 2011.





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           Establishes a new class of vehicles that may use HOV lanes -  
            Enhanced AT PZEVs - and authorizes access from January 1, 2012  
            until January 1, 2015.

           Provides that drivers of single-occupant Enhanced AT PZEVs are  
            not exempt from paying tolls on the high-occupancy toll (HOT)  
            lanes under development on State Highway Route (SR 10) and SR  
            110 in Los Angeles.

           Deletes the requirement that before Caltrans may prohibit  
            access to certain HOV lanes by low-emission vehicles because  
            of congestion in those lanes, it must make a finding that  
            demonstrates the infeasibility of alleviating congestion in  
            the HOV lanes by other means, including by raising the  
            occupancy standards in those lanes.
          
          COMMENTS:

           1.Purpose  . The purpose of the bill, which is sponsored by  
            General Motors, is to provide incentives to consumers to  
            purchase the next generation of more technologically advanced  
            vehicles by giving them access to HOV lanes.

           2.History of bill  .  The bill was passed by the Assembly and has  
            returned to the Senate for concurrence in Assembly amendments.  
             Because the current version of the bill is substantially  
            different than what this committee passed previously, the  
            Rules Committee referred this bill under Senate Rule 29.10 for  
            a hearing on the Assembly amendments. At today's 29.10  
            hearing, the committee may not amend the bill further and may  
            only hold the bill or return the bill as approved by the  
            committee to the Senate Floor. 

            This committee passed this bill as a "work-in-progress" on  
            April 28th, 2009 on a 7 to 0 vote.  As passed, the bill  
            extended the sunset date on white-sticker vehicles to January  
            1, 2015 in order to allow the author and sponsor to determine  
            appropriate emission and fuel economy standards for the  
            vehicles the sponsor seeks to support, as well as to provide  
            this committee an opportunity to hold informational hearings  
            on the policy of providing low-emission vehicles access to HOV  
            lanes.  


           3.Background on emissions categories  . ARB has established  
            several categories that describe the emissions profile of a  




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            vehicle.  These are listed in the following table along with  
            an example of the technology used in that vehicle, in order  
            from the least emitting to the most. The next generation of  
            clean vehicles is reflected in Enhanced AT PZEVs and ZEVs.  As  
            the table suggests, there are a variety of technologies used  
            in those vehicles, many of which are in development.  

           --------------------------------------------------------------- 
          |                              |                                |
          |      Emissions Category      |       Technology Example       |
          |                              |                                |
          |------------------------------+--------------------------------|
          |ZEV                           |Battery (e.g., Tesla Roadster,  |
          |(zero-emission vehicle)       |RAV 4 EV), hydrogen fuel cell   |
          |                              |(e.g., Honda Clarity)           |
          |------------------------------+--------------------------------|
          |Enhanced AT PZEV              |Uses a ZEV fuel such as a       |
          |(advanced technology partial  |battery, coupled with an        |
          |zero-emission vehicle)        |internal combustion engine      |
          |                              |(e.g., Volt)                    |
          |------------------------------+--------------------------------|
          |AT PZEV                       |Gas-electric hybrid (e.g.,      |
          |(advanced technology partial  |Prius), natural gas (e.g.,      |
          |zero-emission vehicle)        |Honda Civic CNG), methanol fuel |
          |                              |cell                            |
          |------------------------------+--------------------------------|
          |PZEV                          |Extremely clean, conventional   |
          |(partial zero-emission        |gas-fueled (~33% of new         |
          |vehicle)                      |vehicles for sale are PZEVs)    |
          |------------------------------+--------------------------------|
          |SULEV                         |Very clean, conventional        |
          |(super ultra low-emission     |gas-fueled vehicle              |
          |vehicle)                      |                                |
          |------------------------------+--------------------------------|
          |ULEV                          |Conventional gas-fueled (over   |
          |(ultra low-emission vehicle)  |half of new vehicles offered    |
          |                              |for sale in CA are ULEVs)       |
          |------------------------------+--------------------------------|
          |LEV                           |Conventional                    |
          |(low-emission vehicle)        |gas-fueled                      |
           --------------------------------------------------------------- 


