BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  SB 1204
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          SENATE THIRD READING
          SB 1204 (Lara and Pavley)
          As Amended  August 19, 2014
          Majority vote 

           SENATE VOTE  :26-10  
           
           TRANSPORTATION      12-2        APPROPRIATIONS      13-4        
           
           ----------------------------------------------------------------- 
          |Ayes:|Lowenthal, Linder,        |Ayes:|Gatto, Bocanegra,         |
          |     |Achadjian, Ammiano,       |     |Bradford,                 |
          |     |Bloom, Bonta, Buchanan,   |     |Ian Calderon, Campos,     |
          |     |Daly, Frazier, Holden,    |     |Eggman, Gomez, Holden,    |
          |     |Nazarian, Quirk-Silva     |     |Linder, Pan, Quirk,       |
          |     |                          |     |Ridley-Thomas, Weber      |
          |-----+--------------------------+-----+--------------------------|
          |Nays:|Gatto, Waldron            |Nays:|Bigelow, Donnelly, Jones, |
          |     |                          |     |Wagner                    |
           ----------------------------------------------------------------- 
           SUMMARY  :  Creates a new program to be administered by the  
          California Air Resources Board (ARB) and funded with cap and  
          trade revenues to develop zero and near-zero emission truck,  
          bus, and off-road vehicle and equipment technologies and related  
          projects.  Specifically,  this bill  :  
           
          1)Creates the California Clean Truck, Bus, and Off-Road Vehicle  
            and Equipment Technology Program (Program) to be administered  
            by ARB in conjunction with the State Energy Resources  
            Conservation and Development Commission (CEC) using cap and  
            trade auction proceeds to develop, demonstrate, pilots, and  
            deploy zero and near-zero emission truck, bus, and off-road  
            vehicle and equipment technologies with priority given to  
            projects in disadvantaged communities.  

          2)Limits expenditure of Program funds for projects that:

             a)   Develop technology, demonstrate, and pilot commercial  
               deployment of zero and near-zero emission medium- and  
               heavy-duty truck technology, including projects that  
               facilitate clean goods movement with no less than 20% of  
               funding going toward early commercial deployment  of  
               existing zero and near-zero emission heavy duty truck  
               technology until January 1, 2018.  








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             b)   Develop zero and near-zero emission bus technology,  
               demonstrate pre-commercial pilots, and provide early  
               commercial deployments, including pilots of multiple  
               vehicles at one site or region;

             c)   Develop, demonstrate, pilot, and deploy zero and  
               near-zero emission off-road vehicle and equipment in port,  
               agricultural, marine, construction, and rail sectors; 

             d)   Develop purchase incentives, including point-of-sale  
               incentives, for commercially available zero and near-zero  
               emission truck, bus, and off-road vehicle and equipment  
               technologies and fueling infrastructure to accelerate  
               market acceptance; and,

             e)   Develop projects that support greater commercial motor  
               vehicle freight efficiency and greenhouse gas (GHG)  
               emissions reductions, including advanced intelligent  
               transportation systems, autonomous vehicles, and other  
               freight information and operations technologies.  

          3)Requires that ARB, in consultation with CEC, develop guidance,  
            as specified, for the implementation of the Program.  

          4)Provides that projects required pursuant to state or federal  
            law, rules, regulations, are not eligible for funding under  
            the Program.  

          5)Requires ARB, in consultation with CEC, to create an annual  
            framework and plan that articulates the overarching vision for  
            the Program, outlines performance criteria, and describes  
            agency roles.  
           
          FISCAL EFFECT  :  According to the Assembly Appropriations  
          Committee:

          1)Unknown ongoing cost pressures to fund Program expenditures  
            and grants, likely in the tens of millions of dollars annually  
            Greenhouse Gas Reduction Fund (GGRF).  

          2)Increased annual costs to ARB, from the GGRF, of approximately  
            $450,000 to develop eligibility criteria for zero emission bus  
            and truck retrofits and remanufactures.  








