(1)Existing law creates the enhanced fleet modernization program to provide compensation for the retirement and replacement of passenger vehicles and light-duty and medium-duty trucks that are high polluters.

The California Global Warming Solutions Act of 2006 designates the State Air Resources Board as the state agency charged with monitoring and regulating sources of emissions of greenhouse gases. The act authorizes the state board to include the use of market-based compliance mechanisms. Existing law requires all moneys, except for fines and penalties, collected by the state board as part of a market-based compliance mechanism to be deposited in the Greenhouse Gas Reduction Fund.

Existing law creates the Vehicle Inspection and Repair Fund, which serves as a repository for fees collected by the Department of Consumer Affairs pursuant to the Automotive Repair Act and the motor vehicle inspection program, also known as smog check. Existing law creates the High Polluter Repair or Removal Account in the Vehicle Inspection and Repair Fund, and all moneys in the account are available upon appropriation to the department and the state board to establish and implement a program for the repair or removal of high polluters as part of the smog check program. Existing law creates the Enhanced Fleet Modernization Subaccount in the High Polluter Repair or Removal Account and makes available upon appropriation all moneys in the account to establish and implement the enhanced fleet modernization program.

This bill would establish the Clean Cars 4 All Program to be administered by the State Air Resources Board to focus on achieving reductions in the emissions of greenhouse gases, improvements in air quality, and benefits to low-income state residents through the replacement of high-polluter motor vehicles with cleaner and more efficient motor vehicles or a mobility option, as specified. The bill also would require the state board, no later than January 1, 2019, to update the guidelines for the Clean Cars 4 All Program and the enhanced fleet modernization program, as specified. The bill would require the state board, beginning no later than July 1, 2019, and every year thereafter, to collect and post on its Internet Web site specified information on both programs.

This bill would authorize the state board to allocate moneys, upon appropriation, for the expansion of the replacement component or mobility option component of both programs from the Enhanced Fleet Modernization Subaccount, the High Polluter Repair or Removal Account, and the Vehicle Inspection and Repair Fund. The bill also would authorize the state board to allocate moneys, upon appropriation, from the Greenhouse Gas Reduction Fund to the Clean Cars 4 All Program.

This bill would make conforming changes.

(2)This bill would incorporate additional changes to Section 44125 of the Health and Safety Code proposed by AB 188 to be operative only if this bill and AB 188 are enacted and this bill is enacted last.

(1)Existing law creates the enhanced fleet modernization program to provide compensation for the retirement and replacement of passenger vehicles and light-duty and medium-duty trucks that are high polluters.

The California Global Warming Solutions Act of 2006 designates the State Air Resources Board as the state agency charged with monitoring and regulating sources of emissions of greenhouse gases. The act authorizes the state board to include the use of market-based compliance mechanisms. Existing law requires all moneys, except for fines and penalties, collected by the state board as part of a market-based compliance mechanism to be deposited in the Greenhouse Gas Reduction Fund.

Existing law creates the Vehicle Inspection and Repair Fund, which serves as a repository for fees collected by the Department of Consumer Affairs pursuant to the Automotive Repair Act and the motor vehicle inspection program, also known as smog check. Existing law creates the High Polluter Repair or Removal Account in the Vehicle Inspection and Repair Fund, and all moneys in the account are available upon appropriation to the department and the state board to establish and implement a program for the repair or removal of high polluters as part of the smog check program. Existing law creates the Enhanced Fleet Modernization Subaccount in the High Polluter Repair or Removal Account and makes available upon appropriation all moneys in the account to establish and implement the enhanced fleet modernization program.

This bill would establish the Clean Cars 4 All Program to be administered by the State Air Resources Board to focus on achieving reductions in the emissions of greenhouse gases, improvements in air quality, and benefits to low-income state residents through the replacement of high-polluter motor vehicles with cleaner and more efficient motor vehicles or a mobility option, as specified. The bill also would require the state board, no later than January 1, 2019, to update the guidelines for the Clean Cars 4 All Program and the enhanced fleet modernization program, as specified. The bill would require the state board, beginning no later than July 1, 2019, and every year thereafter, to collect and post on its Internet Web site specified information on both programs.

