BILL ANALYSIS
SENATE TRANSPORTATION & HOUSING COMMITTEE BILL NO: ab 787
SENATOR ALAN LOWENTHAL, CHAIRMAN AUTHOR: hill
VERSION: 6/15/10
Analysis by: Jennifer Gress FISCAL: yes
Hearing date: June 29, 2010
SUBJECT:
Smog check: vehicle repair assistance and retirement program
DESCRIPTION:
This bill increases the amount of money from $1,500 to $2,000
that the Bureau of Automotive Repair (BAR) may pay to a person
who retires his or her vehicle under the smog check program,
deletes the provision of law that provides for repair assistance
to vehicle owners whose vehicles have been directed to a
test-only smog check station, and directs the resulting savings
to the vehicle retirement program.
ANALYSIS:
To meet federal air quality standards, existing law requires
California-registered, gasoline-powered vehicles and certain
diesel-powered vehicles to undergo biennial smog inspections to
measure motor vehicle-related pollutants. New vehicles six
model years old and newer, vehicles with a pre-1976 model year,
electric vehicles, motorcycles, and large commercial vehicles
are exempt from the smog check program.
Upon initial registration and upon a change of ownership and
registration of a vehicle, the vehicle owner must submit to the
Department of Motor Vehicles (DMV) a valid certificate of
compliance indicating that the vehicle has passed its smog
inspection. If a vehicle fails any component of a smog
inspection, the vehicle owner must, with some exceptions, repair
the vehicle and pass a subsequent smog inspection before being
able to register or renew the registration of the vehicle.
AB 787 (HILL) Page 2
Each year, BAR directs a certain percentage of vehicles that it
deems to be "high emitters" (currently about 42 percent of
vehicles subject to the program) to specified "test-only"
stations. Test-only stations are those that test, but do not
repair, vehicles.
Under existing law, BAR administers a Consumer Assistance
Program that provides financial support to assist vehicle owners
who have failed their smog inspection. Vehicle owners have the
following options:
1.Repair cost waiver: A waiver allows a vehicle owner to
register his or her vehicle, even if it does not pass a smog
inspection. A vehicle owner qualifies for a repair cost
waiver after he or she spends at least $450 for repairs,
including parts and labor. For low-income vehicle owners,
defined as persons whose income does not exceed 185 percent of
the federal poverty level, the vehicle owner qualifies for the
repair cost waiver (known in this case as an "economic
hardship extension") if an estimate for repairs exceeds $250.
A vehicle owner may apply for only one repair cost waiver for
the life of a vehicle. Failures resulting from emissions
control equipment that is missing or that has been tampered
with are not eligible for a repair cost waiver.
2.Repair assistance: Two categories of vehicle owners are
currently eligible for repair assistance under this program.
The first consists of low-income vehicle owners, defined as
persons whose income does not exceed 185 percent of the
federal poverty level, which BAR has authority to increase to
225 percent, whose vehicles fail their smog inspection. The
second category of eligible vehicle owners consists of persons
who were directed to a test-only facility and whose vehicles
fail the smog inspection. Under the repair assistance
program, BAR will pay up to $500 for repair costs, subject to
a co-payment of $20 for low-income persons and $100 for all
other persons.
3.Vehicle retirement: The vehicle retirement program provides
vehicle owners compensation to voluntarily retire (or scrap)
their vehicles that have failed a smog inspection. Under this
option, a vehicle owner applies to BAR and receives an
approval letter by mail. The owner then takes the approval
letter to a vehicle dismantler under contract with BAR for
retirement and payment. The vehicle is removed from operation
and dismantled. Existing law allows BAR to pay an owner who
AB 787 (HILL) Page 3
elects to retire his or her vehicle up to $1,500 and to opt to
pay more than $1,500 if it determines that doing so will be
cost-effective. Currently, BAR provides $1,000 to a vehicle
owner who retires his or her vehicle and is working in
cooperation with ARB to amend BAR's regulations to provide
$1,500 owners who are low-income.
To be eligible for any of these consumer assistance options, the
vehicle must have failed its smog inspection and have been
continuously registered for at least 24 months, with some
exceptions, in an area where vehicles are subject to biennial
smog inspection.
