BILL ANALYSIS
SB 632
Page 1
SENATE THIRD READING
SB 632 (Alan Lowenthal)
As Amended August 18, 2010
Majority vote
SENATE VOTE: Vote not relevant
TRANSPORTATION APPROPRIATIONS
(vote not relevant) (vote not relevant)
SUMMARY : Allow the South Coast Air Quality Management District
(SCAQMD) and the Sacramento Metropolitan Air Quality management
District (SMAQMD) to levy vehicle registration renewal fees of
up to $3 to fund emission control projects. Specifically, this
bill :
1)Allows SCAQMD and the SMAQMD to levy a fee of up to $3 upon
motor vehicles registered within their respective districts.
2)Requires any such fees to be paid to and collected by the
Department or Motor Vehicles (DMV) upon registration renewal.
3)Exempts from this fee any vehicle that does not pay
registration fees or that meets the standards of a
zero-emission vehicle.
4)Requires DMV to distribute to SCAQMD and SMAQMD the revenues
from this fee, less DMV's own costs.
5)Requires SCAQMD and the SMAQMD to use the revenues for
projects to reduce nitrogen oxides (NOx) or volatile organic
compound (VOC) emissions from motor vehicles.
6)Prohibits SCAQMD and SMAQMD from using more than 5% of the
revenues for their own administrative costs.
7)Prohibits the SCAQMD and the SMAQMD from using the revenues to
fund projects required by local, state or federal mandates
unless the project funding is awarded before the compliance
dates of those mandates.
8)Allows SCAQMD and SMAQMD to use the revenues to fund projects
even if the State Implementation Plan (SIP) already assumes
that the emission reductions from those projects will occur.
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EXISTING LAW :
1)Requires a vehicle registration fee of $31 to be paid for the
registration of every motor vehicle, except those expressly
exempt.
2)Authorizes a variety of additional fees that are related to
the operation of motor vehicles to be paid with the
registration, most particularly to address certain air quality
and law enforcement issues. These fees support, among other
things, service authorities for freeway emergencies,
California Highway Patrol staffing, and fingerprint
identification programs.
3)Authorizes an air pollution control district designated by the
Air Resources Board (ARB) as a state non-attainment area for
any pollutant emitted by motor vehicles to levy a fee up to $6
on motor vehicles registered within an air district.
4)Authorizes the San Joaquin Valley Unified Air Pollution
Control District to increase the motor vehicle registration
fee to up to, but not exceeding, $30 for incentive-based
programs to achieve surplus emission reductions.
FISCAL EFFECT : Unknown
COMMENTS : Section 185 of the Federal Clean Air Act (CAA)
requires areas that are designated as Severe or Extreme
Nonattainment of the National Ambient Air Quality Standards
(NAAQS) for ozone to develop, as a revision to the SIP, a fee
collection rule to be implemented in the event that an area
fails to attain the ozone standards by the required attainment
date.
The theory behind the now more than 30 year old requirement is
that the fee would act as a deterrent to emissions and result in
additional pollution control. Failure to adopt a Section 185
approvable rule will result in sanctions that may include higher
emission offset ratios and loss of highway funding.
Additionally, the California Environmental Protection Agency
(EPA) would be required to adopt a federal rule to implement
Section 185 and would collect the fee plus substantial penalties
directly.
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Although the one-hour ozone standard has been revoked and major
stationary sources contribute less than 10% to the emissions
inventory, "major stationary sources" are still required to pay
the fee. This requirement places an extreme economic burden on
some stationary sources because such sources in California are
required to have maximum feasible controls and already pay
administrative fees. In contrast, according to SCAQMD, mobile
sources including motor vehicles, locomotives, ships and
off-road equipment have not reduced their fair share of
emissions. The current Section 185 fee is over $8,000 per ton,
and exceeds $30 million in aggregate in the SCAQMD
jurisdictional area alone and potentially millions more in the
SMAQMD.
