BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON ENVIRONMENTAL QUALITY
                               Senator Wieckowski, Chair
                                 2015 - 2016  Regular 
           
          Bill No:            AB 904
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          |Author:    |Perea                                                |
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          |Version:   |7/14/2015              |Hearing      | 7/15/2015      |
          |           |                       |Date:        |                |
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          |Urgency:   |No                     |Fiscal:      |Yes             |
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          |Consultant:|Joanne Roy                                           |
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          SUBJECT:  Air Quality Improvement Program:  Clean Reused Vehicle  
          Rebate Project.

            ANALYSIS:
          
          Existing law:  


          1) Creates the Air Quality Improvement Program (AQIP),  
             administered by California Air Resources Board (ARB), in  
             consultation with local air districts, to provide competitive  
             grants to fund projects to reduce criteria air pollutants,  
             improve air quality, and support research to improve the air  
             quality impacts of alternative fuels and vehicles, vessels, and  
             equipment technologies.  (Health and Safety Code (HSC) §44274).  
              

          2) 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.  This program was not created through statute, but  
             instead was developed and initiated by ARB pursuant to ARB's  
             existing statutory authority through AQIP.  


          3) Creates the Enhanced Fleet Modernization Subaccount to  
             implement the Enhanced Fleet Modernization Program (EFMP)  
             developed by ARB, in consultation with the Bureau of Automotive  
             Repair, that allows for the voluntary retirement of  







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             high-polluting passenger vehicles and light-duty and  
             medium-duty trucks.  (HSC §44125).


          4) Under the California Alternative and Renewable Fuel, Vehicle  
             Technology, Clean Air, and Carbon Reduction Act of 2007,  
             requires the State Energy Resources Conservation and  
             Development Commission (commonly referred to as the California  
             Energy Commission) (CEC) to implement the Alternative and  
             Renewable Fuels and Vehicle Technology Program to fund measures  
             to develop and deploy technologies and alternative and  
             renewable fuels in the marketplace to help attain the state's  
             climate change policies.  (HSC §43865 et seq.).

          5) Creates the Advanced Clean Cars Program (ACCP) administered by  
             ARB that sets forth air quality and emissions reductions  
             requirements for certain vehicle models and assures the  
             development of certain clean air vehicles.  

          6) Creates the Charge Ahead Initiative, 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.  (HSC §44258 et seq.)

          7) Establishes the Greenhouse Gas Reduction Fund (GGRF) in the  
             State Treasury, requires all moneys, except for fines and  
             penalties, collected pursuant to a market-based mechanism be  
             deposited in the fund and requires the Department of Finance,  
             in consultation with ARB and any other relevant state agency,  
             to develop, as specified, a three-year investment plan for the  
             moneys deposited in the GGRF.  (Government Code §16428.8)

          8) Prohibits the state from approving allocations for a measure or  
             program using GGRF moneys except after determining that the use  
             of those moneys furthers the regulatory purposes of AB 32, and  
             requires moneys from the GGRF be used to facilitate the  
             achievement of reductions of GHG emissions in California.  (HSC  
             §39712) 

          9) Defines "used vehicle" as a vehicle that has been sold, or has  
             been registered with the Department of Motor Vehicles, or has  
             been sold and operated upon the highways, or has been  
             registered with the appropriate agency of authority, of any  








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             state, District of Columbia, territory or possession of the  
             United States or foreign state, province, or manufacturer in  
             the sales or distribution work of such manufacturer.  (Vehicle  
             Code §665).

          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 $1,800 for  
                acquisition of an eligible used vehicle from a licensed  
                dealer.  Restricts the rebate availability to counties in  
                which less than 2% of the total CRVRP rebates have been  
                issued, or counties which are located in air districts that  
                have been designated by ARB as a state nonattainment area  
                and does not meet National Ambient Air Quality Standards.

             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.  

          2) Provides that "eligible used vehicle" only includes the same  
             types of vehicles that are eligible for a rebate under CVRP.

          3) Limits rebates or other incentives issued under this program to  
             one per vehicle.  

          4) Limits rebates or other incentives issued under this program to  
             low- and moderate-income consumers living in disadvantaged  
             communities.

          5) Requires ARB to coordinate CRVRP with CVRP, EFMP, and the  
             Charge Ahead Initiative, as follows:

             a)    Coordinate CRVRP eligibility with EFMP eligibility.









