BILL ANALYSIS                                                                                                                                                                                                    






           SENATE TRANSPORTATION & HOUSING COMMITTEE       BILL NO: SB 459
          SENATOR MARK DESAULNIER, CHAIRMAN              AUTHOR:  pavley
                                                         VERSION: 9/11/13
          Analysis by:  Erin Riches                      FISCAL:  yes
          Hearing date:  September 12, 2013



          SUBJECT:

          Vehicle retirement:  Enhanced Fleet Modernization Program

          DESCRIPTION:

          This bill requires the state Air Resources Board (ARB) to update  
          the Enhanced Fleet Modernization Program (EFMP) guidelines, as  
          specified.

          ANALYSIS:

          Smog Check Program

          Existing law establishes the Motor Vehicle Inspection Program,  
          commonly known as the smog check program.  The Department of  
          Consumer Affairs administers this program through the Bureau of  
          Automotive Repair (BAR).  The smog check program generally  
          requires vehicle owners to have their vehicles tested every two  
          years, with some exceptions, including gas-powered vehicles  
          manufactured prior to 1976, alternatively-fueled vehicles, and  
          vehicles six years or newer.  

          Consumer Assistance Program (CAP)

          If a vehicle fails a smog check, the owner must, in most cases,  
          repair the vehicle and pass a subsequent smog check in order to  
          register a vehicle or renew its registration.  A vehicle owner  
          whose vehicle fails a smog test can obtain financial assistance  
          through CAP, administered by BAR.  CAP provides three options:

            Repair cost waiver  .  A repair cost waiver allows a vehicle  
            owner to register the vehicle for two years even if it fails  
            the smog test.  In order to qualify for the waiver, the owner  
            must spend at least $450 on repairs.  Low-income vehicle  
            owners (defined as those with household income at or below 185  
            percent of the federal poverty level) qualify if the repair  
            estimate exceeds $250. 




          SB 459 (PAVLEY)                                        Page 2

                                                                       



            Repair cost assistance  .  Vehicle owners who are current on  
            their vehicle registration fees and whose vehicle has failed a  
            smog test qualify for $500 toward emission-related repairs.   
            In addition, the owner's household income must be at or below  
            225 percent of the federal poverty level and the owner cannot  
            have previously received CAP assistance for the same vehicle.   


            Vehicle retirement  .  If a vehicle has failed a smog test, the  
            owner may apply for up to $1,500 (household income at or below  
            225 percent of the federal poverty level) or $1,000 (all other  
            individuals) towards a replacement vehicle.  The vehicle must  
            be currently registered as operable, with registration paid,  
            and:

                  o         have been continuously registered for two  
                    years prior to application; or
             o    registered as non-operational for a maximum of 60 days  
               during the prior two years, occurring at least 90 days  
               prior to application; or 
             o    have had lapsed registration for less than 121 days  
               during prior two years, provided the vehicle is registered  
               for at least 90 days prior to application.

            Under this program, the owner takes the BAR approval letter to  
            a BAR-approved vehicle dismantler, who destroys the vehicle  
            and issues the owner a check.  

          Existing law requires the Department of Consumer Affairs, in  
          consultation with ARB, to disseminate information about the smog  
          check program.  

          Enhanced Fleet Modernization Program (EFMP)

          Existing law also establishes the EFMP, administered by ARB in  
          consultation with BAR for vehicle retirement, and by ARB in  
          consultation with two local air districts for vehicle  
          replacement.  This program provides for the voluntary retirement  
          of passenger vehicles and light- and medium-duty trucks that are  
          high polluters.  A vehicle need not have failed a smog check in  
          order to be eligible for EFMP, but a vehicle owner whose vehicle  
          has failed a smog check may apply to BAR for vehicle retirement  
          assistance under EFMP.  BAR determines whether the owner is  
          eligible for CAP or EFMP (or neither).  





          SB 459 (PAVLEY)                                        Page 3

                                                                       


          Under the statewide program, 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.

          Under the local air district program, EFMP offers:

           A $2,500 voucher to low-income vehicle owners (household  
            income at or below 225 percent of federal poverty level) to  
            replace a high-polluting vehicle, by either purchasing a  
            vehicle eight years old or newer, or using the voucher toward  
            public transit.   
           A $2,000 voucher to all other vehicle owners to replace a  
            high-polluting vehicle by either purchasing a vehicle four  
            years old or newer, or using the voucher toward public  
            transit. 

          Local air districts have issued only a dozen replacement  
          vouchers under EFMP, all in the South Coast Air Quality  
          Management District.  

            This bill :

           Allows a motor vehicle that has failed a smog check and has  
            been registered for at least two years in the state without  
            substantial lapse, as defined by BAR, to be eligible for CAP  
            assistance.

           Requires ARB, in consultation with BAR, to update the EFMP  
            regulations by June 30, 2015, but BAR shall continue to  
            administer the EFMP, pursuant to the updated regulations.

