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 ----------------------------------------------------------------- |Author: |Cooper | |----------+------------------------------------------------------| |Version: |5/31/2016 | ----------------------------------------------------------------- ----------------------------------------------------------------- |Urgency: |No |Fiscal: |Yes | ----------------------------------------------------------------- ----------------------------------------------------------------- |Consultant|Erin Riches | |: | | ----------------------------------------------------------------- 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 AB 1965 (Cooper) 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 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 AB 1965 (Cooper) Page 3 of ? 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 AB 1965 (Cooper) Page 4 of ? 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 AB 1965 (Cooper) Page 5 of ? 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 AB 1965 (Cooper) Page 6 of ? 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 -- END --