BILL ANALYSIS Ó
SENATE COMMITTEE ON TRANSPORTATION AND HOUSING
Senator Jim Beall, Chair
2015 - 2016 Regular
Bill No: AB 904 Hearing Date: 7/14/2015
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|Author: |Perea |
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|Version: |7/13/2015 |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant|Erin Riches |
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SUBJECT: Air Quality Improvement Program: Clean Reused Vehicle
Rebate Project
DIGEST: This bill establishes a new program to provide
incentives for the purchase or lease of used clean vehicles.
ANALYSIS:
Air Quality Improvement Program (AQIP)
Existing law establishes AQIP, which is administered by the
state Air Resources Board (ARB) in consultation with local air
districts. AQIP is funded through, among other things,
surcharges on vehicle registration fees and a portion of the
Smog Abatement Fee (paid to register vehicles less than six
model years old and therefore exempt from smog check). AQIP
also receives a significant amount of Greenhouse Gas Reduction
Fund (GGRF) monies. AQIP, which encompasses multiple programs,
provides competitive grants to fund projects to improve the
air-quality impacts of alternative fuels and vehicles, vessels,
and equipment technologies.
Clean Vehicle Rebate Project (CVRP)
CVRP, which is part of AQIP, is administered by ARB's
contractor, the California Center for Sustainable Energy. CVRP
provides a rebate of up to $5,000 for purchasing or leasing a
new zero-emission vehicle or plug-in hybrid electric vehicle.
Specifically, a consumer may obtain a $5,000 rebate for a
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hydrogen fuel-cell vehicle; a $2,500 rebate for a zero-emission,
battery electric vehicle; a $1,500 voucher for a plug-in hybrid
electric vehicle; or a $900 rebate for a neighborhood electric
vehicle.
As of June 8, 2015, CVRP had issued 107,885 rebates ($228
million). There is no cap on the number of rebates which may be
issued, but rebates are subject to funding availability and the
program has more than once been forced to stop issuing rebates
and create a waiting list due to funds running out. A consumer
can apply for a rebate within 18 months of purchasing or leasing
an eligible vehicle. The consumer must retain ownership of the
vehicle in California for at least 30 consecutive months after
the purchase or lease date or reimburse ARB for part or all of
the rebate amount. The consumer must also agree to other
conditions, such as not tampering with the emissions control
system of the vehicle. Rebates are distributed on a first-come,
first-served basis and issued within 90 days of application
approval.
Enhanced Fleet Modernization Program
Existing law also establishes the Enhanced Fleet Modernization
Program (EFMP) under ARB. EFMP provides for the voluntary
"retirement" (scrappage) of high-polluting passenger vehicles
and light- and medium-duty trucks. The vehicle must be
currently registered as operable and must have been continuously
registered for two years prior to the application, unless the
owner can demonstrate that the vehicle has been operated in
California during that period. EFMP is funded by an additional
$1 surcharge on the vehicle registration fee. EFMP has a
statewide component and a local component.
Under the statewide component, ARB administers the Consumer
Assistance Program (CAP), in consultation with the Bureau of
Automotive Repair. This program offers a $1,500 voucher to
low-income vehicle owners, or a $1,000 voucher to other owners,
to retire a high-polluting vehicle. CAP is funded by $6 of the
Smog Abatement Fee, in addition to citation fees imposed by the
Bureau of Automotive Repair on smog stations.
Under the local component, ARB administers a program, authorized
in the San Joaquin Valley and South Coast air districts, to
replace high-polluting vehicles. In addition to the
"retirement" vouchers described above, the local EFMP program
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offers a $2,500 "replacement" voucher to low-income vehicle
owners to replace a high-polluting vehicle by either purchasing
a vehicle eight years old or newer, or using the voucher toward
public transit.
ARB is also currently implementing the new EFMP Plus-Up Program
(Plus-Up) in the San Joaquin and South Coast air districts.
Plus-Up provides additional incentives above and beyond EFMP
base incentives for individuals in disadvantaged communities who
retire high-polluting vehicles and replace them with used or new
hybrid, plug-in hybrid, or zero-emission vehicles. Eligible
participants can receive additional incentives ranging from
$1,500 to $5,000, depending on the vehicle type that is
purchased. The EFMP, Plus-Up, and CVRP rebates can be "stacked"
for a total of up to $12,000.
