BILL ANALYSIS Ó
AB 904
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Date of Hearing: April 27, 2015
ASSEMBLY COMMITTEE ON TRANSPORTATION
Jim Frazier, Chair
AB 904
(Perea) - As Introduced February 26, 2015
SUBJECT: Air Quality Improvement Program: Clean Reused Vehicle
Rebate Project
SUMMARY: Requires the Air Resources Board (ARB) to create a
rebate program for used clean air vehicles. Specifically, this
bill:
1)Requires ARB to establish, as part of the Air Quality
Improvement Program (AQIP), the Clean Reused Vehicle Rebate
Project (CRVRP) to provide rebates for the purchase of
eligible used clean air vehicles.
2)Defines "eligible used vehicles" including as battery
electric, plug-in hybrid, and fuel cell vehicles.
3)Defines "used vehicles" as vehicles that have been sold or
registered with an appropriate authority and operated upon the
highway, as specified.
EXISTING LAW:
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1)Requires 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.
2)Creates the AQIP, administered by ARB and the California
Energy Commission (Commission), in consultation with local air
districts, to fund specified air quality improvement projects.
3)Creates the Clean Vehicle Rebate Program (CVRP), within the
AQIP, to promote accelerated widespread commercialization of
zero-emission vehicles (ZEVs) by providing rebates of up to
$5,000 for the purchase or lease of per eligible light-duty
vehicle.
4)Creates the Enhanced Fleet Modernization Program (EFMP) in the
Bureau of Automotive Repair (BAR), pursuant to AB 118 (Nunez),
Chapter 750, Statutes of 2007, to augment BARs vehicle
retirement Consumer Assistance Program (CAP).
5)Creates the Advanced Clean Cars Program (ACCP) administered by
ARBs that sets forth air quality and emissions reductions
requirements for certain vehicles model and assures the
development certain clean air vehicles.
6)Creates the Charge Ahead Initiative, pursuant to AB 1275 (De
Leon) Chapter 530, Statutes of 2014, which outlines the vision
of placing one million electric cars, trucks, and buses on
California roadways and directs ARB to draft a financial plan
to meet that goal and ensure that disadvantaged communities
can participate.
FISCAL EFFECT: Unknown
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COMMENTS: According to the author, disadvantaged communities in
California are disproportionately burdened by multiple sources
of pollution. However, these same communities are far behind
other areas of the state when it comes to receiving clean air
vehicle rebates. To illustrate this point, the author cites
data showing that CVRP rebates in Fresno County account for less
than 1% of the total rebates issued in the program to date
despite the fact that Fresno County ranks 8th out of the 10 most
disadvantaged communities and it has some of the poorest air
quality in California. To address this inequity, the author has
introduced AB 904 which would create the CRVRP to increase
access to clean vehicles in disadvantaged communities by
incentivizing the purchase of used clean air vehicles.
California has gone to great lengths to curb GHG emissions and
improve air quality and appears to be on target to meet GHG
emissions reduction goals set forth in AB 32. A much more
demanding target looms beyond the AB 32 horizon, however.
Executive Order (EO) S-3-05, signed by Governor Schwarzenegger,
calls for an 80% reduction of GHG emissions below 1990 levels by
2050. Meeting this 2050 target will involve substantial effort
and, given that the transportation sector is responsible for 40%
of GHG emissions, much effort has been focused in this sector.
In March 2012, Governor Brown issued EO B-12-2012 that set the
goal of placing 1.5 million clean cars on California's roadways
by 2025. Also in early 2012, ARB approved ACCP that combined
the control of smog-causing pollutants and GHG emissions into a
single coordinated package of vehicle requirements for model
years 2017 through 2025. The ACCP set lower emissions standards
for gasoline- and diesel-powered cars and delivered to the
marketplace an increasing number of clean cars with zero- and
near-zero-emission technologies, such as full battery electric,
plug-in hybrid electric, and hydrogen fuel cell vehicles.
To encourage the adoption of these new clean cars, ARB also
implemented the CVRP, which offers up to $5,000 in rebates
toward the purchase or lease of eligible light-duty clean air
vehicles. To obtain a CVRP rebate, an individual is required to
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purchase or lease an eligible vehicle and then apply for the
rebate. There is no guarantee that rebates will be issued and
participants are encouraged to apply for rebates before the fund
is exhausted.
