BILL ANALYSIS Ó
SB 359
Page 1
Date of Hearing: September 11, 2013
ASSEMBLY COMMITTEE ON TRANSPORTATION
Bonnie Lowenthal, Chair
SB 359 (Corbett) - As Amended: September 6, 2013
SENATE VOTE : Not relevant
SUBJECT : Air Quality Improvement Program
SUMMARY : Loans $30 million from the Vehicle Inspection and
Repair Fund to the Air Quality Improvement Fund for
appropriation to the California Air Resources Board's (ARB's)
Clean Vehicle Rebate Project (CVRP) and the Hybrid and
Zero-Emission Truck and Bus Voucher Incentive Project (HVIP)
within the Air Quality Improvement Program (AQIP); directs the
loan to be repaid by June 30, 2016.
EXISTING LAW :
1)Pursuant to AB 118 (Nunez), Chapter 750, Statutes of 2007,
establishes various programs to help implement the state's
greenhouse gas emission reduction goals. Included in these
programs is the AQIP. The purpose of AQIP is to fund projects
that reduce criteria air pollutants, improve air quality, and
provide research for alternative fuels and vehicles, vessels,
and equipment technologies.
2)Establishes the Vehicle Inspection and Repair Fund into which
revenues from the smog check certificate fee are deposited for
administration of the Smog Check Program within the Bureau of
Automotive Repair (BAR).
FISCAL EFFECT : Unknown
COMMENTS : AQIP provides financial incentives for public and
private groups and individuals to adopt smog and diesel
particulate pollution-reducing technology that concurrently
reduces greenhouse gas emissions. Funding for AQIP comes
primarily from the smog abatement fee that is assessed annually
for a vehicle's first six registration years in lieu of
providing a biennial smog certification. Of the $20 that is
collected for each vehicle annually, $4 is allocated to ARB for
AQIP. Typically, the annual budget act allocates about $35
million to AQIP.
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ARB just recently adopted its AQIP 2013-14 funding plan that
proposes to focus most of the AQIP funding on the two largest
project categories-CVRP and HVIP. It is for these two projects
for which this bill would provide a $30 million loan from the
Smog Check Program.
CVRP : This project provides vehicle rebates on a first-come,
first-served basis to California residents, businesses,
non-profit organizations, and government entities that purchase
or lease a battery or fuel cell electric vehicle, or a plug-in
hybrid electric vehicle. The aim of this program is to get the
cleanest vehicles on the road in California by providing
consumer rebates to partially offset the higher initial cost of
advanced technologies. ARB touts that, through its investments
in CVRP - coupled with corresponding investments in vehicle
charging and fueling infrastructure by regional governments, the
California Energy Commission and federal government - it is
enticing manufacturers to focus their early advanced vehicle
deployments in California.
ARB proposes to allocate a minimum of $10 million for CVRP
against proposed needs of between $40 million and $60 million.
This needs projection is based on ongoing trends in rebate
disbursement volumes, as well as potentially higher funding
needs driven by increases in consumer demand associated with new
model releases, higher vehicle production volumes, and an
increase in new car sales. ARB opted not to propose significant
changes to its CVRP funding plan, despite the level of unmet
needs, based on stakeholders' fears that near-term changes (such
as lower rebate amounts) could have unintended market
consequences. ARB and stakeholders, instead, agreed that any
changes should be thoroughly analyzed before being implemented.
HVIP : Regarding HVIP, ARB's funding plan proposes a $5 million
minimum allocation, which is expected to fund approximately 150
vehicles. HVIP provides vouchers to help California fleets
purchase hybrid and zero-emission trucks and buses. The project
plays a critical role in accelerating early market penetration
of hybrid technology with the goal of significant fleet
penetration of these vehicles into California by 2020.
In addition to the $15 million allotted for these two programs
in the current year, pending legislation, SB 95 (Committee on
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Budget and Fiscal Review), provides for the early repayment of
two General Fund loans totaling $24.55 million and the transfer
of this amount to the Air Quality Improvement Fund with
direction that these funds be spent by ARB on CVRP.
Furthermore, other currently pending bills, AB 8 (Perea) and SB
11 (Pavley), extend until January 1, 2024, extra fees on vehicle
registrations, boat registrations, and tire sales in order to
fund, among other programs, AQIP.
This bill would loan $30 million to AQIP for use on both CVRP
and HVIP (but does not specify how much each project would
receive). The money would be loaned from the Vehicle Inspection
and Repair Fund. That fund pays for the administration of the
Smog Check Program within BAR. The fund currently has reserves
of about $62 million, which represents about a six-month reserve
for the program. According to the California Department of
Consumer Affairs, the loan is not expected to impact the BAR's
administration of the Smog Check Program.
Understandably, industry advocates for these two rebate programs
are nervous that CVRP and HVIP may run out of money before the
end of the fiscal year. They point to how the CVRP and HVIP
incentive programs have succeeded in reducing the up-front cost
of zero-emission vehicle technologies in the early stages of the
market, before economies of scale have been achieved. They also
point to experiences in other states where rebate programs were
suspended for lack of funds and resulted in pronounced market
impacts. Further, supporters argue that suspension of these
programs (for lack of funding), could "send a chill throughout
the market and create uncertainty as to whether California is
committed to zero-emission vehicle technologies."
Proposed amendments: The author intends to take amendments in
committee to do the following:
1) Specify that the $30 million loan will be divided as
follows: $20 million to be directed to CVRP; and $10
million to be directed to HVIP. Amendments will also
provide that the loan is to be repaid by AQIP.
2) Appropriate an addition $8 million to the Enhanced Fleet
Modernization Program (EFMP). EFMP provides for the
voluntary retirement of passenger vehicles and light and
medium duty trucks that are high polluters. The program is
administered by BAR. Proposed changes to the program that
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will place increased emphasis on ensuring low-income
individuals have greater participation in the program.
3) Add provisions to provide a $10 million loan from the
Vehicle Inspection and Repair Fund to the Heavy Duty
Vehicle Air Quality Loan Program within the Treasurer's
Office. ARB has worked with the State Treasurer's Office
to develop the program to provide financial assistance to
truckers affected by the Statewide In-Use Bus and Truck
Rule and the Heavy-Duty Vehicle Greenhouse Gas Emission
Reduction Measure.
Related legislation: AB 8 (Perea) would extend 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 programs, including AQIP. AB 8 is currently
pending on the Senate Floor.
SB 11 (Pavley), as proposed to be amended, will be identical to
AB 8. SB 11 is currently pending in the Assembly Transportation
Committee.
Previous legislation: AB 118 (Núñez, Chapter 750, Statutes of
2007) enacted the California Alternative and Renewable Fuel,
Vehicle Technology, Clean Air, and Carbon Reduction Act of 2007
and established the Enhanced Fleet Modernization Program and the
Air Quality Improvement Program.
REGISTERED SUPPORT / OPPOSITION :
Support
Alliance of Automobile Manufacturers
Altec Green Fleet
BAE Systems
Boulder Electric Vehicle
California Air Pollution Control Officers Association
California Electric Transportation Coalition
California Municipal Utilities Association
California New Car Dealers Association
CALSTART
California Center for Sustainable Energy
Eaton Corporation
Electric Vehicles International
Environmental Defense Fund
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Honda North America, Inc.
Kenworth Truck Company
Natural Resources Defense Council
Nissan North America
Plug In America
Proterra
Quantum Technologies
Sacramento Air Quality Management District
San Diego Gas & Electric
Smith Electric Vehicles
Southern California Edison
UPS
Opposition
None on file
Analysis Prepared by : Janet Dawson / TRANS. / (916) 319-2093