BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                     SB 513


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          SENATE THIRD READING


          SB  
          513 (Beall)


          As Amended  August 31, 2015


          Majority vote


          SENATE VOTE:  40-0


           ------------------------------------------------------------------ 
          |Committee       |Votes|Ayes                  |Noes                |
          |                |     |                      |                    |
          |                |     |                      |                    |
          |                |     |                      |                    |
          |----------------+-----+----------------------+--------------------|
          |Transportation  |12-3 |Frazier, Achadjian,   |Baker, Linder,      |
          |                |     |Bloom, Campos, Chu,   |Melendez            |
          |                |     |Daly, Dodd, Eduardo   |                    |
          |                |     |Garcia, Gomez,        |                    |
          |                |     |Medina, Nazarian,     |                    |
          |                |     |O'Donnell             |                    |
          |                |     |                      |                    |
          |----------------+-----+----------------------+--------------------|
          |Appropriations  |12-5 |Gomez, Bloom, Bonta,  |Bigelow, Chang,     |
          |                |     |Calderon, Nazarian,   |Gallagher, Jones,   |
          |                |     |Eggman, Eduardo       |Wagner              |
          |                |     |Garcia, Holden,       |                    |
          |                |     |Quirk, Rendon, Weber, |                    |
          |                |     |Wood                  |                    |
          |                |     |                      |                    |
          |                |     |                      |                    |
           ------------------------------------------------------------------ 








                                                                     SB 513


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          SUMMARY:  Updates the Carl Moyer Air Quality Standards  
          Attainment Program (Moyer Program) and local incentive programs  
          (AB 923 Program).  Specifically, this bill:  


          1)Clarifies that local air districts can continue to levy  
            program fees, even after they come into compliance with  
            National and California Ambient Air Quality Standards  
            (attainment), in order to maintain compliance with the  
            standards. 
          2)Adjusts the cost-effectiveness formula for projects to more  
            effectively incentivize the statewide deployment of cleaner  
            technologies.


          3)Encourages leveraging of other public funding sources to more  
            readily accomplish program goals.


          4)Recognizes greenhouse gas (GHG) reductions so that funded  
            projects can achieve both criteria pollutant and GHG emissions  
            reductions.


          5)Streamlines and updates program administrative requirements.


          6)Deletes references to obsolete and redundant code sections,  
            revises and recasts a number of provisions, defines a variety  
            of terms, and makes related, clarifying amendments.


          7)Defines a variety of terms.


          8)Makes related, clarifying amendments.









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          EXISTING LAW:   


          1)Established the Moyer Program [AB 1571 (Villaraigosa), Chapter  
            923, Statutes of 1999], administered by the Air Resources  
            Board (ARB) and local air districts, to fund the incremental  
            cost of cleaner-than-required vehicles, engines, and  
            equipment.  The primary objective of the program is to achieve  
            air quality improvements that would not otherwise occur  
            through regulations or other legal mandates.  The Moyer  
            Program is funded by vehicle registration surcharges adopted  
            by local air districts in non-attainment areas.


          2)Expanded the Moyer Program [AB 923 (Firebaugh), Chapter 707,  
            Statutes of 2004] to cover additional pollutants and engines,  
            imposes a $1 fee on tire sales to fund the Moyer Program and  
            CalRecycle, and established air quality improvement programs  
            through local air districts.  


          3)Extended the date for each of the various fees and surcharges  
            that support the Moyer Program and the AB 923 Program [AB 8  
            (Perea), Chapter 401, Statutes of 2013] until January 1, 2024,  
            and requires ARB to convene a workgroup to evaluate the Moyer  
            and AB 923 Programs and make recommendations for updates.


          FISCAL EFFECT:  According to the Assembly Appropriations  
          Committee, the ARB indicates that it will not require additional  
          administrative resources to implement the provisions of this  
          bill.  The increase in the cap on administrative costs will  
          allow ARB to spend an additional $350,000 on administration and  
          $350,000 on outreach annually from current program revenues. The  
          local districts together would be allowed to spend at least an  
          additional $860,000 from current Moyer Program revenues on  
          administration.  For the AB 923 program, local districts  
          together would be allowed to spend an additional $625,000 from  








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          current program revenues on administration annually.


          COMMENTS:  The Moyer Program provides grants through the state's  
          35 local air districts for deployment of engines, equipment, and  
          emission-reduction technologies that are cleaner-than-required  
          by current laws or regulations.  The Moyer Program was expanded  
          upon in 2004 with the passage of AB 923 which authorized, among  
          other things, an increase in the surcharge local air districts  
          are allowed to levy on motor vehicle registrations within their  
          jurisdictions from $4 to $6, expanded the types of emissions  
          covered by the Moyer Program and increased the tire fee by $0.75  
          to fund programs under ARB and local air districts to mitigate  
          or remediate air pollution caused by tires.