To ensure program integrity and prevent fraud, ARB has set
certain CVRP requirements including, but not necessarily be
limited to, the requirement that eligible vehicle have zero- and
near-zero emissions and that only one rebate be issued per
vehicle. Individuals who receive a rebate pursuant to CVRP are
required to retain ownership of the vehicle for operation in
California for a minimum of 30 consecutive months immediately
after purchase or lease and sign documents, under penalty of
perjury, with regard to compliance with program requirements.
To augment the state's existing vehicle rebate program and to
encourage the retirement of older, dirty cars and their
replacement with cleaner cars, ARB developed EFMP, which
consists of two elements: the Retirement-Only Program and the
Retire-and-Replace Program. The Retirement-Only Program,
implemented by the Bureau of Automotive Repair in conjunction
with CAP, provides up to $1,500 for low-income consumers to
scrap their vehicles if they meet certain eligibility
guidelines. The Retire-and-Replace Program, on the other hand,
provides low-income individuals incentives for scrapping their
old, dirty vehicles and provides additional money toward the
purchase of a new, clean air vehicle. The Retire-and-Replace
program is available in the areas of the state that have the
poorest air quality and is implemented by the South Coast Air
Quality Management District (AQMD) and the San Joaquin Valley
Air Pollution Control District (APCD).
In addition to these programs, this year ARB will implement the
EFMP Plus-Up Program (Plus Up) to provide additional incentives
above and beyond EFMP base incentives for individuals in
disadvantaged communities that retire older, dirty vehicles and
replace them with used or new hybrid, plug-in hybrid, or ZEV.
Plus-Up will be implemented in the San Joaquin Valley APCD and
South Coast AQMD, and eligible low-income participants can
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receive additional incentives ranging from $1,500 to $5,000
depending on the vehicle type that is purchased. EFMP, Plus-Up,
and CVRP rebates can be "stacked" and if all program incentives
are used, together they would total $12,000 if an individual
opts to retire a vehicle and purchase a new clean air vehicle.
In addition to these programs, the recently enacted Charge Ahead
Imitative has stated the goal of placing at least one million
zero-emission and near-zero-emission vehicles into service by
January 1, 2023, and requires ARB to develop a funding plan
needed to achieve the goal. The bill also made changes to
CVRP, requiring the establishment of programs that further
increase access to and direct benefits for disadvantaged,
low-income, and moderate-income communities and consumers from
electric transportation. With respect to clean air vehicle
funding, the Charge Ahead Initiative modified CVRP to include
additional extra credit for low-income drivers who wish to buy
or lease an electric car and provides assistance to car-sharing
programs in low-income neighborhoods and installing electric
vehicle charging stations in apartment buildings in those
communities.
Committee concerns and proposed author's amendments:
1)It is laudable that the author wishes to improve air quality
by increasing access to clean air vehicles for low- and
middle-income individuals in disadvantaged communities and
undoubtedly areas with the poorest air quality need increased
focus on them to encourage the purchase and use of cleaner
vehicles. It is important to note, however, that there are
already a number of programs in existence (CAP, EFMP, and
CVRP) and under development (Plus-Up and the Charge Ahead
Initiative) that are designed to do what the author is
seeking to accomplish with AB 904. For example, once the
Plus-Up program is deployed, a low-income individual in a
disadvantaged community would be able to take advantage of up
to $12,000 in rebates and incentives toward the purchase of a
cleaner vehicle not including additional other incentives and
programs currently under development.
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To address this concern, the author has proposed amendments
that would require ARB to coordinate with the CVRP and EFMP
programs to enhance outreach to low to moderate income
communities.
2)In addition to being duplicative of existing programs, AB 904
fails to address key components of the program it seeks to
create - components that clearly distinguish it from existing
programs and would help ensure its success. For example:
a) The bill does not specifically address the date by which
ARB would be required to establish the program nor does it
speak to the amount that would be allocated to the program
or what funding would be used to support the program.
These are important factors given the substantial "call"
funds in the GGRF and other program dollars.