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             b)    Ensure appropriate outreach and targeting to low- and  
                moderate-income communities to encourage participation.

             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.

          6) 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  
             recipients from benefiting from this program.

            Background
          
          1) Batteries:  General.  One of the key elements of any electric  
             vehicle is its battery.  A battery is an electrochemical energy  
             storage device that can release an electrical charge when  
             needed.  It generally consists of an anode, a cathode, and an  
             electrolyte (separator).  Batteries may be made up of one or  
             more cells, which can be connected together (in series) to  
             provide a higher voltage.  For example, a typical 12-volt car  
             battery is made up of six cells connected together internally  
             and a battery pack for a battery electric vehicle ( ) may have  
             hundreds of individual cells.  

          Battery characteristics that are particularly important for  
             automotive use include their energy density and power density.   
             Energy density is a measure of how much energy a battery can  
             hold. The higher the energy density, the longer it will last  
             before needing to be recharged.  Power is the rate at which  
             energy is used.  Power density is the measure of how much power  
             a battery can deliver on demand - how quickly it can release  
             energy and conversely, how quickly it can be recharged.  

          Battery types are typically identified by the materials that make  
             up one or more of components of the battery.  Common types of  
             automotive batteries include lead-acid, which are used in  
             conventional cars; nickel-metal hydride, which are commonly  
             used in hybrid vehicles; lithium-ion, which are becoming the  
             battery of choice for plug-in hybrids, battery electric  
             vehicles, and some conventional hybrids; lithium polymer, which  








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             can be found in some hybrid vehicles; and, lithium iron  
             phosphate, which are now being used in hybrids and BEVs.

          The estimated price of a replacement battery to a consumer  
             generally ranges from $3,000 to $6,000, but the price is  
             dependent on the manufacturer.  On the high end, a battery can  
             cost approximately $12,000.  

          2) Batteries: longevity and warranties.  If a battery fails, the  
             entire battery must be replaced.  Currently, there is just one  
             manufacturer (BMW), which is set up to do modular replacement  
             of a battery (for the BMW i3), meaning the entire battery would  
             not need to be replaced.  However, this type of modular  
             replacement for BEV batteries is in its infancy.

          Several manufacturers of plug-in vehicles offer 9-year/100,000  
             mile battery warranties.  The National Renewable Energy  
             Laboratory states that today's batteries may last 12 to 15  
             years in moderate climates and eight to 12 years in extreme  
             climates.

          Although manufacturers have not published pricing for replacement  
             batteries, some are offering extended warranty programs with  
             monthly fees.  If a battery needs to be replaced outside the  
             warranty, it may be a significant expense.  

          3) Air Quality Improvement Program (AQIP).  The AQIP, which was  
             established by the California Alternative and Renewable Fuel,  
             Vehicle Technology, Clean Air, and Carbon Reduction Act of 2007  
             (AB 118 (Nuñez, Chapter 750, Statutes of 2007), is a voluntary  
             incentive program administered by ARB to finance, through  
             grants, revolving loans, or loan guarantees, projects that  
             improve air quality, promote research on the air quality  
             impacts of alternative fuels and advanced technology vehicles,  
             and support work force training.  

          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)  
             moneys.  

          4) Clean Vehicle Rebate Project (CVRP).  CVRP, which is part of  








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             AQIP, is funded by ARB and administered by the Center for  
             Sustainable Energy, in order to promote the production and use  
             of zero-emission vehicles, including electric, plug-in hybrid  
             electric and fuel cell vehicles.  CVRP enables the purchaser or  
             lessee of an eligible vehicle to receive a rebate.  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 of or the entire rebate amount.  Rebates  
             are distributed on a first-come, first-served basis and issued  
             within 90 days of application approval.  

          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  
             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 or a zero-emission motorcycle.

          As of June 23, 2015, CVRP has issued 109,660 rebates ($231.8M)  
             since March 2010.  There is no cap on the number of rebates  
             that 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.  

          5) Public Fleet Pilot Project.  Administered by CSE for ARB, the  
             Public Fleet Pilot Project offers up to $15,000 in rebates for  
             the purchase of new, eligible zero-emission and plug-in hybrid  
             light-duty vehicles.  The project replaces standard CVRP  
             rebates with increased incentives for public agencies operating  
             in the state's disadvantaged communities.