This bill would authorize the state board to allocate moneys, upon appropriation, for the expansion of the replacement component or mobility option component of both programs from the Enhanced Fleet Modernization Subaccount, the High Polluter Repair or Removal Account, and the Vehicle Inspection and Repair Fund. The bill also would authorize the state board to allocate moneys, upon appropriation, from the Greenhouse Gas Reduction Fund to the Clean Cars 4 All Program.

This bill would make conforming changes.

(2)This bill would incorporate additional changes to Section 44125 of the Health and Safety Code proposed by AB 188 to be operative only if this bill and AB 188 are enacted and this bill is enacted last.

(1)Existing law creates the enhanced fleet modernization program to provide compensation for the retirement and replacement of passenger vehicles and light-duty and medium-duty trucks that are high polluters.

The California Global Warming Solutions Act of 2006 designates the State Air Resources Board as the state agency charged with monitoring and regulating sources of emissions of greenhouse gases. The act authorizes the state board to include the use of market-based compliance mechanisms. Existing law requires all moneys, except for fines and penalties, collected by the state board as part of a market-based compliance mechanism to be deposited in the Greenhouse Gas Reduction Fund.

Existing law creates the Vehicle Inspection and Repair Fund, which serves as a repository for fees collected by the Department of Consumer Affairs pursuant to the Automotive Repair Act and the motor vehicle inspection program, also known as smog check. Existing law creates the High Polluter Repair or Removal Account in the Vehicle Inspection and Repair Fund, and all moneys in the account are available upon appropriation to the department and the state board to establish and implement a program for the repair or removal of high polluters as part of the smog check program. Existing law creates the Enhanced Fleet Modernization Subaccount in the High Polluter Repair or Removal Account and makes available upon appropriation all moneys in the account to establish and implement the enhanced fleet modernization program.

This bill would establish the Clean Cars 4 All Program to be administered by the State Air Resources Board to focus on achieving reductions in the emissions of greenhouse gases, improvements in air quality, and benefits to low-income state residents through the replacement of high-polluter motor vehicles with cleaner and more efficient motor vehicles or a mobility option, as specified. The bill also would require the state board, no later than January 1, 2019, to update the guidelines for the Clean Cars 4 All Program and the enhanced fleet modernization program, as specified. The bill would require the state board, beginning no later than July 1, 2019, and every year thereafter, to collect and post on its Internet Web site specified information on both programs.

This bill would authorize the state board to allocate moneys, upon appropriation, for the expansion of the replacement component or mobility option component of both programs from the Enhanced Fleet Modernization Subaccount, the High Polluter Repair or Removal Account, and the Vehicle Inspection and Repair Fund. The bill also would authorize the state board to allocate moneys, upon appropriation, from the Greenhouse Gas Reduction Fund to the Clean Cars 4 All Program.

This bill would make conforming changes.

Existing law creates the enhanced fleet modernization program to provide compensation for the retirement and replacement of passenger vehicles and light-duty and medium-duty trucks that are high polluters.

The California Global Warming Solutions Act of 2006 designates the State Air Resources Board as the state agency charged with monitoring and regulating sources of emissions of greenhouse gases. The act authorizes the state board to include the use of market-based compliance mechanisms. Existing law requires all moneys, except for fines and penalties, collected by the state board as part of a market-based compliance mechanism to be deposited in the Greenhouse Gas Reduction Fund.

Existing law creates the Vehicle Inspection and Repair Fund, which serves as a repository for fees collected by the Department of Consumer Affairs pursuant to the Automotive Repair Act and the motor vehicle inspection program, also known as smog check. Existing law creates the High Polluter Repair or Removal Account in the Vehicle Inspection and Repair Fund, and all moneys in the account are available upon appropriation to the department and the state board to establish and implement a program for the repair or removal of high polluters as part of the smog check program. Existing law creates the Enhanced Fleet Modernization Subaccount in the High Polluter Repair or Removal Account and makes available upon appropriation all moneys in the account to establish and implement the enhanced fleet modernization program.

This bill would establish the Clean Cars 4 All Program to be administered by the State Air Resources Board to focus on achieving reductions in the emissions of greenhouse gases, improvements in air quality, and benefits to low-income state residents through the replacement of high-polluter motor vehicles with cleaner and more efficient motor vehicles or a mobility option, as specified. The bill also would require the state board, no later than July 1, 2018, January 1, 2019, to update the guidelines for the Clean Cars 4 All Program and the enhanced fleet modernization program, as specified. The bill would require the state board, beginning no later than July 1, 2019, and every year thereafter, to collect and post on its Internet Web site specified information on both programs.

