Existing law establishes the Air Quality Improvement Program that is administered by the State Air Resources Board for the purposes of funding projects related to, among other things, the reduction of criteria air pollutants and improvement of air quality. Pursuant to its existing statutory authority, the state board has established the Clean Vehicle Rebate Project, as a part of the Air Quality Improvement Program, to promote the production and use of zero-emission vehicles by providing rebates for the purchase of new zero-emission vehicles.

The Charge Ahead California Initiative requires the state board to adopt, no later than June 30, 2015, revisions to the criteria and other requirements for the Clean Vehicle Rebate Project to, among other things, limit eligibility based on income.

This bill would require the state board to adopt regulations for the purposes of the Clean Vehicle Rebate Project that would establish the maximum gross annual income at specified levels for a person to be eligible for a rebate; increase rebate payments by $500 for applicants with household incomes less than or equal to 300% of the federal poverty level; low-income applicants, as defined; include outreach to disadvantaged communities, as specified, to increase consumer awareness; low-income households; and prioritize rebate payments for low-income applicants.

Existing law establishes the Air Quality Improvement Program that is administered by the State Air Resources Board for the purposes of funding projects related to, among other things, the reduction of criteria air pollutants and improvement of air quality. Pursuant to its existing statutory authority, the state board has established the Clean Vehicle Rebate Project, as a part of the Air Quality Improvement Program, to promote the production and use of zero-emission vehicles by providing rebates for the purchase of new zero-emission vehicles.

The Charge Ahead California Initiative requires the state board to adopt, no later than June 30, 2015, revisions to the criteria and other requirements for the Clean Vehicle Rebate Project to, among other things, limit eligibility based on income.

This bill would, for all eligible vehicle types except fuel cell electric vehicles, would require the state board to adopt regulations for the purposes of the Clean Vehicle Rebate Project that would establish the maximum gross annual income at unspecified specified levels for a person to be eligible for a rebate under the project. rebate; increase rebate payments by $500 for applicants with household incomes less than or equal to 300% of the federal poverty level; include outreach to disadvantaged communities, as specified, to increase consumer awareness; and prioritize rebate payments for low-income applicants.

Existing law establishes the Air Quality Improvement Program that is administered by the State Air Resources Board for the purposes of funding projects related to, among other things, the reduction of criteria air pollutants and improvement of air quality. Pursuant to its existing statutory authority, the state board has established the Clean Vehicle Rebate Project, as a part of the Air Quality Improvement Program, to promote the production and use of zero-emission vehicles by providing rebates for the purchase of new zero-emission vehicles.

Existing law establishes the Air Quality Improvement Program that is administered by the State Air Resources Board for the purposes of funding projects related to, among other things, the reduction of criteria air pollutants and improvement of air quality. Pursuant to its existing statutory authority, the state board has established the Clean Vehicle Rebate Project, as a part of the Air Quality Improvement Program, to promote the production and use of zero-emission vehicles by providing rebates for the purchase of new zero-emission vehicles.

This bill would declare the intent of the Legislature to enact legislation to establish income eligibility requirements for clean vehicle rebates under the Clean Vehicle Rebate Project.

SENATE COMMITTEE ON ENVIRONMENTAL QUALITY

Senator Wieckowski, Chair

2015 - 2016 Regular

Bill No: AB 2564

SUBJECT: Air Quality Improvement Program: Clean Vehicle Rebate Project.

ANALYSIS:

Existing law:

1. Establishes the Air Quality Improvement Program (AQIP), to be administered by the California Air Resources Board (ARB) in consultation with local air districts, to provide competitive grants to fund projects to reduce criteria air pollutants, improve air quality, and support research to improve the air quality impacts of alternative fuels and vehicles, vessels, and equipment technologies. (Health and Safety Code (HSC) §44274).
2. Establishes the Charge Ahead Initiative administered by ARB with the goals of reaching at least one million zero-emission and near-zero-emission vehicles by January 1, 2023, and increasing accessibility for disadvantaged, low-income, and moderate-income communities. ARB is required to establish programs that further increase access to and direct benefits for disadvantaged, low-income, and moderate-income communities and consumers from electric transportation. (HSC §44258 et seq.)
3. Under the California Global Warming Solutions Act of 2006 (also known as AB 32), requires ARB to determine the 1990 statewide greenhouse gas (GHG) emissions level and approve a statewide GHG emissions limit that is equivalent to that level, to be achieved by 2020, and to adopt GHG emissions reductions measures by regulation. ARB is authorized to include the use of market-based mechanisms to comply with these regulations. (HSC §38500 et seq.)
4. Establishes the Greenhouse Gas Reduction Fund (GGRF) in the State Treasury, requires all moneys, except for fines and penalties, collected pursuant to a market-based mechanism be deposited in the fund. (Government Code §16428.8)
5. Prohibits the state from approving allocations for a measure or program using GGRF moneys except after determining that the use of those moneys furthers the regulatory purposes of AB 32, and requires moneys from the GGRF be used to facilitate the achievement of reductions of GHG emissions in California. (HSC §39712)