Charge Ahead Initiative
In March 2012, Governor Brown issued an Executive Order setting
a goal of 1.5 million zero-emission vehicles on California roads
by 2025. SB 1275 (De León, Chapter 530, Statutes of 2014)
builds on this goal by establishing the Charge Ahead California
Initiative at ARB, which outlines a vision of placing 1 million
electric cars, trucks, and buses on California's roads by 2023.
SB 1275 directs ARB to provide incentives to increase the
availability of zero-emission vehicles and near-zero-emission
vehicles, particularly in disadvantaged communities. Pursuant
to SB 1275, ARB's FY 2015-16 Funding Plan, which was voted on by
the ARB board on June 25, 2015, includes, among other programs
and actions:
1)An income eligibility cap for CVRP that would exclude the
higher income consumers most likely to purchase a
zero-emission vehicle without a CVRP rebate;
2)Higher rebate levels under CVRP for lower income consumers
most in need of financial incentives to purchase a
CVRP-eligible vehicle;
3)A new pilot project to create vanpooling for Central Valley
agricultural workers; and
4)Expansion of the four existing pilot projects, including
increased incentives for public fleets to purchase
CVRP-eligible vehicles, advanced technology car-sharing and
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mobility options, increased EFMP incentives for vehicle
replacement, and financing assistance.
This bill:
1)Requires ARB to establish a Clean Reused Vehicle Rebate
Project (CRVRP) by July 1, 2017, to provide an applicant with
any of the following:
a) A rebate or other incentive of up to $2,500 for
acquisition of an eligible used vehicle from a licensed
dealer.
b) A rebate or other incentive of an unspecified dollar
amount for the replacement or refurbishment of a battery
and related components for an eligible used vehicle, for an
extended warranty for the battery and related components,
or for both.
c) A rebate or other incentive of an unspecified dollar
amount for an extended service warranty to cover unexpected
vehicle repairs not covered by the manufacturer's warranty
related to unique problems in eligible used vehicles.
1)Limits rebates or other incentives issued under this program
to one per vehicle.
2)Limits rebates or other incentives issued under this program
to low- and moderate-income consumers living in disadvantaged
communities.
3)Requires ARB to coordinate CRVRP with CVRP, EFMP, and the
Charge Ahead Initiative, to, including but not limited to:
a) Coordinate CRVRP eligibility with EFMP eligibility.
b) Ensure appropriate outreach and targeting to low- and
moderate-income communities.
c) Expand financing mechanisms, including but not limited
to a loan or loan-loss reserve credit enhancement program
to increase consumer access to zero-emission and
near-zero-emission financing and leasing options, to help
increase participation rates among low- and moderate-income
consumers.
1)Requires ARB to establish safeguards for CRVRP to prevent
fraudulent activity by sellers and acquirers of eligible used
vehicles and practices that could prevent intended CRVRP
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recipients from benefiting from this program.
COMMENTS:
1)Purpose. The author states that although Fresno County is one
of the most polluted areas in the state, it accounts for less
than 1% of CVRP rebates. According to ARB's CalEnviroScreen
2.0 data, Fresno County includes eight of the top 10 most
disadvantaged communities in California. In order for a
successful deployment of clean cars, more efforts need to be
made to target disadvantaged communities. The author states
that this bill would create a secondary clean vehicle
marketplace that is more affordable than the new clean vehicle
market. The new CRVRP would enable low- and middle-income
buyers to participate in the clean economy. The author notes
that more than 100,000 clean vehicles have been sold or leased
in California in the past four years; with clean vehicle
leases approaching their expiration date, the time is
opportune for more Californians to own a clean vehicle.
2)Should the state provide double vouchers? While this bill
provides that CRVRP may only provide one voucher per vehicle,
it does not address whether a vehicle may also receive a CVRP
voucher. The intent of CVRP is to help put more clean
vehicles on the roads; while providing an additional voucher
to a vehicle under CRVRP would help low- and moderate-income
buyers and leasers obtain a used clean vehicle, it would not
actually put an additional clean vehicle on the road.
