BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 11|
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THIRD READING
Bill No: SB 11
Author: Pavley (D), et al.
Amended: 5/28/13
Vote: 27 - Urgency
SENATE ENVIRONMENTAL QUALITY COMMITTEE : 8-1, 4/3/13
AYES: Hill, Calderon, Corbett, Fuller, Hancock, Jackson, Leno,
Pavley
NOES: Gaines
SENATE TRANSPORTATION & HOUSING COMMITTEE : 6-2, 4/9/13
AYES: Beall, Cannella, Galgiani, Lara, Liu, Pavley
NOES: Gaines, Wyland
NO VOTE RECORDED: DeSaulnier, Hueso, Roth
SENATE APPROPRIATIONS COMMITTEE : 6-1, 5/23/13
AYES: De León, Walters, Hill, Lara, Padilla, Steinberg
NOES: Gaines
SUBJECT : Alternative fuel and vehicle technologies: funding
programs
SOURCE : American Lung Association, California
California Air Pollution Control Officer's
Association
CALSTART
DIGEST : This bill extends until January 1, 2024, extra
charges on vehicle registrations, boat registrations, and tire
sales in order to fund the AB 118, Carl Moyer, and AB 923
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programs. This bill also extends the authority of local air
districts to impose vehicle registration surcharges in their
area.
ANALYSIS :
Existing law:
1.Authorizes local air district boards to adopt a $2 surcharge
on vehicle registration, subject to certain requirements, to
be used to implement emission reduction programs from
vehicular sources or off-road engines, including for projects
eligible under the Carl Moyer Program, and other specified
projects until January 1, 2015.
2.Creates the Air Quality Improvement Program (AQIP), to be
administered by the ARB in consultation with local air
districts, to fund air quality improvement projects.
3.Creates the Enhanced Fleet Modernization Subaccount to
implement an Enhanced Fleet Modernization program developed by
the Air Resources Board (ARB), in consultation with the Bureau
of Automotive Repair, to commence on January 1, 2010, that
allows for the voluntary retirement of high polluting
passenger vehicles and light-duty and medium-duty trucks.
4.Requires that ARB, no later than July 1, 2008, develop
regulations to apply following a year after a 12-month period
where the hydrogen fuel dispensed in California for
transportation purposes exceeds 3,500 metric tons.
5.Requires the California Energy Commission (CEC) to adopt and
transmit an Integrated Energy Policy Report every two years on
trends and issues.
6.Establishes certain vehicle and vessel related surcharges and
fees, until January 1, 2016, including an $8 fee increase in
smog abatement, a $3 fee increase in the annual vehicle
registration fee, a $5 fee increase for special identification
plates, and a $10-20 fee increase for vessel registration, to
fund the AQIP and the Alternative and Renewable Fuel and
Vehicle Technology (ARFVT) and Enhanced Fleet Modernization
programs
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7.Establishes the California Tire Recycling Fee, which imposes a
$1.75 surcharge on new tires, where $1 is directed to the
Department of Resources Recycling and Recovery, and $0.75 is
directed to the Air Pollution Control Fund to be allocated by
the ARB to local air districts for programs and projects that
mitigate mobile source air pollution, until January 1, 2015,
at which point the tire fee is reduced to $0.75 and retained
by the Department of Resources Recycling and Recovery.
This bill:
1. Restricts, pursuant to Section 3 of Article XIX of the
California Constitution, the expenditure of revenues from
fees and taxes imposed by the state on vehicles for specified
purposes, subject to certain exceptions.
2. Requires the CEC and the ARB to ensure that revenues from
specified fees imposed on vehicles that are used for purposes
of ARFVT Program and AQIP are expended in compliance with
Section 3 of Article XIX of the California Constitution.
3. Requires the CEC to rank applications for projects proposed
for funding awards based on solicitation criteria developed,
and give additional preference to funding those projects with
higher benefit-cost scores.
4. Extends the authorization for local air district boards to
adopt a two-dollar surcharge on vehicle registration, to be
used to implement emission reduction programs from vehicular
sources or off-road engines, until January 1, 2024.
