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 --