BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  SB 11
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          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.  








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          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:








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              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.
                








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                 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 











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