BILL ANALYSIS Ó AB 1964 Page 1 ASSEMBLY THIRD READING AB 1964 (Bloom) As Amended May 5, 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 Page 2 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)Makes other, non-substantive changes to related provisions. FISCAL EFFECT: According to the Assembly Appropriations Committee, costs to the Department of Motor Vehicles are minor and absorbable. California Department of Transportation will AB 1964 Page 3 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 date approaches, the author asserts that the value of the green sticker and the incentive for purchasing a PHEV will continually AB 1964 Page 4 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, thereby exacerbating the HOV lane degradation to the point that carpool requirements may have to be increased to three or AB 1964 Page 5 more occupants. Please see the policy committee analysis for full discussion of this bill. Analysis Prepared by: Janet Dawson / TRANS. / (916) 319-2093 FN: 0002855