This bill would authorize the state board to allocate moneys, upon appropriation, for the expansion of the replacement component or mobility option component of both programs from the Enhanced Fleet Modernization Subaccount, the High Polluter Repair or Removal Account, and the Vehicle Inspection and Repair Fund. The bill also would authorize the state board to allocate moneys, upon appropriation, from the Greenhouse Gas Reduction Fund to the Clean Cars 4 All Program.

This bill would make conforming changes.

Existing law creates the enhanced fleet modernization program to provide compensation for the retirement and replacement of passenger vehicles and light-duty and medium-duty trucks that are high polluters.

The California Global Warming Solutions Act of 2006 designates the State Air Resources Board as the state agency charged with monitoring and regulating sources of emissions of greenhouse gases. The act authorizes the state board to include the use of market-based compliance mechanisms. Existing law requires all moneys, except for fines and penalties, collected by the state board as part of a market-based compliance mechanism to be deposited in the Greenhouse Gas Reduction Fund.

Existing law creates the Vehicle Inspection and Repair Fund, which serves as a repository for fees collected by the Department of Consumer Affairs pursuant to the Automotive Repair Act and the motor vehicle inspection program, also known as smog check. Existing law creates the High Polluter Repair and or Removal Account in the Vehicle Inspection and Repair Fund, and all moneys in the account are available upon appropriation to the department and the state board to establish and implement a program for the repair or removal of high polluters as part of the smog check program. Existing law creates the Enhanced Fleet Modernization Subaccount in the High Polluter Repair or Removal Account and makes available upon appropriation all moneys in the account to establish and implement the enhanced fleet modernization program.

This bill would establish the Plus Up Clean Cars 4 All Program to be administered by the State Air Resources Board to focus on achieving reductions in the emissions of greenhouse gases, improvements in air quality, and benefits to low-income state residents through the replacement of high-polluting high-polluter motor vehicles, vehicles with cleaner and more efficient motor vehicles or a mobility option, as specified. The bill also would require the state board, no later than July 1, 2018, to update the guidelines for the Clean Cars 4 All Program and the enhanced fleet modernization program, as specified. The bill would require the state board, beginning no later than July 1, 2019, and every year thereafter, to collect and post on its Internet Web site specified information on both programs.

This bill would authorize the state board to allocate moneys, upon appropriation, for the expansion of the replacement component or mobility option component of both programs from the Enhanced Fleet Modernization Subaccount, the High Polluter Repair or Removal Account, and the Vehicle Inspection and Repair Fund. The bill also would authorize the state board to allocate moneys, upon appropriation, from the Greenhouse Gas Reduction Fund to the Plus Up Clean Cars 4 All Program.

This bill would make conforming changes.

Existing law creates the enhanced fleet modernization program to provide compensation for the retirement and replacement of passenger vehicles and light-duty and medium-duty trucks that are high polluters.

The California Global Warming Solutions Act of 2006 designates the State Air Resources Board as the state agency charged with monitoring and regulating sources of emissions of greenhouse gases. The act authorizes the state board to include the use of market-based compliance mechanisms. Existing law requires all moneys, except for fines and penalties, collected by the state board as part of a market-based compliance mechanism to be deposited in the Greenhouse Gas Reduction Fund.

Existing law creates the Vehicle Inspection and Repair Fund, which serves as a repository for fees collected by the Department of Consumer Affairs pursuant to the Automotive Repair Act and the motor vehicle inspection program, also known as smog check. Existing law creates the High Polluter Repair and Removal Account in the Vehicle Inspection and Repair Fund, and all moneys in the account are available upon appropriation to the department and the state board to establish and implement a program for the repair or removal of high polluters as part of the smog check program. Existing law creates the Enhanced Fleet Modernization Subaccount in the High Polluter Repair or Removal Account and makes available upon appropriation all moneys in the account to establish and implement the enhanced fleet modernization program.

This bill would establish the Plus Up Program to be administered by the State Air Resources Board to focus on achieving reductions in the emissions of greenhouse gases, improvements in air quality, and benefits to low-income state residents through the replacement of high-polluting motor vehicles, as specified. The bill also would require the state board, no later than July 1, 2018, to update the guidelines for the enhanced fleet modernization program, as specified. The bill would require the state board, beginning no later than July 1, 2019, and every year thereafter, to collect and post on its Internet Web site specified information on both programs.