           4.The purpose of HOV lanes  .  In allowing for the development of  
            HOV lanes, the Legislature declared its intent to "stimulate  
            and encourage the development of ways and means of relieving  




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            traffic congestion on California highways and, at the same  
            time, to encourage individual citizens to pool their vehicular  
            resources and thereby conserve fuel and lessen emission of air  
            pollutants."  The committee may wish to consider the extent to  
            which allowing single-occupant vehicles into the HOV lanes may  
            undermine the policy objectives of encouraging carpooling and  
            reducing traffic congestion.

           5.HOV lane degradation  .  The Federal Highways Administration  
            (FHWA) granted conditional approval to allow hybrid vehicles  
            in HOV lanes, as authorized by AB 2628 (Pavley), in April  
            2006.  FHWA required Caltrans to monitor and report on the  
            performance of HOV lanes and to take steps to address  
            degradation (i.e., congestion), if necessary.  

            In July 2006, after 50,000 yellow stickers were issued to  
            hybrid vehicles under the program, Caltrans assessed  
            congestion in the HOV lanes using both the state and federal  
            standards of performance.  Under the state standard, Caltrans  
            found that the number of congested HOV lane segments increased  
            from 7 to 12 percent.  Under the federal standard, Caltrans  
            found that approximately 46 percent of HOV lane segments  
            operated under degraded conditions.  While the increased  
            congestion could not be attributed solely to single-occupant  
            hybrid vehicles accessing the lanes, FHWA nonetheless asserted  
            that these vehicles did not have to be the cause of  
            degradation for Caltrans to take action to reduce HOV lane  
            congestion and requested that Caltrans develop a plan for  
            improving the performance of HOV lanes.
           
            Caltrans submitted the California High Occupancy Vehicle Lane  
            Degradation Reduction Plan to FHWA in August 2007.  The plan  
            outlines short- and long-term measures to improve HOV lane  
            performance, including increased enforcement, improved system  
            management, infrastructure improvements, public education,  
            and, if necessary, a prohibition of single-occupant hybrid  
            vehicles from accessing the most congested segments of the  
            HOV-lane network.  

            Following the submittal of that plan, Caltrans updated its  
            analysis of HOV lane degradation and submitted a supplemental  
            report to FHWA in September 2008.  This updated analysis found  
            that, based on the federal standard, congestion increased on  
            HOV lanes from 46 percent to 54 percent.  Given the growth in  
            both population and number of registered vehicles, degradation  
            is only likely to worsen.  




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            Given the current threat of congestion on the state's HOV  
            lanes and the possibility that this bill would result in  
            further degradation, the committee may wish to consider the  
            following two questions:

                 What are the possible consequences of allowing HOV lanes  
               to degrade further vs. continuing to incentivize  
               low-emission vehicles?

                 Are there incentives other than HOV lane access that  
               might be offered to encourage the development and  
               deployment of these vehicles?
           
          1.Extension of HOV lane access for hybrids (yellow sticker  
            vehicles)  .  In addition to establishing a new category of  
            low-emission vehicles that may access HOV lanes, this bill  
            extends the HOV lane access provisions for hybrid vehicles by  
            six months.  The rationale for extending the authority for  
            this class of vehicles, despite the fact that hybrids are now  
            widely available and enjoy broad consumer acceptance, is that  
            delaying the implementation of the access provisions for  
            Enhanced AT PZEVs to 2012 has created a gap between it and the  
            2011 expiration of the access provisions for hybrids.  Hybrid  
            owners who would lose HOV lane privileges at the end of this  
            year may desire to replace their vehicle but not have an  
            alternative eligible for HOV lane access available to  
            purchase.  

            This bill, as well as AB 1500 (Lieu), Chapter 37, Statutes of  
            2010, extend HOV lane access for white sticker vehicles  
            without delay.  Under the white sticker program, there are  
            several vehicles available for purchase currently, or will be  
            available by the end of this year or early next year, that  
            remain eligible for HOV lane access.  Some of these include  
            the Honda Civic (compressed natural gas), Honda Clarity (fuel  
            cell electric hybrid), Nissan Leaf (battery electric), and  
            Tesla Roadster (battery electric).