This bill requires ARB, in consultation with the California Energy Resources Conservation and Development Commission (CEC), local air districts and the public, to adopt regulations for the Clean Vehicle Rebate Project (CVRP), adopted pursuant to AQIP, that do the following:

1. Lower CVRP income limits to $125,000 for single filers, $170,000 for heads of households, and $250,000 for joint filers, as specified, for all eligible vehicles except fuel cell electric vehicles.
2. Prioritize rebate payments for low-income consumers.
   
3. Increase rebate amounts by $500 per rebate for consumers with household incomes less than or equal to 300% of the federal poverty level for all eligible vehicles.
4. Include outreach to low-income households.

Background

1. Background on Clean Vehicle Rebate Project. AB 118 (Núñez, Chapter 750, Statutes of 2007) established the Alternative and Renewable Fuels and Vehicle Technology (ARFVT) program, the Enhanced Fleet Modernization Program (EFMP), and the Air Quality Improvement Program (AQIP). The three programs are intended to promote vehicle and fuel technology that reduces air pollution and GHG emissions statewide. AB 118 provides funding to the programs through surcharges on vehicle and vessel registrations, which was extended by AB 8 (Perea, Chapter 401, Statutes of 2013) until 2023.

The primary purpose of the AQIP, administered by ARB in consultation with local air districts, is to fund projects to reduce criteria air pollutants, improve air quality, and provide funding for research on air quality impacts of alternative fuels and vehicles.

Pursuant to their authority under AQIP, ARB developed the Clean Vehicle Rebate Project (CVRP), administered by ARB’s contractor, the California Center for Sustainable Energy. The CVRP is intended to encourage and accelerate zero- and near-zero emission, on-road light-duty vehicle deployment and technology innovation. CVRP provides rebates for purchasing or leasing a new battery electric vehicle (BEV) of up to $4,000, up to $3,000 for a plug-in hybrid electric vehicle, and up to $6,000 for a hydrogen fuel cell electric vehicle (FCEV).

CVRP supplemented by GGRF. The demand for CVRP has steadily increased over time and surpassed funding available through AB 118. Originally the funding gap was covered with loans from various funds. In the 2014-15 Budget Act, $200 million was appropriated to AQIP from the Greenhouse Gas Reduction Fund (GGRF). Last year, CVRP was one of the few non-continuously appropriated programs to receive an appropriation from GGRF ($90 million for low carbon transportation investments, with ARB approving $75 million of that for CVRP). To date, CVRP has spent $320 million ($178 million from GGRF) to provide over 150,000 rebates. ARB proposes to spend an additional $230 million on CVRP from the $500 million requested appropriation for low carbon transportation and fuels in the Governor’s 2016-17 fiscal year budget. Funding for CVRP is currently exhausted, and all applications for rebates submitted after June 10, 2016 are being placed on a rebate waitlist.

