BILL ANALYSIS Ó
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
AB 904 (Perea) - Air Quality Improvement Program: Clean Reused
Vehicle Rebate Project
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|Version: July 13, 2015 |Policy Vote: T. & H. 9 - 0, |
| | E.Q. 5 - 1 |
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|Urgency: No |Mandate: No |
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|Hearing Date: August 17, 2015 |Consultant: Mark McKenzie |
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This bill meets the criteria for referral to the Suspense File.
Bill
Summary: AB 904 would require the State Air Resources Board
(ARB) to establish a Clean Reused Vehicle Rebate Project (CRVRP)
within the Air Quality Improvement Program (AQIP) by July 1,
2017 to provide rebates or incentives for eligible consumers for
the acquisition of used clean vehicles, or for extended
warranties or batteries and related components for eligible used
vehicles.
Fiscal
Impact:
ARB estimates it would incur costs of approximately $700,000
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and 4 PY of staff to develop and administer the program. (Air
Quality Improvement Fund or Greenhouse Gas Reduction Fund -
GGRF)
Program costs (local assistance), likely in the tens of
millions annually (Air Quality Improvement Fund or GGRF). For
illustrative purposes, ARB has issued an average of over $45
million annually in rebates under CVRP since 2010.
Background: Existing law establishes AQIP, which is administered by 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. AQIP encompasses several programs and
is partially funded through 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), as well as GGRF monies.
Existing law establishes the Clean Vehicle Rebate Program
(CVRP), within the AQIP, to promote accelerated widespread
commercialization of zero-emission vehicles by providing rebates
of up to $5,000 for the purchase or lease of an eligible
light-duty vehicle. This program was not created through
statute, but developed and initiated by ARB pursuant to its
existing statutory authority through AQIP. As of June 23, 2015,
109,660 CVRP rebates ($231.8M) have been issued 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 been oversubscribed during several fiscal years.
Existing law establishes the Enhanced Fleet Modernization
Subaccount to implement the Enhanced Fleet Modernization Program
(EFMP), which was developed by ARB in consultation with the
Bureau of Automotive Repair, and allows for the voluntary
retirement of high-polluting passenger vehicles and light-duty
and medium-duty trucks. EFMP is funded by an additional $1
surcharge on vehicle registrations, and has both a local and
state administered component.
Under the statewide component, ARB administers the Consumer
Assistance Program (CAP), in consultation with the Bureau of
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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
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.
Proposed Law:
AB 904 would require ARB to establish CRVRP by July 1, 2017 to
provide an applicant who is a low- or moderate-income consumer
residing in a disadvantaged community with any of the following
incentives for a single vehicle:
A rebate or other incentive with a value of up to $1,800 for
the acquisition of an eligible used vehicle from a licensed
dealer.
A rebate or other incentive for the replacement or
refurbishment of a battery and related components of an
eligible used vehicle, or an extended warranty for those
items, or both.
A rebate or other incentive 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.
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This bill would also do the following:
Limit eligibility to battery electric, plug-in hybrid, and
fuel cell vehicles that have been sold or registered for
operation on highways, as specified.
Limit the issuance of rebates or incentives to one per vehicle
to an applicant who is a low- or moderate-income consumer
residing in a disadvantaged community that is located in one
of the following: (1) a county where less than two percent of
rebates have been issued under the CVRP, or (2) an air
district designated as being in nonattainment with federal
ambient air quality standards.
Require ARB to coordinate the CRVRP with the CRRP, the EFMP,
and the Charge Ahead Initiative, including all of the
following: (1) coordinating eligibility with eligibility for
EFMP; (2) ensuring appropriate outreach and targeting to
eligible households to encourage participation; and (3)
expanding financing mechanisms, including a loan or loan-loss
reserve credit enhancement program and prequalification or
point-of-sale rebates, as specified.
Require ARB to establish safeguards to prevent both fraudulent
activity by sellers and acquirers of eligible used vehicles
and practices that could prevent targeted consumers from
benefiting from the program.
Staff
Comments: AB 904 would limit participation to applicants in
disadvantaged communities in counties where less than two
percent of rebates have been issued under the CVRP, or in an air
district designated as being in nonattainment with federal
ambient air quality standards. This would limit participation
to applicants in disadvantaged communities in the following 25
counties: Butte, Fresno, Imperial, Kern, Kings, Los Angeles,
Madera, Merced, Monterey, Orange, Riverside, San Bernardino,
Sacramento, San Bernardino, San Joaquin, Santa Barbara, Santa
Cruz, Solano, Stanislaus, Tehama, Tulare, Ventura, Yolo, and
Yuba.
This bill establishes a rebate program for used clean vehicles,
and specifies that CRVRP may only provide one voucher per
vehicle. Staff notes that it would be difficult to determine
whether a used vehicle eligible for a CRVRP received a voucher
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under CVRP when it was first purchased. While the bill would
make clean vehicles more accessible to lower income applicants
who may not be able to purchase a new clean vehicle, it is
likely that the program would result in multiple state vouchers
being issued for the purchase of the same vehicle (with a CVRP
rebate when purchased new, and with a CRVRP rebate when
purchased as a used vehicle).
Staff notes that there has been high demand for rebates issued
under the existing CVRP; it has been fully subscribed in past
years, and oversubscribed in several fiscal years. The creation
of a second AQIP rebate program through the proposed CRVRP would
likely mean that fewer resources could be dedicated to the
existing CVRP. The programs would compete for the same funding
sources (the Air Quality Improvement Fund and GGRF). In
addition, there are currently several other programs that
provide state incentives towards the purchase of used clean
vehicles in disadvantaged communities in nonattainment areas,
including the "Plus-Up" Program and "retire and replace" program
under the EFMP. This bill creates a new incentive program that
would be duplicative of those programs, with the distinction
that this bill is also targeted to counties that have not
received a high proportion of incentives under the CVRP.
ARB indicates it would need 4 additional PY of staff at a cost
of approximately $700,000 to develop and administer the CRVRP
created by this bill. Staff notes, however, that there are only
3 PY of staff dedicated to the current CVRP, and 3.5 PY
dedicated to the EFMP "retire and replace" program. To the
extent the program created by this bill diverts funding away
from these existing programs, ARB's staffing costs could be
partially offset by reductions to existing programs.
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