           The updated EFMP guidelines shall:

             o    Consider requiring a vehicle owner to take, complete, or  
               pass a smog check.
             o    Establish $1,500 as the minimum retirement voucher  
               amount for low-income owners and $1,000 as the maximum  
               retirement voucher amount for all other owners.
             o    Allow an owner to obtain a replacement voucher in  
               addition to a retirement voucher.  
             o    Establish $2,500 as the minimum replacement voucher for  
               low-income owners and provide that replacement compensation  




          SB 459 (PAVLEY)                                        Page 4

                                                                       


               for all other owners shall not exceed that of low-income  
               owners.
             o    Allow for larger retirement or replacement vouchers in  
               order to maximize the program's air quality benefits while  
               also ensuring participation by low-income motor vehicle  
               owners.
             o    Allow voucher increases to be based on factors  
               including, but not limited to, the age of the vehicle, the  
               emissions benefits of the vehicle, the emissions impact of  
               any replacement vehicle, participation by low-income  
               vehicle owners, and the location of the vehicle in an area  
               of the state with the poorest air quality.
             o    Allow program eligibility to be limited on the basis of  
               income to ensure the program adequately serves low- and  
               moderate-income individuals.
             o    Provide coordination with vehicle retirement under CAP  
               to ensure that vehicle owners participate in the  
               appropriate program to maximize emissions reductions.
             o    Streamline administration to simplify participation  
               while protecting the accountability of monies spent.
             o    Ensure that the vehicle replacement component of the  
               program is available in areas designed as federal extreme  
               nonattainment.
             o    Require that vehicles eligible for retirement have  
               sufficient remaining life, such as passing a recent smog  
               check or proof of current registration.

           Requires ARB, when updating the EFMP guidelines, to study and  
            consider all of the following:

             o    Methods of financial assistance other than vouchers.
             o    An option for automobile dealerships or other used car  
               sellers to accept cars for retirement, provided the cars  
               are dismantled consistent with program requirements.
             o    An incentive structure with varied incentive amounts to  
               maximize program participation and cost-effective emissions  
               reductions.
             o    Increased emphasis on replacing high-polluting vehicles  
               with cleaner vehicles or increased use of public transit to  
               increase use of the vehicle replacement component of the  
               program.  
             o    Increased emphasis on reducing greenhouse gas emissions  
               through increased vehicle efficiency or transit use as a  
               result of the program.
             o    Increased partnerships and outreach with community-based  
               organizations.




          SB 459 (PAVLEY)                                        Page 5

                                                                       



          COMMENTS:

           1.Purpose  .  The author states that 75 percent of vehicular  
            pollution is caused by just 25 percent of the vehicle fleet,  
            and that vehicle retirement programs are one of the most  
            effective ways to reduce vehicular air pollution.  Although AB  
            787 (see "Previous legislation" below) helped increase the  
            number of vehicles retired each year, only 39,413 vehicles  
            were retired under CAP in 2011-12, leaving millions of  
            high-polluting cars on California roads.  The author states  
            that EFMP, the primary tool for ensuring that retired vehicles  
            are replaced with clean vehicles, has not yet successfully  
            attracted substantial consumer participation.  The author  
            states that ARB is scheduled to begin reviewing EFMP  
            regulations this fall; this bill directs ARB to consider  
            specific ways to make the program more accessible, convenient,  
            and financially feasible for low-income vehicle owners to  
            replace their high-polluting vehicles with cleaner cars. 

           2.Registration requirements  .  Currently, CAP requires a vehicle  
            owner to provide proof of two continuous years of vehicle  
            registration in order to qualify for vehicle retirement  
            assistance.  The intent of this requirement is to help ensure  
            that out-of-state vehicle owners do not take advantage of the  
            program.   This bill allows a vehicle that has been registered  
            for at least two years without a substantial lapse, as defined  
            by BAR, to be eligible for CAP assistance.  The author states  
            that many low-income car owners fail to register their cars  
            continuously for two years because they cannot afford it.   
            Thus, this bill will make more low-income vehicle owners  
            eligible for CAP.  In addition, because a vehicle is  
            smog-tested when an owner brings it in as part of vehicle  
            registration, relaxing the requirement for two continuous  
            years of registration could lead to more vehicles being smog  
            tested and ultimately, more high-polluting vehicles being  
            retired.

           3.Previous legislation  .  AB 787 (Hill), Chapter 231, Statutes of  
            2010, authorized BAR to pay up to $1,500 to a low-income  
            individual and up to $1,000 to any other individual who  
            retires his or her vehicle under the smog check program or  
            EFMP.

           4.29.10 hearing  .  When this committee passed this bill in April,  
            it established a one-year pilot program within CAP to help  




          SB 459 (PAVLEY)                                        Page 6

                                                                       


            low-income vehicle owners retire high-polluting vehicles.  It  
            was subsequently amended in the Assembly to instead primarily  
            address EFMP.  Because of these amendments, the Senate Rules  
            Committee referred this bill back to this committee for a  
            hearing under Senate Rule 29.10.  At today's hearing, the  
            committee may, with a majority vote, (1) hold the bill; (2)  
            return the bill as approved by the committee to the Senate  
            Floor; or (3) refer the bill to the Committee on  
            Appropriations.  
          
          Assembly Votes:
               Floor:53-23 (Unofficial)
               Trans:10-5
               Floor:    53-25
               Appr: 12-5
               Trans:    11-5

          Senate Votes:
               Floor:    36-0
               Appr:   6-0
               T&H:  10-0





























          SB 459 (PAVLEY)                                        Page 7

                                                                       


          POSITIONS:  (Communicated to the committee by 2p.m. on Thursday,
                     September 12, 2013.)

               SUPPORT:  American Lung Association in California
                         Asian Pacific Environmental Network
                         Breathe California
                         California Council for Environmental and Economic  
          Balance
                         Coalition for Clean Air
                         Consumer Action
                         Consumer Federation of California
                         Consumers for Auto Reliability and Safety
                         Greenlining Institute
                         Natural Resources Defense Council
                         San Joaquin Valley Air Pollution Control District
                         South Coast Air Quality Management District
                         Union of Concerned Scientists
                         ValleyCAN
                         
               OPPOSED:  Association of California Car Clubs