BILL ANALYSIS                                                                                                                                                                                                    



                                                                    AB 1176


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          Date of Hearing:  April 27, 2015


                        ASSEMBLY COMMITTEE ON TRANSPORTATION


                                 Jim Frazier, Chair


          AB 1176  
          (Perea) - As Amended April 23, 2015


          SUBJECT:  Vehicular air pollution


          SUMMARY:  Creates the Advanced Low-Carbon Diesel Fuels Access  
          Program, administered by the State Energy Resources Conservation  
          and Development Commission (Commission) to fund advanced  
          low-carbon diesel fueling infrastructure projects in  
          disadvantaged communities. Specifically, this bill:  


          1)Makes declarations regarding the disproportional air quality  
            impacts experienced by disadvantaged communities as a result  
            of heavy freight traffic moving along major transportation  
            corridors; and states the Legislature's intent to direct  
            resources toward those communities to provide economic and  
            health benefits.


          2)Defines a variety of terms.


          3)Creates the Advanced Low-Carbon Diesel Fuels Access Program  
            (Program) to be administered by the Commission, in  
            consultation with the Air Resources Board (ARB) to reduce  
            greenhouse gas (GHG) emissions of diesel motor vehicles by  
            providing funding assistance for projects that expand advanced  








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            low-carbon diesel fueling infrastructure in disadvantaged  
            communities.


          4)Provides that the Program be funded from the Greenhouse Gas  
            Reduction Fund (GGRF), established by AB 32 (Nunez), Chapter  
            488, Statutes of 2006, upon appropriation by the Legislature.


          5)Requires the Commission, on or before March 1, 2016, to  
            complete the following:


             a)   Develop implementation guidelines for the Program that  
               ensure focus on communities with the greatest impact from  
               vehicular air pollution; and,


             b)   Select the disadvantaged communities to receive Program  
               funds, in consultation with the California Environmental  
               Protection Agency (CalEPA).


          6)Requires that the Commission give priority to projects that  
            provide quantifiable benefits to disadvantaged communities,  
            demonstrate co- or multi-benefits, leverage additional monies,  
            provide immediate benefits, and include marketing, education  
            and outreach strategies designed to increase effectiveness.


          7)Prohibits the Program from being used to fund projects  
            undertaken pursuant to state, federal, or local laws.


          8)Requires the Commission and ARB to allocate at least 50% of  
            available program funds to projects that provide direct  
            benefits to disadvantaged communities or that serve or are  
            located within disadvantaged communities.









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          9) Authorizes the Commission to reprioritize Alternative and  
            Renewable Fuel and Vehicle Technology Program (ARFVTP)  
            contracts and extend them by two years if Program requirements  
            are met and if the project directly benefits a disadvantaged  
            communities or is located within a disadvantaged community.


          10)Appropriates $35 million from the GGRF to the Commission for  
            the purpose of implementing the Advanced Low-Carbon Diesel  
            Fuels Access Program.


          11)Makes related, technical amendments.


          12)Includes an urgency clause.


          EXISTING LAW:  

          1)Requires ARB, pursuant to AB 32, to develop a plan of how to  
            reduce statewide GHG emissions to 1990 levels by 2020.  Under  
            AB 32, ARB is authorized to include the use of market-based  
            mechanisms to comply with these regulations (such as cap and  
            trade mechanism).

          2)Establishes the GGRF in the State Treasury and requires all  
            money collected pursuant to cap and trade, with limited  
            exceptions, be deposited into the fund.

          3)Creates the ARFVTP, pursuant to AB 118 (Nunez), Chapter 750,  
            Statutes of 2007, and requires the Commission to fund projects  
            that develop and deploy technologies and alternative and  
            renewable fuels in the marketplace to help meet the state's  
            climate change policies.  

          4)Creates the Air Quality Improvement Program (AQIP),  
            administered by ARB and the Commission, in consultation with  








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            local air districts, to fund specified air quality improvement  
            projects.  

