BILL ANALYSIS                                                                                                                                                                                                    Ó






           SENATE TRANSPORTATION & HOUSING COMMITTEE       BILL NO:  AB 2013
          SENATOR MARK DESAULNIER, CHAIRMAN              AUTHOR:   Muratsuchi
                                                         VERSION:  4/2/14
          Analysis by:  Erin Riches                      FISCAL:   Yes
          Hearing date:  June 10, 2014                       URGENCY: YES



          SUBJECT:

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

          DESCRIPTION:

          This bill raises the cap on the "green sticker" Clean Air  
          Vehicle program, which allows certain low-emission vehicles to  
          access HOV lanes with a single occupant. 

          ANALYSIS:

          An HOV lane, also known as a carpool lane, aims to promote and  
          encourage ridesharing, thereby alleviating traffic congestion  
          and improving air quality.  Depending on the particular HOV  
          lane, a vehicle must have a minimum of either two or three  
          occupants in order to access the lane.

          Existing federal law authorizes states, until September 30,  
          2017, to allow certain low-emission and energy-efficient  
          vehicles with a single occupant to use HOV lanes.  A state that  
          enacts such a policy must monitor its HOV system and report to  
          the Federal Highway Administration (FHWA) on the impact these  
          vehicles have on highway operations.  If these vehicles cause a  
          degradation of HOV lane operations, the state must limit or  
          discontinue clean air vehicle use of the lanes.  Federal law  
          deems that an HOV lane is degraded if vehicles operating in the  
          lane fail to maintain a minimum average operating speed  
          (generally 45 miles per hour) during 90 percent of the time over  
          a consecutive 180-day period during morning or evening weekday  
          peak-hour periods.  Federal law requires states to take action  
          on degraded facilities within 180 days of identifying them as  
          degraded.  If a state fails to comply, FHWA may impose  
          sanctions, including withholding payment of federal funds and  
          withholding approval of projects.

          Existing state law exempts certain clean, alternative-fuel  
          vehicles from HOV lane occupancy requirements, so that a vehicle  




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          with just one occupant may use an HOV lane if it displays a  
          Clean Air Vehicle sticker.  The state has implemented three  
          clean air vehicle HOV sticker programs in recent years:

           White HOV stickers.  AB 71 (Cunneen), Chapter 330, Statutes of  
            1999, established the "white sticker program," which allows  
            vehicles that meet certain strict emission standards to drive  
            in carpool lanes with a single occupant.  These vehicles are  
            typically pure battery electric vehicles, dedicated compressed  
            natural gas or liquid petroleum gas vehicles, and hydrogen  
            fuel cell vehicles, such as the BMW i3EV, Chevy Spark EV, Fiat  
            500e, Ford Focus EV, Honda Civic CNG, Honda Fit EV, Hyundai  
            Tucson Fuel Cell, Mitsubishi i-MiEV, Nissan Leaf, Tesla Model  
            S, and Toyota RAV4 EV, among others.  State law places no  
            limit on the number of stickers that can be issued; as of May  
            5, 2014, the state Department of Motor Vehicles (DMV) had  
            issued 47,516 white stickers.  This program expires on 
          January 1, 2019.

           Yellow HOV stickers (expired).  AB 2628 (Pavley), Chapter 725,  
            Statutes of 2004, established the "yellow sticker program,"  
            which granted HOV lane access to certain single-occupant,  
            hybrid or alternatively fueled vehicles.  DMV began issuing  
            yellow stickers for the Toyota Prius and Honda Civic Hybrid in  
            April 2006, when the FHWA granted conditional approval of the  
            program.  The number of vehicles that might be issued these  
            stickers was ultimately capped at 85,000, a limit that was  
            reached in 2007; all yellow stickers expired on July 1, 2011.   

               
           Green HOV stickers.  SB 535 (Yee), Chapter 215, Statutes of  
            2010, established the "green sticker program," which allows  
            certain single-occupant vehicles - generally, plug-in hybrid  
            vehicles that meet the Air Resources Board's (ARB)strictest  
            emissions standard - to drive in carpool lanes.  The vehicles  
            eligible to date for green stickers are the BMW i3 Rex,  
            Cadillac ELR, Chevrolet Volt, Ford C-Max Energi, Ford Fusion  
            Energi, Honda Accord Plug-in Hybrid, and Toyota Prius Plug-in.  
             State law limits the number of green stickers that DMV may  
            issue to 40,000.  The green sticker program began on January  
            1, 2012; on May 9, 2014, DMV issued the 40,000th sticker.   
            This program expires on January 1, 2019.

