BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON APPROPRIATIONS
                             Senator Ricardo Lara, Chair
                            2015 - 2016  Regular  Session

          SB 1239 (Gaines) - Smog check:  exemptions
          
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          |Version: April 26, 2016         |Policy Vote: T. & H. 6 - 5      |
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          |Urgency: No                     |Mandate: No                     |
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          |Hearing Date: May 9, 2016       |Consultant: Mark McKenzie       |
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          This bill meets the criteria for referral to the Suspense File.



          Bill  
          Summary:  SB 1239 would provide an exemption from smog check  
          requirements for motor vehicles with a model year of 1976-1980  
          until January 1, 2019, if the owner submits proof that the  
          vehicle is insured as a collector car.


          Fiscal  
          Impact:  
           Unknown costs to the Bureau of Automotive Repair (BAR) to  
            modify information technology systems.  These costs would  
            likely to be incurred a second time when the exemption expires  
            in 2019.  (Vehicle Inspection and Repair Fund)

           Unknown loss of smog certification revenues, potentially in  
            excess of $150,000 for two years, depending on the number of  
            vehicles insured as collector cars. (Vehicle Inspection and  
            Repair Fund)   ------See staff comments----- 








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           Minor and absorbable BAR costs to update smog check  
            regulations and publications. (Vehicle Inspection and Repair  
            Fund)

           Likely minor costs to the Department of Motor Vehicles (DMV)  
            to review evidence that a vehicle is insured as a collector in  
            order to waive the smog check requirement.   (Motor Vehicle  
            Account)


          Background:  Existing law establishes the Motor Vehicle Inspection Program,  
          commonly known as the smog check program, as a means to measure  
          motor vehicle related pollutants.  The program is administered  
          by BAR and generally requires gas-powered motor vehicles to pass  
          a biennial smog check inspection with specified exceptions, such  
          as vehicles manufactured prior to the 1976 model year,  
          alternative fuel vehicles, and vehicles six model years old or  
          newer.  As a condition of initial registration, upon change of  
          ownership, and renewal of vehicle registration, the vehicle  
          owner must submit to DMV a valid certificate of compliance  
          indicating that the vehicle has passed its smog inspection. 
          Existing law defines a "collector motor vehicle" as a motor  
          vehicle owned by a collector that is used primarily in shows,  
          parades, charitable functions, and historical exhibitions for  
          display, maintenance, and preservation, and is not used  
          primarily for transportation.  Existing law provides a partial  
          smog check exemption for some collector vehicles.  Specifically,  
          a collector motor vehicle is exempt from the visual and  
          functional inspection of emission controls if it is at least 35  
          years old, and the owner can demonstrate that the vehicle is  
          insured as a collector vehicle.  These vehicles must still pass  
          a functional inspection of the fuel cap, a visual inspection for  
          liquid fuel leaks, and a tailpipe emissions test.  


          Proposed Law:  
            SB 1239 would exempt a motor vehicle that is insured as a  
          collector vehicle, and manufactured after the 1976 but prior to  
          the 1981 model year, from smog check requirements until January  
          1, 2019.


          Staff  
          Comments:  BAR data indicates that approximately 105,000  








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          vehicles with a 1976-1980 model year were given smog check tests  
          over the past two years.  The number of vehicles with collector  
          car insurance is unknown, but if the exemption in this bill  
          applied to 18,200 vehicles in a given year, the revenue losses  
          would exceed $150,000.  The bill is likely to create an  
          incentive for vehicle owners to acquire collector insurance in  
          order to avoid smog check requirements, especially since the  
          average smog check failure rate for vehicles with a 1976-1980  
          model year exceeds 30 percent (over 32,000 vehicles over the  
          past two years).
          Staff notes this bill does not require a vehicle to meet the  
          statutory definition of a "collector motor vehicle" to qualify  
          for the smog check exemption, but the owner would be required to  
          demonstrate that the vehicle is insured as a collector vehicle.   
          A cursory review of insurance products indicates that collector  
          car insurance is readily available without mileage restrictions,  
          but the insured person must certify that the vehicle is not a  
          "daily driver" and that all household members have a regular-use  
          vehicle insured for daily driving. 


          BAR indicates that the bill is likely to require modifications  
          to information technology systems, but was unable to provide an  
          estimate of those costs at the time of this analysis.


          DMV costs would be minor since the department is likely to  
          implement the bill by requiring vehicle owners to appear in a  
          field office for inspection of insurance documents to qualify  
          for a waiver of the smog check requirements.


          Staff notes that older vehicles are typically higher polluters  
          and have a disproportionate impact on air quality, even though  
          they make up a very small percentage of the registered vehicles  
          in the state.  The smog check program is a measure included in  
          the State Implementation Plan to achieve federal ozone and  
          particulate matter standards in non-attainment areas.  To the  
          extent this bill's exemption results in a significant loss of  
          emission reductions, the California Air Resources Board would  
          need to conduct analysis to identify, develop, and implement  
          substitute emission control measures to make up for those lost  
          emission reductions.  Costs to complete that work would be  
          significant.








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          Recommended  
          Amendments:  Staff notes that the bill is intended to apply the  
          exemption to vehicles with a model year of 1976 through 1980,  
          but it is currently drafted to apply to vehicles "manufactured  
          after the 1976 model year but prior to the 1981 model year."   
          Since existing law exempts all vehicles manufactured prior to  
          1976, the current bill would still require 1976 model year  
          vehicles to comply with smog check requirements.   The bill  
          should be amended to correct this oversight.


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