BILL ANALYSIS Ó
SB 1275
Page 1
Date of Hearing: June 23, 2014
ASSEMBLY COMMITTEE ON NATURAL RESOURCES
Wesley Chesbro, Chair
SB 1275 (De Leon) - As Amended: May 6, 2014
SENATE VOTE : 27-9
SUBJECT : Vehicle retirement and replacement: Charge Ahead
California Initiative
SUMMARY : Establishes the Charge Ahead California Initiative
(CACI) which, through a variety of incentive programs, is
intended to increase the availability of zero-emission (ZEV) and
near-zero-emission (NZEV) vehicles, particularly to
disadvantaged and low- and moderate-income communities.
EXISTING LAW :
1)Establishes the California Alternative and Renewable Fuel,
Vehicle Technology, Clean Air, and Carbon Reduction Act of
2007 [AB 118 (Nunez), Chapter 750, Statutes of 2007]. AB 118
is funded through temporary increases in vehicle registration
fees ($3), smog abatement fees ($8), boat registration fees
($10/20), and special identification plate fees ($5).
Collection of these fees is authorized until 2024 pursuant to
AB 8 (Perea), Chapter 401, Statutes of 2013. The fees support
three major programs:
a) The Air Quality Improvement Program (AQIP), administered
by the Air Resources Board (ARB) in consultation with local
air districts, funds projects that reduce criteria air
pollutants, improve air quality, and provide research for
alternative fuels and vehicles, vessels, and equipment
technologies. The two primary programs adopted by ARB
pursuant to AQIP are the Clean Vehicle Rebate Project
(CVRP) and the Hybrid and Zero Emissions Truck and Bus
Voucher Incentive Program (HVIP). AQIP is funded by smog
abatement fees, boat registration fees, and special
identification plate fees and receives between $30-36
million per year from these sources.
b) The Enhanced Fleet Modernization Program (EFMP), under
which ARB, in consultation with the Bureau of Automotive
Repair (BAR), pays to permanently remove cars and small
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trucks from operation through voluntary retirement by their
owners. EFMP is funded by $1 of the vehicle registration
fee and receives approximately $30 million per year.
c) The Alternative and Renewable Fuel and Vehicle
Technology Program (ARFVTP), administered by California
Energy Commission (CEC), provides grants and other
financial incentives to accelerate the development and
deployment of clean, efficient, low carbon alternative
fuels and technologies. ARFVTP is funded by $2 of the
vehicle registration fee and receives approximately $100
million per year total.
2)Requires ARB, pursuant to California Global Warming Solutions
Act of 2006 [AB 32 (Nunez), Chapter 488, Statutes of 2006], to
adopt a statewide GHG emissions limit equivalent to 1990
levels by 2020 and adopt regulations to achieve maximum
technologically feasible and cost-effective GHG emission
reductions. AB 32 authorizes ARB to permit the use of
market-based compliance mechanisms to comply with GHG
reduction regulations, once specified conditions are met.
3)Establishes the Greenhouse Gas Reduction Fund (GHGRF) and
requires all moneys, except for fines and penalties, collected
by ARB from the auction or sale of allowances pursuant to a
market-based compliance mechanism (i.e., the cap-and-trade
program adopted by ARB under AB 32) to be deposited in the
GHGRF and available for appropriation by the Legislature.
4)Establishes the GHGRF Investment Plan and Communities
Revitalization Act [AB 1532 (John A. Pérez), Chapter 807,
Statutes of 2012] to set procedures for the investment of GHG
allowance auction revenues. AB 1532 authorizes a range of GHG
reduction investments and establishes several additional
policy objectives.
5)Requires the investment plan to allocate (1) a minimum of 25
percent of the available moneys in the GHGRF to projects that
provide benefits to identified disadvantaged communities and
(2) a minimum of 10 percent of the available moneys in the
GHGRF to projects located within identified disadvantaged
communities [SB 535 (De Leon), Chapter 830, Statutes of 2012].