          Up to $2.877 million in funding from GGRF is available for  
             California public entities fleets located in or serving  
             disadvantaged communities.  The Public Fleet Pilot Project  
             benefits disadvantaged communities by providing immediate air  
             pollution emission reductions while stimulating local  
             deployment of the next generation of zero-emission and plug-in  
             hybrid electric light-duty vehicles.  The Public Fleet Pilot  
             Project is administered as a set-aside within CVRP.









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          6) Enhanced Fleet Modernization Program (EFMP).  

             a)    Plus-Up Program.  ARB is 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  
                incentives ranging from $1,500 to $5,000, depending on the  
                vehicle type that is purchased and the income level of the  
                applicant.  The EFMP, Plus-Up, and CVRP rebates can be  
                "stacked" for a total of up to $12,000.

             b)    Car scrappage programs:  EFMP provides for the voluntary  
                "retirement" (scrappage) of high-polluting passenger  
                vehicles and light- and medium-duty trucks. 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.  

             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 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.  

          7) Charge Ahead Initiative.  SB 1275 (de León, Chapter 530,  
             Statutes of 2014) establishes the Charge Ahead California  
             Initiative, which outlines a vision of placing 1 million  
             electric cars, trucks, and buses on California's roads by 2023  
             and 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 includes, among other  
             programs and actions:  a) $163M for CVRP, which includes an  
             income cap to exclude high-income consumers and higher rebate  








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             levels for lower income consumers; b) increased investments for  
             light-duty pilot projects in disadvantaged communities  
             including $20M to expand air district administered  
             retire-and-replace pilot programs that help low-income  
             residents afford the cleanest cars.
            
          Comments  
           
          1)Purpose of Bill.  According to the author, "AB 904 provides an  
            opportunity for California to increase access to electric  
            vehicles for those with the most need.  California has some of  
            the most polluted areas in the country and requires extensive  
            and immediate transformation for its disadvantaged communities.   
            This bill will provide an immediate, tangible, and measureable  
            benefit for low-moderate income Californians who largely  
            purchase used vehicles in contrast to new ones.  In the long run  
            making electric vehicles accessible to low-moderate income  
            Californians will speed up technological development and  
            increase the demand and deployment of electric vehicle  
            technology in our state.  This bill builds consumer confidence  
            in the market by establishing a battery warranty and encourages  
            those who may not have the means to take the risk with new  
            technology to purchase a long term saving investment for their  
            everyday transportation needs."

          2)Existing programs and projects benefitting disadvantaged  
            communities.  According to ARB, several vehicle incentive  
            programs and projects exist that specifically address  
            disadvantaged communities, including:

             a)   EMFP Plus-Up:  Promotes advanced technology vehicle  
               replacements (new or used) for lower-income consumers.  ARB  
               has recently initiated a pilot project under EFMP in the San  
               Joaquin Valley and greater Los Angeles area to help  
               low-income individuals and families in disadvantaged  
               communities (as determined by CalEnviroScreen) to retire  
               older, polluting vehicles and purchase cleaner and more  
               fuel-efficient cars.  The program provides increasingly  
               larger cash payments for the lowest-income families to move  
               up to the very cleanest cars.  For example, under this  
               program, it is possible for a family that meets the income  
               guidelines to receive up to $12,000 toward the purchase of an  
               electric vehicle.  Eligible vehicles must be less than eight  
               years old and get 20 mpg or greater, such as a Toyota Prius.   








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               Plus-Up also allows for recipients to be eligible for  
               vouchers for public transit passes, between $2,500 and $4,500  
               in value, depending on income level.

             ARB states that Plus-Up is funded Fiscal Year (FY) 2014-15 for  
               $3 million; and expects to provide $20 million in FY 2015-16  
               with the intent of expanding the program to other areas in  
               the state.