           2.Los Angeles' high-occupancy toll (HOT) lanes  .  The bill  
            provides that Enhanced AT PZEVs shall not be exempt from  
            paying tolls use to the HOT lane facilities under development  
            on SR 10 and SR 110 in Los Angeles.  Because high demand  
            exists for those lanes by carpoolers and the Los Angeles  
            Metropolitan Transportation Authority may not raise occupancy  
            standards while its HOT lane demonstration program is in  




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            effect, insufficient capacity exists in those lanes for  
            single-occupant low-emission vehicles to enter without paying  
            the toll.  
           
          3.Federal approval to reduce uncertainty  .  The authority for  
            states to allow "low-emission and energy-efficient" vehicles  
            to access HOV lanes is contained in federal law.  The United  
            States Environmental Protection Agency (US EPA) is charged  
            with defining what constitutes "low-emission and  
            energy-efficient;" and the Federal Highway Administration  
            (FHWA) is responsible for approving a state's policy to allow  
            US EPA-approved low-emission and energy-efficient vehicles  
            into the HOV lanes.  US EPA and FHWA have provided their  
            respective approvals for vehicles eligible for white stickers  
            to use the HOV lanes in California.  At the time that AB 2628  
            was enacted to authorize hybrids (yellow-sticker vehicles), US  
            EPA had not determined what types of hybrids would meet the  
            definition of "low-emission and energy-efficient."  To deal  
            with this uncertainty, AB 2628 included a provision that  
            prohibited its implementation until the state received the  
            necessary federal approvals.  Because US EPA had not acted,  
            FHWA granted California a conditional approval to allow  
            hybrids to use HOV lanes, pending action by US EPA.  US EPA  
            has recently issued a draft rule and determined that the  
            hybrids allowed in California's HOV lanes do not comply.  US  
            EPA and FHWA have requested that California change its  
            criteria for determining which hybrid vehicles may access HOV  
            lanes, but California has not done so.
           
             With regard to this bill, US EPA has not approved vehicles  
            that meet the criteria for an Enhanced AT PZEV as  
            "low-emission and energy-efficient," which is similar to the  
            situation the state faced when it authorized hybrids to access  
            HOV lanes.  Unlike its predecessor, AB 2628, this bill does  
             not  require federal approval prior to implementation.   
            Additionally, US EPA has already determined that California's  
            definition of yellow-sticker vehicles does not conform with  
            its proposal and FHWA is increasingly concerned about  
            congestion in the HOV lanes.  It is unclear what will happen  
            if this bill is enacted and DMV issues stickers for Enhanced  
            AT PZEVs beginning January 1, 2012 absent federal approval.   
            If the federal government does not approve these vehicles to  
            use the HOV lanes, certainly the state risks the loss of  
            federal transportation funding.  Perhaps more significantly,  
            however, consumers may feel extreme discontent if they  
            purchase a vehicle, begin using the HOV lane, and then are  




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            told that access is prohibited.  It may make more sense to  
            treat Enhanced AT PZEVs in the same manner that the state  
            treated hybrids when it enacted AB 2628 and make  
            implementation contingent on receiving federal approval.

          RELATED LEGISLATION
          
          AB 1500 (Lieu), Chapter 37, Statutes of 2010, extends the sunset  
          date, from January 1, 2011 to January 1, 2015, on the law that  
          allows white-sticker vehicles to access HOV lanes.
          


          Assembly Votes:
               Floor:    65-8
               Appr: 15-0
               Trans:    9-2

           POSITIONS:  (Communicated to the Committee before noon on  
                     Wednesday,                             
                       August 4, 2010)

               SUPPORT:  General Motors (sponsor)
                         California Electric Transportation Coalition
                         California Natural Gas Vehicle Coalition
                         Chrysler
                         Pacific Gas and Electric Company
                         Tesla Motors
                         Toyota North America, Inc.
          
               OPPOSED:  None received.