BILL ANALYSIS Ó
SB 1204
SENATE COMMITTEE ON ENVIRONMENTAL QUALITY
Senator Jerry Hill, Chair
2013-2014 Regular Session
BILL NO: SB 1204
AUTHOR: Lara & Pavley
AMENDED: April 21, 2014
FISCAL: Yes HEARING DATE: April 30, 2014
URGENCY: No CONSULTANT: Rebecca Newhouse
SUBJECT : CALIFORNIA CLEAN TRUCK BUS AND OFF-ROAD VEHICLES
AND EQUIPMENT PROGRAM
SUMMARY :
Existing law :
1) Under the California Global Warming Solutions Act of 2006
(commonly referred to as AB 32), requires the Air Resources
Board (ARB) to determine the 1990 statewide GHG emissions
level and approve a statewide GHG emissions limit that is
equivalent to that level, to be achieved by 2020, and to
adopt GHG emissions reductions measures by regulation. ARB
is authorized to include the use of market-based mechanisms
to comply with these regulations. (Health and Safety Code
(HSC) §38500 et seq.)
2) Establishes the Greenhouse Gas Reduction Fund (GGRF) in the
State Treasury and requires all moneys, except for fines
and penalties, collected pursuant to a market-based
mechanism be deposited in the fund and requires the
Department of Finance, in consultation with ARB and any
other relevant state agency, to develop, as specified, a
three-year investment plan for the moneys deposited in
GGRF. (Government Code §16428.8).
3) Requires the investment plan to allocate a minimum of 25%
of the available moneys in the fund to projects that
provide benefits to disadvantaged communities, and a
minimum of 10% of the available moneys in the fund to
projects located within disadvantaged communities. (HSC §
39713).
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4) Requires moneys from GGRF be used to facilitate the
achievement of reductions of GHG emissions in this state
consistent with the California Global Warming Solutions Act
of 2006, and to the extent feasible complement efforts to
improve air quality, and direct investment toward the most
disadvantaged communities and households in the state,
among other things. (HSC §39712).
5) Under the California Alternative and Renewable Fuel,
Vehicle Technology, Clean Air, and Carbon Reduction Act of
2007 (HSC §43865 et seq.), requires the California Energy
Resources Conservation and Development Commission (commonly
referred to as the California Energy Commission) (CEC) to
implement the Alternative and Renewable Fuels and Vehicle
Technology Program (ARFVTP) to provide funding measures to
specified entities to develop and deploy technologies and
alternative and renewable fuels in the marketplace to help
attain the state's climate change policies.
6) Creates the Air Quality Improvement Program (AQIP), to be
administered by ARB in consultation with local air
districts, to fund air quality improvement projects. (HSC
§44274).
7) Establishes certain vehicle and vessel related surcharges
and fees, until January 1, 2016, including an $8 fee
increase in the smog abatement, a $3 fee increase in the
annual vehicle registration fee, a $5 fee increase for
special identification plates and a $10-20 fee increase for
vessel registration, to fund the AQIP and ARFVT programs,
among others. (HSC §44060.5 and Vehicle Code §§9250.1,
9261.1, & 9853.6).
8) Establishes the Carl Moyer Program, administered by ARB, to
fund the incremental cost of cleaner-than-required
vehicles, engines, and equipment and authorizes the funding
of projects reducing NOx, particulate matter (PM) and
reactive organic gases emissions under the Carl Moyer
Program until January 1, 2015, after which date, only the
reduction of NOx emission reduction projects will be
eligible for funding. (HSC §44275).
This bill :
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1) Establishes the California Clean Truck, Bus, and Off-Road
Vehicle and Equipment Technology Program (program),
administered by ARB in conjunction with CEC, and requires
the program fund development, demonstration,
pre-commercial pilot and early commercial deployment of
zero-and near-zero emission truck, bus, and off-road
vehicle and equipment technologies from monies appropriated
to the program from GGRF.
2) Requires that projects in disadvantaged communities be
prioritized.
3) Requires that projects funded by the program are limited to
the following:
a) Development, demonstration, pre-commercial pilots and
early commercial deployments of zero and near-zero
medium and heavy-duty truck, bus, and off-road vehicles
and equipment technologies.
b) Purchase incentives for commercially available zero
and near-zero truck, bus and off road vehicle and
equipment technologies and fueling infrastructure.
