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 AB 2013 (MURATSUCHI) Page 2 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 AB 2013 (MURATSUCHI) Page 3 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 AB 2013 (MURATSUCHI) Page 4 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. AB 2013 (MURATSUCHI) Page 5 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 AB 2013 (MURATSUCHI) Page 6 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.) AB 2013 (MURATSUCHI) Page 7 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