BILL ANALYSIS                                                                                                                                                                                                    Ó






           SENATE TRANSPORTATION & HOUSING COMMITTEE       BILL NO: sb 1204
          SENATOR MARK DESAULNIER, CHAIRMAN              AUTHOR:  lara
                                                         VERSION: 3/24/14
          Analysis by:  Erin Riches                      FISCAL:  yes
          Hearing date:  April 1, 2014



          SUBJECT:

          Vehicle emissions reductions:  California Clean Truck, Bus, and  
          Off-Road Vehicle and Equipment Technology Program 

          DESCRIPTION:

          This bill creates a California Clean Truck, Bus, and Off-Road  
          Vehicle and Equipment Technology Program to fund development,  
          demonstration, pilot projects, and commercial deployment of  
          zero- and near-zero-emission truck, bus, and off-road vehicle  
          and equipment technologies.  This bill provides that the program  
          shall be funded from the Greenhouse Gas Reduction Fund, and  
          shall prioritize projects located in disadvantaged communities.   


          ANALYSIS:

          California Global Warming Solution Act of 2006 and Greenhouse  
          Gas Reduction Fund

          AB 32 (Núñez), Chapter 488, Statutes of 2006, requires the state  
          Air Resources Board (ARB) to develop a plan of how to reduce  
          emissions to 1990 levels, by 2020.  AB 32 also requires ARB to  
          ensure that greenhouse gas (GHG) emission reduction requirements  
          and programs, to the extent feasible, direct public and private  
          investment toward the most disadvantaged communities in the  
          state.  It authorizes ARB to adopt a schedule of fees to be paid  
          by GHG emission sources regulated under AB 32 and deposited into  
          the Greenhouse Gas Reduction Fund (commonly known as  
          cap-and-trade), available upon appropriation by the Legislature  
          to carry out AB 32 requirements.

          SB 535 (De Leon), Chapter 830, Statutes of 2012 requires the  
          Department of Finance, when developing the three-year investment  
          plan for cap-and-trade monies, to allocate 25 percent of these  
          funds to projects that provide benefits to disadvantaged  
          communities, and to allocate a minimum of 10 percent of  




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          available cap-and-trade monies to projects located within  
          disadvantaged communities.  The bill outlines a process to  
          identify these communities and allows for periodic modification  
          as necessary.

          Air Quality Improvement Program (AQIP)

          AB 118 (Núñez, Chapter 750, Statutes of 2007) establishes the  
          Air Quality Improvement Program (AQIP), administered by ARB in  
          consultation with local air districts.  This program is funded  
          through surcharges on vehicle registration fees, a portion of  
          vessel registration fees, a portion of the Smog Abatement Fee  
          (paid to register vehicles less than six model years old and  
          therefore exempt from smog check), and an increase in the fee  
          for identification plates for various types of vehicles, such as  
          farm trailers and logging vehicles, operated on public roads.
          This program provides competitive grants to fund projects to  
          improve the air quality impacts of alternative fuels and  
          vehicles, vessels, and equipment technologies.  AQIP encompasses  
          several programs, including the Hybrid and Zero-Emission Truck  
          and Bus Voucher Incentive Project (HVIP).  HVIP, which is  
          administered by ARB and its contractor, CALSTART, provides  
          vouchers to California fleet owners to help purchase hybrid and  
          zero-emission trucks and buses.

          Alternative and Renewable Fuel and Vehicle Technology Program  
          (ARFVTP)

          AB 118 (Núñez, Chapter 750, Statutes of 2007) also establishes  
          the Alternative and Renewable Fuel and Vehicle Technology  
          Program (ARFVTP), administered by the state Energy Commission.   
          This program provides funding for development and deployment of  
          alternative and renewable fuels and advanced transportation  
          technologies to help attain the state's climate change goals.   
          Eligible projects include, for example, development,  
          improvement, and production of alternative and renewable  
          low-carbon fuels; improvement of light-, medium-, and heavy-duty  
          vehicle technologies; and expansion of infrastructure connected  
          with existing fleets, public transit, and transportation  
          corridors.
           
          This bill  creates a California Clean Truck, Bus, and Off-Road  
          Vehicle and Equipment Technology Program, to be administered by  
          ARB in conjunction with the state Energy Commission.  This bill  
          provides that the program shall be funded from the Greenhouse  
          Gas Reduction Fund, and shall prioritize projects located in  




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          disadvantaged communities.  

          Specifically, this bill requires the California Clean Truck Bus,  
          and Off-Road Vehicle and Equipment Program to fund:

           Development, demonstration, and pilot deployment of zero- and  
            near-zero-emission medium- and heavy-duty truck technology  
            projects.

           Pilot deployment of large numbers of zero- and  
            near-zero-emission buses to demonstrate the impact of clean  
            buses in disadvantaged communities, the difficulty of transit  
            operators to afford clean buses, and the possibility of  
            finding applications for these technologies in other  
            heavy-duty vehicles.   

           Development, demonstration, and pilot deployment of zero- and  
            near-zero-emission technologies to be used in off-road  
            vehicles and equipment, including port equipment, agricultural  
            equipment, and marine and rail equipment.  

