BILL ANALYSIS                                                                                                                                                                                                    Ó



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          Date of Hearing:  April 18, 2016


                       ASSEMBLY COMMITTEE ON NATURAL RESOURCES


                                 Das Williams, Chair


          AB 2564  
          (Cooper) - As Amended April 12, 2016


          SUBJECT:  Clean Vehicle Rebate Project:  income eligibility


          SUMMARY:  Reforms the Clean Vehicle Rebate Project (CVRP) by  
          increasing outreach and rebate levels for low-income  
          Californians. Lowers income limits for CVRP. 


          EXISTING LAW:  


          1)Establishes the California Alternative and Renewable Fuel,  
            Vehicle Technology, Clean Air, and Carbon Reduction Act of  
            2007 [AB 118 (Nunez), Chapter 750, Statutes of 2007].  AB 118  
            is funded through temporary increases in vehicle registration  
            fees ($3), smog abatement fees ($8), boat registration fees  
            ($10/20), and special identification plate fees ($5).   
            Collection of these fees is authorized until 2024 pursuant to  
            AB 8 (Perea), Chapter 401, Statutes of 2013.  The fees support  
            three major programs:

             a)   The Air Quality Improvement Program (AQIP), administered  
               by the Air Resources Board (ARB) in consultation with local  
               air districts, funds projects that reduce criteria air  
               pollutants, improve air quality, and provide research for  
               alternative fuels and vehicles, vessels, and equipment  








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               technologies.  The two primary programs adopted by ARB  
               pursuant to AQIP are the CVRP and the Hybrid and Zero  
               Emissions Truck and Bus Voucher Incentive Program (HVIP).   
               AQIP is funded by smog abatement fees, boat registration  
               fees, and special identification plate fees and receives  
               between $30-36 million per year from these sources.

             b)   The Enhanced Fleet Modernization Program (EFMP), under  
               which ARB, in consultation with the Bureau of Automotive  
               Repair (BAR), pays to permanently remove cars and small  
               trucks from operation through voluntary retirement by their  
               owners.  EFMP is funded by $1 of the vehicle registration  
               fee and receives approximately $30 million per year.

             c)   The Alternative and Renewable Fuel and Vehicle  
               Technology Program (ARFVTP), administered by California  
               Energy Commission (CEC), provides grants and other  
               financial incentives to accelerate the development and  
               deployment of clean, efficient, low carbon alternative  
               fuels and technologies.  ARFVTP is funded by $2 of the  
               vehicle registration fee and receives approximately $100  
               million per year.

          2)Requires ARB, pursuant to California Global Warming Solutions  
            Act of 2006 [AB 32 (Nunez), Chapter 488, Statutes of 2006], to  
            adopt a statewide Greenhouse Gas (GHG) emissions limit  
            equivalent to 1990 levels by 2020 and adopt regulations to  
            achieve maximum technologically feasible and cost-effective  
            GHG emission reductions.  AB 32 authorizes ARB to permit the  
            use of market-based compliance mechanisms to comply with GHG  
            reduction regulations.

          3)Establishes the Greenhouse Gas Reduction Fund (GGRF) and  
            requires all moneys, except for fines and penalties, collected  
            by ARB from the auction or sale of allowances pursuant to a  
            market-based compliance mechanism (i.e., the cap-and-trade  
            program adopted by ARB under AB 32) to be deposited in the  
            GGRF and available for appropriation by the Legislature.









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          4)Establishes the GGRF Investment Plan and Communities  
            Revitalization Act [AB 1532 (John A. Pérez), Chapter 807,  
            Statutes of 2012] to set procedures for the investment of GHG  
            allowance auction revenues.  AB 1532 authorizes a range of GHG  
            reduction investments and establishes several additional  
            policy objectives.

          5)Requires the investment plan to allocate (1) a minimum of 25%  
            of the available moneys in the GHGRF to projects that provide  
            benefits to identified disadvantaged communities, and (2) a  
            minimum of 10% of the available moneys in the GGRF to projects  
            located within identified disadvantaged communities [SB 535  
            (de León), Chapter 830, Statutes of 2012].  

          6)Establishes the Charge Ahead California Initiative pursuant to  
            SB 1275 (de León), Chapter 530, Statutes of 2014, that, among  
            other things, included the goal of placing into service at  
            least one million zero emissions vehicles (ZEV) and near-zero  
            emission vehicles (NZEV) by January 1, 2023, and increasing  
            access for disadvantaged, low-income, and moderate-income  
            communities and consumers to ZEVs and NZEV vehicles.


          THIS BILL:


          1)Requires outreach to disadvantaged communities to increase  
            consumer awareness about CVRP.  Prioritizes rebates payments  
            for low-income consumers.

          2)Increases rebate amounts by $500 per rebate for consumers with  
            household incomes less than or equal to 300% of the federal  
            poverty level.  Increased rebate amounts are available for  
            fuel-cell electric vehicles, battery electric vehicles, and  
            plug-in hybrid electric vehicles. 



          3)Lowers CVRP income limits to $125,000 single filer, $170,000  








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            for head of household, and $250,000 for joint filers. Excludes  
            fuel cell electric vehicles from the income limit.



          FISCAL EFFECT:  Unknown


          COMMENTS:  


          1)Background.  In 2007, AB 118 established three new programs  
            intended to promote vehicle and fuel technology that reduces  
            air pollution and GHG emissions statewide.  These programs are  
            AQIP, EFMP, and ARFVTP.
             