THIS BILL :
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1)Establishes CACI, requires it to be administered by ARB, and
sets forth the following goals:
a) Place in service at least one million ZEVs and NZEVs by
January 1, 2023.
b) Establish a self-sustaining ZEV and NZEV industry in
which the vehicles are a viable mainstream option for
individual vehicle purchasers, businesses, and public
fleets.
c) Increase access for disadvantaged and low- and
moderate-income communities to ZEVs and NZEVs.
d) Increase the placement of those vehicles in those
communities to enhance the air quality, lower GHGs, and
promote overall benefits for those communities.
2)Requires ARB, in consultation with the CEC, air districts, and
the public, to:
a) Adopt a plan by June 30, 2015 to meet the CACI goals
commencing in the 2016-17 fiscal year, including
establishing an estimate of the total funding necessary for
programs and projects, including CVRP, HVIP, and other
specified AB 118 programs. Requires the plan to be updated
every three years through January 1, 2023.
b) Adopt revisions to CVRP by June 30, 2015 to ensure all
of the following:
i) Rebate levels are phased down in multiyear
increments based on cumulative sales levels as determined
by ARB.
ii) Modifications are adopted to both improve
effectiveness and ensure that the program better serves
persons of low and moderate incomes.
iii) Qualified low- and moderate-income vehicle owner
participants in the EFMP are eligible for rebates for the
purchase of used ZEVs and NZEVs that were eligible for
CVRP when they were originally purchased.
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iv) Consideration of the conversion to prequalification
and point-of-sale rebates or other methods to increase
participation rates.
c) Adopt revisions to HVIP by June 30, 2015 to ensure
eligibility for a truck or bus retrofitted or
remanufactured to be a ZEV or NZEV.
d) Establish programs that further increase access to and
direct benefits for disadvantaged and low- and
moderate-income communities from electric transportation,
including any of the following:
i) A loan or loss reserve credit enhancement program to
increase consumer access to ZEV and NZEV financing and
leasing options.
ii) Car sharing programs that serve disadvantaged
communities and incorporate ZEVs and NZEVs.
iii) Deployment of charging infrastructure in multiunit
dwellings in disadvantaged communities.
3)Authorizes the use of EFMP funds for "mobility options" (i.e.,
car sharing and public transit vouchers) as an alternative to
vehicle replacement.
4)Defines the following terms:
a) "Car sharing" means a model of vehicle rental where
users can rent vehicles for short periods of time and users
are members that have been preapproved to drive.
b) "Near-zero-emission vehicle" means a light-duty plug-in
hybrid electric vehicle or a medium-duty, heavy-duty, or
bus hybrid electric vehicle or plug-in hybrid electric
vehicle.
c) "Zero-emission vehicle" means a light-duty, medium-duty,
heavy-duty, or bus battery electric vehicle or hydrogen
fuel cell vehicle.
d) "Mobility option" means a voucher for public transit or
car sharing.
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5)Makes related findings and declarations.
FISCAL EFFECT : According to the Senate Appropriations
Committee, this bill would result in the following costs to ARB
from the GHGRF:
1)Approximately $619,000 and 4 personnel years (PYs) in 2014-15
and ongoing costs of $454,000 and 3 PYs to adopt the specified
funding plan and administer the components of that plan.
2)Ongoing costs of approximately $165,000 and 1 PY beginning in
2014-15 to develop and administer each of the new programs
specified in the bill. Actual costs and staffing needs would
depend upon the amount of funding dedicated to the specified
programs.
3)Annual costs of $344,000 and 2 PYs, beginning in 2016-17, to
develop and implement a certification program for truck and
bus hybrid and zero-emission vehicle retrofits and
remanufactures.
4)Unknown ongoing costs to fund additional program expenditures,
likely in the millions to tens of millions annually.
COMMENTS :
1)Author's statement :
[SB 1275] is an effort to support the deployment of 1
million electric vehicles and make them more accessible to
low- and moderate- income earners. Although California
leads the nation in electric vehicle sales, accounting for
1/3 of all sales, we have a long ways to go to transition
our vehicle fleet to zero and near-zero emission vehicles
that will help us achieve our climate goals. Clean
vehicles are also critically important to our efforts to
improve localized air quality in communities that are
heavily polluted.