           Development of commercially available zero- and  
            near-zero-emission trucks, buses, and off-road vehicles and  
            equipment using streamlined purchase incentives pursuant to  
            HVIP.  

          This bill requires ARB, as part of this program, to develop  
          solicitations in consultation with transit operators to fund at  
          least two large-scale zero- or near-zero-emission bus pilot  
          deployment projects of between 10 and 40 buses, to be located in  
          or near disadvantaged communities.

          This bill also requires ARB to create a multiyear framework and  
          plan for HVIP incentives, as follows:

           Focus on providing incentives for zero- and near-zero-emission  
            medium- and heavy-duty vehicles as they become commercially  
            available.  
           Structure incentives to drive acquisition volumes by reducing  
            payback times for these vehicles. 
           Provide long-term certainty about incentives while remaining  
            flexible and open to new technologies.
           Examine opportunities to link HVIP vehicle funding with  
            infrastructure funding to provide coordinated funding for both  
            vehicles and related infrastructure.
           Provide for sufficient HVIP incentives for plug-in and  




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            zero-emission vehicles in disadvantaged communities to  
            increase sales of the cleanest vehicles in communities where  
            they are needed most.

          COMMENTS:

           1.Purpose .  The author notes that 40 percent of California's  
            contribution to climate pollution comes from cars, trucks,  
            trains, and other mobile sources.  While technology for  
            light-duty cars has progressed significantly, making it widely  
            available for commercial use, technology for heavy-duty trucks  
            and buses is severely lagging.  It is essential to reduce GHG  
            emissions and improve air quality in areas that suffer  
            disproportionately from air pollution, such as those near  
            ports or major transportation corridors.   The region  
            surrounding the ports of Los Angeles and Long Beach, for  
            example, ranks as one of the most polluted in the country.   
            The author states that this bill will make it easier for truck  
            owners to transition to zero- and near-zero technology and  
            improve the health of millions of Californians who live in  
            communities that are burdened daily by transportation-related  
            pollution.

           2.Why a new program  ?  As described above, the Energy  
            Commission's ARFVTP provides funding for development and  
            deployment of alternative and renewable fuels and advanced  
            transportation technologies, while ARB's HVIP helps California  
            fleet owners purchase hybrid and zero-emission trucks and  
            buses.  The author notes that creating a new program is  
            appropriate because this bill allows for a broader range of  
            projects than AQIP and ARFVTP, and helps further prioritize  
            investment in heavy-duty technology.  It is not entirely  
            clear, however, what projects are eligible for the new program  
            that are not currently eligible for AQIP or ARFVTP.

           3.Other issues to consider  .  As the bill moves forward, the  
            author may wish to consider addressing the following issues:
                
                  This bill requires ARB to create a "multiyear framework  
               and plan" for HVIP.  It may be appropriate to provide ARB  
               flexibility to evaluate this plan each year pursuant to  
               program funding levels and the state of emerging  
               technologies.

                 This bill requires ARB, in the multiyear HVIP plan, to  
               "provide long-term certainty about incentives."  This  




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               requirement appears to imply that ARB must establish  
               long-term funding for these incentives.  It may be  
               appropriate to provide ARB flexibility to evaluate and  
               adjust the HVIP plan each year pursuant to program funding  
               levels.  

                 This bill requires ARB to fund "near-zero-emission"  
               technologies.  It may be appropriate to define  
               "near-zero-emission."  

           1.Private fleets  .  The California Bus Association has taken a  
            "support if amended" position.  The association states that  
            making private charter-party carriers eligible for the program  
            created by this bill would help drive investment in the  
            private as well as public sector.  

           2.Double-referral  .  The Rules Committee has referred this bill  
            to both this committee and to the Environmental Quality  
            Committee.  Therefore, if this bill passes this committee, it  
            will be referred to the Environmental Quality Committee.   

          RELATED LEGISLATION:
          
          This committee will hear two related bills at today's hearing:
          
                 SB 913 (DeSaulnier) requires ARB and the Bureau of  
               Automotive Repair to cooperate in issuing a specified  
               number of vouchers through EFMP and the Consumer Assistance  
               Program to retire high-polluting cars, and a specified  
               number of vouchers through EFMP to replace high-polluting  
               cars.

                 SB 1275 (De León) requires ARB to expand EFMP to provide  
               for ridesharing and car-sharing vouchers as an alternative  
               to vehicle-replacement vouchers.  It also requires ARB to  
               adopt a funding plan for projects under AQIP, adopt  
               specified revisions to AQIP, and establish programs to  
               increase access to and direct benefits from electric  
               transportation for disadvantaged and low- and  
               moderate-income communities.

          
          POSITIONS:  (Communicated to the committee before noon on  
          Wednesday,                                             March 26,  
          2014.)





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               SUPPORT:  American Lung Association of California
                         Breathe California
                         CALSTART
                         Center for Transportation and the Environment 
                         Communities for a Better Environment 
                         Coalition for Clean Air
                         Environment California
                         Environmental Defense Fund
                         Greenlining Institute
                         Natural Resources Defense Council
                         Sierra Club California

               OPPOSED:  California Chamber of Commerce