BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 513|
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THIRD READING
Bill No: SB 513
Author: Beall (D)
Amended: 6/2/15
Vote: 21
SENATE TRANS. & HOUSING COMMITTEE: 10-0, 4/21/15
AYES: Beall, Cannella, Allen, Bates, Galgiani, Leyva, McGuire,
Mendoza, Roth, Wieckowski
NO VOTE RECORDED: Gaines
SENATE ENVIRONMENTAL QUALITY COMMITTEE: 7-0, 4/29/15
AYES: Wieckowski, Gaines, Bates, Hill, Jackson, Leno, Pavley
SENATE APPROPRIATIONS COMMITTEE: 7-0, 5/28/15
AYES: Lara, Bates, Beall, Hill, Leyva, Mendoza, Nielsen
SUBJECT: Carl Moyer Memorial Air Quality Standards Attainment
Program
SOURCE: California Air Pollution Control Officers Association
DIGEST: This bill makes a number of changes to the Carl Moyer
Memorial Air Quality Standards Attainment Program.
ANALYSIS:
Existing law:
1)Establishes, pursuant to AB 1571 (Villaraigosa, Chapter 923,
Statutes of 1999), 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
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pollution control districts (air districts) for deployment of
engines, equipment, and emission-reduction technologies that
are cleaner than required by current laws or regulations. The
Program provides approximately $60 million for projects each
year throughout the state. The Carl Moyer Program was
initially funded primarily through General Fund
appropriations.
2)Expands the Carl Moyer Program, pursuant to AB 923 (Firebaugh,
Chapter 707, Statutes of 2004), to address particulate matter
(PM) and reactive organic gases (ROG) emissions in addition to
nitrogen oxide (NOx) emissions. It established ongoing
funding by authorizing air districts to collect an additional
$2 surcharge on vehicle registration fees to fund emission
reduction projects and by establishing a fee of 75 cents per
tire. The AB 923 program funds Carl Moyer Program-eligible
projects as well as agricultural equipment, school bus, and
vehicle scrap programs.
3)Includes a provision, pursuant to AB 8 (Perea, Chapter 401,
Statutes of 2013), extending the tire fees and the AB 923
program until January 1, 2024. (The vehicle registration
surcharge does not have a sunset.) AB 8 also required ARB to
convene a workgroup to evaluate the Carl Moyer 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 air districts then worked together
to develop statutory language to implement the Program
improvements identified by the workgroup.
4)Requires a project to meet a cost-effectiveness test in order
to be eligible for funding. 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, to help ensure the Program
did not overpay for projects receiving funds from other
sources. 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
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reduction programs, and the California Energy Commission's
Alternative and Renewable Fuel and Vehicle Technology Program.
AB 1507 aimed to address the unintended consequence of
discouraging projects that accomplish multiple goals.
5)Prohibits the Carl Moyer Program from providing grants to
projects with a cost-effectiveness of more than $13,600 per
ton of NOx reduced in the state or a higher value that
reflects Consumer Price Index adjustments as determined by
ARB. For projects obtaining ROG and PM reductions, ARB shall
determine appropriate adjustment factors to calculate a
weighted cost-effectiveness.
6)Provides that the Carl Moyer Program shall only fund the
"incremental cost" of a project, defined as the cost of the
project minus a baseline cost that would otherwise be incurred
by the applicant in the normal course of business (e.g., to
meet existing federal, state, or local requirements). States
that incremental cost may include added lease or fuel costs as
well as incremental capital costs.
7)Provides that the following projects are eligible under the AB
923 program: 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.
8)Provides that the following projects are eligible under the
Carl Moyer Program: 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.
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9)Provides that funds not expended by an air district within a
two-year period shall revert back to ARB within 60 days for
further allocation.
This bill makes multiple changes to the Carl Moyer and AB 923
programs, including the following.
1)Requires, relative to leveraging of other funding sources,
ARB, by July 1, 2017, to revise the guidelines to exclude
funds from federal, state, and local programs, or other public
funding sources, from the cost-effectiveness calculation.
These public funding sources include, but are not limited to,
the Greenhouse Gas Reduction Fund, 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.
2)Requires, relative to cost-effectiveness calculation, ARB, in
collaboration with air districts, to establish
cost-effectiveness values that consider factors including, but
not limited, to, the cost of emission control technologies and
the cost-effectiveness values for NOx, PM, or ROG for any
adopted rule or control measure in any district's approved
state implementation plan or ARB rule.
3)Adds energy costs to the definition of incremental cost.