2)Background . In 2007, AB 118 established three new programs
intended to promote vehicle and fuel technology that reduces
air pollution and GHG emissions statewide. These programs are
AQIP, EFMP, and ARFVTP.
AQIP provides financial incentives for public and private
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groups and individuals to adopt smog and diesel particulate
pollution reducing technology that concurrently reduces GHG
emissions. Two of AQIP's flagship projects, CVRP and HVIP,
represent the program's largest funding commitments. AQIP has
also provided incentives for biofuels research, hybrid truck
testing, lawn and garden equipment replacement, zero-emission
all-terrain agricultural work vehicle rebates, advanced
technology demonstration, and hybrid off-road equipment pilot
projects.
Until last year, the Legislature appropriated about $30-40
million annually to AQIP from AB 118 fee revenues. Last year,
an additional $30 million was loaned to AQIP from the Vehicle
Inspection and Repair Fund, $20 million of which was allocated
to CVRP and $10 million for HVIP. Since 2009, ARB has spent
approximately $205 million on AQIP programs, with $125 million
going to CVRP and $50 million to HVIP. The 2014-15 Budget Act
approved by the Legislature June 15 and pending on the
Governor's desk appropriates $200 million to AQIP from the
GHGRF (cap-and-trade auction revenues).
EFMP supplements BAR's vehicle retirement program known as the
Consumer Assistance Program. Through joint administration by
local air districts and BAR, eligible low-income consumers
whose vehicles fail smog check tests may receive financial
assistance to voluntarily retire their vehicles and/or replace
them with vehicles meeting certain emission and model-year
requirements. During fiscal year 2011-2012, approximately $34
million of EFMP funds were expended for the retirement of
25,741 vehicles.
ARFVTP funds projects by various public and private groups
that "develop and deploy innovative technologies that
transform California's fuel and vehicle types to help attain
the state's climate change policies." The CEC prepares an
investment plan, in coordination with a stakeholder advisory
committee, which outlines the ARFVTP's funding priorities,
then CEC solicits bids for projects, awarding funds based on
eligibility criteria.
Monies appropriated to the ARFVTP come from temporary
increases in smog abatement fees, vehicle registration fees,
vessel registration fees and certain other vehicle fees.
According to the CEC, $360 million of ARFVTP funds have been
awarded to projects such as the construction of electric
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vehicle charging stations, the deployment of natural
gas-powered vehicles, the production of biofuels, construction
of hydrogen fueling stations, and production of electric
vehicles (e.g., $10 million to Tesla to expand production
capacity for the Model X cross-over electric SUV).
3)From the many to the few . Until the recent appropriation of
cap-and-trade auction revenues, the vast majority (over 90
percent) of funds for both the ARFVTP and AQIP have come from
annual registration fees paid through DMV by vehicle owners.
AB 118 applies a registration fee increase of $3 for all
vehicles, plus an $8 increase in the smog abatement fee that
applies to newer vehicles that are exempt from smog check. $2
of the registration fee goes to ARFVTP and $1 to EFMP. The $8
smog fee is split between ARFVTP and AQIP. The registration
fee increase is flat - that is it is collected without regard
to a vehicle's value. So a car valued at $500 pays the same
as a car valued at $100,000.
According to ARB, $125 million worth of CVRP rebates have been
awarded as of April 30, 2014. Nearly 99 percent of these
funds have gone to battery electric and plug-in hybrid
vehicles, as detailed below. For example, 8,113 $2500 rebates
(a total of over $20 million) have gone to purchase new Tesla
Model S vehicles, with base prices ranging from $70,000 to
over $100,000. Survey data indicates that the typical CVRP
recipient earns over $150,000/year, drives 15-30 miles/day and
owns at least one other non-electric vehicle. Approximately
80 percent of the rebates have been awarded within the South
Coast and Bay Area air districts.
