BILL ANALYSIS                                                                                                                                                                                                    



                                                                    AB 1964


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          Date of Hearing:  April 4, 2016


                        ASSEMBLY COMMITTEE ON TRANSPORTATION


                                 Jim Frazier, Chair


          AB 1964  
          (Bloom) - As Amended March 28, 2016


          SUBJECT:  High-occupancy vehicle lanes:  vehicle exceptions


          SUMMARY:  Creates a new program (upon expiration of the existing  
          program) to allow plug-in hybrid electric vehicles (PHEVs)  
          access to high-occupancy vehicle (HOV) lanes for a three-year  
          period, regardless of vehicle occupancy level.  Specifically,  
          this bill:


          1)Imposes a January 1, 2018, sunset on the issuance of decals  
            for the white sticker HOV access program for certain clean air  
            vehicles (discussed below); provides that decals issued before  
            that date are valid until January 1, 2019, consistent with the  
            existing sunset date for this program. 


          2)Provides that decals issued in the green sticker HOV access  
            program (also discussed below) prior to January 1, 2018, are  
            valid until January 1, 2019, also consistent with the existing  
            sunset date.


          3)Provides that decals issued in the green sticker HOV access  
            program on or after January 1, 2018, and before January 1,  
            2019, are valid until January 1, 2022.








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          4)Strikes the cap on the number of decals that can be issued in  
            the green sticker program.   


          5)Creates a new program, beginning January 1, 2019, that  
            provides for the issuance of an unlimited number decals to  
            allow HOV access for PHEVs until January 1 of the third year  
            after the year of issuance; requires decals for this program  
            to be distinguishable from white or green stickers.


          6)Provides for a 60-day enforcement transition period in the  
            event that clean air vehicle access to HOV lanes is  
            discontinued.


          7)Makes other, non-substantive changes to related provisions. 


          EXISTING LAW:  


          1)Directs the Department of Motor Vehicles (DMV) to issue decals  
            for clean air vehicles, until January 1, 2019, as follows:  

             a)   White stickers are available for an unlimited number of  
               vehicles that meet California's super ultra-low emission  
               vehicle standard for exhaust emissions and the federal  
               inherently low-emission vehicle (ILEV) evaporative emission  
               standard.  Vehicles that meet these requirements are  
               typically certified pure zero-emission vehicles (100%  
               battery electric and hydrogen fuel cell) and compressed  
               natural gas vehicles; and, 

             b)   Green stickers are available for 85,000 vehicles that  
               meet California's enhanced AT PZEV requirement or  
               transitional zero-emission vehicles (TZEV) standard,  








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               generally referred to as PHEVs. 
          1)Requires that drivers of clean air vehicles displaying the  
            appropriate white or green access sticker be allowed to use  
            HOV lanes and freeway ramps, regardless of occupancy level,  
            until such time as the Department of Transportation (Caltrans)  
            determines that federal law does not authorize the state to  
            allow these vehicles to use HOV lanes or ramps.
              
          2)Requires Caltrans to remove individual HOV lanes, or HOV lane  
            segments, during periods of peak congestion from these access  
            provisions if it finds that the lane exceeds a level of  
            service C (generally meaning at or near free-flowing traffic  
            with minimal delays) and that the operation or projected  
            operation of clean air vehicles will significantly increase  
            HOV lane congestion.  

          FISCAL EFFECT:  Unknown


          COMMENTS:   In 2012, Governor Brown issued an executive order  
          laying the foundation for 1.5 million zero- or near-zero  
          emission vehicles to be on California's roadways by 2025  
          (referred to as the ZEV mandate).  In response, the California  
          Air Resources Board promulgated regulations requiring the  
          largest automakers to derive 15% of their annual California  
          sales from electric vehicles and other zero- or near-zero  
          emissions vehicles by 2025.  This equates to approximately  
          270,000 vehicles annually.  


          Transitioning to clean air vehicles presents some significant  
          hurdles for consumers to overcome, for example, upfront costs  
          are higher than internal combustion engine (ICE) vehicles.   
          Moreover, electric vehicles, with their relatively limited  
          miles-per-charge capability, often induce range anxiety.  Given  
          this, and given the importance of these vehicles in meeting  
          climate change goals, federal and state governments offer  
          incentives to spur the commercial success of these vehicles.   
          Typical incentives include:  reduced purchase prices, tax  








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          credits, rebates, sales tax exemptions, HOV access, and free  
          parking.  These incentive programs appear to have been  
          successful in enticing consumers to purchase clean air vehicles  
          over ICE vehicles.  For example, in a survey report released in  
          2014 by the California Center for Sustainable Energy, 59% of  
          respondents indicated that access to HOV lanes was an important  
          motivation for purchasing a clean air vehicle.


