BILL ANALYSIS                                                                                                                                                                                                    

                                                                       AB 904

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          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  


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          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  

          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  

          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  

          1)Cost pressures, likely in the tens of millions of dollars to  


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            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  


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          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  


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          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  


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          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