             AQIP provides financial incentives for public and private  
            groups and individuals to adopt smog and diesel particulate  
            pollution reducing technology that concurrently reduces GHG  
            emissions.  Two of AQIP's flagship projects, CVRP and HVIP,  
            represent the program's largest funding commitments.  AQIP has  
            also provided incentives for biofuels research, hybrid truck  
            testing, lawn and garden equipment replacement, zero-emission  
            all-terrain agricultural work vehicle rebates, advanced  
            technology demonstration, and hybrid off-road equipment pilot  
            projects.  CVRP provides rebates for ZEV and NZEV, including  
            plug-in hybrid vehicles, battery electric vehicles, fuel cell  
            electric vehicles, and neighborhood electric vehicles.

            The demand for CVRP has steadily increased over time and  
            surpassed funding available through AB 118.  Originally the  
            funding gap was covered with loans from various funds.  In the  
            2014-15 Budget Act, $200 million was appropriated to AQIP from  
            the GGRF.  Last year, CVRP was one of the few non-continuously  
            appropriated programs to receive an appropriation from GGRF.   
            Despite that, CVRP may still run out of funding prior to the  
            enactment of this year's budget, and the administrator may  
            need to establish a wait list.  To date, CVRP has spent over  
            $300 million ($160 million from GGRF) to provide over 142,000  








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            rebates.  ARB proposes to spend an additional $230 million on  
            CVRP from the $500 million requested appropriation for low  
            carbon transportation and fuels in the Governor's 2016-17  
            fiscal year budget. 

          2)Money for nothing.  As CVRP expenditures have grown, there  
            have been concerns about the equity of the program and its  
            cost effectiveness.  Some the statistics that demonstrate the  
            equity issues with CVRP include:

             a)   Over 50% of rebate recipients' household incomes are  
               over $150,000 a year;
              
             b)   Over 20% of rebate recipients' household incomes are  
               over $250,000 a year;

             c)   88% of recipients are Caucasian;

             d)   75% of recipients are male;
              
             e)   83% are college graduates;

             f)   Approximately 22,000 rebates ($56 million) were used on  
               vehicles whose prices range from $70,000 to over $100,000;  
               and,

             g)   One assembly district (28) had 7,881 rebates costing  
               over $17 million while another assembly district (32) had  
               85 rebates costing approximately $180,000.



            These equity issues were recognized when the Legislature  
            passed SB 1275 (de León), Chapter 530, Statutes of 2014, which  
            established the Charge Ahead California Initiative to increase  
            access to ZEVs and NZEVs for lower income Californians and  
            disadvantaged communities.  SB 1275 also required eligibility  
            to be limited based on income.  In response to SB 1275, ARB,  
            on March 28, 2016, set an income cap of:








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             a)   $250,000 for single filers;

             b)   $340,000 for head-of-household filers; and,

             c)   $500,000 for joint filers.



            In addition, rebate amounts will be increased by $1,500 per  
            rebate for consumers with household incomes less than or equal  
            to 300% of the federal poverty level.
            CVRP raises questions of cost effectiveness because it is  
            unclear how many additional ZEV and NZEVs are on the road  
            because of CVRP.  According to UCLA Luskin Center, many new  
            car buyers would purchase plug-in hybrids without a rebate.   
            In fact, 33% of plug-in hybrids are purchased without a  
            rebate.  Research has also shown that CVRP induced a 7%  
            increase in sales and California spends $30,000 for each  
            additional ZEV and NZEV sold.  The UCLA Luskin Center  
            recommends targeting rebates for lower income Californians to  
            make CVRP more cost effective.  Another issue is only 18% of  
            car-owning households in California even are aware that CVRP  
            exists. Rebates could be more cost effective if more  
            Californians knew about them.  In addition, for those who did  
            know about the rebates and did purchase a vehicle, the top two  
            motivations were 1) saving money on fuel costs, and 2)  
            reducing environmental impacts.  Therefore, the price of gas  
            and the environmental benefits of the vehicles may have more  
            impact on purchasing decisions than CVRP. 


          1)This bill.  This bill attempts to improve equity and cost  
            effectiveness of CVRP by implementing two recommendations from  
            an ARB discussion document. The bill also goes further on  
            actions ARB has already taken to address equity and cost  
            effectiveness.  These recommendations include increasing  
            awareness about CVRP by requiring outreach in disadvantaged  
            communities and prioritizing rebates payments for low-income  
            consumers.  This bill also increases rebate amounts by $500  








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            per rebate for consumers with household incomes less than or  
            equal to 300% of the federal poverty level.  ARB's current  
            income limits would not affect many rebate recipients and  
            still include very high-income Californians.  This bill lowers  
            the CVRP income limits to $125,000 single filer, $170,000 for  
            head of household, and $250,000 for joint filers. 
            


          2)Amendment.  The author and committee may wish to consider  
            amendments to expand the outreach component of the bill to all  
            consumers with household incomes less than or equal to 300% of  
            the federal poverty level.

          3)Related Legislation.  


          
          AB 1851 (Gray) creates and expands a broad array of incentive  
          programs to increase the sales and use of certain clean air  
          vehicles. The bill is awaiting hearing in the Assembly Revenue  
          and Taxation Committee.





          AB 1710 (Calderon), requires ARB, in coordination with the  
          Commission, on or before    January 1, 2019, to develop and  
          implement a comprehensive program to promote advanced-technology  
          light-duty vehicle deployment in the state to drastically  
          increase the use of ZEVs to meet the state's emissions reduction  
          goals.  The bill is awaiting hearing in the Assembly Revenue and  
          Taxation Committee.
             
          REGISTERED SUPPORT / OPPOSITION:











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          Support


          None on file










          Opposition



          None on file
          Analysis Prepared by:Michael Jarred / NAT. RES. / (916) 319-2092