In response to this concern, the author's proposed
amendments would require that the CRVRP be implemented and
administered by ARB beginning on July 1, 2017.
b) The bill does not address parameters of the program
which would help to improve successful implementation and
minimize fraud - a particularly pertinent issue given that
the used car market can include not only dealer
transactions but also third party transactions. This is
critical given the potential for unscrupulous individuals
to repeatedly buy and resell these clean cars, each time
capturing a rebate and all the while depleting program
funds while failing to deploy newer, cleaner vehicles.
To address this concern, the author has proposed that the
CRVRP provide a $2,500 rebate toward the purchase of an
eligible used clean air vehicle only when purchased from a
licensed dealer. Only one rebate would be allowed per
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vehicle. The author's suggested amendments also specify
that a rebate (unspecified amount) could be applied to the
purchase of an electric vehicle battery.
While limiting rebates to one-time dealership sales may
help to eliminate fraud associated with buying and
reselling vehicles to obtain multiple rebates on the same
vehicle, tracking rebates on a per vehicle bases could
present difficulties. For example, under CVRP, rebates are
only issued on new vehicles so there is no need to track
the vehicle once the rebate is issued. For used vehicle
rebates, a database would be needed to link the rebate
with, assumedly, the vehicle identification number, which
would likely involve access Department of Motor Vehicles
records and/or information. Rebate tracking for batteries
could be even more difficult and it would be difficult to
ascertain whether batteries receiving rebates are being
installed in vehicles that also received a rebate which, if
not controlled, could result in rapid depletion of program
funds and the inability of the program to realize the
ultimate objective of placing additional clean air vehicles
into service on California's roadways to achieve clean air
goals.
1)The CRVRP would greatly benefit from providing prospective
rebate recipients with clear and accurate information about
available used clean air vehicles to ensure that the vehicle
they are purchasing adequately meets their needs. For
example, if a buyer wishes to use a rebate to purchase a used
EV, particularly one which may have diminished battery
capacity, they should be informed that the vehicle may only
achieve a 60-70 mile driving range on a single charge. This
would be particularly important for buyers whose driving needs
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exceed the vehicle's range as well as for those who may not
have ready access to unique fueling infrastructure these
vehicles require.
All in all, the problem the author is seeking to address is a
serious and legitimate problem. Unfortunately, even with the
author's proposed amendments, AB 904 is lacking in pertinent
details and, hence, its merits cannot be weighed sufficiently.
Related legislation: AB 1074 (C. Garcia) would direct the
Commission to develop an alternative refueling infrastructure
plan, as part of a broader assessment, that identifies the
number of alternative fueling stations that will be needed to
fulfill the state's clean transportation goals.
AB 1074 passed out of this committee on April 13, 2015, with a
16-0 vote and is awaiting hearing in the Assembly Appropriations
Committee.
SB 40 (Gaines), would require incentives for qualifying
zero-emission, battery-electric passenger vehicles under the
CVRP be limited to vehicles with a manufacturer's suggested
retail price of $40,000 or less and that rebates for qualifying
vehicles be $3,500. SB 40 is awaiting hearing in the Senate
Transportation and Housing Committee.
Previous legislation: AB 1275 (De Leon), Chapter 530, Statutes
of 2014, created the Charge Ahead Initiative stated the goals of
the initiative are to place in service at least 1,000,000
zero-emission and near-zero-emission vehicles by January 1,
2023, and increasing access for disadvantaged, low-income, and
moderate-income communities and consumers to zero-emission and
near-zero-emission vehicles by, among other things, establishing
programs that further increase access to and direct benefits for
disadvantaged, low-income, and moderate-income communities and
consumers from electric transportation.
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AB 118 (Nunez), Chapter 750, Statutes of 2007, established the
AQIP, administered by ARB in consultation with local air
districts, and funded through surcharges on vehicle and vessel
registration fees, smog abatement fees, and identification plate
fees.
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.
REGISTERED SUPPORT / OPPOSITION:
Support
San Joaquin Valley Air Pollution Control District
Opposition
None on file
AB 904
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Analysis Prepared by:Victoria Alvarez / TRANS. / (916) 319-2093