BILL ANALYSIS Ó
SENATE TRANSPORTATION & HOUSING COMMITTEE BILL NO: SB 359
SENATOR MARK DESAULNIER, CHAIRMAN AUTHOR: corbett
VERSION: 9/12/13
Analysis by: Carrie Cornwell FISCAL: yes
Hearing date: September 12, 2013
SUBJECT:
Air quality and alternative fuel vehicles
DESCRIPTION:
This bill provides $48 million in additional funding for the
current fiscal year to the Air Resources Board (ARB) to support
rebates for alternatively fueled vehicle purchases, vehicle
retirements, and heavy duty vehicle upgrades.
ANALYSIS:
Air Quality Improvement Program
AB 118 (Núñez), Chapter 750, Statutes of 2007, created the Air
Quality Improvement Program (AQIP) , which the ARB administers in
consultation with local air districts to provide competitive
grants to fund projects to reduce criteria air pollutants,
improve air quality, and support research to improve the air
quality impacts of alternative fuels and vehicles, vessels, and
equipment technologies.
Pursuant to ARB's 2013-14 AQIP investment plan, the 2013-14
Budget Act appropriates $15 million to ARB's Clean Vehicle
Rebate Program, which provides rebates of up to $2,500 for the
purchase of all-electric and other qualifying clean vehicles.
Also pursuant to the AQIP, the budget appropriates $5 million to
ARB's Hybrid and Zero-Emission Truck and Bus Incentive Project,
and $2 million to its Heavy Duty Vehicle Air Quality Loan
Program, through which it provides loan guarantees to truck and
bus owners to finance clean heavy duty trucks and buses and
certain retrofits to those vehicles.
Enhanced Fleet Modernization Program
SB 359 (CORBETT) Page 2
AB 118 also created the Enhanced Fleet Modernization Program
(EFMP) , under which ARB, in consultation with the Bureau of
Automotive Repair (BAR), provides for the voluntary retirement
of passenger vehicles and light and medium duty trucks that are
high polluters. EFMP offers:
A $1,000 voucher to all vehicle owners to retire a
high-polluting vehicle.
A $1,500 voucher to low-income vehicle owners (household
income at or below 225 percent of federal poverty level) to
retire a high-polluting vehicle.
AB 118 derives funding for these programs from additional fees
on vehicle and vessel registrations, including a $1 increase in
the annual vehicle registration fee for EFMP; and from a $4
increase in the Smog Abatement Fee, paid to register vehicles
that are less than six model years old and therefore exempt from
smog check.
This bill :
1.Requires the Controller to loan $40 million from the Vehicle
Inspection and Repair Fund (BAR's administrative reserves) to
the Air Quality Improvement Fund and allocate as follows:
$20 million to the ARB for the Clean Vehicle Rebate
Project (CVRP).
$10 million to the ARB for the Hybrid and Zero-Emission
Truck and Bus Incentive Project (HVIP).
$10 million to the ARB for the Heavy Duty Vehicle Air
Quality Loan Program.
1.By June 30, 2016, requires $30 million of the loan to be
repaid to the Vehicle Inspection and Repair Fund from a
non-General Fund source, upon appropriation by the
Legislature, with interest at the rate earned by the Pooled
Money Investment Account. The remaining $10 million of the
loan must be repaid by June 30, 2021, from the Air Pollution
Control fund, which pays ARB's general administrative
expenses, in the same manner.
2.Appropriates $8 million from the Enhanced Fleet Modernization
Subaccount of the High Polluter Repair Account to BAR for the
SB 359 (CORBETT) Page 3
EFMP to fund vehicle retirements.
COMMENTS:
1.Purpose . The author indicates that she is carrying this bill
to provide vital funding to assist a broad cross-section of
Californians and to help the state achieve its vitally
important air quality and greenhouse gas reduction goals.
These goals strike at the heart of California's efforts to
ensure clean air and an improved environment by supporting
state clean air transportation programs. This bill also
provides for additional funding for the Enhanced Fleet
Modernization Program to continue helping low-income residents
transition away from using older, heavy polluting vehicles.
2.Support . Industry advocates for ARB's two rebate programs are
concerned 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."
3.Unsatiable desire . The 2013-14 Budget Act provides $15
million for rebates through ARB's Clean Vehicle Rebate
Program; pending legislation (SB 95, also known as "the baby
budget") will provide another $24.55 million; this bill will
provide yet another $20 million for a total of $60 million for
the 2013-15 year, a fourfold increase over last year. How
much money is prudent to direct to the incentive programs? At
what point is the clean vehicle market sufficiently saturated
such that incentives are no longer appropriate? What does the
cost-benefit analysis of the rebate program indicate? Are
there other related programs that would deliver more
cost-effective benefits? These questions remain unanswered
for this program.
For the other two ARB programs this bill funds, HVIP and the
Heavy Duty Vehicle Air Quality Loan Program, the imposition of
ARB's truck and bus rule, which takes effect on January 1,
SB 359 (CORBETT) Page 4
2014, appears likely to drive demand up, as heavy duty vehicle
owners (some of whom are shown as supporters below) must
upgrade their vehicles to comply.
4.Where's all this money coming from ? 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
and receives revenues from the Smog Abatement Fee, which
vehicle owners pay to register vehicles that are less than six
model years old and therefore exempt from smog check. 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.
Additionally, this bill increases BAR's spending authority to
provide financial compensation to retire or repair
high-polluting vehicles from existing EFMP revenues.