4)Adds, relative to expansion of project categories, 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%. Also changes "fueling or
electrification infrastructure" to "fueling or energy
infrastructure to fuel or power covered sources."
5)Provides, relative to liquidation, return, and recapture of
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funds, that funds not liquidated by an air district within a
four-year period shall be returned to ARB within 90 days for
further allocation and makes provisions for recaptured funds.
Comments
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 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; allowing greater
leveraging of funds from multiple sources; expanding eligible
project categories; and further streamlining the Program. The
sponsor of this bill is the California Air Pollution Control
Officers Association (CAPCOA), which represents the state's 35
local air districts.
Time for an update. The Carl Moyer Program and the AB 923
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 and AB 923 programs were based on technology ideas
available at that time. This bill will 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
updates the Carl Moyer and AB 923 programs to help them more
effectively address the state's air quality concerns.
Issues raised in the Senate Environmental Quality Committee.
The Senate Environmental Quality Committee (EQ) analysis raised
a number of issues with this bill.
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1)Ancillary benefits. Existing law requires the Carl Moyer
Program to address reductions in NOx, ROGs, and PM emissions.
GHG emissions reductions do not increase the
cost-effectiveness calculation, or the amount of funding, for
a project. The prior version of this bill allowed air
districts to consider "ancillary benefits" in the
cost-effectiveness calculation for a project. The EQ analysis
noted that the definition of ancillary benefits was overly
broad and expressed concerns that ancillary benefits might
take precedence over the Program's primary goals. This bill
was amended in the Senate Appropriations Committee to remove
the ancillary benefits provision.
2)Incremental cost. For purposes of determining the amount of
funding for a project, existing law defines the incremental
cost of a project as the cost of the project minus a baseline
cost that would otherwise be incurred by the applicant (e.g.,
to meet existing federal, state, or local requirements). The
prior version of this bill expanded the definition by removing
the baseline provision. The EQ analysis noted that "Without a
baseline, the defined term is inconsistent with the plain
meaning of the term 'increment.'" The author amended this
bill in the Senate Appropriations Committee to re-insert
baseline cost.
3)Other economic factors. Existing law requires ARB to adjust
the maximum per-project cost-effectiveness amount to account
for inflation. The prior version of this bill authorized ARB
to adjust the cost-effectiveness amount to account for
inflation and "other economic factors," a term that the EQ
analysis noted was overly broad. The author amended this bill
in the Senate Appropriations Committee to replace the term
"other economic factors" with "other factors authorized in
this section" in order to narrow and clarify the scope of
factors that may be considered.
4)Multidistrict projects. Existing law authorizes ARB to
reserve up to 10% of Carl Moyer Program funds each year to
directly fund a project that is multidistrict in nature. The
prior version of this bill additionally authorized ARB to fund
any project that ARB "determines contributes toward the
achievement of state air quality goals." The EQ analysis
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noted that the term "state air quality goals" was overly
broad. The author amended this bill in the Senate
Appropriations Committee to remove that language and instead
clarify that ARB may fund any project authorized by the Carl
Moyer Program statutes.
5)Liquidation, return, and recapture of funds. The EQ analysis
noted that this bill should define the terms "liquidate,"
"return," and "recapture." The author amended this bill in
the Senate Appropriations Committee to define those terms.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: No
According to the Senate Appropriations Committee:
1)Minor and absorbable costs to the Air Pollution Control Fund
(special fund) to ARB to update regulations in accordance with
this bill.
2)Unknown cost pressures, at least in the millions of dollars,
from the Air Pollution Control Fund for increased uses of the
AB 923 program.
3)Unknown cost pressures, at least in the millions of dollars,
to the Greenhouse Gas Reduction Fund (special fund) for
projects that may seek funding from both the Greenhouse Gas
Reduction Fund and the Carl Moyer Program.
SUPPORT: (Verified5/29/15)
California Air Pollution Control Officers Association (source)
American Lung Association
Bay Area Air Quality Management District
Butte County Air Quality Management District
California Electric Transportation Coalition
California Natural Gas Vehicle Coalition
CALSTART
Clean Energy and Clean Energy Renewable Fuels
Imperial County Air Pollution Control District
Imperial County Board of Supervisors
Rural County Representatives of California
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Sacramento Metropolitan Air Quality Management District
San Joaquin Valley Air Pollution Control District
Santa Barbara County Air Pollution Control District
South Coast Air Quality Management District
Tehama County Board of Supervisors
U.S. Hybrid
Yolo-Solano Air Quality Management District
OPPOSITION: (Verified5/29/15)
None received
Prepared by: Erin Riches / T. & H. / (916) 651-4121
6/2/15 20:15:13
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