5. Defines "publicly owned hydrogen fueling station" to mean
equipment used to store and dispense hydrogen fuel to
vehicles according to industry codes and standards that is
open to the public.
6. Prohibits the ARB from enforcing any element of its existing
clean fuels outlet (CFO) regulation or of any regulation that
requires that any person to construct, operate or provide
funding for the construction or operation of any publicly
available hydrogen fueling station until January 1, 2024.
7. Requires the ARB to make the number of vehicles that
automobile manufacturers project to be sold or leased
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available to the public.
8. On or before June 30, 2014, and every year thereafter, the
ARB must aggregate and make available all of the following:
A. The number of hydrogen-fueled vehicles that motor
vehicle manufacturers project to be sold or leased over the
next three years as reported to the ARB pursuant to the Low
Emission Vehicle regulations.
B. The total number of hydrogen-fueled vehicles registered
with the Department of Motor Vehicles (DMV) through April
30.
1. On or before June 30, 2014, and every year thereafter, the
ARB, based on the information made available, must do both of
the following:
A. Evaluate the need for additional publicly available
hydrogen fueling stations for the subsequent three years in
terms of quantity of fuel needed for the actual and
projected number of hydrogen-fueled vehicles, geographic
areas where fuel will be needed, and station coverage.
B. Report findings to the CEC on the need for additional
public hydrogen fueling stations in terms of numbers of
stations, geographic areas where additional stations will
be needed, and minimum operating standards, such as number
of dispensers, filling protocols, and pressures.
1. Requires the CEC to allocate $20,000,000 annually to fund
the number of stations identified, not to exceed 20% of the
monies appropriated by the Legislature from the ARFVT Fund,
until there are at least 100 publicly available hydrogen
fueling stations in operation in California.
2. Provides that if the CEC, in consultation with the ARB,
determines that the full amount is not needed to fund the
number of stations identified by the ARB pursuant to
subdivision (d), the CEC may allocate any remaining monies to
other projects, subject to the requirements of the ARFVT
Program.
3. Requires the CEC, in consultation with the ARB, to award
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funds based on best available data, including information
made available, as specified, and input from relevant
stakeholders, including motor vehicle manufacturers that have
planned deployments of hydrogen-fueled vehicles, according to
a strategy that supports the deployment of an effective and
efficient hydrogen fueling station network in a way that
maximizes benefits to the public while minimizing costs to
the state.
4. Requires the ARB to provide preference in awarding funding
to those projects with higher benefit-cost scores that
maximize the purposes and goals of the Air Quality
Improvement Program.
5. Requires the CEC and ARB, on or before December 31, 2015,
and annually thereafter, to jointly review and report on
progress toward establishing a hydrogen fueling network that
provides coverage and capacity to fuel cell vehicles in the
state.
6. Authorizes the CEC to design grants, loan incentive programs
and other forms of financial assistance to assist in
deployment of hydrogen fueling infrastructure as rapidly as
possible.
7. Specifies that the funds appropriated for hydrogen
infrastructure shall be available for encumbrance by the CEC
for up to four years from the date of appropriation and
available for liquidation up to four years after the
encumbrance expiration.
8. Requires the ARB, in consultation with air districts, to
convene working groups to evaluate the policies and goals of
the Carl Moyer Program, no later than July 1, 2013.
9. Directs ARB and CEC 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 by November 1, 2014.
10.Extends the authorization to fund projects reducing NOx, PM
and reactive organic gasses under the Carl Moyer Program,
until January 1, 2024.
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11.Extends the sunset date of various vehicle and
vessel-related fees, including an $8 fee increase in smog
abatement, a $3 fee increase in the annual vehicle
registration fee, a $5 fee increase for special
identification plates, and a $10 fee increase for vessel
registration, to fund the ARFVT, AQIP and Enhanced Fleet
Modernization programs, until January 1, 2024.
12.Extends the sunset date of the $0.75 fee increase on tire
sales to fund the Carl Moyer Program, until January 1, 2024.
13.Adds intelligent transportation systems as a category of
projects eligible for funding under the ARFVT Program.
14.Defines "Benefit-cost score" for purposes of this bill.