             Does the Plus-Up Pilot Project, which focuses on providing  
               individuals and families in disadvantaged communities with  
               potentially up to $12,000 to purchase cleaner vehicles (that  
               are less than eight years old), satisfy the goals of this  
               bill, if not more due to the air emission reductions as well?  
                

             b)   Public Fleet Incentive Pilot Project:  Offers rebates of  
               up to $15,000 for public fleets to reduce emissions in or  
               near disadvantaged communities.  The project launched in  
               February 2015; rebates for 86 vehicles totaling $430,000 were  
               reserved by April 30, 2015.  (FY 2015-16:  $5M).  (See  
               Background #5 for more detail.)

             c)   Car Sharing and Mobility Option Pilot Project:  Provides  
               funding to establish advanced technology clean car sharing  
               fleets in or near disadvantaged communities to offer an  
               alternate mode of transportation and encourage use of  
               advanced technology cars.  (FY 2015-16:  $5M).

             d)   Financing Assistance Pilot Project:  Provides financing  
               assistance, such as loan loss guarantees for financial  
               institutions, or through non-profit organizations that are  
               already lending to lower income consumers, to support  
               consumers in or near disadvantaged communities in the  
               purchase of an advanced technology vehicle.  (FY 2015-16:   
               $4M).

             e)   Agricultural Worker Vanpools in the San Joaquin Valley  
               Pilot Project:  Provides incentives for the purchase of new  
               eligible zero-emission, plug-in hybrid, and hybrid passenger  
               vans to turn over the existing fleet or to expand  
               availability to new riders.  Eligibility is limited to  
               projects that serve disadvantaged community census tracts in  
               the San Joaquin Valley.  








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             (FY 2015-16:  $3M).

             f)   Car scrappage programs (See Background #6(b) for more  
               detail):

               i)     CAP:  Provides consumers with $1,000, and $1,500 for  
                 low-income consumers, to retire a vehicle that meets  
                 certain eligibility guidelines.  (FY 2014-15:  $23.5M).

               ii)    EFMP:  Retirement-only program:  Provides customers  
                 with $1,000, and $1,500 for low-income consumers, for  
                 vehicles that meet certain eligibility guidelines.   
                 Starting July 1, 2015, EFMP will be limited to low-income  
                 consumers, and they will receive $1,500 incentive for  
                 vehicle retirement.  (FY 2014-15:  $25.9M).

               iii)   EFMP:  Retirement-and-replacement program:  Provides  
                 funds to consumers to retire an older vehicle and replace  
                 it with a new, cleaner model.  ARB provides grants to the  
                 San Joaquin Valley Air Pollution Control District and South  
                 Coast Air Quality Management District to implement the  
                 program in their jurisdictions.  (FY 2014-15:  $2.8M)

             The several existing programs and projects listed above, as  
             well as the accompanying tens of millions of dollars of  
             funding, provide air emission benefits and place cleaner  
             vehicles in those communities.  

             Because this bill proposes to add an entirely new program that  
                                     is very similar to the ones above, a question arises as to  
             whether doing so would be considered unnecessary. 

          3)Coordinate among programs or incorporate within existing  
            programs?  Pursuant to several legislative directives, such as  
            SB 1275 (de León, Chapter 530, Statutes of 2014), ARB is  
            currently implementing several programs aimed at helping  
            low-income consumers and consumers in disadvantaged communities.  
             AB 904 requires ARB to coordinate the proposed CRVRP with the  
            CVRP, EFMP, and the Charge Ahead California Initiative.   
            However, because there appears to be much overlap in these  
            programs, can the objectives of this bill be met via the several  
            programs and projects currently in place?  Establishing a new  
            program or project is time consuming and costly; and adding  
            another one to the fray may result in redundancy and confusion.   








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          The Committee may wish to consider whether it would be more  
            prudent, time saving, and cost effective for ARB to incorporate  
            some of the proposed mechanisms/benefits in this bill such as  
            extended warranties or replacement of batteries into existing  
            programs.

          4)Is legislation necessary?  This bill would establish CRVRP as  
            part of AQIP.  As noted above, CVRP was not created through  
            statute, but instead was developed and initiated pursuant to  
            ARB's existing statutory authority under AQIP.  This bill  
            proposes to establish CRVRP as part of AQIP.  A question arises  
            as to whether legislation is necessary to create CRVRP  
            considering ARB already has existing statutory authority through  
            AQIP.

          5)What is the funding?  This bill does not specify a funding  
            source or amount for the proposed CRVRP, which would be  
            established as part of AQIP.

             a)   Funding sources for AQIP.  As noted above, AQIP is funded  
               through, among other things, surcharges on vehicle  
               registration fees and a portion of the Smog Abatement Fee,  
               and receives a significant amount of GGRF.

