BILL ANALYSIS                                                                                                                                                                                                    Ó



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

          Bill No:          SB 1405           Hearing Date:     4/19/16
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          |Author:   |Pavley                                                |
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          |Version:  |4/13/2016    Amended                                  |
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          |Urgency:  |No                     |Fiscal:      |Yes             |
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          |Consultant|Erin Riches                                           |
          |:         |                                                      |
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          SUBJECT:  Zero-emission vehicles:  transportation systems


            DIGEST:  This bill requires the state Air Resources Board (ARB)  
          to revise the Zero Emission Vehicle (ZEV) regulation to expand  
          the definition of transportation systems eligible for ZEV  
          credits, and to conduct a study relating to transit-subsidized  
          rides on ZEV-credit-qualified transportation systems serving  
          disadvantaged communities.

          ANALYSIS:
          
          AB 32 and disadvantaged communities

          AB 32 (Núñez and Pavley, Chapter 488, Statutes of 2006) requires  
          ARB to develop a plan to reduce emissions to 1990 levels by  
          2020.  It also requires ARB to ensure that programs to reduce  
          greenhouse gas (GHG) emissions are targeted, to the extent  
          feasible, to the most disadvantaged communities (DACs) in the  
          state.  AB 32 authorizes ARB to deposit any fees paid by GHG  
          emission sources into the Greenhouse Gas Reduction Fund (GGRF).

          SB 535 (De León, Chapter 830, Statutes of 2012) requires 25% of  
          GGRF funds to be allocated to projects that provide benefits to  
          DACs, and at least 10% to projects located within DACs.  DACs  
          have been identified by the California Environmental Protection  
          Agency using census tract data based on geographic,  
          socioeconomic, public health, and environmental hazard criteria.  
           








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          Charge Ahead Initiative

          In March 2012, Governor Brown issued an Executive Order setting  
          a goal of 1.5 million zero-emission vehicles (ZEVs) on  
          California roads by 2025.  The order also set a GHG emissions  
          reduction target of 80% below 1990 levels by 2050.  SB 1275 (De  
          León, Chapter 530, Statutes of 2014) builds on this goal by  
          establishing the Charge Ahead California Initiative at ARB,  
          which outlines a vision of placing 1 million electric cars,  
          trucks, and buses on California's roads by 2023.  SB 1275  
          directs ARB to provide incentives to increase the availability  
          of ZEVs and near-ZEVs, particularly in DACs.  Pursuant to SB  
          1275, ARB's FY 2015-16 Funding Plan includes, among other  
          provisions, a new pilot project to create vanpooling for Central  
          Valley agricultural workers, and the expansion of four pilot  
          projects: increased incentives for public fleets to purchase  
          vehicles eligible for Clean Vehicle Rebate Program rebates;  
          advanced technology car-sharing and mobility options; increased  
          incentives for vehicle replacement under the Enhanced Fleet  
          Modernization Program; and financing assistance.  These pilot  
          projects are currently being implemented.

          ZEV regulation 

          The ZEV regulation includes near-zero-emission vehicles in  
          addition to pure ZEVs.  The regulation, which aims to encourage  
          the commercialization of battery electric and fuel-cell  
          vehicles, has a goal for ZEVs to comprise 15% of new cars sold  
          in California by 2025.  The ZEV regulation requires a certain  
          percentage of a vehicle manufacturer's passenger car and  
          light-duty truck fleet each year to be battery electric and  
          fuel-cell vehicles, clean plug-in hybrids, clean hybrids, and/or  
          clean gasoline vehicles with near-zero tailpipe emissions.   
          Different types of vehicles generate varying credits; a minimum  
          percentage of pure ZEVs are required.

          In complying with the ZEV regulation, manufacturers can transfer  
          credits among each other and from third parties.  Manufacturers  
          can over-comply with the ZEV regulation, then use their credit  
          balance to provide flexibility in the timing and production of  
          bringing new clean cars to the market to meet more stringent ZEV  
          requirements in the coming years.  If a manufacturer fails to  
          meet its ZEV requirement in a given year, it has two years to  
          make up the deficit; if it still fails to comply, it is subject  
          to financial penalties.








          SB 1405 (Pavley)                                   Page 3 of ?
          
          

          According to ARB, compliance with the ZEV regulation through  
          model year 2014 represents a total of nearly 4 million ZEVs and  
          near-ZEVs, including more than 500 fuel-cell vehicles; 60,000  
          battery electric vehicles; 29,400 neighborhood electric  
          vehicles; 60,000 clean plug-in hybrids; and more than 3 million  
          clean gasoline vehicles.    

          ZEV regulation:  transportation system credits

          The ZEV regulation provides credits to manufacturers for  
          vehicles placed in an "innovative transportation system."  To be  
          eligible, a project must at minimum demonstrate shared use of  
          ZEVs and the application of "intelligent new technologies" such  
          as reservation management, card systems, depot management,  
          location management, charge billing, and real-time wireless  
          information systems.  If a project additionally features linkage  
          to transit, such as dedicated parking and charging facilities at  
          transit stations, it may receive additional credits.  A project  
          that features linkage to transit but does not demonstrate shared  
          use or application of intelligent new technologies may also  
          receive credits.  A manufacturer can apply for the credits and  
          directly use them or may obtain credits from a third party (such  
          as a car-sharing company) that has applied for credits and then  
          sold them on the credit market.  Transportation system credits  
          may be used to meet a portion, but not the entirety, of a  
          manufacturer's obligation.  ARB determines the credits earned  
          per vehicle.


          ZEV Action Plan


          Following the Governor's 2012 Executive Order, the ZEV Action  
          Plan was established to identify specific strategies and actions  
          that state government would take to meet the milestones  
          identified in the order.  The plan was a product of an  
          interagency working group led by the Governor's office, with  
          input from industry and other stakeholders.