This bill would authorize the state board to allocate moneys, upon appropriation, for the expansion of the replacement component or mobility option component of both programs from the Enhanced Fleet Modernization Subaccount, the High Polluter Repair or Removal Account, and the Vehicle Inspection and Repair Fund. The bill also would authorize the state board to allocate moneys, upon appropriation, from the Greenhouse Gas Reduction Fund to the Plus Up Program.

This bill would make conforming changes.

CONCURRENCE IN SENATE AMENDMENTS

CSA1 Bill Id:AB 630

Author:(Cooper)

As Amended Ver:September 8, 2017

Majority vote

Original Committee Reference: TRANS.

SUMMARY: Establishes the Plus-Up program and adds provisions to improve performance of the related Enhanced Fleet Modernization Program (EFMP).

The Senate amendments:

1. Rename the Plus-Up program the Clean Cars 4 All Program and clarifies that the program is focused on reducing greenhouse gas emissions and improving air quality by providing benefits to the state's low-income residents by replacing high-polluting cars with cleaner cars or providing a mobility option.
2. Require the California Air Resources Board (ARB), beginning in the 2018-19 fiscal year (FY) and every FY thereafter, to set specific, measurable program goals.
3. Require ARB, no later than January 1, 2019, to take steps to meet the established program goals, including updating program guidelines.
4. Require that ARB's implementing regulations for the programs ensure improved coordination, integration, and partnerships with other similar programs including those that receive Greenhouse Gas Reduction Fund monies.
5. Specify that enhanced prescreening of program applicants may be considered by ARB, as appropriate.
6. Require ARB to post on its Internet Web site, no later than July 1, 2019, and annually thereafter, an analysis of program performance and to use this information to inform future program goals.
7. Define a variety of terms.
8. Make clarifying and conforming changes.
9. Adds provisions from AB 188 (Salas), of the current legislative session, to avoid chaptering out conflicts.

AS PASSED BY THE ASSEMBLY, this bill:

1. Codified the Plus-Up program.
2. Required ARB, in consultation with the Bureau of Automotive Repair (BAR), beginning in 2018-19 fiscal year and every year thereafter, to set specific measurable goals for the retirement and replacement of high-polluting passenger vehicles and light- and medium-duty trucks.
3. Required ARB to take steps necessary to meet program goals including, but not necessarily limited to, updating the program guidelines for both EFMP and Plus-Up no later than July 1, 2018, continuing to allow BAR to administer EFMP.
4. Required ARB to update program guidelines (for both EFMP and Plus-Up) to include a focus on achieving air quality improvements and providing benefits to low-income Californians through the replacement of high-polluting passenger vehicles.
5. Provided, pursuant to available mobility options, that replacement compensation may be provided either through EFMP or Plus-Up.
6. Provided that compensation for replacement vehicles may be decreased, as needed, to maximize air quality benefits and participation by low-income motor vehicle owners and to meet program goals.
7. Required enhancement of applicant pre-screening for both EFMP and Plus-Up, if ARB determines it is appropriate to do so.
8. Required enhanced income eligibility verification for both EFMP and Plus-Up to ensure the programs are not misused.
9. Required that specific steps be taken to ensure that EFMP and Plus-Up are available in air districts with more than one million residents.
10. Required that priority be given to retire and replace programs for vehicles that are 15 years old or older and have more than 75,000 miles of usage.
11. Required ARB to establish EFMP and Plus-Up program goals and objectives, collect specified program data, and report the information on its Internet Web site annually beginning on or before July 1, 2019, on its Internet Website.
12. Provided that, upon appropriation by the Legislature, ARB may allocate monies for the expansion of the replacement component or the mobility option component for either EFMP or Plus-Up from specified funding sources.

FISCAL EFFECT: According to the Senate Appropriations Committee:

1. ARB estimates ongoing costs of approximately $670,000 annually and four personnel year of new staff to implement and administer the expanded program, including adopting updated regulations and guidelines, setting annual measurable program goals, ensuring coordination and consistency with other programs, and conducting and posting annual performance analysis data.
2. Unknown, significant additional program costs, potentially in the tens of millions annually, to expand the replacement or mobility option components of both the EFMP and the Clean Cars 4 All Programs. For illustrative purposes, these components of the current EFMP and EFMP Plus-Up programs, which only applied in the San Joaquin Valley and South Coast air districts, received $67.4 million in 2016-17.

