BILL ANALYSIS                                                                                                                                                                                                    Ó



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          Date of Hearing:  April 13, 2015


                        ASSEMBLY COMMITTEE ON TRANSPORTATION


                                 Jim Frazier, Chair


          AB 857  
          (Perea) - As Amended April 15, 2015


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


          SUMMARY:  After 2018, re-establishes the priorities of the  
          California Clean Truck, Bus, and Off-Road Vehicle and Equipment  
          Technology Program (Technology Program) by providing that no  
          less than 50% (or $100 million, whichever is greater) of program  
          funds go to certain heavy-duty trucks that meet specified  
          emissions standards.   Specifically, this bill:  


          1)Requires that 50% of Greenhouse Gas Reduction Fund (GGRF)  
            funds appropriated to the Technology Program (or $100 million,  
            whichever is greater), during the period between January 2,  
            2018 and January 1, 2023, be allocated to support the  
            commercial deployment of existing zero- and near-zero-emission  
            heavy-duty truck technology [trucks with a gross vehicle  
            weight rating (GVWR) of 26,001 lbs. or more] that meet or  
            exceed low NOx standards (0.02 grams per brake horsepower-hour  
            oxides of nitrogen).



          2)Recasts existing provisions and makes related, clarifying  
            amendments.








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          EXISTING LAW: 


          1)Requires the Air Resources Board (ARB), pursuant to AB 32  
            (Nunez), Chapter 488, Statutes of 2006, to develop a plan of  
            how to reduce statewide greenhouse gas (GHG) emissions to 1990  
            levels by 2020.  Under AB 32, ARB is authorized to include the  
            use of market-based mechanisms to comply with these  
            regulations (such as cap and trade mechanism).

          2)Establishes the GGRF in the State Treasury and requires all  
            money collected pursuant to cap and trade, with limited  
            exceptions, be deposited into the fund.

          3)Creates the Technology Program pursuant to SB 1204 (Lara),  
            Chapter 524, Statutes of 2013, to 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 including, but not  
            necessarily limited to, medium- and heavy-duty trucks,  
            vocational trucks, short-haul and long-haul trucks, buses, and  
            off-road vehicles and equipment, port equipment, agricultural  
            equipment, marine equipment, and rail equipment.

          4)Requires that the Technology Program be funded from the GGRF  
            and prioritized for projects in disadvantaged communities.  

          5)Requires, until January 1, 2018, that no less than 20% of  
            funding for the Technology Program support commercial  
            deployment of existing zero- and near-zero-emission heavy duty  
            trucks, which is broadly defined.

          6)Under the California Alternative and Renewable Fuel, Vehicle  
            Technology, Clean Air, and Carbon Reduction Act of 2007,  
            created by AB 118 (Nunez), Chapter 750, Statutes of 2007,  
            requires California Energy Commission (Commission) to  








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            implement the Alternative and Renewable Fuels and Vehicle  
            Technology Program (ARFVTP) to fund specified entities to  
            develop and deploy technologies and alternative and renewable  
            fuels in the marketplace to help meet the state's climate  
            change policies.  

          7)Creates the Air Quality Improvement Program (AQIP),  
            administered by ARB and the Commission, in consultation with  
            local air districts, to fund specified air quality improvement  
            projects.  

          8)Requires ARB, in consultation with the Commission, to develop  
            guidance through the existing AQIP funding plan process to  
            implement the Technology Program.

          9)Defines a "heavy-duty truck" as vehicles weighing  
            14,000-19,500 pounds GVWR. 
          


          FISCAL EFFECT:  Unknown


          COMMENTS:  AB 32 required ARB to develop a plan to reduce GHG  
          emissions to 1990 levels, by 2020.  AB 32 also required ARB to  
          ensure that GHG emissions reduction requirements and programs,  
          to the extent feasible, directs public and private investment  
          toward the most disadvantaged communities in the state.  In  
          addition, AB 32 authorized ARB to adopt a schedule of fees to be  
          paid by GHG emission sources and to deposit those monies into  
          the GGRF, which would then be available upon appropriation by  
          the Legislature, to carry out AB 32 requirements. 