          Since 2013, new priorities have emerged.  The draft 2015 ZEV  
          Action Plan identifies seven broad goals for state government to  
          advance ZEVs:  building consumer awareness and demand; enabling  
          necessary infrastructure; promoting broad access; transforming  








          SB 1405 (Pavley)                                   Page 4 of ?
          
          
          vehicle fleets; expanding the use of zero-emission rail,  
          freight, and other medium- and heavy-duty technologies;  
          capturing economic development opportunities; and supporting  
          national and international ZEV deployment.  

          This bill requires ARB to:

          1)Revise the ZEV regulations by March 1, 2017, to expand the  
            definition of "transportation systems eligible for  
            zero-emission vehicle credits."  Specifically, the ARB shall  
            include in this definition additional entities utilizing  
            fleets of ZEVs, including rental car companies, transportation  
            network companies (TNCs), taxicab companies, and car-sharing  
            companies, to the extent that operations of these entities  
            reduce per-passenger emissions.

          2)Conduct a study to determine the feasibility and efficacy of  
            providing grants to transit operators to subsidize  
            cost-effective rides serving DACs through the use of ZEVs  
            utilized by ZEV-credit-eligible transportation systems, in a  
            manner that complements the transit service.
          
          
          COMMENTS:

          1)Purpose.  The author states that California's ZEV program has  
            driven a critical set of innovations in transportation  
            technology.  But in order to meet the Governor's goal of 1.5  
            million ZEVs by 2025, and to provide broad access to these  
            vehicles in all communities, the state will need to  
            significantly augment its efforts to build consumer awareness  
            and deploy vehicles in DACs.  The author states that the  
            current regulatory framework is far behind today's trend  
            toward a multimodal and mobility-driven model.  This bill  
            brings the ZEV regulation into alignment with modern  
            transportation trends and seeks to encourage locally driven  
            pilot programs that benefit DACs.  

          2)How many ZEVs are on California's roads?  According to ARB, as  
            of December 2015 there were 180,000 ZEVS on California's  
            roads, representing about 3.5% of new car sales.  About 1.4  
            million ZEVs were sold between 2010 and 2015.  The Draft 2015  
            ZEV Action Plan notes that as of January 2015, Californians  
            drive 40% of all ZEVs on the road in the U.S., while the U.S.  
            comprises about half of the world market.  ARB's 2013 Climate  








          SB 1405 (Pavley)                                   Page 5 of ?
          
          
            Change Scoping Plan and current draft Mobile Source Strategy  
            both point to the need for the light-duty vehicle fleet to be  
            largely electrified by 2050, with ZEV sales of nearly 100% by  
            that point.  

          3)Where are the ZEVs?  According to the Draft 2015 ZEV Action  
            Plan, the metropolitan areas of Los Angeles, San Diego, and  
            the San Francisco Bay Area lead the state in plug-in electric  
            vehicle sales.  ZEV adoption has been greatest in Los Angeles  
            and Santa Clara counties.  Many regions with low ZEV adoption  
            have longer average driving distances, lack charging  
            infrastructure, and have high populations of disadvantaged,  
            low-income, and moderate-income communities.  One strategy  
            included in the draft plan is to increase access to ZEVs for  
            low- and moderate-income consumers and to build awareness in  
            DACs.  Another strategy is to expand the use of zero-emission  
            buses; specifically, to fund public transit and infrastructure  
            benefiting DACs and low- and moderate-income communities, and  
            to develop a program to build ZEV buses in local public  
            transit fleets.

          4)Updating the "transportation systems" definition.  The author  
            states that this bill is needed to modernize the ZEV  
            regulation to incorporate today's technology:  The current  
            regulation focuses on car-sharing, while ride-sharing has now  
            become quite popular.  The ZEV regulation currently defines  
            "innovative transportation system" as shared use of ZEVs and  
            the application of technologies such as reservation  
            management, card systems, depot management, location  
            management, charge billing, and real-time wireless information  
            systems, with additional credits awarded for linkage to  
            transit.  While it does not appear that the current regulation  
            excludes fleets such as rental car companies, TNCs, and  
            taxicab companies, the author states that updating the  
            regulation to specifically include these entities will help  
            foster consumer awareness and help the state reach its ZEV  
            goals.

          5)Double-referral.  This bill has also been referred to the  
            Senate Environmental Quality Committee.

          Related Legislation:
          
          AB 1710 (Calderon) - requires ARB to develop and implement a  
          program comprised of a portfolio of incentives to promote ZEV  








          SB 1405 (Pavley)                                   Page 6 of ?
          
          
          and near-ZEV deployment.  AB 1710 also provides tax incentives  
          for purchasing new or used ZEVs or near-ZEVs.  This bill will be  
          heard by the Assembly Revenue and Taxation Committee on April  
          18.  

          AB 2426 (Low) - requires ARB to establish and implement a  
          Workplace Charging Stations Grant Program to provide funds for  
          installation of electric vehicle charging stations in commercial  
          parking facilities.  This bill is pending in the Assembly  
          Transportation Committee.

          AB 2564 (Cooper) - requires ARB to adopt regulations for the  
          Clean Vehicle Rebate Program, which provides rebates for the  
          purchase of new ZEVs, to establish specified income limits,  
          increase rebate payments for applicants with household incomes  
          less than or equal to 300% of the federal poverty level, include  
          outreach to DACs to increase consumer awareness, and prioritize  
          rebate payments for low-income applicants.  This bill will be  
          heard in the Assembly Natural Resources Committee on April 18.  

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


            POSITIONS:  (Communicated to the committee before noon on  
          Wednesday,
                          April 13, 2016.)
          
            SUPPORT:  

          TechNet

          OPPOSITION:

          None received


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