COMMENTS: Under the federal Clean Air Act, EPA establishes National Ambient Air Quality Standards (NAAQS) for outdoor air throughout the country. These federal standards exist for several air pollutants due to their negative impact on public health above specified concentrations, including ozone, particulate matter (PM), nitrogen oxide (NOx), oxides of sulfur (SOx), carbon monoxide, and lead. Regions that do not meet the NAAQS are designated non-attainment areas. In California, the South Coast and San Joaquin air basins are both non-attainment areas and as such are required develop and implement comprehensive plans to attain and maintain federal air quality standards. Since transportation emissions are considered a primary source of air pollutants (such as NOx and PM emissions), plans to help achieve attainment typically involve efforts to increase the retirement of old, dirty vehicles and replacing them with cleaner cars.

California has implemented a number of programs to help reduce vehicle emissions. Specifically, the Consumer Assistance Program (CAP) was created to encourage voluntary accelerated retirement of vehicles that fail smog check by providing a monetary incentive of $1,000 ($1,500 for low income consumers). Further, EFMP provides for additional voluntary retirement older, high-polluting passenger vehicles and light- and medium-duty trucks but unlike CAP, EFMP allows vehicles to be retired without first having to fail a smog test. Under EFMP, vehicle owners are offered a $1,000 voucher ($1,500 for low-income owners) for the retirement of high-polluting vehicles.

As a follow-on to EFMP, Plus-Up was created with the passage of SB 1275 (De León), Chapter 530, Statutes of 2014, to enhance retire and replace efforts specifically in extreme non-attainment areas. Specifically, Plus-Up includes two pilot programs, one in the San Joaquin Valley Air District and the other in the South Coast Air District, where low-income vehicle owners who live in one of these districts can get a $2,500 "replacement" voucher in addition to the $1,500 base EFMP "retirement" voucher to either purchase a car that is less than eight years old, or to obtain a public transit voucher. If a qualifying low-income individual lives in a disadvantaged community within one of these air districts and wants to purchase a hybrid, plug-in hybrid, or battery electric vehicle, he or she can "stack" additional incentives on top of the EFMP and Plus-Up incentives.

Plus-Up in the San Joaquin Valley (Tune-In Tune-Up) and in the South Coast Air Quality District (Replace Your Ride) have resulted in the retirement of many high-polluting vehicles. Both programs have unique advertising and outreach methods to reach low- and moderate-income vehicle owners to get them to participate. Some of the most successful methods include "events" where individuals can obtain a free smog test and undergo pre-screenings to determine whether they are eligible for various incentives.

The author points out that Plus-Up has been instrumental in reducing emissions and improving air quality in two non-attainment areas of the state. He believes, however, that the expansion of these programs will help keep other large metropolitan areas in the state from slipping into non-attainment status. For this reason, the author has introduced this bill which would authorize the expansion of Plus-Up into other areas of the state and improve the programs with respect to enhanced performance metrics, data collection and reporting.

This bill is similar to a bill introduced by the author last year (AB 1965 (Cooper) of 2016) that would have, among other things, expanded Plus-Up to areas in the state with one million or more residents. Despite the fact that AB 1965 was not signed into law, ARB used its administrative authority to expand Plus-Up in accordance with AB 1965 requirements. According to ARB, three air districts in California have initiated draft Plus-Up implementation plans and the programs are expected to be initiated this summer in the San Francisco Bay Area, the Sacramento region, and in San Diego area. As a result, this bill would serve primarily to codify existing efforts by ARB to expand Plus-Up statewide as well as establish program goals and metrics, provide program transparency and accountability requirements, and ensure that program dollars are being put to their highest and best use.