          Subsequent legislation, AB 118, established the AQIP  
          administered by ARB in consultation with local air districts.   
          The AQIP is funded through various fees and surcharges on  
          vehicles and provides competitive grants to fund projects that  








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          improve air quality.  The AQIP encompasses several programs,  
          including the Hybrid and Zero-Emission Truck and Bus Voucher  
          Incentive Program (HVIP), which is administered by ARB and  
          provides vouchers to California fleet owners to help purchase  
          hybrid and zero-emission trucks and buses.

          AB 118 also established the ARFVTP, which is administered by the  
          Commission, 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.  
           
          In 2014, SB 1204 established the Technology Program which is  
          administered by ARB in conjunction with the Commission.  The  
          intent of SB 1204 was to create a single, overarching program to  
          develop and deploy heavy-duty vehicles primarily because the  
          author felt that heavy-duty vehicles were not being adequately  
          addressed in HVIP and AQIP.  Specifically, the Technology  
          Program, until January 1, 2018, provides GGRF funds for projects  
          that develop technology, demonstrate and pilot commercial and  
          early-commercial deployment of zero and near-zero emission  
          medium- and heavy-duty truck technology, and facilitate clean  
          goods movement.  The Technology Program works to develop  
          zero-and near-zero emission technologies for specified vehicles  
          and equipment not only for trucks, but also for off-road  
          vehicles and equipment at the ports as well as in agricultural,  
          marine, and rail sectors.  Within the Technology Program,  
          funding priority is generally given to projects that demonstrate  
          benefit to disadvantaged communities, the ability to leverage  
          additional public and private funding, and provide the potential  
          for co-benefits.  

          According to the author, air pollution continues to affect human  
          health disproportionately in disadvantaged communities and  








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          especially along transportation corridors.  He notes that in the  
          South Coast and San Joaquin Valley Air Districts, nearly 80% of  
          smog forming pollutants, such as NOx, come from mobile  
          sources--primarily, large transport trucks.  The author also  
          notes that manufactures claim that new technologies will be  
          available in the transportation marketplace within the next  
          three years that could meet near-zero emissions levels (90% NOx  
          reduction over the current standard). The author notes, however,  
          that to achieve widespread deployment of these new technologies,  
          financial incentives need to be in place to help "buy down" the  
          capital costs of this improved technology.  





          To help incentivize the adoption of these new technologies, the  
          author has introduced this bill which would reestablish the  
          priorities of the Technology Program for five years beginning on  
          January 2, 2018 and ending on January 1, 2023.  Specifically, AB  
          857 would require, during that five-year period, that 50% of  
          Technology Program funds (or $100 million, whichever is greater)  
          be used for the deployment of certain heavy-duty vehicles -  
          those weighing 26,001 lbs. GVWR or greater that meet a low NOx  
          standard (i.e., meet or exceed an emission standard of 0.02  
          grams per brake horsepower-hour oxides of nitrogen).  





          Supporters of AB 857, which include, among others, natural gas  
          industry representatives, contend that the bill will create  
          incentives for zero- and near-zero emission heavy-duty truck  
          purchases that will help purchasers afford the initial costs of  
          these cleaner trucks. They contend that these incentives will  
          help accelerate retirement of older, high polluting trucks; help  
          grow the clean, alternative fuel truck market; and stimulate  
          additional investments in the next generation of zero- and  








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          near-zero emission truck technologies.  





          The California Trucking Association (CTA), also writing in  
          support of this bill, agrees that expanding incentives to  
          support deployment of clean and low carbon heavy-duty vehicles  
          used for goods movement would be a wise investment.  CTA  
          contends that increased funding commitments for certain  
          heavy-duty trucks will ensure that incentives are directed to  
          reducing the greatest possible emissions in the transportation  
          sector.





          Writing in opposition to AB 857, the Union of Concerned  
          Scientists (UCS) and the American Lung Association in California  
          (ALAC) agree that transportation sector emissions need to be  
          targeted, but they believe that the bill, unnecessarily, directs  
          a very large fraction of GGRF funds exclusively to commercial  
          deployment of the heaviest of trucks, thereby limiting funding  
          for other important emissions reducing projects.  They also  
          contend that AB 857 fails to address specified GHG emissions  
          reductions despite the fact that the money is coming from the  
          GGRF, which is predicated on reducing global warming pollution.   