5.Helping the helped . Survey data indicates that the typical
recipient of a Clean Vehicle Rebate earns over $150,000 a year
and owns at least one other non-electric car. ARB reports
that through April of this year it had provided the following
rebates through the CVRP:
------------------------------------------------------------------
| Vehicle Type and Model | Number of | Total Dollars |
| | Rebates | Allocated |
|----------------------------+----------------+--------------------|
|Light-Duty Zero-Emission | 11,552 | $32,905,488 |
| Vehicle | | |
|----------------------------+----------------+--------------------|
|BMW 1 Series Active E | 70 | $52,500 |
|----------------------------+----------------+--------------------|
|CODA | 48 | $120,000 |
|----------------------------+----------------+--------------------|
|Ford Focus Electric | 426 | $1,065,000 |
|----------------------------+----------------+--------------------|
|Honda FCX-Clarity | 10 | $45,000 |
|----------------------------+----------------+--------------------|
|Honda 2013 Fit EV | 72 | $180,000 |
|----------------------------+----------------+--------------------|
SB 359 (CORBETT) Page 5
|Mercedes-Benz F-Cell | 3 | $7,500 |
|----------------------------+----------------+--------------------|
|Mitsubishi i-MiEV | 116 | $230,061 |
|----------------------------+----------------+--------------------|
|Nissan LEAF | 7,924 | $23,920,390 |
|----------------------------+----------------+--------------------|
|Smart ED | 338 | $663,000 |
|----------------------------+----------------+--------------------|
|Th!nk City 2011 | 49 | $116,037 |
|----------------------------+----------------+--------------------|
|Tesla Roadster | 156 | $660,000 |
|----------------------------+----------------+--------------------|
|Tesla Model S - 60 kWh | 411 | $1,027,500 |
| battery | | |
|----------------------------+----------------+--------------------|
|Tesla Model S - 85 kWh | 1,713 | $4,282,500 |
| battery | | |
|----------------------------+----------------+--------------------|
|Toyota RAV4 EV | 215 | $534,000 |
|----------------------------+----------------+--------------------|
|Wheego LiFe | 1 | $2,000 |
|----------------------------+----------------+--------------------|
|Plug-In Hybrid Electric | 10,367 | $15,529,500 |
| Vehicle | | |
|----------------------------+----------------+--------------------|
|Chevy Volt Low Emission | 5,394 | $8,087,850 |
| package | | |
|----------------------------+----------------+--------------------|
|Ford CMAX Energi | 310 | $465,000 |
|----------------------------+----------------+--------------------|
|Ford Fusion Energi | 75 | $112,500 |
|----------------------------+----------------+--------------------|
|Honda Accord Plug-In | 15 | $22,500 |
|----------------------------+----------------+--------------------|
|Toyota Prius Plug-In Hybrid | 4,573 | $6,841,650 |
|----------------------------+----------------+--------------------|
|Zero Emission Motorcycle | 148 | $159,400 |
|----------------------------+----------------+--------------------|
|Brammo | 19 | $21,300 |
|----------------------------+----------------+--------------------|
|Vectrix | 5 | $6,900 |
|----------------------------+----------------+--------------------|
|Zero | 124 | $131,200 |
|----------------------------+----------------+--------------------|
|Neighborhood Electric | 93 | $102,550 |
| Vehicles | | |
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|----------------------------+----------------+--------------------|
|GEM | 57 | $56,950 |
|----------------------------+----------------+--------------------|
|Miles EV | 35 | $44,100 |
|----------------------------+----------------+--------------------|
|Vantage | 1 | $1,500 |
|----------------------------+----------------+--------------------|
|Commercial Zero Emission | 49 | $980,000 |
| Vehicles | | |
|----------------------------+----------------+--------------------|
|Navistar eStar 300 | 10 | $200,000 |
|----------------------------+----------------+--------------------|
|Smith Newton 1-9 | 39 | $780,000 |
|----------------------------+----------------+--------------------|
|Total | 22,209 |$49,676,938 |
------------------------------------------------------------------
Source: California Air Resources Board
The Nissan Leaf, at 7,924 rebates, is the number one recipient
of rebates, followed by the Chevy Volt, Toyota Prius Plug-in,
and the Tesla Model S. The current net price for the Leaf
(after $7,500 federal tax credit and $2,500 CVRP rebate) can
be as low as $20,000, the Volt and Prius start at about
$33,000, and the Tesla Model S ranges in price from $70,000 to
over $100,000.
6.Concurrence hearing . This bill is back in the Senate on
concurrence and has been referred to this committee pursuant
to rule 29.10 because Assembly amendments deleted the original
contents of this bill related to exemptions for housing
projects under the California Environmental Quality Act. At
today's 29.10 hearing, the committee may not amend the bill
further and may only hold the bill or return the bill as
approved by the committee to the Senate floor.
Assembly Votes:
Floor: 44-20 (Unofficial)
Appr: 15-1
Trans: 11-3
POSITIONS: (Communicated to the committee by 3p.m. on Thursday,
September 12, 2013.)
SUPPORT: Allison Transmission, Inc.
Altec Green Fleet
SB 359 (CORBETT) Page 7
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
Eaton Corporation
Electric Vehicles International
Environmental Defense Fund
Honda North America, Inc.
Kenworth Truck Company
Napa Valley Unified School District
Natural Resources Defense Council
Nissan North America
Northern Sonoma County Air Pollution Control
District
Odyne Hybrid Systems
Pacific Gas and Electric Company
Parker Hannifin Corporation
Plug In America
Proterra
Quantum Technologies
Sacramento Municipal Utility District
San Diego Gas & Electric
Smith Electric Vehicles
Southern California Edison
Tesla Motors, Inc.
UPS
Union of Concerned Scientists
Zero Motorcycles
OPPOSED: None received.