Analysis Prepared by: Victoria Alvarez / TRANS. / (916) 319-2093 FN: 0002242

 THIRD READING  

Bill No: AB 630

Author:

Amended: 9/8/17 in Senate

Vote:

SENATE ENVIRONMENTAL QUALITY COMMITTEE: 5-1, 7/5/17

AYES: Wieckowski, Hill, Lara, Skinner, Stern

NOES: Gaines

NO VOTE RECORDED: Stone

SENATE TRANS. & HOUSING COMMITTEE: 8-3, 7/11/17

AYES: Beall, Allen, Atkins, McGuire, Mendoza, Roth, Skinner, Wiener

NOES: Cannella, Morrell, Vidak

NO VOTE RECORDED: Gaines, Wieckowski

SENATE APPROPRIATIONS COMMITTEE: 5-2, 9/1/17

AYES: Lara, Beall, Bradford, Hill, Wiener

NOES: Bates, Nielsen

ASSEMBLY FLOOR: 54-20, 5/31/17 - See last page for vote

SUBJECT:

SOURCE: Author

DIGEST:

This bill establishes the Clean Cars 4 All Program, which will be administered by the California Air Resources Board (ARB) to achieve air quality improvements and benefit low-income residents by replacing high-polluter vehicles with cleaner and more efficient vehicles or a specified mobility option. This bill effectively codifies the existing Enhanced Fleet Modernization Program’s Plus-Up Pilot Project (EFMP Plus-Up), and makes specified revisions to the program.

Senate Floor Amendments of 9/8/17 include provisions to resolve chaptering conflicts with AB 188 (Salas).

ANALYSIS: Existing federal law establishes the Federal Clean Air Act (FCAA). FCAA’s implementing regulations set National Ambient Air Quality Standards (NAAQS) for six criteria pollutants, designate air basins that do not achieve NAAQS as nonattainment, allow only California to set vehicular emissions standards stricter than the federal government, and allow other states to adopt either the federal or California vehicular emissions standards. (42 U.S.C. §7401 et seq.)

Existing state law establishes the ARB as the air pollution control agency in California and requires the ARB, among other things, to control emissions from a wide array of mobile sources and implement the FCAA. (Health and Safety Code (HSC) §39500 et seq.)

(NOTE: See the Senate Environmental Quality Committee analysis for more details on relevant existing state law.)

This bill:

1. Defines:
   1. “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.
   2. “Disadvantaged community” means a community identified by the CalEnviroScreen tool created pursuant to HSC Section 39711.
   3. “High polluter” means a high-emission motor vehicle, including, but not limited to, a gross polluter.
   4. “Low-income state resident” and “low-income motor vehicle owner” means a person whose income does not exceed 225% of the federal poverty level, as published quarterly in the Federal Register by the United States Department of Health and Human Services.
   5. “Mobility option” means a voucher for public transit or car sharing.
   6. “Clean Cars 4 All Program” means the program established by the bill.
   7. “Program” means EFMP established in HSC Section 44125.
2. Establishes the Clean Cars 4 All Program to be administered by ARB to focus on achieving reductions in the emissions of greenhouse gases (GHGs), improvements in air quality, and benefits to low-income state residents through the replacement of high-polluting motor vehicles with cleaner alternative or a mobility option.
3. Requires annually, beginning in the 2018–19 fiscal year, ARB, in consultation with the Bureau of Automotive Repair (BAR), to set specific, measurable goals for the retirement and replacement of passenger vehicles and light- and medium-duty trucks that are high polluters.
4. Requires ARB and BAR to meet the goals they set and to update the EFMP and Plus-Up programs in furtherance of those goals by January 1, 2019, and clarifies BAR administers EFMP pursuant to ARB guidelines and ARB administers Plus-Up.
5. Requires, when applicable, improved coordination relating to other programs that target disadvantaged communities and receive Greenhouse Gas Reduction Fund (GGRF) moneys.
6. Requires ARB to determine if enhanced prescreening of applicants to either program is appropriate.
7. Requires ARB to post on its Internet Web site annually, starting July 1, 2019, a variety of performance, accounting, and evaluation information, as specified.
8. Allows ARB, upon appropriation of funds from the Legislature into specified accounts or from GGRF, to expand the replacement or mobility option components of Clean Cars 4 All Program.
9. Includes provisions to resolve chaptering conflicts with AB 188 (Salas), and makes technical and clarifying amendments.

Background

1. Air quality standards. FCAA passed in 1963 and has been revised many times thereafter. The FCAA and its implementing regulations are intended to protect public health and environmental quality by limiting and reducing pollution from various sources. Under the FCAA, the United States Environmental Protection Agency (US EPA) establishes NAAQS that apply to outdoor air throughout the country.

In 1969 and 1971, ARB set the first air quality standards for ozone, Particulate Matter (PM), oxides of nitrogen (NOx), oxides of sulfur (SOx), and carbon monoxide due to their negative impacts on public health above specified concentrations.

