BILL ANALYSIS                                                                                                                                                                                                    Ó



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          ASSEMBLY THIRD READING


          AB  
          857 (Perea)


          As Amended  May 5, 2015


          Majority vote


           ------------------------------------------------------------------- 
          |Committee       |Votes |Ayes                 |Noes                 |
          |                |      |                     |                     |
          |                |      |                     |                     |
          |----------------+------+---------------------+---------------------|
          |Transportation  |16-0  |Frazier, Achadjian,  |                     |
          |                |      |Baker, Bloom,        |                     |
          |                |      |Campos, Chu, Daly,   |                     |
          |                |      |Dodd, Eduardo        |                     |
          |                |      |Garcia, Gomez, Kim,  |                     |
          |                |      |Linder, Medina,      |                     |
          |                |      |Melendez, Nazarian,  |                     |
          |                |      |O'Donnell            |                     |
          |                |      |                     |                     |
          |----------------+------+---------------------+---------------------|
          |Natural         |9-0   |Williams, Dahle,     |                     |
          |Resources       |      |                     |                     |
          |                |      |                     |                     |
          |                |      |Cristina Garcia,     |                     |
          |                |      |Hadley, Harper,      |                     |
          |                |      |McCarty, Rendon,     |                     |
          |                |      |Mark Stone, Wood     |                     |
          |                |      |                     |                     |
          |----------------+------+---------------------+---------------------|
          |Appropriations  |17-0  |Gomez, Bigelow,      |                     |
          |                |      |Bonta, Calderon,     |                     |








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          |                |      |Chang, Daly, Eggman, |                     |
          |                |      |Gallagher,           |                     |
          |                |      |                     |                     |
          |                |      |                     |                     |
          |                |      |Eduardo Garcia,      |                     |
          |                |      |Gordon, Holden,      |                     |
          |                |      |Jones, Quirk,        |                     |
          |                |      |Rendon, Wagner,      |                     |
          |                |      |Weber, Wood          |                     |
          |                |      |                     |                     |
          |                |      |                     |                     |
           ------------------------------------------------------------------- 


          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  
            (Nitrogen oxides) standards (0.02 grams per brake  
            horsepower-hour oxides of nitrogen).


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


          FISCAL EFFECT:  According to the Assembly Appropriations  
          Committee, increased first year costs of $842,000 and ongoing  








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          annual costs of $1,017,000 for staffing and $1,000,000 in  
          contracts to perform the following duties: 


          1)Develop guidelines and procedures to implement the program. 
          2)Develop grant solicitations for new projects. 


          3)Conduct fleet audits and data analysis. 


          4)Conduct on-site inspections. 


          5)Update GGRF and fiscal procedures to manage cash flow and  
            changes resulting from the program. 


          6)Review grant solicitations, process and track funding  
            disbursements. 


          COMMENTS:  Existing law requires Air Resources Board (ARB) to  
          develop a plan to reduce GHG emissions to 1990 levels by 2020,  
          requires ARB to ensure that GHG emissions reduction requirements  
          and programs, to the extent feasible, direct public and private  
          investment toward the most disadvantaged communities in the state,  
          and authorize ARB to adopt a schedule of fees to be paid by GHG  
          emission sources into the GGRF, which is available upon  
          appropriation by the Legislature, to carry out emission reduction  
          requirements. 


          AB 118 (Núñez), Chapter 750, Statutes of 2007 established the Air  
          Quality Improvement Program (AQIP), funded through various fees  
          and surcharges on vehicles, to provide competitive grants to fund  
          projects that 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  








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          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 California  
          Energy Commission (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 (Lara), Chapter 524, Statutes of 2014 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  
          especially along transportation corridors.  He notes that in the  
          South Coast and San Joaquin Valley Air Districts, nearly 80% of  








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          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, this  
          bill 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 this bill, 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  
          near-zero emission truck technologies.  


          Writing in opposition to this bill, the Union of Concerned  
          Scientists (UCS) and the American Lung Association in California  
          (ALAC) note 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  








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          deployment of the heaviest of trucks, thereby limiting funding for  
          other important emissions reducing projects.  They also contend  
          that this bill 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 this bill 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  
          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.



          Please see the policy committee analysis for full discussion of  
          this bill.




          Analysis Prepared by:                                               
                          Victoria Alvarez / TRANS. / (916) 319-2093  FN:  
          0000667











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