             Under AQIP, 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  
               would be established for CRVRP.  If CRVRP takes from existing  
               AQIP funds, how would this affect the current programs and  
               projects, such as CVRP?

             b)   Potential GGRF?  As noted earlier, AQIP receives a  
               significant amount of GGRF.  GGRF investments must facilitate  
               the achievement of GHG emissions reductions.  Considering  
               this bill does not likely reduce GHG emissions because no  
               high-polluting cars are required to be retired, it seems  
               questionable whether the proposed CRVRP would be eligible to  
               receive GGRF moneys.

          6)Potential of double-dipping.  This bill provides that an  
            eligible used vehicle only includes the same vehicles that are  
            eligible for rebate pursuant to CVRP.  According to ARB, 70% to  








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            75% of vehicles eligible for CVRP rebates have received them.   
            Considering that approximately three out of four cars eligible  
            have received the CVRP rebate, this bill may provide another  
            rebate or incentive for the same vehicle, but without the  
            environmental benefit of further reducing air pollution.   

          7)Incentives.  This bill provides for incentives to purchase  
            eligible used clean vehicles.  The term "incentive" is very  
            broad.  Common forms of incentives may be either financial or  
            non-financial.  Examples of financial incentives include a  
            rebate (buyer receives cash after making the purchase), a  
            voucher (buyer receives what is essentially a coupon to take to  
            a dealer who will deduct the voucher amount from the cost and  
            submit to ARB for payment), or a loan with favorable terms.   
            Non-financial incentives may include HOV lane access, free  
            charging or free hydrogen fuel, or free/reduced parking costs.   
            Also, while incentives often target the consumer, incentives are  
            sometimes structured around the dealer or lending institution,  
            such as a loan loss guarantee program.  Various forms of  
            incentives have different advantages and disadvantages based on  
            the type of behavior meant to be encouraged.  The types of  
            incentives intended for this bill is unclear.

          8)Fraud.  Although this bill requires ARB to establish safeguards  
            for CRVRP against fraudulent activity, there is concern that  
            fraud potential with this bill is high.  For example, although a  
            vehicle is limited to one CRVRP rebate or incentive, this bill  
            could result in unknowing consumers becoming victims of sellers  
            who may not be honest about whether the vehicle had already  
            received a CRVRP rebate or other incentive at the time of  
            purchase.  In addition, there is no standard of information for  
            a consumer or ARB to know the value and price of a used car  
            because they are dependent on the condition of that particular  
            vehicle.  How is ARB expected to prevent fraud on a used car?  

          9)How would ARB implement a warranty program?  This bill proposes  
            to establish CRVRP, which would include an extended warranty for  
            a battery and related components and an extended service  
            warranty to cover unexpected vehicle repairs.  Manufacturers  
            currently do not have warranty programs for batteries only.  ARB  
            would have to either develop a battery warranty program or work  
            with the manufacturers to help them develop a battery warranty  
            program.  This would be a completely new program area for ARB.









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             a)   How long would an extended warranty be?  This bill would  
               provide an applicant an extended service warranty to cover  
               unexpected vehicle repairs not covered by the manufacturer's  
               warranty related to unique problems in eligible used  
               vehicles.  Although not included in the bill, parameters on  
               an extended warranty that should be considered include:   
               minimum warranty requirements, incentive type (point of sale  
               rebate, rebate toward warranty purchase for a used advanced  
               technology vehicle), and minimum warranty coverage in years  
               and mileage.  

             b)   What should a warranty cover?  Car warranties tend to have  
               limits on what they cover.  For example, some may not cover  
               damage as a result of negligent care or an accident caused by  
               the owner.  Or there may be requirements to maintain a car in  
               a specified manner in order for a warranty to apply.  A  
               question arises as to whether similar conditions would apply  
               to the warranties proposed in this bill.  Also, what types of  
               mechanical issues are considered "unique problems"?  This  
               bill is unclear as to what kinds of unique problems would be  
               covered by a warranty.  