          5)Created the Low Carbon Fuel Standard (LCFS), pursuant to  
            Executive Order (EO) S-01-07, which calls for a of a 10%  
            reduction in the carbon intensity of California's  
            transportation fuels by 2020 using a market-based approach.
          


          FISCAL EFFECT:  Unknown


          COMMENTS:  Approximately 40% of emissions generated in  
          California can be attributed to the transportation sector.  As a  
          result, California is making a concerted effort to increase the  
          use of alternative fuels to help reduce GHG emissions and other  
          toxic air pollutants associated with conventional  
          petroleum-based fuels.  A number of legislative measures and  
          regulations are targeted at increasing the use of renewable  
          fuels including AB 1007 (Pavley), Chapter 371, Statutes of 2005,  
          which required ARB and the Commission to develop a plan to  
          increase alternative fuels use in California.  

          Subsequent legislation, AB 118, established AQIP which is  
          administered by ARB in consultation with local air districts,  
          and funded through various fees and surcharges on vehicles.   
          AQIP provides competitive grants to fund projects that improve  
          air quality and encompasses programs such as the Hybrid and  
          Zero-Emission Truck and Bus Voucher Incentive Program, which is  
          administered by ARB and provides vouchers to California fleet  
          owners to help purchase hybrid and zero-emission trucks and  
          buses.

          AB 118 also established the ARFVTP, which is administered by the  
          Commission and provides funding for development and deployment  
          of alternative and renewable fuels and advanced transportation  
          technologies to help attain the state's climate change goals.   
          Eligible projects include, for example, the development,  








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          improvement, and production of alternative and renewable  
          low-carbon fuels; improvement of light-, medium-, and heavy-duty  
          vehicle technologies; and expansion of infrastructure connected  
          with existing fleets, public transit, and transportation  
          corridors.  

           
          The LCFS, administered by ARB, was established in 2007 through  
          EO S-01-07.  The LCFS uses a market-based, cap and trade,  
          approach to lowering the GHG emissions from petroleum-based  
          transportation fuels.  The LCFS requires producers of  
          petroleum-based fuels to reduce the carbon intensity of their  
          products beginning with a 0.25% in 2011 and culminating in a 10%  
          reduction in 2020.  Petroleum importers, refiners, and  
          wholesalers can either develop their own low carbon fuel  
          products or buy LCFS credits from other companies that develop  
          and sell low carbon fuel alternative fuels, such as biofuels,  
          electricity, natural gas, and hydrogen.  


          According to the author, the top 25% of disadvantaged  
          communities are located in the San Joaquin Valley and these  
          communities suffer from some of the poorest air quality in the  
          state, oftentimes as a direct result of heavy freight traffic  
          that moves along the nearby Interstate-5 (I-5) and State Route  
          (SR) 99 corridors.  The author also points out that other  
          disadvantaged communities experiencing poor air quality as a  
          result of freight movement also lie along the I-710 and SR 60  
          corridors near the Ports of Los Angeles and Long Beach. 





          The author believes that these communities could realize  
          immediate, significant reductions in GHG and criteria pollutant  
          emissions if the vehicles using these freight corridors had  
          ready access to low-carbon fueling infrastructure.  The sponsor  
          of AB 1176, Propel Fuels, indicates that many low-carbon fuel  








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          options are available to consumers, often at lower price points  
          than conventional diesel, but due to lack of available  
          alternative fueling infrastructure, these low-carbon diesel  
          options are underutilized.  The sponsor contends that the only  
          thing holding back widespread use of low-carbon diesel is lack  
          of available infrastructure and he notes that once low-carbon  
          fuel use is more widespread, there will be immediate GHG  
          reductions and commensurate air quality benefits.  To  
          substantiate this contention, the sponsor points to studies  
          showing that renewable diesel can achieve up to 70% GHG  
          reductions when compared to conventional diesel use.





