BILL ANALYSIS                                                                                                                                                                                                    



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

          Bill No:          SB 513            Hearing Date:     4/21/2015
           ----------------------------------------------------------------- 
          |Author:   |Beall                                                 |
          |----------+------------------------------------------------------|
          |Version:  |4/6/2015                                              |
           ----------------------------------------------------------------- 
           ----------------------------------------------------------------- 
          |Urgency:  |No                     |Fiscal:      |Yes             |
           ----------------------------------------------------------------- 
           ----------------------------------------------------------------- 
          |Consultant|Erin Riches                                           |
          |:         |                                                      |
           ----------------------------------------------------------------- 
          

          SUBJECT:  Carl Moyer Memorial Air Quality Standards Attainment  
          Program 


            DIGEST:  This bill makes a number of changes to the Carl Moyer  
          Memorial Air Quality Standards Attainment Program (Carl Moyer  
          Program).

          ANALYSIS:
          
          Existing law establishes the Carl Moyer Memorial Air Quality  
          Standards Attainment Program (Carl Moyer Program) under the  
          state Air Resources Board (ARB).  This program provides grants  
          through the state's 35 local air quality management and air  
          pollution control districts (air districts) for deployment of  
          engines, equipment, and emission-reduction technologies that are  
          cleaner than required by current laws or regulations.  AB 923  
          (Firebaugh), Chapter 707, Statutes of 2004, expanded the Carl  
          Moyer Program and authorized air districts to collect a  
          surcharge on vehicle registration fees to fund emission  
          reduction projects.  The AB 923 program funds Carl Moyer  
          Program-eligible projects and agricultural equipment, school  
          bus, and vehicle scrap programs.  

          AB 8 (Perea), Chapter 401, Statutes of 2013, included a  
          provision extending the fees to fund the Carl Moyer Program  
          until January 1, 2024.  AB 8 also required ARB to convene a  
          workgroup to evaluate the program.  ARB and the air districts  
          convened two public meetings of the workgroup, in June and  
          October 2014, to solicit input from stakeholders.  ARB and the  







          SB 513 (Beall)                                      Page 2 of ?
          
          
          air districts then worked together to develop statutory language  
          to implement the program improvements identified by the  
          workgroup.  This bill is the result of those efforts.

          This bill makes multiple changes to the Carl Moyer and AB 923  
          programs, including the following.  
          
          Leveraging of other funding sources

          One of the primary objectives of the Carl Moyer Program is to  
          obtain cost-effective emission reductions.  In order to be  
          eligible for funding, a project must meet a cost-effectiveness  
          test.  The air district reviewing the project application  
          calculates the project's cost-effectiveness by dividing the  
          annualized cost of the potential project (dollars per year) by  
          the annual weighted surplus emission reductions the project will  
          achieve (tons per year).  Initially, other public funds had to  
          be deducted from the cost-effectiveness calculation.  The intent  
          of this requirement was to help ensure the program did not  
          overpay for projects receiving funds from other sources, as well  
          as to ensure that participants provide a meaningful financial  
          commitment to the project.  AB 1507 (Lieu), Chapter 571,  
          Statutes of 2010, required ARB to revise program guidelines to  
          exclude from the calculation, funds from federal greenhouse gas  
          (GHG) emission reduction programs and the California Energy  
          Commission's Alternative and Renewable Fuel and Vehicle  
          Technology Program (ARFVTP).  AB 1507 aimed to address the  
          unintended consequence of discouraging projects that accomplish  
          multiple goals.

          This bill requires ARB, by July 1, 2017, to revise the  
          guidelines to exclude funds from federal, state, and local  
          programs, or other funding sources, from the cost-effectiveness  
          calculation.  These funding sources include, but are not limited  
          to, the Greenhouse Gas Reduction Fund (commonly known as  
          cap-and-trade), energy diversity programs, and programs that are  
          intended to provide emissions reductions but do not require  
          those reductions to count toward federal air quality standards.   
           

          Cost-effectiveness calculation

          The Carl Moyer Program prohibits grants for projects with a  
          cost-effectiveness of more than $13,600 per ton of NOx reduced  
          in the state or a higher value that reflects CPI adjustments as  








          SB 513 (Beall)                                      Page 3 of ?
          
          
          determined by ARB.  For projects obtaining reactive organic gas  
          and particulate matter (PM) reductions, ARB shall determine  
          appropriate adjustment factors to calculate a weighted  
          cost-effectiveness.  

          This bill requires ARB, in collaboration with air districts, to  
          establish cost-effectiveness values that consider factors  
          including, but not limited, to: the ability of a project to  
          provide ancillary benefits (see below); the cost of emission  
          control technologies; and the cost-effectiveness values for NOx,  
          PM, or reactive organic gases for any adopted rule or control  
          measure in any district's approved state implementation plan or  
          ARB rule.  This bill also authorizes an air district to  
          recognize the ancillary benefit when determining the grant  
          amount.