          10)What are long-term or other costs and considerations to keep in  
            mind for the clean car owner?

             a)   What happens after the incentive/warranty ends or does not  
               cover the cost of repair/replacement?  A longer-term  
               challenge for a clean car owner may be maintenance and repair  
               of the vehicle over its lifetime.  Batteries gradually lose  
               their maximum charge over time.  At a certain point, they  
               become too weak to power a car.  Eventually, it will be  
               worthwhile to replace the battery to get back the vehicle's  
               original capabilities.  The applicant under this program  
               would be purchasing a used vehicle, which means that the  
               battery is already further along in its life at the time of  
               purchase.  As noted earlier, the estimated cost to replace a  
               battery is generally in the range of $3,000 to $6,000, and if  
               a battery fails, the entire battery must be replaced.  If a  
               warranty does not cover the cost of replacement or the  
               warranty has expired, is the cost of replacing the battery  
               feasible for that purchaser?  If not, is it possible that the  
               owner may get stuck in a situation that they cannot easily  
               afford to get out of or be left without a working vehicle  
               entirely? 








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             b)   Other considerations for the clean car owner.  Depending  
               on the type of clean vehicle, a home charging station may be  
               required.  The cost varies for a home charging station based  
               on the type of charger and location (home vs. multi-dwelling  
               unit).  ARB estimates that for a residential application,  
               installation costs would range from approximately $1,500 to  
               $6,000.  A charger added to the design of a new structure  
               would cost much less than retrofitting an older unit that has  
               old wiring.  In addition, as with any electrical appliance,  
               there are also energy costs and potential maintenance and  
               repairs of equipment to consider.  Another consideration is  
               whether the vehicle owner lives in a rental - It is possible  
               the landlord might be reluctant to add a home charging  
               station on the property.  In general, the owner will need to  
               consider the availability and accessibility of charging  
               stations in the area in which the vehicle is expected to be  
               driven.

             Additionally, owners would eventually be responsible for the  
               maintenance, which could include replacing the battery and  
               beyond the provisions of this bill.  Will it be financially  
               feasible for the owner to maintain a car that requires a  
               battery that costs thousands of dollars?  

             If a purchaser in a disadvantaged community must choose between  
               a used conventional vehicle and used clean vehicle, is it  
               possible that the purchaser, as well as the environment, may  
               get more "bang for the buck" by choosing a newer,  
               conventional vehicle?  Plenty of newer, conventional vehicles  
               exist that are subject to fuel efficiency standards, NOx and  
               other pollutant criteria standards.  For the vehicle  
               purchaser, is it more prudent to buy a newer, conventional  
               vehicle that may have a longer lifespan than a clean vehicle;  
               as well as a battery maintenance cost of $50 as opposed to  
               thousands of dollars?

          11)Could no requirement for the retirement of a polluting vehicle  
            result in no improvement in air quality?  This bill establishes  
            CRVRP as part of AQIP.  Pursuant to AQIP, grants are provided to  
            fund clean vehicle and equipment projects that reduce criteria  
            and toxic air pollutants; ARB is directed to evaluate proposed  
            projects based on potential reduction of criteria or toxic air  
            pollutants, cost-effectiveness, contribution to regional air  








          AB 904 (Perea)                                          Page 15 of  
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            quality improvement, and ability to promote the use of clean  
            alternative fuels and vehicle technologies.

          Removing the legacy fleet of older, polluting vehicles is what  
            will make the difference in improving air quality in  
            disadvantaged communities.  This bill does not require a  
            recipient of a CRVRP benefit to scrap an older, polluting  
            vehicle in order to receive a rebate or incentive to buy a  
            clean, reused vehicle.  Rather than reducing the number of  
            polluting cars on the road, is it possible that this bill may  
            simply add more cars?  

          For example, if a CRVRP recipient did not own a car previously and  
            instead used public transit for transportation, would this bill  
            increase the number of cars in the community, potentially  
            worsening traffic?  Because of an increase in number of cars on  
            the road, motor vehicles may sit in traffic longer, which in  
            turn may create more air pollution.  Although the individual  
            vehicle may not create more emissions, it may cause others to do  
            so.   

          A question arises as to how much this proposal will improve  
            environmental quality overall in disadvantaged communities when  
            the bill does not reduce the number of older, polluting cars.  

          12) Broader impacts on the environment.  

             a)   From where does the electricity come?  Although battery  
               electric vehicles (EVs) produce zero emissions from the  
               vehicles themselves, and hybrid electric vehicles and plug-in  
               hybrid electric vehicles (PHEVs) produce fewer emissions than  
               vehicles using internal combustion engines alone, there are  
               emissions produced by, or other environmental impacts  
               resulting from, the sources of electricity they use.  For  
               example, like internal combustion engines, coal-fired  
               generating stations emit carbon dioxide, which is a GHG; and  
               nuclear generating stations produce radioactive waste  
               products that remain toxic for thousands of years.