1. CVRP statistics. Survey data compiled by the Center for Sustainable Energy reveals that 77% of the survey respondents have household incomes of over $100,000/year, with about half of those consumers at household incomes over $200,000. The data also shows that three quarters of the CVRP rebate recipients are men, and that 83% of all survey respondents are college graduates. Of the 150,000 rebates, about 9,300 or 6%, have gone to residents of disadvantaged communities. Approximately 22,000 rebates ($56 million) were used on vehicles whose prices range from $70,000 to over $100,000.
2. 1.5 million clean cars by 2025. In 2012, The Governor’s Executive Order B-16-2012 set milestones for zero-emission vehicles, including a target of over 1.5 million zero-emission vehicles will be on California roads by 2025. Additionally, SB 1275 (de Leon, Chapter 530, Statutes of 2014), through the Charge Ahead Initiative established a goal of one million zero and near-zero emission vehicles by 2023. Currently, Californians have purchased around 200,000 of these vehicles.
3. SB 1275 and income cap. Amidst concerns that the CVRP was primarily benefiting wealthy car buyers who would have likely bought an alternative vehicle regardless of the rebate, legislation was introduced in 2014 to address issues of equity and cost effectiveness in the program. SB 1275 (de León, Chapter 530, Statutes of 2014) requires ARB to increase access to zero-emission and near-zero emission vehicles for lower and moderate income Californians and disadvantaged communities. SB 1275 also required eligibility to be limited based on income. In response, ARB, on March 28, 2016, set an income cap of $250,000 for single filers, $340,000 for head-of-household filers, and c) $500,000 for joint filers. According to ARB, these income eligibility limits are consistent with Proposition 30, approved by California voters in 2012.

Additionally, ARB modified the program to increase rebates by $1,500 for consumers with household incomes less than or equal to 300% of the federal poverty level (about $73,000 for a family of four).

According to ARB’s approved funding plan that proposed the income eligibility limits, “The income eligibility limit should support continued growth of the ZEV market to meet the broader SB 1275 goals to deploy 1 million ZEVs by 2023 and establish a self-sustaining market and the Governor’s goal of 1.5 million ZEVs by 2025. To meet this principle, staff is striving to establish income eligibility for the project in a way that targets incentives towards those likely to value the rebate most in deciding to make a ZEV purchase.” In response to stakeholders recommending lower income eligibility limits for CVRP rebates, the plan states, “[Staff] is concerned that if the limit is set too low it would limit growth of the ZEV market at this key early stage thereby impacting California’s ability to meet the ZEV deployment targets established by SB 1275 and the Governor.”

This bill reduces the current CVRP income eligibility caps by half, and increases the rebate for those at or below 300% of the federal poverty level by $500.

Comments

1. Purpose of Bill. According to the author, “AB 2564 aims to make clean vehicles more accessible to California drivers living in communities with poor air quality by limiting eligibility by income, increasing rebates levels for lower-income consumers and improving outreach.”
   
2. Regulations. AB 118 requires ARB to administer AQIP, in consultation with local air districts, and to develop guidelines to implement the program. AB 118 specifies that prior to adoption of the guidelines, ARB is required to hold at least one public hearing, and to hold at least three public workshops in different regions of the state. The Office of Administrative Law (OAL) approved regulations implementing AQIP in 2009.

The CVRP program, adopted pursuant to authority under AQIP, is not currently implemented through a regulatory process. Instead, each fiscal year, ARB adopts a funding plan for programs funded through AQIP, including CVRP. The 2015-16 FY plan for AQIP adjusted income level eligibility for CVRP rebates and increased rebate levels for low-income consumers.

AB 2564 would require ARB to adjust CVRP income eligibility levels and increase rebates for low-income consumers through a regulatory process, which entails following the administrative procedures act, and final approval by OAL. As regulatory processes can be lengthy, the changes required in this bill may not take effect until 2018.

1. Income limits. As noted in the background, ARB recently established income eligibility limits for CVRP rebates. In setting these thresholds, ARB staff noted the goal of better targeting those consumers who are influenced in their decision to buy a ZEV by the availability of rebate. AB 2564 sets income eligibility levels that reduce ARB’s income thresholds by half.

Although income limits at reasonable levels is a simple, and potentially effective method of targeting low and middle-income consumers who place greater weight on availability of clean vehicles when making decisions to buy a zero-emission or near-zero emission vehicles, setting these income limits at a level that is too low may impede market adoption in certain areas. Consumers with an income that would make them high-income earners in some areas of the state might be middle-income earners in high cost of living areas, such as Santa Clara and Marin counties, and therefore may place more weight on rebates when deciding what type of car to buy. ARB staff, in the AQIP investment plan for FY 2016-17, expressed concern that lowering CVRP income limits beyond their recommendations ($250,000 for single filers, $500,000 for joint filers) could negatively impact ZEV market development in the state.

