BILL ANALYSIS Ķ SB 1455 Page 1 ( Without Reference to File ) SENATE THIRD READING SB 1455 (Kehoe) As Amended August 24, 2012 2/3 vote SENATE VOTE :Vote not relevant NATURAL RESOURCES 6-3 APPROPRIATIONS 10-4 ----------------------------------------------------------------- |Ayes:|Chesbro, Brownley, |Ayes:|Gatto, Blumenfield, | | |Dickinson, Huffman, | |Bradford, Campos, Davis, | | |Monning, Skinner | |Hall, Hill, Lara, | | | | |Mitchell, Solorio | | | | | | |-----+--------------------------+-----+--------------------------| |Nays:|Knight, Grove, Halderman |Nays:|Harkey, Nielsen, Norby, | | | | |Wagner | ----------------------------------------------------------------- SUMMARY : Extends until December 1, 2023, various fees and surcharges related to the clean air, fuel, tire recycling, and vehicle programs of the Air Resources Board (ARB), the California Energy Commission (CEC), the Department of Resources Recycling and Recovery (CalRecycle), and the State Bureau of Automotive Repair (BAR). Prohibits ARB from moving forward with implementation of the Clean Fuels Outlet regulation, and instead directs funds from the Alternative and Renewable Fuel and Vehicle Technology Fund for the construction and operation of a hydrogen fueling network in California. Requires CEC and ARB to report on the status of the state's alternative transportation fuel use in the Integrated Energy Policy Report (IEPR). Specifically, this bill : 1)Extends the sunset dates of various clean air and alternative fuels and vehicle programs, and the related fees and surcharges, under ARB, CEC, and BAR to December 31, 2023. The fees and surcharges are: a) AB 118 (Nuņez), Chapter 750, Statutes of 2007, which authorizes a vehicle registration fee to fund the Alternative and Renewable Fuel and Vehicle Technology Program. SB 1455 Page 2 b) AB 923 (Firebaugh), Chapter 707, Statutes of 2004, which increased the vehicle registration fee for vehicles registered in specified areas in the state and increased the Tire Recycling Fee to fund air emissions reduction activities. c) The Carl Moyer Memorial Air Quality Standards Attainment (Carl Moyer) Program, which can be used to fund the incremental cost of cleaner-than-required vehicles, engines, and equipment. 2)Prohibits ARB from submitting regulations related to the Clean Fuels Outlet regulation and the deployment of hydrogen fueling stations to the Office of Administrative Law, and instead: a) Defines "publicly available hydrogen fueling station" to mean the equipment used to store and dispense hydrogen fuel to vehicles according to industry codes and standards that is open to the public. b) Requires ARB to aggregate and make available to the public no later than January 1, 2014, and every two years thereafter, the number of vehicles that automobile manufacturers project to be sold or leased. c) Requires CEC to allocate $20 million each fiscal year, beginning July 1, 2013, through June 30, 2016, and up to $20 million each fiscal year thereafter, not to exceed 20% of moneys appropriated by the Legislature from the Alternative and Renewable Fuel and Vehicle Technology Fund, for purposes of constructing and operating a hydrogen fueling network sufficient to provide convenient fueling to vehicle owners and expand that network as necessary to support a growing market for vehicles requiring hydrogen fuel, until there are at least 100 publicly available hydrogen fueling stations d) Requires CEC's expenditures not exceed 20% of the moneys appropriated annually by the Legislature from the Alternative and Renewable Fuel and Vehicle Technology Fund. e) Permits CEC to defer allocating the moneys as needed to keep the number of fueling stations appropriate for the SB 1455 Page 3 fueling needs of hydrogen vehicles. f) States that once CEC determines, in consultation with ARB, that the private sector is establishing publicly available hydrogen fueling stations without the need for government support, requires CEC to cease providing funding for those stations. g) Requires, on or before December 31, 2015, and annually thereafter, that ARB and CEC jointly review and report on progress toward establishing a hydrogen fueling network, as specified. h) Authorizes CEC to design loan incentive programs, revolving loan programs, and other forms of financial assistance, and authorizes CEC to enter into an agreement with the Treasurer to provide financial assistance to further the development of the hydrogen fueling network. i) Requires that funds appropriated to CEC for the purposes of this bill be available for encumbrance by CEC for up to four years from the date of the appropriation. j) Requires ARB, no later than July 1, 2013, to convene a working group to evaluate the policies and goals contained within the Carl Moyer and AB 923 (Firebaugh and Pavley), Chapter 707, Statutes of 2004, programs. aa) Sunsets these provisions on December 31, 2023. 1)Directs ARB and CEC, by November 1, 2014, to update the economic analysis used to develop and review ARB's regulations to include a range of petroleum and alternative fuel prices to more accurately assess the future costs of petroleum-based and alternative fuels. 2)Requires, beginning November 1, 2015, and every two years thereafter, CEC, in consultation with ARB and as a part of its IEPR, to provide a status of the state's alternative transportation fuel use, including: a) An evaluation of how new and existing investment programs could help to increase the state's alternative fuels use; and, SB 1455 Page 4 b) An evaluation of how federal fuel policies and existing state policies will help increase the use of alternative fuels in the state. 