          UCS and ALAC also contend that AB 857 would prematurely limit  
          future technology investments, such as hybrid or plug-in hybrid  
          trucks, which could be zero-emission capable but would not be  
          eligible for prioritized funding unless they were also certified  








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          to the low-NOx standard.  They note that precluding these types  
          of technologies could exclude promising options for emissions  
          reductions and air quality improvements within and well beyond  
          the 2018 to 2023 timeframe.  





          Lastly, UCS and ALAC point out that natural gas-powered  
          heavy-duty trucks will be certified to low-NOx emissions levels  
          within the next few years and will undoubtedly qualify for  
          funding under this bill; however, GHG emissions reductions from  
          these vehicles remains uncertain given that there is frequent  
          methane leakage that occurs during natural gas extraction,  
          distribution, and refueling as well as from the vehicle itself.





          Suggested amendments:  In response to concerns that directing a  
          very large fraction of Technology Program dollars exclusively to  
          support the commercial deployment of certain zero- and near-zero  
          emissions heavy duty trucks could limit the implementation of  
          other important emissions reduction projects, that author has  
          agreed to lower the percentage to 50%.


          


          Previous legislation:  SB 1204 (Lara) Chapter 524, Statutes of  
          2014, created a the Technology Program to 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.  

          AB 8 (Perea), Chapter 401, Statutes of 2013, extended until  








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          January 1, 2024, extra fees on vehicle registrations, boat  
          registrations, and tire sales in order to fund the programs that  
          support the production, distribution, and sale of alternative  
          fuels and vehicle technologies, as well as air emissions  
          reduction efforts.  

          AB 118, Nunez, Chapter 750, Statutes of 2007, created the  
          California Alternative and Renewable Fuel, Vehicle Technology,  
          Clean Air, and Carbon Reduction Act of 2007 that required the  
          Commission to implement the ARFVTP and 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.  

          AB 32 (Nunez), Chapter 488, Statutes of 2006 required the ARB to  
          develop a plan of how to reduce emissions to 1990 levels by the  
          year 2020 and also required ARB to ensure that, to the extent  
          feasible, GHGs reduction requirement and programs direct public  
          and private investment toward the most disadvantaged  
          communities.  
          


          Double referral:  This bill will be referred to the Assembly  
          Natural Resources Committee should it pass out of this  
          committee.



          REGISTERED SUPPORT / OPPOSITION:




          Support


          Southern California Gas (Sponsor)









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          Alhambra Chamber of Commerce


          Antelope Valley Air Quality Management District


          Association of California Cities-Orange County


          Azusa Chamber of Commerce


          Black Chamber of Orange County


          Boys & Girls Club of Greater Ventura


          Boys Republic


          Burbank Chamber of Commerce


          California Natural Gas Vehicle Coalition


          California Trucking Association 


          Cars are Basic


          City of Atascadero


          City of Goleta









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          City of McFarland


          City of Monterey Park


          City of Perris


          Clean Air Now


          Clean Energy and Clean Energy Renewable Fuels 


          Coachella Valley Economic Partnership


          Congress of California Seniors


          COPE Health Solutions


          County of Santa Barbara


          Culver City Chamber


          Dana Point Chamber of Commerce


          Desert Valleys Builders Association


          Dignity Health









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          Duarte Chamber of Commerce


          Duarte Unified School District


          Economic Development Collaborative Ventura County


          Economic Development Corporation service Tulare County


          Economic Vitality Corporation


          Federacion de Clubes Jaliscienses Del Sur de California


          Foothill Workforce Investment Board


          Fullerton Chamber of Commerce


          Gardena Valley Chamber of Commerce


          Gateway Chambers Alliance 


          Greater West Covina


          Hanford Chamber of Commerce


          Grandma's House of Hope









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          Kheir Clinic


          Laguna Nigel Chamber of Commerce


          Latino Caucus Priority Bill Press Conference


          Lincoln Training Center


          Los Angeles Area Chamber of Commerce


          Orange County Business Council




          Opposition


          American Lung Association in California


          Union of Concerned Scientists







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











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