----------------------------------------------------------------
|Vehicle Type by Model |Number of |Total |Percentage of |
| |Rebates |Dollars |Total Dollars |
| | |Expended |Expended |
|--------------------------+----------+----------+---------------|
|Light-Duty Zero-Emission | |$81,564,95| 65.30%|
|Vehicles |31,064 | 9| |
|--------------------------+----------+----------+---------------|
| BMW 1 Series Active E | | $52,500| 0.04%|
| |?? | | |
| |70 | | |
|--------------------------+----------+----------+---------------|
| Chevrolet Spark EV | |$1,745,000| 1.40%|
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| |?? 698 | | |
|--------------------------+----------+----------+---------------|
| CODA | | $122,500| 0.10%|
| |?? | | |
| |49 | | |
|--------------------------+----------+----------+---------------|
| FIAT 500e | |$7,375,208| 5.90%|
| | 2,952 | | |
|--------------------------+----------+----------+---------------|
| Ford Focus Electric | |$2,682,223| 2.15%|
| |?? 1075 | | |
| | | | |
|--------------------------+----------+----------+---------------|
| Honda FCX Clarity | | $57,500| 0.05%|
| |?? | | |
| |15 | | |
|--------------------------+----------+----------+---------------|
| Honda Fit EV | | $783,750| 0.63%|
| |?? 314 | | |
| | | | |
|--------------------------+----------+----------+---------------|
| Mercedes-Benz F-CELL | | $65,000| 0.05%|
| |?? | | |
| |26 | | |
|--------------------------+----------+----------+---------------|
| Mitsubishi i-MiEV | | $363,561| 0.29%|
| |?? 176 | | |
| | | | |
|--------------------------+----------+----------+---------------|
| Nissan Leaf | |$42,133,93| 33.73%|
| |15,240 | 0| |
|--------------------------+----------+----------+---------------|
| Smart Electric Fortwo | |$2,369,000| 1.90%|
| |?? 1022 | | |
| | | | |
|--------------------------+----------+----------+---------------|
| Tesla Model S | |$20,270,25| 16.23%|
| | 8,113 | 0| |
|--------------------------+----------+----------+---------------|
| Tesla Roadster | | $675,000| 0.54%|
| |?? 162 | | |
| | | | |
|--------------------------+----------+----------+---------------|
| Th!nk City | | $126,037| 0.10%|
| |?? | | |
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| |53 | | |
|--------------------------+----------+----------+---------------|
| Toyota RAV4 EV | |$2,739,000|2.19% |
| |?? 1,097 | | |
| | | | |
|--------------------------+----------+----------+---------------|
| Wheego LiFe | | $4,500| 0.00%|
| |?? | | |
| |2 | | |
|--------------------------+----------+----------+---------------|
|Plug-In Hybrid Electric | |$41,992,32| 33.62%|
|Vehicles |28,019 | 6| |
|--------------------------+----------+----------+---------------|
| Cadillac ELR | | $28,500| 0.02%|
| |?? | | |
| |19 | | |
|--------------------------+----------+----------+---------------|
| Chevrolet Volt | |$20,796,10| 16.65%|
| |13,870 | 1| |
|--------------------------+----------+----------+---------------|
| Ford CMAX Energi | |$3,044,033| 2.44%|
| | 2,031 | | |
|--------------------------+----------+----------+---------------|
| Ford Fusion Energi | |$3,217,500| 2.58%|
| | 2,145 | | |
|--------------------------+----------+----------+---------------|
| Honda Accord Plug-In | | $312,000| 0.25%|
| |?? 208 | | |
| | | | |
|--------------------------+----------+----------+---------------|
| Toyota Prius Plug-in | |$14,594,19|11.68% |
|Hybrid | 9,746 | 2| |
----------------------------------------------------------------
4)ARB's proposed AQIP funding plan - a lot more of the same, and
a few token reforms . On May 23, ARB released an AQIP funding
plan for 2014-15 that proposes how to spend both the AB 118
fee revenues, as well as the "low carbon transportation" funds
appropriated from the GHGRF in the Budget Act. The plan is
scheduled for ARB adoption on June 26.
