BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  AB 462
                                                                  Page  1


          ASSEMBLY THIRD READING
          AB 462 (Bonnie Lowenthal)
          As Amended  March 22, 2011
          Majority vote 

           TRANSPORTATION      12-0                                        
           
           ----------------------------------------------------------------- 
          |Ayes:|Bonnie Lowenthal,         |     |                          |
          |     |Achadjian, Blumenfield,   |     |                          |
          |     |Bonilla, Buchanan, Eng,   |     |                          |
          |     |Furutani, Galgiani,       |     |                          |
          |     |Logue, Miller, Carter,    |     |                          |
          |     |Solorio                   |     |                          |
          |     |                          |     |                          |
           ----------------------------------------------------------------- 
           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 








                                                                  AB 462
                                                                  Page  2


            add-on of equipment for previously unregulated agricultural 
            sources, the new purchase of school buses pursuant to the 
            Lower-Emission School Bus Program (LESBP), 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, 
            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 








                                                                  AB 462
                                                                  Page  3


          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 
          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.  








                                                                  AB 462
                                                                  Page  4



          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."  

          Concerns:  As a late expression of concern, the Alliance of 
          Automobile Manufacturers indicated that they have "serious 
          reservations" about this bill in terms of the $2 fee to be used 
          for routine maintenance instead of being spent on large capital 
          expenditures; the bill detracts from the intentions of the 
          original law that was for the purchase of new, low-emission 
          buses (not fuel tanks or fueling dispensers); and conformity 
          with Proposition 26 (as passed by the statewide voters on 
          November 2, 2010, that broadens the definition of a state or 
          local tax to include many payments currently considered to be 
          fees or charges and changes the vote threshold for approval from 
          a simple majority to a two-thirds vote).  

          Related bill:  AB 470 (Halderman) of 2011, a similar bill, is 
          being held by the committee as a two-year bill.  
           

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


                                                               FN:  0000159