          California's experiment in incentivizing the purchase of clean  
          air vehicles by offering HOV lane access for single-occupant  
          vehicles was first authorized in 1999 with the passage of AB 71  
          (Cunneen), Chapter 330, Statutes of 1999, for super ultra-low  
          emission vehicles and ILEVs (white sticker vehicles).  That  
          access was later expanded by AB 2628 (Pavley), Chapter 725,  
          Statutes of 2006, to allow hybrid vehicles.  Yellow decals were  
          issued for these vehicles.  Since allowing large numbers of  
          hybrids into HOV lanes would reduce the effectiveness of the  
          lanes by compromising their ability to offer a quicker commute  
          than adjacent mixed-flow lanes, 
          AB 2628 limited the number of stickers (yellow) for hybrids that  
          were allowed to be issued to 75,000 and allowed Caltrans to  
          suspend HOV lane privileges for hybrids on any particular lane  
          that reached a specified level of congestion.  The yellow  
          sticker program was eventually allowed to sunset.  

          SB 535 (Yee), Chapter 215, Statutes of 2010, essentially  
          replaced the hybrid yellow sticker program with a new program  
          aimed at incentivizing the purchase of enhanced AT PEZ.  The new  
          program (which uses green stickers) was capped at 40,000  
          vehicles and was originally scheduled to sunset on January 1,  
          2015.  SB 286 (Yee), Chapter 414, Statutes of 2013, and 
          AB 266 (Blumenfield), Chapter, 405, Statutes of 2013,  
          subsequently extended sunset dates for both the green sticker  
          and white sticker programs to January 1, 2019.  The cap has also  
          been raised incrementally to the current limit of 85,000 decals,  
          all of which have been disbursed.    

          An HOV lane, commonly referred to as a "carpool" or "diamond"  








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          lane, is part of a traffic management strategy designed to  
          provide an incentive for commuters to form carpools by offering  
          reduced travel times.  The declared legislative intent in  
          establishing these lanes is to relieve traffic congestion,  
          conserve fuel, and reduce vehicular emissions.  


          The success of HOV access programs for clean air vehicles  
          triggers concerns that allowing these additional cars in the HOV  
          lanes may result in degraded performance of the lanes.  The fear  
          is that, if HOV lanes become sufficiently degraded, their  
          benefits (i.e., traffic congestion relief, fuel conservation,  
          and reduced emissions) will be lost and carpooling will be  
          discouraged.  Consequently, both state and federal existing law  
          require Caltrans to monitor the performance of HOV lanes and to  
          take action to remedy the degradation if it occurs.  

          The latest HOV performance monitoring report issued by Caltrans  
          (based on 2014 data), indicates that in the first half of 2014,  
          59% of the HOV lanes were degraded.  That number rose to 63% for  
          the second half of 2014.  According to Caltrans, the connection  
          between clean air vehicles and degradation has yet to be  
          established.  Traffic counts indicate that clean air vehicles  
          constitute a relatively small percentage of the peak hour HOV  
          volume.  For example, in Los Angeles and Ventura counties, clean  
          air vehicles constituted up to 5% of the peak HOV traffic on  
          individual freeway segments.  

          In response to the HOV lane performance monitoring and  
          consistent with federal law, Caltrans submitted to the Federal  
          Highway Administration (FHWA) an action plan to remedy the HOV  
          lane degradation.  That plan called for, among other strategies,  
          increased enforcement, improved incident management response  
          times, and improved detection.  The action plan specifically  
          stated that Caltrans would not be considering prohibiting clean  
          air vehicles from HOV lanes at this time because:  

          1)These vehicles constitute a very low percentage of the users  
            of HOV lanes; and,








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          2)Prohibiting these vehicles runs counter to the Governor's  
            Executive Order that directs state agencies to take action to  
            support and incentivize the purchase and use of these  
            vehicles.  

          FHWA responded to Caltrans' proposed action plan last year,  
          indicating that the plan did not adequately provide "proactive  
          or tangible strategies to affect immediate mitigation for  
          bringing the facilities into compliance or at least leading  
          towards that goal."  As a result, Caltrans will be considering  
          other options (reportedly not including removal of clean air  
          vehicles) to improve HOV lane performance, such as raising  
          vehicle occupancy levels.  

          According to the author, AB 1964 is necessary to provide  
          long-term certainty for consumers of PHEVs.  As the 2019 sunset  
          date approaches, the author asserts that the value of the green  
          sticker and the incentive for purchasing a PHEV will continually  
          diminish.   