Background
AB 118 (Núñez, Chapter 750, Statutes of 2007), created the ARFVT
Program, AQIP and the Enhanced Fleet Modernization program. AB
118 provides, upon appropriation by the Legislature,
approximately $180 million annually until 2016 for these
programs. These funds primarily come from additional fees on
vehicle registrations and vessel registrations. The extension
of the vehicle registration fees, trailer fees, tire fees, and
boat registration fees in this bill will result in approximately
$180 million per year for an additional eight years for the AB
118 programs.
Carl Moyer Program AB 923 . AB 1571 (Villaraigosa, Chapter 923,
Statutes of 1999), established the Carl Moyer Memorial Air
Quality Standards Attainment Program through which ARB provides
grants to offset the incremental costs of purchasing or
retrofitting engines in order to reduce specified air emissions.
The Carl Moyer Program originally received General Fund
appropriations. AB 923 (Firebaugh, Chapter 707, Statutes of
2004), expanded the Carl Moyer Program to cover additional
pollutants and engines, imposed a 75-cent fee on tire sales to
fund the Carl Moyer Program, and authorized local air districts
to levy a surcharge on vehicle registrations to fund certain
emission reduction programs, including eligible projects under
the Carl Moyer Program. The fee for the Carl Moyer Program and
the authorization for the surcharge are set to expire on January
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1, 2015.
Clean Fuels Outlet . ARB adopted its Clean Fuels Outlet
Regulation to provide fueling stations for fuel to meet the
needs of those driving clean, alternative fuel vehicles. When
it first began work on the regulation in 1990, ARB planned to
use it as a tool to provide methanol, ethanol, and compressed
natural gas fueling stations once a certain number of vehicles
using those fuels were certified in California. Those vehicles
were not forthcoming, and ARB last updated the regulation in
2000.
In January 2012, ARB considered and passed amendments to the
regulation to require major refiners and importers of gasoline
to provide alternative fuel fueling stations when the number of
vehicles using a particular alternative fuel reaches 10,000
within an air basin or 20,000 statewide with specified
adjustments. Refiners and importers of gasoline would provide
these alternative fueling stations in proportion to their market
share but would not provide fueling stations for electric
vehicles. This update to the CFO Regulation arose as part of
ARB's work to meet California's air quality and greenhouse gas
emission reduction goals but has not been finalized by the
Office of Administrative Law as required by state law.
Zero Emission Vehicle (ZEVs) . ARB's ZEV regulation requires
that by 2025 about 15% of new car sales will be zero emission
and requires automakers to produce and sell ZEVs, which include
plug-in electric vehicles and fuel cell vehicles (FCVs), in
order to achieve this mandate. Automakers may also produce and
sell vehicles that are partially zero emission or help
transition to ZEVs in order to meet the mandate. This will
ensure that there will be 1.5 million ZEVs on the road by 2025
as directed under Governor Brown's Executive Order B-16-2012.
Hydrogen Highway . In 2004, Governor Schwarzenegger signed an
executive order calling for the development of the California
Hydrogen Highway Blueprint Plan (plan) that would expedite
availability of hydrogen fueling stations. The plan outlined a
path for 100 hydrogen-fueling stations and 2,000 hydrogen-fueled
vehicles by 2010, to be followed by two more phases with
increased deployment of FCVs and hydrogen fuel stations. As
recommended by the plan, the 2005-06 Budget allocated $6.5
million for state-sponsored hydrogen demonstration projects and
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over $12 million was allocated in two subsequent budgets for the
continued development of hydrogen stations. The CEC has awarded
$18.2 million to date, and has $28.6 currently allocated for
hydrogen infrastructure, and has $20 million proposed for the
2013-2014 draft ARFVT Program investment plan. According to the
California Fuel Cell Partnership, there are currently 36
hydrogen-fueling stations, of which, eight are public, 15 are
private or demonstration, and 13 are in development. In total,
25 stations received state funding, 14 of which are currently
open. The California Fuel Cell Partnership has published a
document, the California Road Map, which describes the need for
68 hydrogen stations in state by 2016 to serve the thousands of
FCV drivers expected in the early years of commercialization.