4) Requires that ARB, in consultation with CEC, develop
guidelines for the implementation of the program that are
consistent with AB 32 and that do various things, some of
which include promoting projects that assist the state in
maintaining the 2020 GHG emissions limit, structuring
purchase incentives for eligible technologies to increase
sales in disadvantaged communities, and leveraging, to the
maximum extent feasible, federal or private funding.
5) Specifies that eligible projects do not include projects
required to be undertaken pursuant to state or federal law,
district rules or regulations, or other legally binding
agreements.
6) Specifies that the state may fund studies, technology
development, and demonstration projects focused on
improving performance and financial payback, multivehicle
and commercial scale deployments and deployment of early
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commercially available advanced vehicles and equipment.
7) Requires ARB to give priority to projects that benefit
disadvantaged communities, leverage additional funds,
result in cobenefits, has potential to be replicated and
provide regional benefit, and have other specified
characteristics.
8) Requires ARB, in consultation with CEC, to create a
multiyear framework and plan that articulates an
overarching vision for moving the technologies through the
commercialization process, outlines technology categories
that may be funded and describes roles of agencies and
process for coordination.
9) Defines "zero and near-zero emission" to mean vehicles,
fuels, and related technologies that reduce GHG emissions
when compared with conventional or fully commercialized
alternatives, as defined by ARB, in consultation with CEC.
COMMENTS :
1) Purpose of Bill . According to the author, "Transportation
corridors move freight across the country and intersect
communities leaving behind elevated levels of particulate
matter, such as diesel soot. These types of emissions have
been proven to warm the earth more quickly than greenhouse
gases and have significant health impacts. For example,
the I-710 freeway corridor, a 17-mile stretch from the Port
of Long Beach to East Los Angeles, is traveled by thousands
of heavy-duty trucks daily and home to several rail yards.
If you reside in a community along this corridor, you are
up to 140% more likely to get cancer from diesel soot than
other areas of Los Angeles. These areas also have a much
higher rate of asthma and birth defects.
"In California, 40% of the state's contribution to climate
pollution comes from cars, trucks, trains and other mobile
sources. There has been a great deal of progress with the
technology for light-duty cars making it widely available
for commercial use. We must have the same progress with
heavy-duty trucks. The health of our communities depends
on cleaning up our transportation corridors. While
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technology exists for heavy-duty trucks and buses, they are
severely lagging behind light-duty clean vehicles. The
investment has simply not been made as it has in the other
sectors. Additional research and development is needed in
this sector to allow new technologies to come to market and
be deployed in California.
"SB 1204 is the vehicle to invest in clean heavy-duty
trucks and buses. This investment will make it easier for
truck owners to transition to zero- and near-zero
technology and it will improve the health of millions of
Californians residing in communities that are burdened
daily by transportation pollution."
2) Background.
a) AB 118 (Núñez), Chapter 750, Statutes of 2007,
created the ARFVT program and AQIP. AB 118 provides,
upon appropriation by the Legislature, approximately
$180 million annually until 2023 for these programs.
These funds primarily come from additional fees on
vehicle registrations and vessel registrations.
Air Quality Improvement Program: AQIP, administered by
ARB in consultation with local air districts, 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 following:
The Hybrid and Zero-Emission Truck
and Bus Voucher Incentive Project (HVIP),
administered by ARB and its contractor
CALSTART, provides vouchers to California fleet
owners to help purchase hybrid and
zero-emission trucks and buses.
AB 118 Advanced Technology
Demonstration Projects, administered by ARB,
provides grants to local air districts and
other public agencies to fund
advanced-technology vehicle, equipment, or
emission-control projects that are not yet
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commercialized.
The On-Road Heavy-Duty Vehicle Air
Quality Loan Program (Truck Loan Assistance
Program), administered by ARB and the
California Pollution Control Financing
Authority, provides loans to fleets to help
implement ARB emissions reduction regulations
related to trucks, buses, and heavy-duty
(tractor-trailer) vehicles.
