BILL ANALYSIS Ó AB 904 Page 1 ASSEMBLY THIRD READING AB 904 (Perea) As Amended April 29, 2015 Majority vote ------------------------------------------------------------------- |Committee |Votes |Ayes |Noes | |----------------+------+----------------------+--------------------| |Transportation |14-2 |Frazier, Achadjian, |Kim, Melendez | | | |Baker, Bloom, Chu, | | | | |Daly, Dodd, Eduardo | | | | |Garcia, Gomez, | | | | |Linder, Medina, | | | | |Nazarian, O'Donnell, | | | | |Santiago | | | | | | | |----------------+------+----------------------+--------------------| |Appropriations |12-5 |Gomez, Bonta, |Bigelow, Chang, | | | |Calderon, Daly, |Gallagher, Jones, | | | |Eggman, Eduardo |Wagner | | | |Garcia, Gordon, | | | | |Holden, Quirk, | | | | |Rendon, Weber, Wood | | | | | | | | | | | | ------------------------------------------------------------------- SUMMARY: Requires the Air Resources Board (ARB) to create a rebate program for used clean air vehicles. Specifically, this bill: AB 904 Page 2 1)Requires ARB, no later than July 1, 2017, to establish the Clean Reused Vehicle Rebate Project (CRVRP) as part of the Air Quality Improvement Program (AQIP) to provide an applicant with either of the following: a) A rebate of up to $2,500 for the purchase of an eligible used vehicle from a licensed dealer, or, b) A rebate for the purchase of a battery for an electric vehicle 2)Provides that a rebate be limited to one per vehicle. 3)Requires ARB to coordinate the CRVRP with the Clean Vehicle Rebate Project (CVRP) and the Enhanced Fleet Modernization Program (EFMP) to enhance outreach to low-and moderate-income communities. 4)Defines "eligible used vehicles" as battery electric, plug-in hybrid, and fuel cell vehicles. 5)Defines "used vehicles" as vehicles that have been sold or registered with an appropriate authority and operated upon the highway, as specified. FISCAL EFFECT: According to the Assembly Appropriations Committee: 1)Cost pressures, likely in the tens of millions of dollars to AB 904 Page 3 establish the rebate program (Air Quality Improvement Fund or Greenhouse Gas reduction Fund). 2)Increased annual costs of $350,000 for ARB to develop, implement and review the program (Air Quality Improvement Fund or Greenhouse Gas reduction Fund). 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 this bill which would create the CRVRP to increase access to clean vehicles in disadvantaged communities by incentivizing the purchase of used clean air vehicles. 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, the Advanced Clean Cars Program (ACCP), administered by ARB, 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 AB 904 Page 4 the purchase or lease of eligible light-duty clean air vehicles. To obtain a CVRP rebate, an individual is required to 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 set certain CVRP requirements including, but not necessarily limited to, the requirement that eligible vehicles 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 (BAR) in conjunction with Consumer Assistance Program (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 AB 904 Page 5 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 receive additional incentives ranging from $1,500 to $5,000 depending on the vehicle type that is purchased. In addition to these programs, the recently enacted Charge Ahead Initiative 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. 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 this bill. While limiting rebates to one-time dealership sales may help to eliminate fraud associated with buying and reselling eligible vehicles to obtain multiple rebates on the same vehicle, there will be a need for ARB, in consultation with the Department of AB 904 Page 6 Motor Vehicles, to track rebates to ensure only one rebate is issued per vehicle. Tracking of rebates issued for batteries would also be necessary and, likely, more difficult. If fraud is not fully addressed and carefully controlled in the CRVRP, it 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. It is also important that participants in the CRVRP are provided with clear and accurate information about used clean air vehicles to ensure that the vehicle they are purchasing meet 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 to 70 mile driving range on a single charge. This would be particularly important for buyers whose driving needs exceed the vehicle's range as well as for those who may not have ready access to the unique fueling infrastructure these vehicles require. It is also important that buyers who choose to use the rebate for the vehicle (rather than a new battery) be clearly informed of the potential costs that could be incurred if a new battery or other repairs are needed. Analysis Prepared by: Victoria Alvarez / TRANS. / (916) 319-2093 FN: 0000639