Environmental impacts of hydrogen . An FCV is powered by the
reaction of hydrogen and oxygen in a fuel cell to produce
electricity and water vapor as the only tail pipe emission. The
initial production of hydrogen may be associated with a range of
greenhouse gas (GHG) emissions depending on the production
pathway. Electrolysis, where electricity is used to split water
into oxygen and hydrogen, can produce hydrogen without GHG
emissions if renewable electricity is used. Only a small
fraction of hydrogen is produced in this manner, however, due to
the high costs associated with electrolyzers and renewable
energy. Currently, the most cost effective way to produce
hydrogen on a large scale is to react natural gas with water to
produce CO2 and hydrogen (termed steam reformation).
Ninety-five percent of hydrogen is produced via steam
reformation, primarily for industrial and refinery purposes.
Estimates of "well-to-wheels" (WTW) GHG emissions for hydrogen
produced in this manner reduce GHG emissions by half relative to
current conventional gasoline vehicles, due in part to the
increased efficiency of fuel cells compared to internal
combustion engines. Steam reformation with biomethane as a
feedstock could further decrease WTW GHG emissions for hydrogen
production, although current supplies of biomethane available in
the state are limited. New regulations and standards for
landfill biomethane, as well as efforts to increase biomethane
production in state, pursuant to AB 1900 (Gatto, Chapter 602,
Statutes of 2012), may help increase in-state biomethane
production.
ARFVTP benefits report . The December 2011 benefits report
evaluated the first few years of funding from the ARFVT Program.
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The report gave a range for estimated petroleum and diesel fuel
displacement in years leading up to 2020 based on ARB's ZEV
mandate, as well as surveys and feedback from grant awardees and
auto manufacturers. The high and low projections are based on a
variety of factors including uncertainties in the market, gas
prices, extent of future utilization of funded technologies,
consumer willingness to switch to alternative vehicles and
infrastructure readiness. The report gives a high value for
petroleum gallons displaced from FCVs, estimated to number
124,000 by 2020, of 4% of the total gallons displaced from
alternative fuel and vehicle technologies in 2020 (estimated to
be 1.184 billion). In contrast, petroleum displaced due to
plug-in electric vehicles represents 21% of the total projected
petroleum displaced for the high estimate in 2020. These
numbers highlight the fact that FCVs will not result in a
significant reduction of GHG emissions in the short run, but
instead, will require vehicle market transformation where FCVs
represent a large fraction of the vehicle fleet to realize
significant GHG reductions. Although not insurmountable, the
requirements for market transformation of FCVs, including
creating a hydrogen fueling infrastructure network from scratch,
distributing hydrogen fuel at competitive costs to dispersed
fueling stations and high initial FCV costs in the early stages
of a transition, represent significant challenges, especially
considering the limited public funds available and the
uncertainty surrounding when the hydrogen market will be
self-sustaining and no longer require public subsidy.
CEC has the authority to allocate money for hydrogen
infrastructure . Under the ARFVT Program administered by the
CEC, projects for hydrogen infrastructure can be and have
already been awarded, but the author and proponents contend that
the provisions requiring $20 million be awarded for hydrogen
infrastructure for three years and up to $20 million in eight
subsequent years are necessary to send a clear signal to auto
manufacturers that there is a commitment to hydrogen
infrastructure from the state and thus prompt a timely roll out
of FCVs from the manufacturers beginning in 2015. However, this
mandated allocation for hydrogen infrastructure funds could make
the CEC less flexible in responding to changing market demand
for hydrogen as well as other alternative fuel and
infrastructure technological advancements, especially if there
are significant technological leaps in various fields.
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FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee:
Annual revenues of $180 million (special fund) for various AB
118 programs until 2024, of which $20 million be directed for
the construction and operation of a hydrogen fueling network
in FY 13-14, FY 14-15, and FY 15-16 and up to $20 million in
the remaining years.
Annual tire fee additional revenue of approximately $26
million (special fund) for the Carl Moyer Program.
Annual costs in the hundreds of thousands of dollars to the
ARB, CEC, and Bureau of Automotive Repair to continue to
administer various air quality and alternative fuel programs
and associated reporting requirements which will be fully
covered by the surcharge extensions.
