BILL ANALYSIS Ó AB 462 Page 1 Date of Hearing: April 4, 2011 ASSEMBLY COMMITTEE ON TRANSPORTATION Bonnie Lowenthal, Chair AB 462 (Bonnie Lowenthal) - As Amended: March 22, 2011 SUBJECT : School bus: natural gas tanks SUMMARY : Authorizes an air pollution control district or a regional air quality management district (district), until January 1, 2015, to use motor vehicle registration fee revenues to replace natural gas fuel tanks or fueling infrastructure. Specifically, this bill : 1)Authorizes a district to use the last $2 of the $6 registration fee from motor vehicles registered within the district to replace onboard natural gas fuel tanks on school buses owned by a school district that are 15 years or older, not to exceed $20,000 per bus. 2)Authorizes the use of the funds to replace or enhance the deteriorating natural gas fueling dispensers of fueling infrastructure operated by a school district, not to exceed $500 per dispenser. EXISTING LAW : 1)Authorizes a district, until January 1, 2015, to establish a fee of up to $6 on the registration of motor vehicles registered in the district. 2)Requires the revenues from the first $4 of the fee be used for specified purposes. Requires that the revenues from the last $2 of the fee be used to implement programs to remediate the air pollution harms caused by motor vehicles under the Carl Moyer program, the new purchase, retrofit, repower, or add-on of equipment for previously unregulated agricultural sources, the new purchase of schoolbuses pursuant to the Lower-Emission School Bus Program, and an accelerated vehicle retirement or repair program. 3)Under the Federal Clean Air Act passed in 1970, establishes requirements and standards for the national air pollution control program. Basic elements of the act include national ambient air quality standards for major air pollutants, AB 462 Page 2 hazardous air pollutants standards, state attainment plans, motor vehicle emissions standards, stationary source emissions standards and permits, acid rain control measures, stratospheric ozone protection, and enforcement provisions. 4)Under state law, confers authority to the California Air Resources Board (ARB) over emission standards for mobile sources. The law does not confer authority to ARB to issue permits directly to stationary sources of air pollution. Instead, state law provides that districts have jurisdiction over emission standards for non-mobile, or stationary, sources. FISCAL EFFECT : Unknown COMMENTS : According to the author's office, mobile source emissions are major contributors to the potential cancer risk from air pollution. Long-term studies of school children indicate that nitrogen oxides and particulate matter emissions, such as those from diesel-fueled school buses have much greater impacts on limiting lung growth in children than previously believed. Lower-Emission School Bus Program (LESBP) : The primary goal of the ARB's LESBP is to reduce school children's exposure to both cancer-causing and smog-forming pollution. The program provides grant funding for new, safer school buses and to put air pollution control equipment (i.e., retrofit devices) on buses that are already on the road. The ARB staff, in coordination with the California Energy Commission (CEC) and the local air pollution control districts, has developed guidelines for implementation of the LESBP funds. The guidelines cover which buses and retrofits can be purchased, requirements for the CEC and air districts running the program, and the benefits of the program. Currently, funds can be used for new bus purchases and retrofit pollution devices for buses but funds for infrastructure, such as fueling dispensers, are not allowed. Accordingly, as the original program was designed for the purchase of new school buses, without any mention of fueling infrastructure needs, one may question the bill's provisions that expand the program for compressed natural gas (CNG) fuel nozzle replacements. Proposition 1B was approved by the statewide voters on November 7, 2006, and enacted the Highway Safety, Traffic Reduction, Air AB 462 Page 3 Quality, and Port Security Bond Act of 2006. This bond act authorized $200 million for replacing and retrofitting school buses. The American Recovery and Reinvestment Act of 2009 provided an additional $1.73 million to the program. Need for the bill : According to this bill's sponsor, the South Coast Air Quality Management District states that LESBP "funds can only be used by public school districts for the purchase of new buses, including alternative fueled, e.g. compressed natural gas (CNG) buses to replace older polluting school buses, and for fueling infrastructure. Within the South Coast region, about 1,400 alternative fuel school buses, primarily powered by CNG, have been purchased through the LESBP. However, the fuel tanks on these buses have a useable life of 15 years and are only covered by diminishing-value warranties which expire after 15 years. About 200 of these buses are going to reach their 15 year lifetime limit by 2011-12. An additional 100 to 150 buses each year will also reach the end of their usable lives. The older fuel tanks will result in these otherwise usable and clean burning school buses being taken off the road prematurely. The price for purchasing a new bus is approximately $169,000, versus the price of replacement fuel tanks, which is approximately $20,000. Additionally, fueling infrastructure needs updating with time, including equipment repair or replacement." This bill expands the use of funds pursuant to the LESBP by allowing the program to fund up to $20,000 for fuel tank replacement in CNG school buses, as well as to replace fuel dispensers for CNG infrastructure owned and operated by public schools with one-time funding of up to $500 per dispenser. Accordingly, making this change in the LESBP allows districts to use the $2 portion of the motor vehicle registration fee revenues for these school bus tank and related appurtenance purposes. Support : According to the Southern California utility companies writing in support of the bill, "As CNG vehicles age, the fuel tanks used to store CNG need to be replaced. Since many school districts keep school buses in service for 20 or more years, many of California's CNG school buses are nearing the time when these fuel tanks will need to be replaced. In addition, the fueling dispensers of the CNG fueling infrastructure will also need to be repaired or upgraded as they age. This bill enables school districts to complete both of these tasks." AB 462 Page 4 Related bill : AB 470 (Halderman) of 2011, a similar bill, is being held by the committee as a two-year bill. REGISTERED SUPPORT / OPPOSITION : Support South Coast Air Quality Management District (Sponsor) American Lung Association California Association of School Transportation Officials California School Boards Association West County Transportation Agency San Diego Gas and Electric Company Sempra Energy Utilities Southern California Gas Company Opposition None on file Analysis Prepared by : Ed Imai / TRANS. / (916) 319-2093