          To make these low-carbon fuels more readily available along key  
          freight corridors in and near disadvantaged communities, the  
          author has introduced AB 1176 which would create a program to  
          fund the installation of low-carbon fueling stations.   
          Specifically, low-carbon diesel fueling infrastructure would be  
          located in disadvantaged communities that are disproportionately  
          impacted by poor air quality, selected using the CalEnviroScreen  
          census tract information created by CalEPA pursuant to SB 535  
          (De Leon), Chapter 830, Statutes of 2013.  The alternative  
          fueling stations would be located near conventional fueling  
          stations and be available to the public.





          Despite being less costly and resulting in fewer emissions, the  
          sponsor contends that low-carbon diesel is not widely available  
          to consumers because existing fueling stations are under  
          long-term contracts with fuel producers to dispense  
          conventional, contracted fuels and these products utilize all of  
          the station's fueling storage and dispensing infrastructure  
          (tanks and dispensing facilities).  The sponsor notes that these  








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          contractual arrangements have made it difficult for low-carbon  
          fuels to "break into" the conventional fueling marketplace.  

          The Advanced Low-Carbon Diesel Fuels Access Program would  
          provide funding to allow for the installation of alternative  
          low-carbon fueling infrastructure (tanks, pumps, fuel lines,  
          etc.) at or near conventional fueling stations along major  
          freight corridors thereby increasing consumer options for its  
          use. 

          Writing in support of AB 1176, the Coalition for Clean Air,  
          states that AB 1176 would help facilitate the deployment of  
          low-carbon, liquid fueling infrastructure where the availability  
          of low-carbon fuels is badly needed.  The sponsor, also writing  
          in support, notes that targeting investments on low-carbon fuel  
          infrastructure is disadvantaged communities is a cost-effective  
          and environmental impactful way to provide immediate and  
          substantial reductions of GHG emissions and associated  
          co-benefits.





          Related legislation:  AB 857 (Perea), re-establishes, after  
          2018, the priorities of the California Clean Truck, Bus, and  
          Off-Road Vehicle and Equipment Technology Program (Technology  
          Program) by providing that no less than 80% (or $100 million,  
          whichever is greater) of program funds go to certain heavy-duty  
          trucks that meet specified emissions standards.  AB 857 passed  
          out of this committee on April 13, 2015, with a 16-0 vote and is  
          scheduled to be heard in the Assembly Natural Resources  
          Committee on April 27, 2015.


          Previous legislation:  AB 8 (Perea), Chapter 401, Statutes of  
          2013, extended until January 1, 2024, extra fees on vehicle  
          registrations, boat registrations, and tire sales in order to  
          fund the programs that support the production, distribution, and  








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          sale of alternative fuels and vehicle technologies, as well as  
          air emissions reduction efforts.  

          SB 535 (De Leon), Chapter 830, Statutes of 2013, required that a  
          minimum of 25% of the available moneys in the GGRF go to  
          projects that provide benefits to identified disadvantaged  
          communities and that a minimum of 10% of the available moneys in  
          the fund to projects located within identified disadvantaged  
          communities.  


          AB 118, Nunez, Chapter 750, Statutes of 2007, created the  
          California Alternative and Renewable Fuel, Vehicle Technology,  
          Clean Air, and Carbon Reduction Act of 2007 that required the  
          Commission to implement the ARFVTP and provide funding measures  
          to specified entities to develop and deploy technologies and  
          alternative and renewable fuels in the marketplace to help  
          attain the state's climate change policies.  

          AB 32 (Nunez), Chapter 488, Statutes of 2006, required the ARB  
          to develop a plan of how to reduce emissions to 1990 levels by  
          the year 2020 and also required ARB to ensure that, to the  
          extent feasible, GHGs reduction requirement and programs direct  
          public and private investment toward the most disadvantaged  
          communities.  

          AB 1007 (Pavley), Chapter 371, Statutes of 2005, required ARB  
          and the Commission to develop a plan to increase alternative  
          fuels use in California.  
          


          REGISTERED SUPPORT / OPPOSITION:




          Support









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          Propel Fuels (Sponsor)




          Opposition


          California Chamber of Commerce




          Analysis Prepared by:Victoria Alvarez / TRANS. / (916) 319-2093