          AB 8 included a provision extending the fees to fund the Moyer  
          Program until January 1, 2024, and required ARB to convene a  
          workgroup to evaluate the program.  To satisfy this requirement,  
          ARB and the California Air Pollution Control Officers  
          Association, the sponsor of this bill, held two public workgroup  
          meetings to solicit input from stakeholders.  Specifically,  
          stakeholders were asked to identify program limitations and  
          identify program improvements.  


          The workgroup identified a number of program improvements and  
          many were addressed by ARB through updates to the Moyer Program  
          Guidelines in 2014.  The remaining recommendations, those that  
          required specific statutory changes, are addressed in this bill.  
           Specifically, this bill addresses a number of issues to make  
          the Moyer Program and AB 923 Program more effective by, among  
          other things, clarifying that local air districts can continue  
          to levy program fees even after they achieve attainment, making  
          adjustments to cost-effectiveness calculations to incentivize  
          the statewide deployment of cleaner technologies, encouraging  
          leveraging of other public funding sources, recognizing GHG  
          reductions so that funded projects can achieve both criteria  
          pollutant and GHG emissions reductions, and streamlining and  








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          creating efficiencies  in the administration of the program. 


          Leveraging Funding Sources:  One of the primary objectives of  
          the 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  
          is to help ensure the program does 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 GHG emission 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.  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 including, but not limited to,  
          the GGRF, 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.   
          With this change, multiple project sources can be used  
          cumulatively for projects that achieve multiple goals. 


          Changing Cost-Effectiveness Calculations:  The Moyer Program  
          prohibits grants for projects with a cost-effectiveness of more  
          than $13,600 per ton of nitrogen oxide (NOx) reduced in the  
          state.  For projects obtaining reactive organic gas and  
          particulate matter (PM) reductions, ARB determines appropriate  
          adjustment factors to calculate a weighted cost-effectiveness.   








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          This bill removes the requirement that grants not be made for  
          projects with a cost-effectiveness calculation of more than  
          $13,600 per ton of NOx and instead requires ARB, in  
          collaboration with air districts, to establish  
          cost-effectiveness values that considers additional factors such  
          as 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 originally included provisions allowing ARB and air  
          districts to consider "ancillary benefits" when calculating the  
          cost-effectiveness of projects and for project selection;  
          however, in response to concerns voiced by the Senate  
          Environmental Quality Committee about the definition of  
          ancillary benefits being too broad, the author amended this bill  
          in the Senate Appropriations Committee to narrow the definition.  
           The Senate Appropriations Committee felt the definition was  
          still too broad and removed the ancillary benefits provisions  
          altogether.  The author has indicated his intention to continue  
          to work on the ancillary benefits language and reinsert the  
          language at a later date, pending approval by Senate and  
          Assembly policy committees.  


          Expanding Project Categories:  Under the AB 923 Program,  
          eligible projects include the  purchase of new school buses or  
          retrofit of existing school buses; vehicle retirement 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.  Additionally, air districts are prohibited  
          from using more than 5% of funds collected for administrative  
          expenses.  Eligible projects under the Moyer Program include the  
          purchase of new very low or zero-emission vehicles or heavy-duty  
          engines; retrofit of engines or replacement of old engines with  








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          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.  


          This bill would add repowering of school buses as an eligible  
          project and remove the $20,000 cap on replacement of natural gas  
          fuel tanks on school buses.  This bill also 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%.  Additionally, this bill changes "fueling or  
          electrification infrastructure" to "fueling or energy  
          infrastructure to fuel or power covered sources" to allow  
          funding to go toward a variety of alternative energy fueling  
          programs.


          Committee comments:  The Moyer and AB 923 Programs have been  
          widely successful and have helped private businesses and public  
          agencies voluntarily clean up older, dirtier engines and improve  
          air quality.  The programs have resulted in the retrofit or  
          replacement of an estimated 48,000 engines and reduced 146,000  
          tons of ozone precursors and 6,000 tons of diesel particulates  
          through the investment of over $980 million in state and local  
          funds.  


          While the Moyer Program is intended to fund "surplus"  
          improvements, the sponsor correctly notes that for many years,  
          virtually all mobile emission reductions were surplus; however,  
          as the Legislature and ARB have enacted more laws and  
          regulations in this arena, the bar has moved higher for  
          achieving surplus reductions.  Also, cleaner technology is more  
          costly - making it more expensive for business owners to clean  
          up their equipment.  This bill provides opportunities for ARB  








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          and local air districts to take on more sophisticated, advanced  
          technology projects and leverage additional funds, where needed.  
           This bill also broadens the scope of the programs to help them  
          continue to achieve their stated goals.  




          Analysis Prepared by:                                             
                          Victoria Alvarez / TRANS. / (916) 319-2093  FN:  
          0001787