1. Premature? As ARB just recently established income caps at the end of March for CVRP—a little over two months prior to the depletion of CVRP funds—this measure may be premature.

Additionally, AB 2654, by setting CVRP limits in statute, removes ARB’s discretion to adjust income limits based on market developments or any other factors.

If the committee believes this measure is necessary, an amendment is needed to allow ARB to increase the income limits if ARB finds that the income caps pursuant to this measure are negatively impacting the goals of the program.

Related/Prior Legislation

AB 1851 (Gray) creates and expands a broad array of incentive programs to increase the sales and use of certain clean air vehicles. The bill was held on the Assembly Appropriations suspense file.

AB 1710 (Calderon), requires ARB, in coordination with CEC, on or before January 1, 2019, to develop and implement a comprehensive program to promote advanced-technology light-duty vehicle deployment in the state to drastically increase the use of ZEVs to meet the state's emissions reduction goals. The bill was held on the Assembly Appropriations suspense file.

SOURCE:

Author

SUPPORT:

Rural County Representatives of California

OPPOSITION:

California Electric Transportation Coalition

The Alliance of Automobile Manufacturers

ARGUMENTS IN SUPPORT:

The Rural County Representatives of California

state that the bill improves equity of the CVRP by improving outreach efforts in

all eligible low-income households and not limiting it to disadvantaged

communities. They also note this will encourage applications for eligible low-

income households in an additional 29 counties.

ARGUMENTS IN OPPOSITION:

The Alliance of Automobile Manufacturers

opposes the bill because they argue the income eligibility threshold for ZEV

rebates were recently enacted by the ARB and that those thresholds use voter-

approved figures to determine high-income. They also state that reducing

maximum income thresholds do not make ZEVs more affordable for middle or

lower income consumers, and further note that in the last two years, ZEV sales

have stagnated at approximately 3%, and requirement under this bill will make the

15% requirement for ZEV sales by 2025 considerably more challenging to meet.

-- END --

ASSEMBLY THIRD READING

ATR Bill Id:AB 2564

Author:(Cooper)

As Amended Ver:April 20, 2016

Majority vote

SUMMARY: Reforms the Clean Vehicle Rebate Project (CVRP) by increasing outreach and rebate levels for low-income Californians. Lowers income limits for CVRP. Specifically, this bill:

1. Requires outreach to low-income households and prioritizes rebates payments for low-income consumers.
2. Increases rebate amounts by $500 per rebate for consumers with household incomes less than or equal to 300% of the federal poverty level. Increased rebate amounts are available for fuel-cell electric vehicles, battery electric vehicles, and plug-in hybrid electric vehicles.
3. Lowers CVRP income limits to $125,000 single filer, $170,000 for head of household, and $250,000 for joint filers. Excludes fuel cell electric vehicles from the income limit.

EXISTING LAW:

1. Establishes the California Alternative and Renewable Fuel, Vehicle Technology, Clean Air, and Carbon Reduction Act of 2007 [AB 118 (Núñez), 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:
   1. 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 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 to 36 million per year from these sources.
   2. 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 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.
   3. 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.
2. Establishes the Charge Ahead California Initiative pursuant to SB 1275 (de León), Chapter 530, Statutes of 2014, that, among other things, included the goal of placing into service at least one million zero emissions vehicles (ZEV) and near-zero emission vehicles (NZEV) by January 1, 2023, and increasing access for disadvantaged, low-income, and moderate-income communities and consumers to ZEVs and NZEV vehicles.

FISCAL EFFECT:

1. Increased initial costs of $150,000 to $250,000 (Air Quality Improvement Fund) per year for two years for ARB to adopt regulations to implement CVRP eligibility modifications and prioritizations.
2. Unknown, future and ongoing costs for ARB to update the CVRP program by regulation to reflect current market conditions.
3. Unknown, increased costs for ARB to provide outreach to low-income households.

COMMENTS: In 2007, AB 118 established three new programs intended to promote vehicle and fuel technology that reduces air pollution and greenhouse gas (GHG) emissions statewide. These programs are AQIP, EFMP, and ARFVTP.

AQIP provides financial incentives for public and private 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. CVRP provides rebates for ZEV and NZEV, including plug-in hybrid vehicles, battery electric vehicles, fuel cell electric vehicles, and neighborhood electric vehicles.