The plan proposes to spend $121 million in the next fiscal
year on "Classic CVRP," a huge increase to meet the growing
demand for rebates projected by ARB. ARB staff proposes
minimal changes to CVRP, the main change being cutting the
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rebate amounts by $500 because ARB projects demand may exceed
available funds. Among other changes considered and rejected
by staff are a $60,000 MSRP cap, which would make the Tesla
Model S, Cadillac ELR and potentially other luxury cars
ineligible, and an income cap, which was rejected on the basis
that it could be difficult to administer and enforce.
The plan also recommends spending $9 million on "pilot"
projects to serve disadvantaged communities. Proposed
measures includes measures proposed by this bill, including
car sharing ($2.5 million), additional incentives for
replacement of EFMP retired vehicles with zero-emission,
plug-in hybrid or hybrid vehicles ($2 million), and vehicle
financing assistance ($1.5 million).
5)What are "disadvantaged and low- and moderate-income
communities" ? One of the four goals of the CACI established
by this bill is to increase access for "disadvantaged and low-
and moderate-income communities" to ZEVs and NZEVs. The bill
does not define any of these terms. Under current law,
"disadvantaged communities" are identified by CalEPA pursuant
to SB 535, an existing standard that could be applied to this
bill. However, there are a wide variety of existing
thresholds based on income, so without any definitions, it's
unclear what is intended by "low income" and "moderate
income." In addition, the term "community" itself is vague
and subject to wide range of possible interpretations.
For reference, the California Department of Housing and
Community Development (HCD) determines various maximum income
levels for each county based on household size
(http://www.hcd.ca.gov/hpd/hrc/rep/state/inc2k14.pdf). For
example, for a four-person household in Sacramento County,
where the area median income is $76,100, the HCD limits are
$60,900 for "low income" and $91,300 for "moderate income."
However, while the HCD income limits can be used to identify
low- and moderate-income households, they don't identify low-
and moderate-income "communities."
The author and the committee may wish to consider whether and
how to define the terms "disadvantaged," "low-income,"
"moderate income," and "community."
6)Should low- and moderate-income individuals be targeted, or
only communities ? As referenced in Comment 5 above, this bill
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focuses on "disadvantaged and low- and moderate-income
communities." Assuming those communities are properly defined
and can be identified, it seems an appropriate focus.
However, there are low- and moderate-income individuals who
may not reside in a low- or moderate-income community who
would also be an appropriate focus for a more equitable CVRP
program. The author and the committee may wish to consider
whether individual low- and moderate-income "consumers" should
be included along with "communities."
7)How much is too much ? As referenced in Comment 3 above,
apparently more than half of the CVRP budget has gone to
individuals earning over $150,000/year. In addition, over 16
percent has gone to purchase cars that typically sell for over
$100,000. Whether a $2500 rebate has any effect on the
purchasing decisions of very high income consumers and/or
those in the luxury car market is the subject of some debate,
but it seems clear that a significant amount of CVRP have been
wasted on "free riders" and that these funds could have been
better spent elsewhere. The author and the committee may wish
to consider requiring ARB to establish an income-based means
test for rebate eligibility to assure funds are targeted at
consumers who require rebates to purchase a zero-emission and
near-zero-emission vehicle.
8)Double referral . This bill was double-referred to the
Assembly Transportation Committee, which passed the bill by
vote of 10-2 on June 16, 2014.
REGISTERED SUPPORT / OPPOSITION :
Support
American Lung Association
Asthma Coalition
California Thoracic Society
Cancer Action Network
California League of Conservation Voters
California Society for Pulmonary Rehabilitation
Coalition for Clean Air
Environment California
Global Green USA
Health Care Without Harm
Los Angeles County Medical Association
Physicians for Social Responsibility, San Francisco Bay Area
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Chapter
Regional Asthma Management and Prevention
San Francisco Asthma Task Force
San Francisco Medical Association
Solar Energy Industries Association
St. John's Well Child & Family Centers
Union of Concerned Scientists
Opposition
California Taxpayers Association
Analysis Prepared by : Lawrence Lingbloom / NAT. RES. / (916)
319-2092