          Committee comments, concerns, and suggested amendments:  

          1)That the state should help spur the commercial market for ZEVs  
            is undeniable.  First, transitioning from ICE vehicles to  
            vehicles that meet the ZEV mandate is the cornerstone of the  
            state's efforts to reduce greenhouse gas emissions from the  
            transportation sector.  The more ZEVs that are purchased, the  
            sooner we meet these goals and the sooner we realize a  
            healthier environment.  Second, the 15% ZEV mandate will not  
            be easy for automakers to attain and HOV access for clean air  
            vehicles has proven to be an effective incentive to help.  A  
            recent University of California, Los Angeles study showed that  
            the ability to access HOV lanes prompted the purchase of more  
            than 24,000 plug-in electric cars and hybrids, representing  
            40% of ZEV sales in major urban areas.  AB 1964 represents a  
            creative approach to providing a more sustainable way to  
            continually offer this incentive.  









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          2)The problem with the HOV access incentive, and with this bill,  
            is that there is no established expectation that the incentive  
            should, at some point, stop.  The state should not have to be  
            in the position of indefinitely subsidizing or otherwise  
            incentivizing ZEVs.  That was not the intent of the initial  
            HOV access incentive, as evidenced by both a sunset date and a  
            cap on the number of decals that could be issued, and it  
            should not be the intent of this bill.  

            AB 1964 should be amended to establish a performance metric  
            for the revised program.  For example, HOV access incentives  
            for PHEVs should cease six months after the PHEV market share  
            of total cars sold reaches 8.6% and sustains at least this  
            level for two consecutive years.  This will ensure the  
            incentive is in place long enough for the market to be able to  
            sustain itself.  (Of the 15% ZEV mandate, PHEVs are estimated  
            to likely make up 8.6% of the total cars sold.)  

          3)The bill ceases to issue white stickers for pure zero emission  
            vehicles on January 1, 2018, even though decals are valid  
            until January 1, 2019.  White stickers should be issued up  
            until the sunset date of the program to allow even  
            partial-year use of the HOV access benefit.  The bill should  
            be amended to correct this drafting error.

          4)Increasingly, the HOV lane performance is degraded.  This bill  
            will effectively allow a significant increase in the number of  
            vehicles that will be eligible to access the HOV lanes,  
            thereby exacerbating the HOV lane degradation to the point  
            that carpool requirements may have to be increased to three or  
            more occupants.  

          Related legislation:  AB 1851 (Gray and Ting), among other  
          things, removes the 85,000 cap on the number of decals that can  
          be issued in the green sticker program.  AB 1851 is scheduled to  
          be heard by this committee on April 11, 2016.

          The Governor's administration has proposed trailer bill language  
          to extend the white sticker program until 2025, consistent with  








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          recently enacted federal law.  The Governor's proposal would  
          also remove the cap on the number of decals that can be issued  
          in the green sticker program.

          Previous legislation:  AB 71 (Cunneen), Chapter 330, Statutes of  
          1999, first authorized access to HOV lanes for vehicles in the  
          white sticker program.  

          AB 2628 (Pavley), Chapter 725, Statutes of 2006, expanded the  
          HOV lane access by allowing hybrid vehicles to use the lanes.   
          Yellow stickers were issued for this program.

          SB 535 (Yee), Chapter 215, Statutes of 2010, essentially  
          replaced the hybrid yellow sticker program with a new program  
          aimed at incentivizing the purchase of enhanced AT PEZ.  The new  
          program (which uses green stickers) was capped at 40,000  
          vehicles and was originally scheduled to sunset on January 1,  
          2015.  Sunset dates for both the green sticker and white sticker  
          programs were subsequently extended to January 1, 2019, by SB  
          286 (Yee), Chapter 414, Statutes of 2013, and AB 266  
          (Blumenfield), Chapter, 405, Statutes of 2013.  

          SB 853 (Committee on Budget and Fiscal Review), Chapter 27,  
          Statutes of 2014, among other provisions, expanded the number of  
          available green stickers from 40,000 to 55,000, AB 2013  
          (Muratsuchi), Chapter 527, Statutes of 2014, expanded the number  
          from 55,000 to 70,000, and AB 95 (Committee on Budget), Chapter  
          12, Statutes of 2015, expanded the number from 70,000 to 85,000.  
           

          REGISTERED SUPPORT / OPPOSITION:




          Support


          Auto Alliance








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          Opposition


          None on file



          Analysis Prepared by:Janet Dawson / TRANS. / (916) 319-2093