The demand for CVRP has steadily increased over time and surpassed funding available through AB 118. Originally the funding gap was covered with loans from various funds. In the 2014-15 Budget Act, $200 million was appropriated to AQIP from the Greenhouse Gas Reduction Fund (GGRF). Last year, CVRP was one of the few non-continuously appropriated programs to receive an appropriation from GGRF. Despite that, CVRP may still run out of funding prior to the enactment of this year's budget, and the administrator may need to establish a wait list. To date, CVRP has spent over $300 million ($160 million from GGRF) to provide over 142,000 rebates. ARB proposes to spend an additional $230 million on CVRP from the $500 million requested appropriation for low carbon transportation and fuels in the Governor's 2016-17 fiscal year budget.

As a result of ARB's implementation of SB 1275, ARB, on March 28, 2016, set a CVRP income cap of:

• 1. $250,000 for single filers;
  2. $340,000 for head-of-household filers; and,
  3. $500,000 for joint filers.

In addition, rebate amounts will be increased by $1,500 per rebate for consumers with household incomes less than or equal to 300% of the federal poverty level.

This bill attempts to improve equity and cost effectiveness of CVRP by implementing two recommendations from an ARB discussion document. The bill also goes further on actions ARB has already taken to address equity and cost effectiveness. These recommendations include increasing awareness about CVRP by requiring outreach in disadvantaged communities and prioritizing rebates payments for low-income consumers. This bill also increases rebate amounts by $500 per rebate for consumers with household incomes less than or equal to 300% of the federal poverty level. ARB's current income limits would not affect many rebate recipients and still include very high-income Californians. This bill lowers the CVRP income limits to $125,000 single filer, $170,000 for head of household, and $250,000 for joint filers.

Analysis Prepared by: Michael Jarred / NAT. RES. / (916) 319-2092 FN: 0003117

Date of Hearing: May 11, 2016

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez, Chair

ABPCA Bill Id:AB 2564

Author:(Cooper) – As Amended Ver:April 20, 2016

Urgency: No State Mandated Local Program: No Reimbursable: No

SUMMARY:

This bill requires the California Air Resources Board (ARB), in consultation with the California Energy Commission (CEC), to adopt regulations to establish eligibility for the Clean Vehicle Rebate Project (CVRP) based on income levels. Specifically, this bill:

1. Increases rebate amounts by $500 per rebate for consumers with household incomes less than or equal to 300% of the federal poverty level. Increased rebate amounts are available for fuel-cell electric vehicles, battery electric vehicles, and plug-in hybrid electric vehicles.
   
2. Limits CVRP eligibility to income of $125,000 for single filers, $170,000 for head of household, and $250,000 for joint filers. Excludes fuel cell electric vehicles from the income limit.
3. Requires outreach to low-income households and prioritizes rebate payments for low-income consumers.
   

FISCAL EFFECT:

1. Increased initial costs of $150,000 to $250,000 (Air Quality Improvement Fund) per year for two years for ARB to adopt regulations to implement CVRP eligibility modifications and prioritizations.
2. Unknown, future and ongoing costs for ARB to update the CVRP program by regulation to reflect current market conditions.
3. Unknown, increased costs for ARB to provide outreach to low-income households.

COMMENTS:

1. Purpose. This bill implements recommendations from an ARB discussion document. These recommendations include increasing awareness about CVRP by requiring outreach in disadvantaged communities and prioritizing rebates payments for low-income consumers. This bill goes beyond ARB recommendations and increases rebates for consumers with household incomes less than or equal to 300% of the federal poverty level. Additionally, this bill lowers the CVRP income limits to $125,000 single filer, $170,000 for head of household, and $250,000 for joint filers.
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 the Air Quality Improvement Program (AQIP), the Enhanced Fleet Modernization Program (EFMP) and the Alternative Renewable Fuel and Vehicle Technology Program (ARFVTP).

AQIP provides financial incentives for public and private 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 the Hybrid and Zero Emissions Truck and Bus Voucher Incentive Program (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. CVRP provides rebates for ZEV and NZEV, including plug-in hybrid vehicles, battery electric vehicles, fuel cell electric vehicles, and neighborhood electric vehicles.

