BILL ANALYSIS Ó SB 11 Page 1 Date of Hearing: August 21, 2013 ASSEMBLY COMMITTEE ON APPROPRIATIONS Mike Gatto, Chair SB 11 (Pavley) - As Amended: August 6, 2013 Policy Committee: TransportationVote:10-3 Natural Resources 6-2 Urgency: Yes State Mandated Local Program: No Reimbursable: SUMMARY This bill extends numerous surcharges and fees on vehicle registration, boat registrations, and tire sales to fund the AB 118 and Carl Moyer programs. Specifically, this bill: 1)Extends for eight to nine years, until January 1, 2024, the sunset dates of each of the various fees and surcharges that support AB 118 and the Moyer Program, as follows: a) $3 increase of the annual vehicle registration fee. b) $8 increase of the smog abatement fee, paid to register vehicles that are less than six years old and therefore exempt from smog check. c) $5 increase of the fee for special identification plates for construction equipment, farm trailers, cotton trailers, logging vehicles, and cemetery equipment. d) $10 or $20 (depending upon the even or odd year of registration) increase of the vessel registration fee. e) $0.75 from the retail fee on new tires to the Air Pollution Control Fund (ARB) for the Moyer Program and other air emission reduction efforts. f) $2 surcharge for local air districts on vehicle registrations to fund emission reduction programs, including the Moyer Program. SB 11 Page 2 2)Preempts, until January 1, 2024, the Air Resources Board (ARB) from enforcing regulations related to the Clean Fuels Outlet regulation and the deployment of hydrogen-fueling stations. Requires the Energy Commission (CEC) to allocate $20 million annually until there are at least 100 publicly available hydrogen-fueling stations. 3)Requires a benefit-cost score preference that reflects the expected or potential greenhouse gas emission reduction per dollar awarded by CEC and the reasonably expected or potential criteria pollutant emission reductions per dollar awarded by ARB. 4)Specifies that consumer incentives for light-duty vehicles shall not be greater than compensation given under the Enhanced Fleet Modernization Program at the Bureau of Automotive Repair (BAR). 5)Adds intelligent transportation systems as a category of projects eligible for funding under the AB 118 program. FISCAL EFFECT 1)Increased annual revenues of $180 million (special fund) for various AB 118 programs at CEC, ARB and the BAR. 2)Increased annual tire revenues of $26 million for the Carl Moyer Program at ARB. 3)Annual costs in the hundreds of thousands of dollars to CEC, ARB, and BAR to administer the programs (special fund). COMMENTS 1)Rationale. The author intends this bill to ensure funding, currently set to expire, for programs that reduce air emissions from existing vehicles and develop cleaner alternative vehicle fuels. 2)Background. The state has several distinct programs that seek to address air pollution caused by existing vehicles and to develop cleaner alternative vehicle fuels for widespread use. These programs include: SB 11 Page 3 a) The Carl Moyer Program , administered by ARB, which provides grants to fund the incremental cost of cleaner-than-required heavy-duty engines. Carl Moyer has funded the incremental cost of a diverse range of project types, including purchase of new alternative-fuel heavy-duty vehicles (primarily transit buses and trash trucks) and engine replacements or agricultural irrigation pumps, construction equipment, and marine vessels. According to ARB, these projects have reduced smog-forming nitrogen oxide (NOx) emissions by over 18 tons per day and toxic diesel particulate matter (PM) emissions by almost 1 ton per day, with a cost-effectiveness of about $2,600 per ton of NOx reduced. Funding for Carl Moyer is conditioned upon a cost-effectiveness threshold. The Moyer Program has received funding from a variety of sources, including bond funds, and currently receives dedicated funding from a $0.75 charge on the sale of each new tire, which expires January 1, 2015. The Moyer Program was modified in 2004 by AB 923 (Firebaugh and Pavley, Chapter 707), which allowed local air districts to levy a $2 vehicle registration surcharge to fund local Moyer-like projects. b) AB 118 Programs , created in 2007 by Chapter 750 (Núñez), temporarily raised various vehicle and vessel registration fees and smog abatement fees. The statute created three new accounts into which the resulting revenue are to be placed in order to pay for new programs, as follows: i) Alternative and Renewable Fuel and Vehicle Technology Fund . With estimated annual revenues of about $105 million, this fund provides resources to CEC for financial awards to further the development and commercialization of technologies for renewable and nonpetroleum fuels that help to achieve the state's climate change goals. ii) Air Quality Improvement Fund . Bringing in about $45 million each year, the AQI Fund is to provide resources for ARB to award competitive grants for air quality improvement projects related to fuel and vehicle technologies. SB 11 Page 4 iii) Enhanced Fleet Modernization Subaccount . With annual revenues of about $30 million, this subaccount of the High Polluter Removal and Repair Account is to be used by the BAR, in consultation with ARB, to provide financial compensation for the retirement of high-polluting California vehicles. c) Hydrogen Fueling Stations On January 26, 2016, ARB considered amendments to the Clean Fuels Outlet regulation as part of its Advanced Clean Cars package. In order for the amendments to be officially adopted, ARB is required to submit the amendment package to the Office of Administrative Law within one year of the initial rulemaking notice. The amendments were intended to ensure that there was sufficient hydrogen fueling infrastructure necessary to meet forecasted fuel cell vehicle deployment. Under the amendments, this infrastructure would have helped to ensure sufficient availability of hydrogen after fuel cell vehicles had become commercially available (i.e., large volumes). In order to meet the infrastructure needs, the amendments would have required that oil refiners assure that hydrogen fueling stations were available to the public once certain triggers were met (10,000 fuel cell vehicles in a regional air basin or 20,000 fuel cell vehicles statewide). The ARB did not file the amendments with the Office of Administrative Law because ARB contends that a better way to achieve the goals of the regulation was developed through legislation, which is embodied in this bill. In the event this bill fails passage, ARB issued a new notice in February of this year to amend the regulation. If this bill fails passage, ARB will consider the amendments at its September board hearing. Analysis Prepared by : Jennifer Galehouse / APPR. / (916) 319-2081 SB 11 Page 5