          Pursuant to federal law, state law authorizes the state  
          Department of Transportation (Caltrans), if it is able to  
          attribute unacceptable congestion levels to clean vehicles, to  




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          ban them from HOV lanes.

           This bill  raises the cap on the green sticker program from  
          40,000 to 85,000.

          COMMENTS:

           1.Purpose  .  The author states that green stickers promote the  
            growth and sale of alternative fuel vehicles by incentivizing  
            consumers to purchase the next generation of advanced  
            technology vehicles.  The author states that this bill would  
            accommodate growing participation in this successful program  
            at a time when the market for these vehicles is at a critical  
            juncture.  Promoting the development and sale of  
            alternative-fuel vehicles will help California reach its clean  
            air and greenhouse gas reduction goals.

           2.Do single-occupant vehicles clog carpool lanes  ?  Federal law  
            requires a state that allows clean vehicles to use an HOV lane  
            to submit an annual report to FHWA on HOV lane performance.   
            Federal law also requires a state, if it finds that clean  
            vehicles cause degradation of HOV lane operations, to limit or  
            discontinue clean air vehicle use of these lanes.  

            Caltrans submitted its most recent HOV lane degradation report  
            to FHWA in November 2011.  This report showed that  
            approximately 43 percent of HOV lanes in California were  
            degraded during the first half of the year and approximately  
            49 percent were degraded during the second half of the year.   
            This increase occurred despite the fact that the state law  
            allowing 85,000 hybrid vehicles with yellow stickers to access  
            HOV lanes expired on July 1, 2011.  According to Caltrans,  
            this increase has been observed in prior years and is  
            associated with seasonal increases in traffic volume, not with  
            clean vehicles.  Caltrans identified factors such as vehicles  
            from HOV lanes merging into general-purpose lanes at the end  
            of the HOV lane, "rubbernecking" due to traffic incidents on  
            the freeway, and inclement weather resulting in lower speeds,  
            as key causes of HOV lane congestion. 

            Caltrans submitted an action plan to FHWA in July 2013.  The  
            plan did not propose to ban clean vehicles from HOV lanes  
            because, according to the plan, "These vehicles constitute a  
            very low percentage of users of HOV lanes.  Furthermore,  
            prohibiting these vehicles runs counter to an existing  
            Governor's Executive Order that directs State agencies to take  




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            action to support and incentivize the purchase of these  
            vehicles."  

            In January 2014, FHWA rejected Caltrans' 2011 action plan.   
            Caltrans is currently developing a new action plan to improve  
            HOV lane performance, which reportedly would not include  
            removal of clean air vehicles, but would include raising  
            vehicle occupancy levels.  For example, the plan could propose  
            requiring three occupants in a vehicle, rather than two, in  
            order to access an HOV lane.  Excluding double-occupant  
            vehicles from HOV lanes, while preserving the right of  
            single-occupant clean vehicles to access them, would appear to  
            violate the basic purpose of HOV lanes - namely, to promote  
            carpooling.  

            Writing in opposition to this bill, the Metropolitan  
            Transportation Commission notes that "over 40 percent of the  
            state's HOV lanes that were monitored by Caltrans failed to  
            meet the performance standard set in federal law ? the system  
            is not working optimally today and unfortunately, AB 2013 will  
            simply make matters worse."  In addition, there is no cap on  
            white sticker issuance, and DMV has already issued more than  
            47,000 white stickers.  The committee may wish to consider the  
            extent to which allowing 45,000 more single-occupant vehicles  
            into HOV lanes will increase HOV lane degradation and  
            undermine the policy objectives of encouraging carpooling and  
            reducing traffic congestion.

           3.Should the cap be lifted  ?  As noted on the ARB website  
            regarding the yellow sticker program, "The California  
            legislature limited the time of this early hybrid vehicle  
            program to help promote and encourage development of newer  
            plug-in hybrid and other zero-emissions technologies."   
            Automakers are already working to develop these technologies  
            in response to the federal Corporate Average Fuel Economy  
            (CAFÉ) and Greenhouse Gas Emissions standards, which aim to  
            increase fuel economy to the equivalent of 54.5 miles per  
            gallon for cars and light-duty trucks by 2025.  Automakers  
            argue, however, that producing the cars does no good if  
            consumers are not motivated to buy them; the green sticker  
            program provides consumers incentives to do so.

           4.A critical blow  .  When this committee heard SB 286 last April  
            (see "Related Legislation"), DMV had issued 10,881 green  
            stickers.   In June 2013, when this committee heard AB 266  
            (see "Related Legislation"), this number had risen to 14,524.   




