BILL ANALYSIS                                                                                                                                                                                                    Ó



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

          Bill No:          AB 1965           Hearing Date:    6/21/2016 
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          |Author:   |Cooper                                                |
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          |Version:  |5/31/2016                                             |
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          |Urgency:  |No                     |Fiscal:      |Yes             |
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          |Consultant|Erin Riches                                           |
          |:         |                                                      |
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          SUBJECT:  Enhanced Fleet Modernization Program


           DIGEST:  This bill requires the state Air Resources Board (ARB)  
          to expand the Enhanced Fleet Modernization Program (EFMP),  
          relative to EFMP Plus-Up, in disadvantaged communities (DACs)  
          and in areas with poor air quality.  

          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  







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            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 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 expand EFMP, relative to EFMP Plus-Up,  
          as follows:  

          1)Requires ARB, in consultation with BAR, to set specific,  
            measurable goals for the retirement and replacement of  
            passenger vehicles and light-duty and medium-duty trucks that  
            are high polluters, for fiscal year 2016-17 and every fiscal  
            year thereafter,

          2)Requires ARB, in consultation with BAR, to meet these goals by  
            updating the program guidelines by July 1, 2017, to:

             a)   Require specific steps be taken to ensure that the  
               vehicle replacement component of the program is available  
               in areas at risk of being designated as federal extreme  








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               non-attainment.

             b)   Require specific steps to be taken to ensure that the  
               vehicle replacement component of the program is available  
               in all districts containing DACs.

             c)   Require program funding for targeted outreach in  
               low-income communities and DACs to be increased from the  
               amounts allocated in fiscal year 2015-16.

             d)   Require improved coordination, integration, and  
               partnerships with other programs that target DACs and  
               receive GGRF monies.

          3)Requires ARB, by July 1, 2018, and every other year  
            thereafter, to collect and post on its website the following  
            information:
             a)   Program performance relative to the goals it adopted  
               pursuant to this bill.

             b)   An accounting that includes, but need not be limited to,  
               funding allocated to the program, funding sources, and  
               program expenditures by region.

             c)   A comment on the overall success of the program, or lack  
               thereof, including but not limited to recommendations to  
               improve the overall performance of the program if ARB  
               determines it needs improvement.

          4)Authorizes ARB, upon appropriation by the Legislature, to  
            allocate monies to expand the vehicle replacement component of  
            the program from the Enhanced Fleet Modernization Subaccount,  
            the High Polluter Repair or Removal Account, or the Vehicle  
            Inspection and Repair Fund.

          COMMENTS:

          1)Purpose.  The author states that according to ARB, at least 2  
            million cars in the state, or 9% of the state's light-and  
            medium-duty vehicles, are more than 20 years old.  This is  
            five times the national average.  In 2011, the 9% of the fleet  
            that was model year 1992 or older produced 40% of total  
            smog-forming emissions from passenger vehicles.  According to  
            state and local agency estimates, 10% to 15% of the state's  
            motor vehicles, known as gross polluters, are responsible for  








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            more than half of light-duty vehicle smog in the state.   
            Expanding EFMP Plus-Up to other regions will help get more  
            people into newer, cleaner, safer, and more reliable cars.

          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)How does EFMP Plus-Up work?  EFMP Plus-Up has been  
            particularly successful in the San Joaquin Valley, resulting  
            in the retirement of 292 high-polluting vehicles in the first  
            six months of the program.  In addition, all of the families  
            served in the first six months were in DACs.  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, highest-polluting cars.  

          4)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.   
            EFMP Plus-Up covers two air districts encompassing about 55%  
            of the state's population.  Assuming the program expansion  
            required in this bill would increase the eligible population  
            by 50%, additional costs would be about $19 million.

          5)Time to expand the success story?  Currently, EFMP Plus-Up  








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            only serves two regions, the South Coast and San Joaquin air  
            districts.  The author states that other regions - in  
            particular, the Bay Area and Sacramento air districts - have  
            expressed interest in utilizing EFMP Plus-Up to assist their  
            disadvantaged populations and to target the dirtiest segment  
            of the vehicle fleet.  This bill aims to help expand the  
            program to other regions with poor air quality and to improve  
            coordination, integration, and partnerships with other  
            programs that target DACs, such as weatherization and  
            energy-efficiency initiatives.  

          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 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 1691 (Gipson) - requires ARB to update EFMP, relative to EFMP  
          Plus-Up, to help increase efficiencies and reduce program abuse.  
          This bill will also be heard in this committee today.

          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:    55-23
            Appr:     15-3
            Trans:    12-3
          
          FISCAL EFFECT:  Appropriation:  No    Fiscal Com.:  Yes     
          Local:  No









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

          Valley Clean Air Now (sponsor)
          Alliance of Automobile Manufacturers
          Bay Area Air Quality Management District
          Charge Ahead California
          Coalition for Clean Air
          Communities for a Better Environment
          Environment California
          Greenlining Institute 
          Natural Resources Defense Council
          Sacramento Metropolitan Air Quality Management District
          Union of Concerned Scientists

          OPPOSITION:

          None received

          
          

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