BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | SB 513| |Office of Senate Floor Analyses | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- UNFINISHED BUSINESS Bill No: SB 513 Author: Beall (D) Amended: 8/31/15 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 SENATE FLOOR: 40-0, 6/3/15 AYES: Allen, Anderson, Bates, Beall, Berryhill, Block, Cannella, De León, Fuller, Gaines, Galgiani, Glazer, Hall, Hancock, Hernandez, Hertzberg, Hill, Hueso, Huff, Jackson, Lara, Leno, Leyva, Liu, McGuire, Mendoza, Mitchell, Monning, Moorlach, Morrell, Nguyen, Nielsen, Pan, Pavley, Roth, Runner, Stone, Vidak, Wieckowski, Wolk ASSEMBLY FLOOR: 54-26, 9/2/15 - See last page for vote SUBJECT: Carl Moyer Memorial Air Quality Standards Attainment Program: fees 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 (Carl Moyer Program). SB 513 Page 2 Assembly Amendments (1) authorize the Carl Moyer Program to provide grants for school bus projects, including replacement, repower, and retrofits, consistent with the existing Lower Emission School Bus Program; and (2) make other technical and clarifying changes. 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 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 Carl Moyer 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 SB 513 Page 3 stakeholders. ARB and the air districts then worked together to develop statutory language to implement the Carl Moyer 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 Carl Moyer 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-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). Existing law also 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; SB 513 Page 4 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 Carl Moyer Program may fund installation of fueling or electrification infrastructure. 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 ARB to revise program guidelines to encourage leveraging of other public funding sources. 2)Requires ARB, in collaboration with air districts, to establish cost-effectiveness values in the program guidelines that account for factors such as 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)Expands project eligibility to authorize repower and retrofit school buses with cleaner engines; removes the dollar cap on replacement of natural gas fuel tanks and dispensers on school buses; removes the requirement that the bus be owned by a school district; adds funding of certain alternative fuel and electric infrastructure projects; and increases the administrative set-aside. SB 513 Page 5 4)Deletes references to obsolete and redundant code sections, revises and recasts a number of provisions, and makes related, clarifying amendments. 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 Carl Moyer Program. The source 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. FISCAL EFFECT: Appropriation: No Fiscal Com.:YesLocal: No According to the Assembly Appropriations Committee: SB 513 Page 6 The Carl Moyer Program is funded through a portion of the smog abatement fee included in the annual registration of newer vehicles ($6) and through a fee on the sale of new tires ($0.75) that together generate about $69 million annually. ARB disburses these funds to the local air districts, who implement the programs in their local jurisdictions. The AB 923 program is funded from a $2 surcharge on vehicle registration fees in areas where a local air district's board has approved the collection of these funds. Currently, 19 of the state's 35 air districts collect these funds, which total about $50 million annually statewide. This bill will create unknown but potentially significant cost pressures by expanding eligible uses of the funds generated by both programs. There will also be additional cost pressure on the Greenhouse Gas Reduction Fund (GGRF) for projects that seek funding from both the GGRF and the Carl Moyer Program. 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 Carl Moyer Program revenues on administration. For the AB 923 program, local districts together would be allowed to spend an additional $625,000 from current program revenues on administration annually. SUPPORT: (Verified9/1/15) 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 Fresh Fruit Association California Natural Gas Vehicle Coalition California Trucking Association SB 513 Page 7 CALSTART Clean Energy Coalition for Clean Air Glenn County Board of Supervisors Green California Imperial County Air Pollution Control District Imperial County Board of Supervisors Rural County Representatives of California 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: (Verified9/1/15) None received ASSEMBLY FLOOR: 54-26, 9/2/15 AYES: Achadjian, Alejo, Bloom, Bonilla, Bonta, Brown, Burke, Calderon, Campos, Chau, Chiu, Chu, Cooley, Cooper, Dababneh, Daly, Dodd, Eggman, Frazier, Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray, Roger Hernández, Holden, Jones-Sawyer, Levine, Lopez, Low, Mayes, McCarty, Medina, Mullin, Nazarian, O'Donnell, Olsen, Perea, Quirk, Rendon, Ridley-Thomas, Rodriguez, Salas, Santiago, Mark Stone, Thurmond, Ting, Weber, Williams, Wood, Atkins NOES: Travis Allen, Baker, Bigelow, Brough, Chang, Chávez, Dahle, Beth Gaines, Gallagher, Grove, Hadley, Harper, Irwin, Jones, Kim, Lackey, Linder, Maienschein, Mathis, Melendez, Obernolte, Patterson, Steinorth, Wagner, Waldron, Wilk Prepared by:Erin Riches / T. & H. / (916) 651-4121 9/2/15 18:54:17 **** END **** SB 513 Page 8