BILL ANALYSIS Ó SENATE COMMITTEE ON ENVIRONMENTAL QUALITY Senator Wieckowski, Chair 2015 - 2016 Regular Bill No: AB 1965 ----------------------------------------------------------------- |Author: |Cooper | ----------------------------------------------------------------- |-----------+-----------------------+-------------+----------------| |Version: |5/31/2016 |Hearing |6/29/2016 | | | |Date: | | |-----------+-----------------------+-------------+----------------| |Urgency: |No |Fiscal: |Yes | ------------------------------------------------------------------ ----------------------------------------------------------------- |Consultant:|Rebecca Newhouse | | | | ----------------------------------------------------------------- SUBJECT: Vehicle retirement and replacement. ANALYSIS: Existing law: 1) Establishes the Enhanced Fleet Modernization Program (EFMP), which allows for the voluntary retirement of passenger vehicles and light-duty and medium-duty trucks that are high polluters and requires the program be administered by the Bureau of Automotive Repair (BAR) pursuant to guidelines adopted by the California Air Resources Board (ARB). (Health and Safety Code §44125) 2) Establishes the Charge Ahead Initiative administered by ARB with the goals of reaching at least one million zero-emission and near-zero-emission vehicles by January 1, 2023, and increasing accessibility for disadvantaged, low-income, and moderate-income communities. ARB is required to establish programs that further increase access to and direct benefits for disadvantaged, low-income, and moderate-income communities and consumers from electric transportation. (HSC §44258 et seq.) 3) Under the California Global Warming Solutions Act of 2006 (also known as AB 32), requires ARB to determine the 1990 statewide greenhouse gas (GHG) emissions level and approve a statewide GHG emissions limit that is equivalent to that level, to be achieved by 2020, and to adopt GHG emissions reductions measures by regulation. AB 1965 (Cooper) Page 2 of ? ARB is authorized to include the use of market-based mechanisms to comply with these regulations. (Health and Safety Code §38500 et seq.) 4) Establishes the Greenhouse Gas Reduction Fund (GGRF) in the State Treasury, requires all moneys, except for fines and penalties, collected pursuant to a market-based mechanism be deposited in the fund. (Government Code §16428.8) 5) Prohibits the state from approving allocations for a measure or program using GGRF moneys except after determining that the use of those moneys furthers the regulatory purposes of AB 32, and requires moneys from the GGRF be used to facilitate the achievement of reductions of GHG emissions in California. (HSC §39712) This bill: 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 2017-18 and every fiscal year thereafter. 2) Requires ARB, in consultation with BAR, to meet these goals by updating the program guidelines by July 1, 2018, to: a) Require specific steps to be taken to ensure that the vehicle replacement component of the program is available in all districts that have more than one million residents. b) Require program funding for targeted outreach in low-income communities or disadvantaged communities for the program is evaluated and, if necessary, enhanced to obtain the program's retirement and replacement goals. c) Require, where applicable improved coordination, integration, and partnerships with other programs that target disadvantaged communities and receive GGRF moneys. 3) Requires ARB, by July 1, 2018 and every other year thereafter, to collect and post on its Internet website the following information: a) Program performance relative to the goals it adopted AB 1965 (Cooper) Page 3 of ? 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) An analysis broken down by district of the program's performance to identify areas to be emphasized when setting future goals or updating the program guidelines. 4) Authorizes ARB, upon appropriation by the Legislature, to allocate moneys 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. Background 1) Air pollution in California and the transportation sector. The federal Clean Air Act, and its implementing regulations are intended to protect public health and environmental quality by limiting and reducing pollution from various sources. Under the federal Clean Air Act, the United States Environmental Protection Agency (US EPA) establishes National Ambient Air Quality Standards (NAAQS) that apply for outdoor air throughout the country. These federal standards exist for several air pollutants due to their negative impact on public health above specified concentrations, including ozone, particulate matter (PM), NOx, oxides of sulfur (SOx), carbon monoxide, and lead. US EPA reviews each NAAQS at five-year intervals to ensure that the standards are based on the most recent scientific information. Regions that do not meet the national standards for any one of the standards are designated nonattainment areas. The Clean Air Act sets deadlines for attainment based on the severity of nonattainment and requires states to develop comprehensive plans, known as the state implementation plan (SIP), to attain and maintain air quality standards for each area designated nonattainment for an NAAQS. California has some of the most severe air pollution problems in the country. The South Coast and San Joaquin air basins, which contain over half of the state's population, are extreme nonattainment regions (the highest degree of severity) for AB 1965 (Cooper) Page 4 of ? ozone pollution and are both nonattainment regions for particulate matter (PM). Ground level ozone (or tropospheric ozone) is a primary component of smog and is formed from the reaction of NOx with volatile organic compounds in sunlight. Ozone has a number of negative health effects including irritated respiratory system, reduced lung function, aggravated asthma and inflammation and damage of the lining of the lung. Active children are at highest risk from ozone exposure. PM can be