This bill :
Deletes the provision that vehicle owners directed to
test-only smog facilities are eligible for repair assistance
and makes conforming changes.
Directs the savings resulting from the elimination of repair
assistance for directed vehicles to the vehicle retirement
program.
Increases the maximum payment that BAR may offer for vehicle
retirement from $1,500 to $2,000.
Establishes that a "low-income motor vehicle owner" is a
person whose income does not exceed 300 percent of the federal
poverty level.
COMMENTS:
1.Purpose . The author argues that 75 percent of vehicular
pollution is caused by just 25 percent of the vehicle fleet.
Unfortunately, BAR's vehicle retirement program is continually
raided for General Fund expenditures instead of being used to
retire high polluting vehicles. In addition, the author
asserts that not enough Californians are utilizing the vehicle
retirement program. There are over three million vehicles 15
years old or older in California yet only about 22,000
vehicles are retired through the program annually. Because
vehicle retirement programs are one of the most productive
ways to reduce air pollution, this bill authorizes BAR to
increase the incentive so that more people may participate in
the program and prevent funds intended for vehicle retirement
AB 787 (HILL) Page 4
from being used for other purposes.
This bill also eliminates repair assistance for vehicle owners
who are directed to test-only facilities and whose vehicle
fails its smog inspection. This form of repair assistance
does not have an eligibility criterion based on income; any
owner who is directed to a test-only facility and fails is
eligible. In fiscal year 2007-08, approximately 46 percent of
total expenditures for the repair assistance program were for
vehicle owners who were directed to test-only facilities.
(BAR notes that some of these may have been eligible under the
income provision but chose not to specify their income.) The
author argues that this is an unnecessary subsidy for those
who are otherwise likely able to afford vehicle repairs. This
bill closes that loophole and limits participation in the
repair assistance program to vehicle owners whose income level
does not exceed 300 percent of the federal poverty level.
2.Recent legislation . This bill is very similar to AB 823
(Hill), which this committee passed last year 7 to 3. That
bill was vetoed by the Governor. In his veto message, the
Governor encouraged the author to direct any savings achieved
by the bill to the vehicle retirement program, which this bill
does. Comparing this bill to AB 823, this bill also clarifies
that vehicle retirement is an option for any person whose
vehicle fails its smog inspection and increases the income,
from 225 to 300 percent of the federal poverty level, that
qualifies a person as "low income" for purposes of
participating in BAR's Consumer Assistance Program.
3.Questionable likelihood BAR will increase payment from $1,500
to $2,000 . AB 1870 (Lieber), Chapter 761, Statutes of 2006,
increased, from $1,000 to $1,500, the maximum amount that BAR
may pay a vehicle owner to retire his or her vehicle and
authorized BAR to increase the amount if it deems doing so is
cost-effective. Since passage, BAR continues to pay $1,000
for vehicle retirement, unless the person is low-income in
which case BAR will pay $1,500. Based on this experience, it
may be unlikely to expect BAR to increase funding to $2,000.
4.Benefits of vehicle retirement . By incentivizing the early
retirement of fully functional vehicles, vehicle retirement
programs accelerate emission benefits that would have
otherwise occurred by the natural turnover of the fleet.
Accelerating emission reductions will help to improve air
quality and public health, and further the state's ability to
AB 787 (HILL) Page 5
attain federal air quality standards. In addition to these
environmental and public health benefits, vehicle retirement
programs have economic benefits by incentivizing the purchase
of new or newer vehicles. Automobile manufacturers and
dealers are likely to benefit by accelerated vehicle
purchases, which may be particularly valuable in the state's
current economic climate.
The Assembly votes are not relevant.
RELATED LEGISLATION
AB 2289 (Eng) authorizes BAR to assess vehicle emissions by
using a vehicle's on-board diagnostic system rather than
conventional equipment and requires BAR to rank the performance
of smog check stations and refer the vehicle most likely to need
repairs to the highest performing stations. Set for hearing in
the Senate Business, Professions and Economic Development
Committee on June 28th.
POSITIONS: (Communicated to the Committee before noon on
Wednesday,
June 23, 2010)
SUPPORT: None received.
OPPOSED: Department of Consumer Affairs (unless amended)