BILL ANALYSIS                                                                                                                                                                                                    Ó


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                                 UNFINISHED BUSINESS

          Bill No:  SB 1204
          Author:   Lara (D) and Pavley (D), et al.
          Amended:  8/22/14
          Vote:     21

          AYES:  DeSaulnier, Gaines, Beall, Cannella, Galgiani, Hueso,  
            Lara, Liu, Pavley, Roth, Wyland

          AYES:  Hill, Gaines, Hancock, Jackson, Leno, Pavley
          NOES:  Fuller

           SENATE APPROPRIATIONS COMMITTEE  :  6-1, 5/23/14
          AYES:  De León, Gaines, Hill, Lara, Padilla, Steinberg
          NOES:  Walters

           SENATE FLOOR  :  26-10, 5/27/14
          AYES:  Beall, Block, Cannella, Corbett, Correa, De León,  
            DeSaulnier, Evans, Gaines, Galgiani, Hancock, Hernandez, Hill,  
            Hueso, Jackson, Lara, Leno, Lieu, Mitchell, Monning, Padilla,  
            Pavley, Roth, Steinberg, Torres, Wolk
          NOES:  Anderson, Berryhill, Fuller, Huff, Knight, Morrell,  
            Nielsen, Vidak, Walters, Wyland
          NO VOTE RECORDED:  Calderon, Liu, Wright, Yee

           ASSEMBLY FLOOR  :  59-16, 8/27/14 - See last page for vote

           SUBJECT  :    Vehicle emissions reductions

           SOURCE  :     Author


                                                                    SB 1204

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

           Assembly Amendments  add projects that support greater commercial  
          motor vehicle and equipment freight efficiency and greenhouse  
          gas (GHG) emissions reductions, as specified to the list of  
          projects eligible to be funded; require until January 1, 2018,  
          no less than 20% of funding made available support early  
          commercial deployment of existing zero- and near-zero emission  
          heavy duty truck technology; delete the provision which  
          specified 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; and make technical and clarifying changes.

          ANALYSIS  :    

           California Global Warming Solution Act of 2006 and GGRF
          AB 32 (Núñez, Chapter 488, Statutes of 2006) requires the 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 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 GGRF (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% of these funds to  
          projects that provide benefits to disadvantaged communities, and  



                                                                    SB 1204

          to allocate a minimum of 10% of 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  
          AQIP, administered by ARB in consultation with local air  
          districts.  AQIP 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.

          AQIP 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  
          AB 118 also establishes the ARFVTP, administered by the  
          California Energy Commission (CEC).  ARFVTP 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:  

          1.Establishes the Technology Program, administered by ARB in  
            conjunction with CEC, and requires the Technology Program fund  



                                                                    SB 1204

            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 Technology Program from GGRF.

          2.Specifies expenditure of the Technology Program funds include,  
            but not limited to, 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. 

             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, which may include  
               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 and equipment freight efficiency and GHG emissions  
               reductions, including advanced intelligent transportation  
               systems, autonomous vehicles, and other freight information  
               and operations technologies. 

          1.Requires that ARB, in consultation with CEC, develop guidance,  
            as specified, for the implementation of the Technology  

          2.Requires ARB, in consultation with CEC, to create an annual  
            framework and plan that articulates the overarching vision for  
            the Technology Program, outlines performance criteria, and  



                                                                    SB 1204

            describes agency roles.

          3.Requires, in evaluating potential projects to be funded, ARB  
            give priority to projects that demonstrate one or more of the  
            following characteristics:

             A.   Benefit to disadvantaged communities.

             B.   The ability to leverage additional public and private  

             C.   The potential for cobenefits or multiple-benefit  

             D.   The potential for the project to be replicated.

             E.   Regional benefit, with focus on collaboration between  
               multiple entities.

             F.   Support for technologies with broad market and emissions  
               reduction potential.

             G.   Support for projects addressing technology and market  
               barriers not addressed by other programs.

             H.   Support for enabling technologies that benefit multiple  
               technology pathways.

          1.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.

           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  Yes    
          Local:  No

          According to the Assembly Appropriations Committee: 

          1.Unknown ongoing cost pressures to fund the Technology Program  
            expenditures and grants, likely in the tens of millions of  
            dollars annually GGRF. 

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



                                                                    SB 1204

            and truck retrofits and remanufactures. 

          3.Increased annual costs to ARB, from the GGRF, of approximately  
            $200,000 to augment the AQIP program plan and guidelines to  
            provide guidance to the Technology 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.

           SUPPORT  :   (Verified  8/27/14)

          Breathe California
          California Association of Port Authorities
          California Bus Association
          California League of Conservation Voters
          California Natural Gas Vehicle Coalition
          California Trucking Association
          Center for Transportation and the Environment
          Cities of Long Beach and Salinas
          Coalition for Clean Air
          Communities for a Better Environment
          Environment California
          Environmental Defense Fund
          Los Angeles County Metropolitan Transportation Authority
          Natural Resources Defense Council
          Sierra Club of California
          South Coast Air Quality Management District
          The Greenlining Institute
          Union of Concerned Scientists

           OPPOSITION  :    (Verified  8/27/14)

          California Chamber of Commerce
          California League of Food Processors
          California Manufacturers and Technology Association



                                                                    SB 1204

           ARGUMENTS IN SUPPORT  :    The author's office notes that 40% 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's office 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.

           ARGUMENTS IN OPPOSITION  :    The California Chamber of Commerce  
          (CalChamber) writes:

            CalChamber supports the cost-effective implementation of AB  
            32.  [ARB]'s decision to arbitrarily withhold and sell  
            (auction) allowances will raise billions of dollars at the  
            expense of California businesses and consumers.  This approach  
            runs contrary to expressed goals of AB 32, which is maximizing  
            benefits and minimizing leakage risks and costs.

            As CalChamber has long held, [ARB] lacks authority to raise  
            revenue through the auction of allowances.  Given the  
            substantial legal uncertainties surrounding [ARB]'s authority  
            to impose an auction, expending the proceeds is premature;  
            therefore we must respectfully OPPOSE SB 1204 (Lara) which  
            seeks to fund zero and near-zero emission truck, bus, and  
            off-road vehicle and equipment technologies with AB 32 auction  

          ASSEMBLY FLOOR  :  59-16, 8/27/14
          AYES: Achadjian, Alejo, Ammiano, Bloom, Bocanegra, Bonilla,  
            Bonta, Bradford, Brown, Buchanan, Ian Calderon, Campos, Chau,  
            Chávez, Chesbro, Cooley, Dababneh, Dahle, Daly, Dickinson,  
            Eggman, Fong, Frazier, Garcia, Gatto, Gomez, Gonzalez, Gordon,  
            Gray, Hall, Roger Hernández, Holden, Jones-Sawyer, Levine,  
            Linder, Lowenthal, Maienschein, Medina, Mullin, Muratsuchi,  
            Nazarian, Pan, Patterson, Perea, John A. Pérez, V. Manuel  



                                                                    SB 1204

            Pérez, Quirk, Quirk-Silva, Rendon, Rodriguez, Salas, Skinner,  
            Stone, Ting, Weber, Wieckowski, Williams, Yamada, Atkins
          NOES: Allen, Conway, Donnelly, Fox, Beth Gaines, Gorell, Grove,  
            Hagman, Jones, Logue, Mansoor, Melendez, Nestande, Wagner,  
            Waldron, Wilk
          NO VOTE RECORDED: Bigelow, Harkey, Olsen, Ridley-Thomas, Vacancy

          JA:k  8/27/14   Senate Floor Analyses 

                           SUPPORT/OPPOSITION:  SEE ABOVE

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