BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON TRANSPORTATION AND HOUSING
                              Senator Jim Beall, Chair
                                2015 - 2016  Regular 

          Bill No:          AB 1691           Hearing Date:     6/21/2016
           ----------------------------------------------------------------- 
          |Author:   |Gipson                                                |
          |----------+------------------------------------------------------|
          |Version:  |5/12/2016                                             |
           ----------------------------------------------------------------- 
           ----------------------------------------------------------------- 
          |Urgency:  |No                     |Fiscal:      |Yes             |
           ----------------------------------------------------------------- 
           ----------------------------------------------------------------- 
          |Consultant|Erin Riches                                           |
          |:         |                                                      |
           ----------------------------------------------------------------- 
          

          SUBJECT:  Enhanced Fleet Modernization Program


           DIGEST:  This bill requires the state Air Resources Board (ARB)  
          to update the Enhanced Fleet Modernization Program (EFMP),  
          relative to EFMP Plus-Up, to help increase efficiencies and  
          reduce program abuse.

          ANALYSIS:
          
          1)Existing federal law, the Clean Air Act, requires the U.S.  
            Environmental Protection Agency to establish National Ambient  
            Air Quality Standards for certain air pollutants due to their  
            negative impact on public health above specified  
            concentrations.  Regions that do not meet the national  
            standards for any one of the standards are designated as  
            non-attainment areas. 

          2)Existing state law establishes the smog check program,  
            administered by the Bureau of Automotive Repair (BAR).  This  
            program generally requires vehicles registered in  
            non-attainment areas to undergo emission inspections.   
            Specifically, vehicle owners must have their vehicles tested  
            every two years, with some exceptions, including gas-powered  
            vehicles manufactured prior to 1976, alternatively-fueled  
            vehicles, and vehicles six years old or newer.

          3)Existing state law also establishes the Consumer Assistance  
            Program (CAP) under BAR.  CAP provides assistance to  
            low-income owners of vehicles that have failed a smog test in  







          AB 1691 (Gipson)                                   Page 2 of ?
          
          
            the form of a repair cost waiver, repair cost assistance, or a  
            monetary incentive of up to $1,500 to "retire" (scrap) the  
            vehicle.   

          4)Existing state law establishes the Enhanced Fleet  
            Modernization Program (EFMP), administered by the state ARB  
            and BAR.  EFMP provides for the voluntary retirement of  
            passenger vehicles and light- and medium-duty trucks that are  
            high polluters.  BAR determines whether an owner-applicant is  
            eligible for CAP or EFMP (or neither).  EFMP offers a $1,000  
            voucher ($1,500 for low-income owners) to retire a  
            high-polluting vehicle.  

            EFMP includes a vehicle replacement component, now known as  
            EFMP Plus-Up, which is operated by the San Joaquin and South  
            Coast air districts in partnership with ARB.  (These air  
            districts are the only ones in the state classified as extreme  
            non-attainment.)  Under EFMP Plus-Up, a low-income owner who  
            lives in one of these districts can get a $2,500 "replacement"  
            voucher in addition to the $1,500 base EFMP "retirement"  
            voucher.  The owner may use the funds to either purchase a car  
            that is less than eight years old or to obtain a public  
            transit voucher.  If a low-income owner lives within a  
            disadvantaged community (DAC) in one of these air districts,  
            and wants to purchase a hybrid, plug-in hybrid, or battery  
            electric vehicle, he or she can "stack" additional incentives  
            on top of these two vouchers.  Depending on the owner's income  
            and the type of replacement vehicle, the owner can get up to  
            $12,000 total toward the purchase of a new car.

          This bill requires ARB to update the EFMP guidelines relative to  
          EFMP Plus-Up, no later than June 30, 2017 and effective until  
          July 1, 2022, to:

          1)Require each air district with a backlog or wait list of  
            applicants to submit a plan to ARB with recommendations of how  
            to eliminate the backlog.  

          2)Require each air district to take steps to help prevent  
            program abuse, including but not limited to randomly verifying  
            income eligibility and contacting program participants at  
            least once after their vehicles are replaced.

          3)Require each air district to partner with, and allocate a  
            minimum amount of outreach funds for community-based  








          AB 1691 (Gipson)                                   Page 3 of ?
          
          
            organizations to help ensure program accessibility for the  
            lowest income DACs in the state.  Requires each district to  
            report to ARB every six months on outreach and partnerships.  

          4)Require each air district to enhance its pre-screening of  
            applicants, if determined by ARB to be appropriate.

          5)Require each air district to prioritize retirement of vehicles  
            that are 15 years or older and with more than 75,000 miles.