Annual costs of approximately $225,000 to the Air Pollution
Control Fund (special fund) beginning in 2013 for the
evaluation, analysis, review, and reporting aimed to encourage
implementation of the state alternative transportation fuels
goal.
SUPPORT : (Verified 5/28/13)
American Lung Association, California (co-source)
California Air Pollution Control Officers Association
(co-source)
CALSTART (co-source)
Alliance of Automobile Manufacturers
Bay Area AQMD
Bay Area Biosolids to Energy Coalition
CA Manufacturers & Technology Association
California Association of School Transportation Officials
California Association of Winegrape Growers
California Citrus Mutual
California Cotton Ginners & Growers Association
California Council for Environmental and Economic Balance
California Dairies, Inc.
California Electric Transportation Coalition
California Farm Bureau Federation
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California Grape & Tree Fruit League
California Independent Oil Marketers Association
California Natural Gas Vehicle Coalition
California Rice Industry Association
California Service Station & Automotive Repair Association
California Transit Association
California Trucking Association
Caterpillar
Coalition for Clean Air
Contra Costa Council
Dow Kokam
Efficient Drivetrains, Inc.
Electric Vehicles International, LLC
Environmental Defense Fund
FedEx
Global Automakers Association
Greenkraft, Inc
Honda Motors
Hydrogenics Corporation
Kern County Tax Association
King Canyon Unified School District
Linde
Los Angeles County Integrated Waste Management Authority
Metrolink
Motiv Power Systems, Inc
Napa Valley Unified School District
Natural Resources Defense Council
Navistar, Inc.
Nisei Farmers League
Odyne Systems, LLC
Pacific Ethanol
Propel Fuels
Quallion
Quantum Technologies
Sacramento Area Council of Governments
San Francisco International Airport
San Joaquin Valley AQMD
Santa Clara Valley Transportation Authority
Smith Electric Vehicles
Technology Partners
Tesla Motors
Toyota Motor Corporation
Transpower
UPS
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US Hybrid Corporation
Waste Management
Western Agricultural Processors Association
Western States Petroleum Association
OPPOSITION : (Verified 5/28/13)
Automobile Club of Southern California
CRM Company of Rancho Dominguez
Sierra Club California
ARGUMENTS IN SUPPORT : The California Refuse Recycling Council
writes, The Bioenergy Association of California is an
association of bioenergy companies, public agencies,
environmental groups and others working together to promote
sustainable bioenergy development. Bioenergy is liquid fuels,
renewable natural gas and electricity produced from organic
waste including waste from dairies, wastewater treatment
facilities, urban organic waste, forest and agricultural waste.
In the transportation sector, biofuels and biogas generated from
organic waste are among the lowest carbon fuels available, in
some cases actually carbon negative. Biofuels and biogas reduce
air and water pollution, especially toxic diesel pollution, and
increase in-state production of transportation fuels. They also
help to reduce waste going into landfills and the pollution and
odors from landfills, waste water treatment facilities and
dairies.
The programs that would be reauthorized by SB 11 provide
critical incentives to speed California's transition to cleaner
fuels and transportation technologies. Programs such as the
Carl Moyer Program have proven track records in reducing air
pollution and California's heavy dependence on oil. The AB 118
program is also critical to accelerate deployment of cleaner
fuels, including the next generation of ultra-low carbon fuels,
advanced biofuels and more. By reauthorizing these programs, AB
8 (Perea), 2013, will protect public health and the environment,
create in-state jobs and businesses, and reduce California's
dependence on oil.
ARGUMENTS IN OPPOSITION : The Automobile Club of Southern
California objects to fees and taxes imposed on gasoline powered
on-road vehicles being used to pay for environmental mitigation
stemming from off-road equipment, heavy-duty vehicles and school
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buses. They also state that usage of fees and taxes appears to
violate Article XIX of the California Constitution.
The Sierra Club objects to language in SB 11 that abrogates the
CFO, which they note was publicly vetted over a year ago. They
also state that the CFO abrogation sets a dangerous precedent
that undermines the integrity of the rulemaking process at the
ARB.
RM:nl:ej 5/28/13 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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