The SCAQMD's mission is to protect public health by reducing air
pollution including attainment of state and federal ambient air
quality standards. SCAQMD, as the local air quality agency, has
primary jurisdiction over stationary sources of air pollution,
and limited authority over mobile sources. Reducing emissions
from mobile sources is primarily the responsibility of state and
federal governments.
Great strides have been made in improving air quality; however,
areas under SCAQMD jurisdiction still do not meet the federal
standards for ozone summertime smog, although stationary sources
have achieved a control level upwards of 90%. The reality is
that the federal clean air standards in South Coast Air Basin
(SCAB) cannot be achieved without significantly reducing
emissions from mobile sources beyond today's regulations. The
Sacramento region also faces challenges of its own.
The CAA Section 185 fee is intended to be a penalty for major
stationary sources in areas that have not done all that they can
do to reduce emissions. In reality, within SCAQMD, major
stationary sources have complied with the most stringent control
requirements anywhere and have invested a significant amount of
resources in air pollution controls. Even with the elimination
of all stationary sources, the SCAB would not meet the federal
standards, without significant reduction of emissions from
mobile sources.
Approximately 350 businesses will be forced to pay Section 185
fees within SCAQMD, amounting to about $30 million in total.
Within SMAQMD, 15 businesses may collectively be forced to pay
close to $3 million in Section 185 fees. Fees are based on
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emissions, at a rate of over $8,000 per ton, at this time. As
an added burden, the baseline for calculating the penalty fees
is 2010, a time when most businesses are not operating at full
capacity due to the recession. As the economy recovers, these
businesses will operate closer to normal, and could be forced to
pay even higher penalty fees. Thus, the CAA Section 185 fee is
not only unfair, it may also delay the economic recovery for
certain businesses and force them to curtail operations or move
out of state.
On January 5, 2010, the United States Environmental Protection
Agency (USEPA) released guidance that provides for the use of
alternative programs to satisfy the CAA Section 185 fee
requirement provided it comports with the principles of CAA
Section 172(e). One alternative specifically identified by
USEPA was a fee equivalent program. Such a program must raise
at least as much revenue as otherwise required by the Section
185 fee program and the proceeds are expended to reduce
emissions of ozone-forming pollutants in the same geographic
area. Under this concept, a program can be developed to shift
the fee burden from the specific set of major stationary sources
affected by the Section 185 fee to mobile sources which emit
about 80% of the pollutants that contribute to ozone formation
in the SCAB. The large stationary sources emit less than 10% in
comparison.
Accordingly, the proponents of this bill contend that the state
should enact legislation authorizing SCAQMD and SMAQMD to levy a
motor vehicle fee up to $3 and allow such funds to be spent on
emission reduction projects consistent with the EPA guidance
referenced earlier. The fee is a small percentage of the total
motor vehicle registration fee and would be relatively small
compared to similar fees authorized for other areas of
California.
Multitude of vehicle registration and license fee revenue bills:
There are a number of proposals being considered that would
raise either the vehicle registration or license fees for
various purposes, including funding state park maintenance,
regional blueprint greenhouse gas reduction planning, etc.
Should these proposals be considered on a broader, overarching
level rather than considered separately on a piecemeal basis in
determining the ultimate beneficiary or beneficiaries of the fee
revenues?
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Arguments in support: According to the SMAQMD "Because of an
East Coast bias in federal law and regulation, Sacramento
employers will face harsh fines from the USEPA, with the moneys
from those fines going to Washington, D.C., unless the local air
district is able to generate alternative funds to achieve
emissions reductions required by the federal government.
Granting the local air district's board with authority to raise
DMV registration surcharges by no more than $3 would provide the
district with the means to implement projects and programs to
reduce pollution from motor vehicles, which are the largest
source of emissions. Rather than impose fines upon employers
already hard-hit by the economic crisis, we believe minor
adjustments to motor vehicle registrations surcharges is by far
the fairer, wiser course of action."
Analysis Prepared by : Ed Imai / TRANS. / (916) 319-2093 FN:
0006216