3)Requires ARB when developing new and amended regulations, to include a finding on the effect of the proposed regulations on the state's alternative transportation fuels use. 4)Provides that this bill does not preempt AB 32 and that the bill be implemented consistent with environmental, public health, and sustainability considerations articulated in AB 32, clean fuels and vehicle funding statutes. 5)Requires ARB and CEC, when studying the state's alternative transportation fuel use, to measure: a) In-state job creation through the continued development of an alternative fuels industry in the state; b) Economic vulnerability of residents to future petroleum fuel price spikes by the use of either petroleum fuels or alternative fuels and vehicles; c) Alternative fuel market penetration in nonattainment areas; and, d) Increase access to the supply of alternative fuels and alternative fuel vehicles for all residents, including barriers to supply. FISCAL EFFECT : According to the Assembly Appropriations Committee, this bill will result in the following fiscal impacts: 1)Annual fee revenue, ranging from $48 million to $60 million, from the tire fee extension, 57% of which (roughly $27 million to $34 million) will go to California Department of Resources Recycling and Recovery (CalRecycle) to fund waste tire management and 43% of which (roughly $21 million to $26 million) will go to ARB to fund the Carl Moyer Program (special funds). (Absent this bill, the tire fees drops, as of January 1, 2015, from $1.75 per tire to $0.75 per tire, all of which will go to CalRecycle to fund waste tire management.) SB 1455 Page 5 2)Annual revenue of approximately $180 million from extension of various vehicle, vessel, and other air quality-related surcharges to fund AB 118 programs, as follows: approximately $105 million for the Alternative and Renewable Fuel and Vehicle Technology (ARFVT) Program, administered by CEC; approximately $45 million for the Air Quality Improvement (AQI) Program; administered by ARB; and, approximately $30 million for the passenger vehicle car scrap program, administered by BAR (special funds). 3)Annual local revenue, of approximately $50 million, from extension of local surcharge on vehicle registration fees to fund local vehicle emissions reduction projects (various local funds). 4)Annual redirection of $20 million from the ARFVT Fund during each fiscal year 2013-14 through 2015-16, and up to that amount each fiscal year thereafter, away from projects for the development and commercialization of nonpetroleum fuels and to projects for the construction and operation of a hydrogen fueling network. 5)Ongoing costs in the hundreds of thousands of dollars to ARB, CEC and BAR to continue to administer various air quality and alternative fuel programs (special funds). These costs will be fully covered by the fee extensions authorized by this bill. 6)Ongoing costs in the hundreds of thousands of dollars to ARB and CEC to track and periodically report on alternative-fueled vehicle sales and progress in establishing a hydrogen fueling network, to evaluate alternative fuels use and include such information in the IEPR, and to update the economic analysis used in developing ARB's regulations (special funds.) COMMENTS : California faces significant challenges with air quality. According to the author, "just when they are needed most and a wide variety of new vehicles and technologies are coming to the market, California's major clean transportation and air quality investment programs are all set to expire in 2014 or 2015." This bill would extend these programs and the fees that support them until December 31, 2023. SB 1455 Page 6 The CEC's State Alternative Fuels Plan outlines specific strategies and targets to increase the use of alternative fuels, including setting a goal of 26% penetration for alternative fuel use in California for on-road and off-road vehicles by 2022. This bill requires ARB and the CEC to measure the progress of alternative fuels use in the state, as described. On January 26, 2012, ARB considered amendments to the Clean Fuels Outlet regulation. The amendments are required be submitted to the Office of Administrative Law by December 31, 2012, to take effect. The amendments to the Clean Fuels Outlet regulation were designed to ensure that there was sufficient hydrogen fueling infrastructure necessary to meet forecasted fuel cell vehicle penetration. According to ARB, this infrastructure is needed to demonstrate a market commitment to hydrogen fuel. In order to meet the forecasted station infrastructure needs, the regulation would have required that refiners provide the funding for hydrogen fueling stations available to the public. This bill prohibits ARB from submitting the January 26, 2012, regulation amendments pertaining to the hydrogen fueling infrastructure to the Office of Administrative Law. The bill also prohibits ARB from enforcing any element of the regulation that requires, or has the effect of requiring, any person to construct, operate, or provide funding for the construction or operation of any publicly available hydrogen fueling station. Instead, the bill dedicates $20 million from the AB 118 program in each fiscal year, beginning July 1, 2013, through June 30, 2016, not to exceed 20% of total AB 118 funds annually, to developing the hydrogen infrastructure. The CEC may allocate additional funds after July 1, 2016, as necessary to achieve the publicly available hydrogen fueling infrastructure sufficient to support automobile manufacturer deployment projections for fuel cell vehicles in California. Analysis Prepared by : Elizabeth MacMillan / NAT. RES. / (916) 319-2092 FN: 0005836 SB 1455 Page 7