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          3)Increased annual costs to ARB, from the GGRF, of approximately  
            $200,000 to augment the Air Quality Improvement Program (AQIP)  
            program plan and guidelines to provide guidance to the  
            Program.  

          4)Increased annual costs to ARB, from the GGRF, to develop and  
            implement non-vehicle projects that support greater freight  
            efficiency and GHG reductions.  

          5)One-time costs to the CEC, from the GGRF, to assist in the  
            development of a multiyear framework and plan.  Ongoing  
            absorbable costs.  

           COMMENTS  :  Given that cars and trucks are responsible for nearly  
          40% of California's GHG emissions; it stands to reason that  
          addressing transportation sector emissions represents the  
          logical next step toward achieving the state's emissions  
          reduction goals.  To this end, California has worked diligently  
          to address transportation sector emissions across many  
          platforms, but particularly toward replacing existing fleets  
          (light-duty through heavy-duty) with zero and near-zero  
          emissions vehicles and equipment.  While the light-duty fleet  
          sector has made much progress, turning over the fleet for  
          medium- and heavy-duty vehicles has not had the same level of  
          success despite the fact that these vehicles represent a  
          significant source of GHG and fine particulate matter emissions.  
           
           
          While programs at ARB and CEC address both light- and heavy-duty  
          vehicle sectors, the authors believes that additional, focused  
          efforts are needed for the medium- and heavy-duty zero and  
          near-zero-emission vehicles and equipment to improve market  
          penetration and make the purchase and use of this technology a  
          viable, and affordable option for medium- and heavy-duty fleet  
          operators.  Generally, there are two major programs in place to  
          address the medium- and heavy-duty vehicle sector reside within  
          ARBs and CEC:  the AQIP and Renewable Fuel and Vehicle  
          Technology Program (ARFVTP).  

          AQIP:  AQIP is 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, and an increase in  








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          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.  

          ARFVTP:  ARFVTP is administered by the CEC and 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.  

          To achieve greater widespread deployment of clean medium- and  
          heavy-duty vehicles, the authors believe that additional  
          standards and technology studies and development need to be  
          performed.  The authors contend that additional funding is  
          needed to fully develop and test actual systems, with a focus on  
          performance improvements and cost reduction.  They cite a need  
          for early demonstration projects to explore performance and  
          integration challenges which need to be followed up with larger  
          pre-commercial demonstrations to evaluate real world  
          performance.  Once these systems are developed and tested, the  
          authors note that targeted incentive programs must be created to  
          achieve full market penetration.  

          The authors point out that many of the efforts that are needed  
          to develop and deploy zero and near-zero emission medium and  
          heavy duty vehicles, are not fully addressed in AQIP and ARFVTP.  
           They note that while it may be possible to add these  
          requirements into AQIP and ARFVTP, they contend that greater  
          progress would likely be achieved by creating a single  
          overarching program that is singularly focused on developing and  
          deploying these vehicles.  For example, the development of  








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          studies and advanced research, including advanced technology  
          business case and feasibility studies to develop standards do  
          not fall neatly into AQIP or ARFVTP and the same is true for  
          development of pre-commercial commercial demonstration programs.  
           The authors note that some existing technological development  
          and deployment (incentives) programs can be tailored to address  
          medium- and heavy-duty transportation sector needs, but given  
          that much of the effort in these programs is currently going  
          toward light-duty clean cars, it is unclear whether or not  
          adding these programs into existing efforts would produce the  
          desired results.  

          This concern has led the authors to introduce this bill which  
          creates a separate and distinct program with the singular focus  
          of developing and deploying these technologies so that the goal  
          of fleet turnover can be achieved.  The authors believe that by  
          combining all efforts for this transportation sector into one  
          program, along with increased investments, will ultimately  
          result in broad full-scale deployment of these clean vehicles,  
          particularly in disadvantaged communities.  


           Analysis Prepared by  :   Victoria Alvarez / TRANS. / (916) 319-  
          2093                                                   FN:  
          0004925