directly emitted from combustion or can be formed in the atmosphere when gaseous pollutants such as SO2 and NOx react to form fine particles. Very fine particulate matter is particularly dangerous since it burrows deep into the lungs where it can enter the bloodstream and harm the heart and other organs. Fine particulate pollution poses an especially critical health danger for children, the elderly, and people with existing health problems. Exposure to PM 2.5 is also linked to cardiovascular disease. A 2010 ARB analysis based on scientific assessments by US EPA, reported that approximately 9,000 people in California are estimated to die prematurely each year as a result of exposure to fine particle pollution. Nationally and statewide, the transportation sector is responsible for a major fraction of air pollution, and in particular NOx, which contributes to both ozone and PM formation. Across the US, motor vehicles emit more than half of all NOx emissions. In California, the transportation sector accounts for approximately 80% of the NOx emissions, and according to ARB, 75% of vehicular air pollution in the state is caused by just 25% of the fleet. 2) Car scrap program. The Consumer Assistance Program (CAP) was created to encourage voluntary accelerated vehicle retirement ("car scrap") which provides monetary incentives to vehicle owners to retire older, high-polluting vehicles. Under this program owners who scrap their vehicles are given $1,000 ($1,500 for low income consumers) for vehicles that have failed their last smog test. 3) EFMP and EFMP Plus-Up. Existing state law establishes the Enhanced Fleet Modernization Program (EFMP), administered by the ARB and BAR. EFMP provides for the voluntary retirement of passenger vehicles and light- and medium-duty trucks that are AB 1965 (Cooper) Page 5 of ? high polluters. Unlike CAP, EFMP allows vehicles to be retired without first having to fail a smog test, and 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 (both designated extreme non-attainment areas for ozone). 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 disadvantaged community 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. While the program allows individuals to trade in their high-polluting cars for cleaner gas-powered cars, greater incentives are provided if the individual opts to purchase a hybrid, hybrid-electric, or fully electric vehicle. Depending on income and the type of replacement vehicle, the owner can get up to $12,000 total toward the purchase of a new car. Funding. EFMP is funded through vehicle surcharges, whereas EFMP Plus-Up has been funded through GGRF moneys. For 2015-16, funding for EFMP and EFMP Plus-Up is around $12.8 million which ARB estimates will provide incentives for about 1,500 vehicles. In the 2016-17 fiscal year, 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 pilot program was funded in FY 2015-16 with $20 million from GGRF. The 2016-17 FY investment plan for ARB's low carbon transportation investments proposes $30 million from GGRF. Implementing EFMP Plus-Up. 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. The San Joaquin Valley program uses "grass roots" advertising and outreach to invite low- and moderate-income vehicle owners to participate in "events" where AB 1965 (Cooper) Page 6 of ? 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. Comments 1) Purpose of Bill. According to the author, "AB 1965 will provide financial incentives for low-income individuals to replace their high polluting, less reliable and inefficient vehicles with newer, cleaner and more reliable cars while helping reduce vehicular pollution and improve air quality. Additionally, the bill requires increased targeted outreach to low-income households and disadvantaged communities to ensure that EFMP Plus-Up is accessible to the neediest Californians. AB 1965 also requires ARB to set specific goals for retirement and replacement of high polluting passenger vehicles." 2) Combining efforts. The Committee will also be hearing AB 1691 (Gipson) which also directs ARB to update their EFMP guidelines, relative to the EFMP Plus-Up program. AB 1691 works to reduce and eliminate backlogs and waitlists for the EFMP Plus-Up program, and prioritize older, higher-polluting vehicles for incentives. AB 1965 (Cooper), the subject of this analysis, also directs ARB to update their EFMP guidelines, and requires the update by July 1, 2018. Specifically, AB 1965 expands the EFMP Plus-Up program to additional local air districts. Although the bills are not necessarily conflicting, they establish different timelines for when these updates to the EFMP guidelines relative to the EFMP Plus-Up program are required. As updating guidelines pursuant to the Administrative Procedures Act is a time consuming process, and could result in significant administrative expense, the authors of these measures may wish to combine efforts going forward to consolidate both measures into a single bill. Related/Prior Legislation AB 1965 (Cooper) Page 7 of ? 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 by this committee today. SB 1275 (de León, Chapter 530, Statutes of 2014) established the Charge Ahead Initiative, to provide incentives to increase the availability of zero-emission vehicles and near-zero-emission vehicles, particularly to low-income and moderate-income consumers and disadvantaged communities. 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. DOUBLE REFERRAL: This measure was heard in Senate Transportation and Housing Committee on June 21, 2016, and passed out of committee with a vote of 8-1. SOURCE: Valley Clean Air Now SUPPORT: Alliance of Automobile Manufacturers Bay Area Air Quality Management District Charge Ahead California Coalition for Clean Air Communities for a Better Environment Environment California Research & Policy Center Natural Resources Defense Council Sacramento Metropolitan Air Quality Management District The Greenling Institute Union of Concerned Scientists OPPOSITION: None received -- END --