             The life cycle emissions of an EV or PHEV depend on the source  
               of electricity used to charge it, which vary by region.  In  
               geographic areas that use relatively low-polluting energy  
               sources for electricity production, plug-in vehicles  
               typically have a life cycle emissions advantage over similar  








          AB 904 (Perea)                                          Page 16 of  
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               conventional vehicles that run on gasoline or diesel.  In  
               regions that depend heavily on conventional fossil fuels for  
               electricity generation, PHEVs and EVs may not demonstrate a  
               strong life cycle emissions benefit.  

             A National Academy of Science study from 2013, Alternative  
               Vehicles and Fuels, states that, while the environmental  
               costs of an electric vehicle depends on many things, how you  
               power it is still the most important.  Different regional  
               grids provide different emission levels relative to operating  
               an electric vehicle because of how each energy mix is  
               comprised.  According to a National Academy of Science  
               assessment in 2010, the power grid must produce a majority of  
               electricity from non-fossil fuel in order to realize the  
               potential of electric vehicles.

             Although clean vehicles may reduce the amount of air pollution,  
               it seems prudent to keep in mind potential, broader impacts  
               to the environment.

             b)   Other environmental considerations.  Energy is used to  
               mine iron, lithium, and the rare earth elements; to smelt and  
               process raw materials; to transport all these materials to  
               the factory; and to manufacture the cars, the batteries and  
               everything associated with them.  What kind of energy is  
               consumed for each of these steps and what are their  
               environmental impacts?    

             The metals, solvents and processing chemicals required for the  
               manufacturing of these batteries release GHG like sulfur  
               hexafluoride (SF6), which is over 20,000 times as effective  
               in global warming potential as carbon dioxide.  SF6 gas  
               decomposes to form toxics like sulfur/metal-fluoride gases,  
               sulfur-oxyfluorides, and hydrofluoric and sulfuric acids.  If  
               multitudes of electric vehicles are expected to be built in  
               the future, then toxic compounds and how they are addressed  
               are issues that will have to be tackled in order to build a  
               sustainable future.

          13) Conclusion.  This bill raises many concerns.  Several programs  
            and projects already exist that would seem to achieve the goals  
            of this bill.  If not, then perhaps components of this bill may  
            be incorporated into one or more of these programs.  Also, it  
            appears ARB already has existing statutory authority through  








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            AQIP to create CRVRP.  The bill is unclear as to the funding  
            source and amount for CRVRP.  There is opportunity for  
            double-dipping to occur with each used vehicle sold under this  
            proposal.  It is questionable how ARB could enforce against  
            potential fraud on a used vehicle.  The types of incentives  
            considered in this bill are unclear.  Long-term costs and  
            considerations for the clean vehicle purchaser are of concern.   
            Most importantly, would this bill improve the air quality in  
            disadvantaged communities?  

          Considering the issues raised above, the Committee may wish to  
            consider whether there are sufficient answers to these questions  
            and concerns to move this legislation forward.

          14) Double referral. This bill has been referred to the Senate  
            Committees on Transportation & Housing and Environmental  
            Quality.  This bill is scheduled to be heard in Senate  
            Transportation & Housing Committee on July 14, 2015.

            Related/Prior Legislation

          AB 1176 (Perea) 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 was heard in Senate  
          Transportation Committee on June 30, 2015.

          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 359 (Pavley, Chapter 415, Statutes of 2013) required ARB, in  
          consultation with Bureau of Automotive Repair, to update the EFMP  








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          guidelines, as specified, by June 30, 2015.

          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 moneys, to allocate 25% of these funds to  
          projects that provide benefits to disadvantaged communities, and  
          at least 10% to projects located within disadvantaged communities.  
           
            
          DOUBLE REFERRAL:  

          This measure will be heard in Senate Transportation and Housing  
          Committee on July 14, 2015.  
           
           SOURCE:                    Author  

           SUPPORT:               

          American Lung Association of California
          California Environmental Justice Alliance
          Coalition for Clean Air
          Communities for a Better Environment
          Environment California
          The Greenlining Institute
          Latino Coalition for a Healthy California
          Natural Resources Defense Council
          San Joaquin Valley Air Pollution Control District
          Valley Clean Air Now  

           OPPOSITION:    

          None received  


           
                                           
                                       -- END --