The demand for CVRP has steadily increased over time and surpassed funding available through AB 118. Originally, the funding gap was covered with loans from various funds. In the 2014-15 Budget Act, $200 million was appropriated to AQIP from the GGRF. Last year, CVRP was one of the few non-continuously appropriated programs to receive an appropriation from GGRF. Despite that, CVRP may still run out of funding prior to the enactment of this year’s budget, and the administrator may need to establish a wait list.

To date, CVRP has spent over $300 million ($160 million from AB 32 cap-and-trade revenues) to provide over 142,000 rebates. ARB proposes to spend an additional $230 million on CVRP from the $500 million requested appropriation for low carbon transportation and fuels in the Governor’s 2016-17 fiscal year budget.

1. Recent Legislation. As CVRP expenditures have grown, there have been concerns about the equity of the program and its cost effectiveness. These equity issues were recognized when the Legislature passed SB 1275 (de León), Chapter 530, Statutes of 2014, which established the Charge Ahead California Initiative to increase access to ZEVs and NZEVs for lower income Californians and disadvantaged communities. SB 1275 also required eligibility to be limited based on income. In response to SB 1275, ARB, on March 28, 2016, set an income cap of: a) $250,000 for single filers; b) $340,000 for head-of-household filers; and c) $500,000 for joint filers. Additionally, rebate amounts will be increased by $1,500 per rebate for consumers with household incomes less than or equal to 300% of the federal poverty level. This bill modifies both the income eligibility and rebate amounts established by SB 1275.

Analysis Prepared by: Jennifer Galehouse / APPR. / (916) 319-2081

Date of Hearing: April 18, 2016

ASSEMBLY COMMITTEE ON NATURAL RESOURCES

Das Williams, Chair

ABPCA Bill Id:AB 2564 (

Author:Cooper) – As Amended Ver:April 12, 2016

SUBJECT: Clean Vehicle Rebate Project: income eligibility

SUMMARY: Reforms the Clean Vehicle Rebate Project (CVRP) by increasing outreach and rebate levels for low-income Californians. Lowers income limits for CVRP.

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:
   
   1. 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 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.
      
   2. 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 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.
   3. 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.
2. Requires ARB, pursuant to California Global Warming Solutions Act of 2006 [AB 32 (Nunez), Chapter 488, Statutes of 2006], to adopt a statewide Greenhouse Gas (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.
   
3. Establishes the Greenhouse Gas Reduction Fund (GGRF) 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 GGRF and available for appropriation by the Legislature.
   
4. Establishes the GGRF 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% of the available moneys in the GHGRF to projects that provide benefits to identified disadvantaged communities, and (2) a minimum of 10% of the available moneys in the GGRF to projects located within identified disadvantaged communities [SB 535 (de León), Chapter 830, Statutes of 2012].
   
6. Establishes the Charge Ahead California Initiative pursuant to SB 1275 (de León), Chapter 530, Statutes of 2014, that, among other things, included the goal of placing into service at least one million zero emissions vehicles (ZEV) and near-zero emission vehicles (NZEV) by January 1, 2023, and increasing access for disadvantaged, low-income, and moderate-income communities and consumers to ZEVs and NZEV vehicles.

THIS BILL:

1. Requires outreach to disadvantaged communities to increase consumer awareness about CVRP. Prioritizes rebates payments for low-income consumers.
   
2. Increases rebate amounts by $500 per rebate for consumers with household incomes less than or equal to 300% of the federal poverty level. Increased rebate amounts are available for fuel-cell electric vehicles, battery electric vehicles, and plug-in hybrid electric vehicles.
   
3. Lowers CVRP income limits to $125,000 single filer, $170,000 for head of household, and $250,000 for joint filers. Excludes fuel cell electric vehicles from the income limit.
   

FISCAL EFFECT: Unknown

COMMENTS:

1. 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 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. CVRP provides rebates for ZEV and NZEV, including plug-in hybrid vehicles, battery electric vehicles, fuel cell electric vehicles, and neighborhood electric vehicles.