          COMMENTS:

          1)Purpose.  The author states that the current program does not  
            include requirements to prevent fraud or clear a backlog of  
            waitlisted applicants, leading to uneven program results.  The  
            author states that this bill will establish a common framework  
            to help make program operations more efficient and better  
            equipped to replace the cars that damage the environment the  
            most.  According to the author, this bill will also help focus  
            EFMP Plus-Up on DACs and on annually increasing the number of  
            vehicles replaced. 

          2)Need for the program.  According to ARB, 75% of vehicular air  
            pollution is caused by just 25% of the fleet.  While much  
            attention has been focused on the zero-emissions vehicle (ZEV)  
            mandate, which aims to have ZEVs comprise 15% of new cars sold  
            in California by 2025, programs such as EFMP and EFMP Plus-Up  
            are key to getting older, high-polluting cars off the road and  
            thereby achieving significant emissions reductions.  Because  
            gross-polluting cars are often owned by lower-income  
            individuals, providing financial assistance can be an  
            essential element to helping them scrap these cars and replace  
            them with newer, cleaner cars. 

          3)Need for the bill.  By requiring ARB to continuously evaluate  
            district programs, this bill aims to encourage the use of new  
            and innovative methodologies to better reach and assist  
            low-income participants and further encourage retirement and  
            replacement of the oldest and dirtiest cars.  Tightening up  
            EFMP Plus-Up and focusing the district programs on outreach,  
            prevention of abuse, and prioritizing the oldest cars will  
            help improve air quality in some of the state's most highly  
            polluted areas.

          4)How does EFMP Plus-Up work?  EFMP Plus-Up has been  








          AB 1691 (Gipson)                                   Page 4 of ?
          
          
            particularly successful in the San Joaquin Valley, resulting  
            in the retirement of 292 high-polluting vehicles in the first  
            six months of the program.  The San Joaquin Valley program  
            uses "grass roots" advertising and outreach to invite low- and  
            moderate-income vehicle owners to participate in "events"  
            where they can get a free smog test and undergo pre-screening  
            to determine whether they are eligible for various incentives.  
             The South Coast program uses more traditional outreach tools  
            such as flyers, billboards, and websites.  While the South  
            Coast program is also successful, with a long wait list, it  
            does not necessarily provide the pre-screening that would  
            enable staff to prioritize applications for the oldest, most  
            high-polluting cars.  

          5)How much does it cost?  According to the Assembly  
            Appropriations Committee analysis, funding for EFMP and EFMP  
            Plus-Up totals $12.8 million in 2015-16, which ARB estimates  
            will provide incentives for about 1,500 vehicles.  For  
            2016-17, proposed funding for both programs totals $37.4  
            million (of which $30 million is Greenhouse Gas Reduction  
            Fund), and would provide incentives for about 4,500 vehicles.   

          6)South Coast concerns.  The South Coast air district has taken  
            a "support with amendments" position on this bill.  South  
            Coast states that it does not anticipate having a wait list  
            beyond fiscal year 2016-17, but also states that clearing the  
            backlog is partly dependent on state funding levels for EFMP  
            and EFMP Plus-Up.  South Coast asks for amendments to allow a  
            district to provide backlog information in its quarterly  
            report instead of requiring a formal plan to ARB.  South Coast  
            also requests amendments to help ensure that the programs are  
            available in areas of extreme non-attainment; make the vehicle  
            replacement component available in all districts containing  
            DACs; increase outreach funding; and allocate funding in equal  
            levels to EFMP and EFMP Plus-Up. 

          7)Double-referral.  This bill has also been referred to the  
            Environmental Quality Committee.

          Related Legislation:
          
            AB 1965 (Cooper) - Requires ARB to expand EFMP, relative to EFMP  
          Plus-Up, in DACs and in areas with poor air quality.  This bill  
          will also be heard by this committee today.









          AB 1691 (Gipson)                                   Page 5 of ?
          
          
          SB 1275 (De Leon, Chapter 530, Statutes of 2014) - established  
          the Charge Ahead Initiative, to provide incentives to increase  
          the availability of ZEVs and near-zevs, particularly in DACs.

          SB 459 (Pavley, Chapter 437, Statutes of 2013) - required ARB to  
          update the EFMP guidelines by June 30, 2015, to, among other  
          things, focus program assistance on lower-income vehicle owners.

          Assembly Votes:

            Floor:    59-18
            Appr:     15-5
            Trans:    13-1
          
          FISCAL EFFECT:  Appropriation:  No    Fiscal Com.:  Yes     
          Local:  No


            POSITIONS:  (Communicated to the committee before noon on  
          Wednesday,
                          June 15, 2016.)
          
            SUPPORT:  

          None received

          OPPOSITION:

          None received

          
          

                                      -- END --