BILL ANALYSIS                                                                                                                                                                                                    

                                                                    AB 1964

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          1964 (Bloom)

          As Amended  April 11, 2016

          Majority vote

          |Committee       |Votes|Ayes                  |Noes                |
          |                |     |                      |                    |
          |                |     |                      |                    |
          |                |     |                      |                    |
          |Transportation  |14-2 |Frazier, Linder,      |Brown, Melendez     |
          |                |     |Baker, Bloom, Chu,    |                    |
          |                |     |Daly, Dodd,           |                    |
          |                |     |                      |                    |
          |                |     |                      |                    |
          |                |     |Eduardo Garcia,       |                    |
          |                |     |Gomez, Kim, Mathis,   |                    |
          |                |     |Medina, Nazarian,     |                    |
          |                |     |O'Donnell             |                    |
          |                |     |                      |                    |
          |Appropriations  |12-6 |Bloom, Bonilla,       |Bigelow, Chang,     |
          |                |     |Bonta, Calderon,      |Gallagher, Jones,   |
          |                |     |Daly, Eggman, Eduardo |Obernolte, Wagner   |
          |                |     |Garcia, Holden,       |                    |
          |                |     |Quirk, Santiago,      |                    |
          |                |     |Weber, Wood           |                    |
          |                |     |                      |                    |


                                                                    AB 1964

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          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)Provides that decals issued in the green sticker HOV access  
            program (discussed below) prior to January 1, 2018, are valid  
            until January 1, 2019, also consistent with the existing  
            sunset date; 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, 2021.

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

          3)Creates a new program, beginning January 1, 2019, that  
            provides for the issuance of an unlimited number of 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.

          4)Sunsets the reconstituted HOV access program when the new car  
            PHEV market share reaches 8.6% cumulatively for two  
            consecutive years.

          5)Provides for a 60-day enforcement transition period in the  
            event that clean air vehicle access to HOV lanes is  
            discontinued, and makes other, non-substantive changes to  
            related provisions. 

          FISCAL EFFECT:  According to the Assembly Appropriations  


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          Committee, costs to the Department of Motor Vehicles are minor  
          and absorbable.  California Department of Transportation will  
          continue to incur annual special fund costs of around $100,000  
          beyond the current sunset date for one position associated with  
          federally required analysis and reporting regarding compliance  
          of HOV lanes with federal performance standards.

          COMMENTS:  In 2012, Governor Brown issued an executive order  
          laying the foundation for 1.5 million zero- or near-zero  
          emission vehicles (ZEV) 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  
          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.

          According to the author, this bill is necessary to provide  
          long-term certainty for consumers of PHEVs.  As the 2019 sunset  


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          date approaches, the author asserts that the value of the green  
          sticker and the incentive for purchasing a PHEV will continually  
          diminish.  Furthermore, 
          this bill recognizes that the HOV access 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.  This bill addresses this  
          issue by including a performance metric for the revised program.  
           Under this bill, HOV access incentives for PHEVs will cease  
          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.)  

          Committee comments and concerns:  

          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.  This bill represents a  
            creative approach to providing a more sustainable way to  
            continually offer this incentive.  
          2)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,  


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            thereby exacerbating the HOV lane degradation to the point  
            that carpool requirements may have to be increased to three or  
            more occupants.  

          Please see the policy committee analysis for full discussion of  
          this bill.

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