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            Green sticker issuance has continued to increase dramatically,  
            and on May 9, 2014, DMV issued the final green sticker allowed  
            pursuant to the 40,000 cap.  Supporters argue that the  
            elimination of this incentive will deal a critical blow to  
            clean car sales, as green stickers are a primary incentive to  
            buy low-emission vehicles.

           5.Does HOV access incentivize clean car purchases  ?  It appears  
            that HOV lane access is no longer a primary driver of clean  
            car purchases.  The Center for Sustainable Energy released a  
            set of survey results at the Governor's ZEV summit in March  
            2014 showing that HOV lane access was the primary reason a  
            consumer bought a vehicle for 16 percent of Nissan Leafs, 27  
            percent of Chevy Volts, and 57 percent of Toyota Priuses,  
            purchased or leased prior to the third quarter of 2012.   
            However, HOV lane access accounted for only 15 percent of  
            Nissan Leaf, 20 percent of Chevy Volt, and 34 percent of  
            Toyota Prius purchases or leases in the fourth quarter of  
            2013.  The fourth quarter 2013 results also included Tesla  
            purchases, none of which were attributable to a desire for HOV  
            lane access.  For the fourth quarter 2013 purchases, nearly  
            half of Nissan Leaf (48 percent) and Chevy Volt (48 percent)  
            purchases or leases, as well as 34 percent of Toyota Prius  
            purchases or leases, were attributable to a desire to save  
            money on fuel (this factor was not in evidence in Tesla  
            purchases).  

           6.How many incentives are enough  ?  The ARB's Clean Vehicle  
            Rebate Program (CVRP) provides rebates of up to $2,500 for the  
            purchase or lease of a new zero-emission vehicle or plug-in  
            hybrid electric vehicle.  CVRP is so heavily utilized that the  
            program ran out of funding midyear; the ARB voted in April  
            2014 to establish a waiting list to keep the program going  
            until the beginning of the new fiscal year in June.  In  
            addition, the US Department of Energy offers a $7,500 federal  
            tax credit for the purchase of an electric vehicle, and clean  
            vehicles tend to enjoy free parking in commercial garages,  
            among other benefits.  The committee may wish to consider  
            whether it is necessary to continue offering the green sticker  
            incentive in addition to these other lucrative incentives.

           7.Social equity concerns  .  For a variety of reasons,  
            low-emission vehicles often have higher purchase prices than  
            comparable gasoline-powered vehicles.  These higher purchase  
            prices generally make low-emission vehicles that qualify for  
            HOV lane access unaffordable for lower-income drivers.  (Note  




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            that the CCSE survey referenced above indicates that over half  
            of CVRP recipients earn more than $150,000 per year.)   
            Legislation passed in 2012, AB 2405 (Blumenfield), Chapter  
            674, Statutes of 2012, exempts low-emission vehicles from  
            tolls in high-occupancy toll (HOT) lanes.  Thus,  
            single-occupant vehicles with green stickers not only have  
            access to HOV lanes, but can drive in HOT lanes for free.   
            Some may question whether it is appropriate to be able to  
            "buy" single-occupant access to lanes that were originally  
            intended to promote ridesharing.

           8.Assembly Budget Subcommittee action  .  On May 22, 2014, the  
            Assembly Subcommittee on Resources and Transportation approved  
            trailer bill language increasing the cap on green stickers by  
            10,000, "to ensure that program would continue in the near  
            term as the legislative process continues to deliberate the  
            long-term program design" in this bill.  

          RELATED LEGISLATION:
          
          AB 1721 (Linder), also being heard by this committee today,  
          provides toll-free or reduced-rate passage for certain  
          single-occupant, low-emission vehicles with a Clean Air Vehicle  
          program sticker.

          SB 286 (Yee), Chapter 414, Statutes of 2013, extends the sunset  
          date on the green sticker program from January 1, 2015 to  
          January 1, 2019, or until federal authorization expires,  
          whichever comes first.

          AB 266 (Blumenfield), Chapter 405, Statutes of 2013, extends the  
          sunset date on the white sticker program from January 1, 2015 to  
          January 1, 2019, or until federal authorization expires,  
          whichever comes first.


          Assembly Votes:

               Floor:    63-4
               Appr: 14-1
               Trans:    14-0

          POSITIONS:  (Communicated to the committee before noon on  
          Wednesday,                                             June 4,  
          2014.)





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               SUPPORT:  Alliance of Automobile Manufacturers (sponsor)
                         California Electric Transportation Coalition 
                         California Manufacturers and Technology  
          Association
                         Ford Motor Company
                         Orange County Transportation Authority
                         Sacramento Municipal Utility District
                         South Coast Air Quality Management District

               OPPOSED:  Metropolitan Transportation Commission
                         Transportation Authority of Marin