          Ancillary benefits 

          Under the Carl Moyer Program, covered emissions include only  
          NOx, reactive organic gases, and PM.  GHG emissions reductions  
          do not increase the cost-effectiveness calculation or the amount  
          of funding for a project.

          This bill defines ancillary benefits as reductions in GHG and  
          short-lived climate pollutants; benefits to communities with the  
          most significant exposure to pollution, including but not  
          limited to communities of minority populations or low-income  
          populations; fuel efficiency improvements; and the deployment of  
          advanced technology. 

          Expanding project categories

          Under the AB 923 program, the following projects are eligible:   
          purchase of new school buses or retrofit of existing school  
          buses; vehicle retirement ("scrap") or repair; replacement of  
          natural gas fuel tanks on school buses owned by a school  
          district that are 14 years or older, not to exceed $20,000 per  
          bus; and enhancement of deteriorating natural gas fueling  
          dispensers of fueling infrastructure operated by a school  
          district with a one-time funding amount of not more than $500  
          per dispenser.  The air district may not use more than 5% of  
          funds collected for administrative expenses. 








          SB 513 (Beall)                                      Page 4 of ?
          
          

          This bill:  adds repowering of school buses as an eligible  
          project; removes the $20,000 cap on replacement of natural gas  
          fuel tanks on school buses; removes the requirement that the bus  
          be owned by a school district; removes the $500 cap on  
          enhancement of deteriorating natural gas fueling dispensers;  
          adds funding of alternative fuel and electric infrastructure  
          projects solicited and selected through a competitive bid  
          process; and increases the administrative set-aside to 6.25%.  

          Under the Carl Moyer Program, the following projects are  
          eligible:  purchase of new very low or zero-emission vehicles or  
          heavy-duty engines; retrofit of engines or replacement of old  
          engines with engines certified to more stringent emissions  
          standards or with electric motors and drives; purchase and use  
          of emission-reducing add-on equipment; and light- and  
          medium-duty vehicle projects.  The program may fund installation  
          of fueling or electrification infrastructure.  

          This bill changes "fueling or electrification infrastructure" to  
          "fueling or energy infrastructure to fuel or power covered  
          sources."  

          

          COMMENTS:

          1.Purpose.  The author states that ARB and the state's local air  
            districts, with public and stakeholder input, have identified  
            several limitations of the Carl Moyer Program.  These include  
            the inability to provide meaningful grant amounts to the  
            cleanest, most advanced technologies; the inability to  
            recognize GHG emission reductions and other project benefits;  
            and the inability to combine Carl Moyer Program funding with  
            other funding sources.  This bill addresses these limitations  
            by establishing a process to adjust the cost-effectiveness  
            limit; acknowledging ancillary benefits such as GHG emission  
            reductions, benefits to environmental justice communities, and  
            fuel efficiency; allowing greater leveraging of funds from  
            multiple sources; expanding eligible project categories; and  
            further streamlining the program.  This bill is sponsored by  
            the California Air Pollution Control Officers Association  
            (CAPCOA), which represents the state's 35 local air districts.

          2.Time for an update.  The Carl Moyer Program and the AB 923  








          SB 513 (Beall)                                      Page 5 of ?
          
          
            program have enjoyed significant success: Since 1998, these  
            programs have cleaned up more than 46,000 engines and  
            eliminated 174,600 tons of ozone precursors and 6,400 tons of  
            PM.  CAPCOA notes that the project types originally identified  
            in the Carl Moyer Program and AB 923 program were based on  
            technology ideas available at that time.  This bill will  
            update project categories and provide flexibility to better  
            allow for both current and future technology opportunities.   
            CAPCOA also notes that for many years, virtually all mobile  
            emission reductions were surplus; however, as the Legislature  
            and ARB have enacted more laws and regulations, the bar has  
            moved much higher for achieving surplus reductions.  In  
            addition, the cleanest technology to achieve air quality  
            standards has gotten more expensive, making it more difficult  
            for business owners to clean up their equipment.  This bill  
            provides needed updates to the Carl Moyer and AB 923 programs  
            to help them more effectively address the state's air quality  
            concerns.

          3.Double referred.  This bill has also been referred to the  
            Environmental Quality Committee.

          FISCAL EFFECT:  Appropriation:  No    Fiscal Com.:  Yes     
          Local:  No


            




          POSITIONS:  (Communicated to the committee before noon on  
          Wednesday,
                          April 15, 2015.)
          
            SUPPORT:  

          California Air Pollution Control Officers Association (sponsor)
          American Lung Association
          Bay Area Air Quality Management District
          California Electric Transportation Coalition
          California Natural Gas Vehicle Coalition
          CALSTART
          Imperial County Air Pollution Control District
          Sacramento Metropolitan Air Quality Management District








          SB 513 (Beall)                                      Page 6 of ?
          
          
          San Joaquin Valley Air Pollution Control District 
          Santa Barbara County Air Pollution Control District
          South Coast Air Quality Management District
          U.S. Hybrid
          Yolo-Solano Air Quality Management District

          OPPOSITION:

          None received.
          
          

                                      -- END --