The demand for CVRP has steadily increased over time and surpassed funding available through AB 118. Originally the funding gap was covered with loans from various funds. In the 2014-15 Budget Act, $200 million was appropriated to AQIP from the GGRF. Last year, CVRP was one of the few non-continuously appropriated programs to receive an appropriation from GGRF. Despite that, CVRP may still run out of funding prior to the enactment of this year’s budget, and the administrator may need to establish a wait list. To date, CVRP has spent over $300 million ($160 million from GGRF) to provide over 142,000 rebates. ARB proposes to spend an additional $230 million on CVRP from the $500 million requested appropriation for low carbon transportation and fuels in the Governor’s 2016-17 fiscal year budget.

1. Money for nothing. As CVRP expenditures have grown, there have been concerns about the equity of the program and its cost effectiveness. Some the statistics that demonstrate the equity issues with CVRP include:
   
   1. Over 50% of rebate recipients’ household incomes are over $150,000 a year;
      
   2. Over 20% of rebate recipients’ household incomes are over $250,000 a year;
      
   3. 88% of recipients are Caucasian;
      
   4. 75% of recipients are male;
      
   5. 83% are college graduates;
      
   6. Approximately 22,000 rebates ($56 million) were used on vehicles whose prices range from $70,000 to over $100,000; and,
   7. One assembly district (28) had 7,881 rebates costing over $17 million while another assembly district (32) had 85 rebates costing approximately $180,000.

These equity issues were recognized when the Legislature passed SB 1275 (de León), Chapter 530, Statutes of 2014, which established the Charge Ahead California Initiative to increase access to ZEVs and NZEVs for lower income Californians and disadvantaged communities. SB 1275 also required eligibility to be limited based on income. In response to SB 1275, ARB, on March 28, 2016, set an income cap of:

• 1. $250,000 for single filers;
     
  2. $340,000 for head-of-household filers; and,
     
  3. $500,000 for joint filers.

In addition, rebate amounts will be increased by $1,500 per rebate for consumers with household incomes less than or equal to 300% of the federal poverty level.

CVRP raises questions of cost effectiveness because it is unclear how many additional ZEV and NZEVs are on the road because of CVRP. According to UCLA Luskin Center, many new car buyers would purchase plug-in hybrids without a rebate. In fact, 33% of plug-in hybrids are purchased without a rebate. Research has also shown that CVRP induced a 7% increase in sales and California spends $30,000 for each additional ZEV and NZEV sold. The UCLA Luskin Center recommends targeting rebates for lower income Californians to make CVRP more cost effective. Another issue is only 18% of car-owning households in California even are aware that CVRP exists. Rebates could be more cost effective if more Californians knew about them. In addition, for those who did know about the rebates and did purchase a vehicle, the top two motivations were 1) saving money on fuel costs, and 2) reducing environmental impacts. Therefore, the price of gas and the environmental benefits of the vehicles may have more impact on purchasing decisions than CVRP.

1. This bill. This bill attempts to improve equity and cost effectiveness of CVRP by implementing two recommendations from an ARB discussion document. The bill also goes further on actions ARB has already taken to address equity and cost effectiveness. These recommendations include increasing awareness about CVRP by requiring outreach in disadvantaged communities and prioritizing rebates payments for low-income consumers. This bill also increases rebate amounts by $500 per rebate for consumers with household incomes less than or equal to 300% of the federal poverty level. ARB’s current income limits would not affect many rebate recipients and still include very high-income Californians. This bill lowers the CVRP income limits to $125,000 single filer, $170,000 for head of household, and $250,000 for joint filers.
2. Amendment. The author and committee may wish to consider amendments to expand the outreach component of the bill to all consumers with household incomes less than or equal to 300% of the federal poverty level.
3. Related Legislation.

AB 1851 (Gray) creates and expands a broad array of incentive programs to increase the sales and use of certain clean air vehicles. The bill is awaiting hearing in the Assembly Revenue and Taxation Committee.

AB 1710 (Calderon), requires ARB, in coordination with the Commission, on or before January 1, 2019, to develop and implement a comprehensive program to promote advanced-technology light-duty vehicle deployment in the state to drastically increase the use of ZEVs to meet the state's emissions reduction goals. The bill is awaiting hearing in the Assembly Revenue and Taxation Committee.

REGISTERED SUPPORT / OPPOSITION:

Support

None on file

Opposition

None on file

Analysis Prepared by: Michael Jarred / NAT. RES. / (916) 319-2092