Alternative and Renewable Fuel and Vehicle Technology
Program: ARFVTP, administered by CEC, 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.
a) Cap-and-Trade Auction Revenue . ARB has conducted six
auctions of GHG emission allowances so far. These
auctions have resulted in approximately $663 million in
proceeds to the state. Several bills in 2012 provided
legislative direction for the expenditure of auction
proceeds including:
i) SB 535 (de León) Chapter 830, Statutes of
2012, requires that 25% of auction revenue be used
to benefit disadvantaged communities and requires
that 10% of auction revenue be invested in
disadvantaged communities.
ii) AB 1532 (J. Pérez) Chapter 807, Statutes of
2012, directs the Department of Finance to develop
and periodically update a three-year investment
plan that identifies feasible and cost-effective
GHG emission reduction investments to be funded
with cap-and-trade auction revenues. AB 1532
specifies that reduction of greenhouse gas
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emissions through the development of
state-of-the-art systems to move goods and freight,
advanced technology vehicles and vehicle
infrastructure, advanced biofuels, and low-carbon
and efficient public transportation.
iii) SB 1018 (Budget Committee) Chapter 39,
Statutes of 2012, created GGRF, into which all
auction revenue is to be deposited. The legislation
required that before departments can spend monies
from GGRF, they must prepare a record specifying:
(1) how the expenditures will be used, (2) how the
expenditures will further the purposes of AB 32,
(3) how the expenditures will achieve GHG emission
reductions, (4) how the department considered other
non-GHG-related objectives, and (5) how the
department will document the results of the
expenditures.
Legal Consideration of Cap-and-Trade Auction Revenues .
The 2012-13 budget analysis of cap-and-trade auction
revenue by the Legislative Analyst's Office noted that,
based on an opinion from the Office of Legislative
Counsel, the auction revenues should be considered
mitigation fee revenues, and their use requires that a
clear nexus exist between an activity for which a
mitigation fee is used and the adverse effects related
to the activity on which that fee is levied. Therefore,
in order for their use to be valid as mitigation fees,
revenues from the cap-and-trade auction must be used to
mitigate GHG emissions or the harms caused by GHG
emissions.
In 2012, the California Chamber of Commerce filed a
lawsuit against the ARB claiming that cap-and-trade
auction revenues constitute illegal tax revenue. In
November 2013, the superior court ruling declined to
hold the auction a tax, concluding that it's more akin
to a regulatory fee.
AB 32 Auction Revenue Investment Plan . The first
three-year investment plan for cap-and-trade auction
proceeds, submitted by Department of Finance, in
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consultation with ARB and other state agencies in May of
last year, identified sustainable communities and clean
transportation as one of the key sectors that provide
the best opportunities for achieving the legislative
goals and supporting the purposes of AB 32. The plan
recommended the aforementioned sector receive the
largest allocation of funds from the GGRF. The other
two areas recommended for auction revenue allocation in
the investment plan are energy efficiency and clean
energy, and natural resources and waste diversion.
1) Duplicate Program ? The program created by SB 1204 is
focused on the clean medium and heavy-duty vehicle sector.
It is not entirely clear what projects are eligible for the
new program that are not currently eligible for funding
under the existing AB 118 programs. One key difference
between the existing AB 118 programs and the program
created under SB 1204, however, is that the SB 1204 program
is funded through cap-and-trade auction proceeds, and not
through various vehicle-related fees that serve as the
funding source for AB 118's incentives.
2) Governor's Budget Proposal . The Governor's 2014-15 budget
proposal appropriates $850 million dollars in cap-and-trade
revenue to fund projects including rail modernization,
sustainable communities, low carbon transportation, water
and energy efficiency, watershed and wetlands restoration
and waste diversion. For the low-transportation category,
the proposal allocates $200 million for the ARB to
accelerate the transition to low carbon freight and
passenger transportation, with a priority for disadvantaged
communities. The proposal states that this investment will
support the state's clean air and climate change goals, as
well as the Administration's goal to deploy 1.5 million
zero-emission vehicles in California by 2025 (Executive
Order B-16-2012).
3) Proposals to Expend Cap-and-Trade Auction Revenues . There
are a number of bills this session that propose to spend
cap-and-trade auction revenues for new or existing
programs. Concurrently, the Governor's budget proposal
appropriate $850 million auction revenues for various GHG
emission reduction programs in several agencies, and the
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Pro Tem has released an alternate proposal on a long-range
cap-and-trade revenue investment plan. There will need to
be coordination among authors as these measures move
forward so that these proposals create a cohesive
investment strategy for maximizing GHG emission reductions
and project co-benefits.
4) Technical Amendments .
a) An amendment is needed to add the word "emission" to
several references to zero and near-zero technologies.
b) An amendment is needed to add the word "early" in
front of a reference to commercial scale deployments on
page 5, line 10.
SOURCE : Author
SUPPORT : California Association of Port Authorities
California League of Conservation Voters
CALSTART
Natural Resources Defense Council
OPPOSITION : California Chamber of Commerce
California League of Food Processors
California Manufacturers and Technology
Assocation