3)Duplicative of other efforts? Pursuant to several legislative
directives, ARB is currently in the process of implementing
multiple programs aimed at helping to get low- and
middle-income consumers into the clean car market.
4)Where will the money come from? This bill does not specify a
funding source for CRVRP. Currently, CVRP is highly
subscribed and has more than once run out of funds midyear and
been forced to establish a waiting list. It is unclear
whether a new funding source will be established for CRVRP or
it if it might be part of CVRP.
5)Targeting the program. The author states that the primary
purpose of this program is to get more clean vehicles into
areas with extreme air quality issues. To help achieve this
goal, this bill will be amended on July 13 to (1) limit the
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cash rebate portion to counties in which less than 2% of CVRP
rebates have been issued, or (2) counties in nonattainment
districts that also have not met the National Ambient Air
Quality Standards. The amendments will also reduce the cash
rebate amount to $1,800.
Most CVRP vouchers (84%) have been issued in nine counties: in
order, Los Angeles, Santa Clara, Orange, Alameda, San Diego,
San Mateo, Contra Costa, Riverside, and San Francisco. While
there are 49 counties in which less than 2% of CVRP rebates
have been issued, this bill also limits the program to
disadvantaged communities; as a result, provision (1) limits
the program to 19 counties: Butte, Fresno, Imperial, Kern,
Kings, Merced, Monterey, Sacramento, San Bernardino, San
Joaquin, Santa Barbara, Santa Cruz, Solano, Stanislaus,
Tehama, Tulare, Ventura, Yolo, and Yuba.
The committee understands that there are two air districts in
California that fail to meet National Ambient Air Quality
Standards: San Joaquin Valley Air Pollution Control District
(San Joaquin) and South Coast Air Quality Management District
(South Coast). San Joaquin is made up of eight counties: a
portion of Kern County and all of San Joaquin, Stanislaus,
Merced, Madera, Fresno, Kings, and Tulare counties. South
Coast covers all of Orange County and the urban portions of
Los Angeles, Riverside, and San Bernardino counties.
Thus, the amendments will limit the bill to 25 counties: the
19 counties covered by provision (1), plus Los Angeles,
Madera, Orange, Riverside, San Bernardino, and Stanislaus
counties.
6)Double-referred. This bill has also been referred to the
Senate Environmental Quality Committee, where it will be heard
on July 15, 2015.
RELATED Legislation:
AB 1176 (Perea, 2015) - would establish an Advanced Low-Carbon
Diesel Fuels Access Program to fund low-carbon diesel fueling
infrastructure projects in communities that are
disproportionately impacted by environmental hazards and where
the greatest air-quality impacts can be identified. AB 1176
passed out of this committee on a 10-0 vote on June 30 and will
be heard in the Senate Environmental Quality Committee on July
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15.
SB 1275 (De León, Chapter 530, Statutes of 2014) - established
the Charge Ahead California Initiative under ARB to provide
incentives to increase the availability of zero-emission
vehicles and near-zero-emission vehicles, particularly in
disadvantaged communities.
SB 459 (Pavley, Chapter 437, Statutes of 2013) - required ARB,
in consultation with the Bureau of Automotive Repair, to update
EFMP regulations by June 30, 2015. SB 459 required the
guidelines to include a variety of new policies, including
allowing for retirement and replacement vouchers of larger
amounts, focusing the program more heavily on lower income
owners, and streamlining program requirements to facilitate
participation.
SB 535 (De León, Chapter 830, Statutes of 2012) - requires the
Department of Finance, when developing the three-year investment
plan for cap-and-trade monies, to allocate 25% of these funds to
projects that provide benefits to disadvantaged communities, and
at least 10% to projects located within disadvantaged
communities.
Assembly Votes:
Floor: 58-20
Appr: 12-5
Trans: 14-2
FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes
Local: No
POSITIONS: (Communicated to the committee before noon on
Wednesday,
July 8, 2015.)
SUPPORT:
American Lung Association in California
California Environmental Justice Alliance
Coalition for Clean Air
Environment California
Greenlining Institute
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Latino Coalition for a Healthy California
Natural Resources Defense Council
San Joaquin Valley Air Pollution Control District
Union of Concerned Scientists
OPPOSITION:
None received
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