The federal government followed suit and set NAAQS for six “criteria pollutants.” These included ground-level ozone, PM, NOx, SOx, and carbon monoxide, and added lead. Now, the US EPA reviews each NAAQS at five-year intervals to ensure that the standards are based on the most recent scientific information.

Regions that do not meet the national standards for any one of the standards are designated “nonattainment areas.” The FCAA sets deadlines for attainment based on the severity of nonattainment and requires states to develop comprehensive plans, known as the state implementation plan (SIP), to attain and maintain air-quality standards for each area designated nonattainment for an NAAQS.

The FCAA specifies which entities qualify as major sources of air pollutants, and requires those sources to be permitted and regulated under the requirements in Title V of the FCAA, which is implemented in California by local air districts. Certain sources of air emissions, including combustion facilities and incinerators, are subject to specific Title V requirements regardless of size. A Title V permit authorizes those sources to operate.

In July of 2011, sources not previously subject to Title V requirements became subject to Title V if they had GHG emissions at least 100,000 tons per year (tpy) of carbon dioxide equivalent (CO₂e). For air pollutants besides GHGs, the threshold for determining which sources qualify as Title V changes depending on whether the pollutants are hazardous and whether the source is located in a non-attainment area. The default standard for qualifying as a major source of air pollutants is 100 tpy, although nonattainment areas have lower threshold emission levels for the pollutants that are not in attainment.

Within severe non-attainment areas, sources that emit over 10 tpy of NOx or volatile organic compounds (VOCs) are Title V sources. Common Title V sources include large factories, refineries and power plants. Major source thresholds for hazardous air pollutants (HAPs, in California these are called Toxic Air Contaminants or TACs) are 10 tpy for a single TAC or 25 tpy for any combination of TACs. Examples of TACs include benzene, found in gasoline; perchlorethlyene, emitted from some dry cleaning facilities; and methylene chloride, used as a solvent and paint stripper by a number of industries.

Due to the lower emission thresholds for air pollutants that are in nonattainment air basins, a larger fraction of facilities are required to be permitted under Title V in the South Coast Air Quality Management District and San Joaquin Valley Unified Air Pollution Control District, which are nonattainment areas for ozone and PM.

1. Health impacts of air pollution. When not adequately controlled, air pollution has dire consequences on the health and safety of both people and the environment. Poor air quality causes the lungs to constrict, resulting in wheezing, shortness of breath and chest tightness, especially during exercise or physical activity.

It is well known that air pollution causes asthma. According to the Centers for Disease Control and Prevention, nationwide 7.4% of adults and 8.6% of children have been diagnosed with asthma. In California, the numbers are significantly higher: 13.1% of adults and 12.5% of children have been diagnosed with asthma. Lower income and minority groups are disproportionately affected by asthma due to their increased exposure to air pollution.

Depending on exposure, air pollution alone can cause an increased risk of cardiovascular and respiratory illness, lung disease, cancerous tumors, birth defects, premature births, developmental disorders, central nervous system damage, intellectual disability, persistent memory impairments, epilepsy, dementia, and premature death.

A June 2017 study published by Harvard researchers in the New England Journal of Medicine found that there is no safe level of long-term exposure to PM 2.5 (PM that is less than 2.5 micrometers in diameter) and ozone below which there is no risk of premature death. The study followed over 60 million Americans over 65 years old for seven years. Two key findings in the study are that reducing PM 2.5 concentrations by one microgram per cubic meter nationwide would save about 12,000 lives each year and that reducing ozone concentrations by one part per billion nationwide would save about 1,900 lives each year.

1. Vehicles and air pollution. Vehicles are one of the primary sources of air pollution nationally. As such, the FCAA authorizes US EPA to establish and regulate emissions standards for mobile sources.

California, due to its preexisting vehicle-emission standards and severe motor vehicle air pollution problems, is authorized under the FCAA to implement separate mobile emission standards from the federal government. Other states may choose to follow either the national standard or the stricter California standards.

State law assigns the ARB with primary responsibility for control of mobile-source air pollution, including adoption of rules for reducing vehicle emissions, the specification of vehicular fuel composition, emissions control devices, and engine standards.

1. EFMP and EFMP Plus-Up. EFMP is an incentive program funded through a $1 surcharge on vehicle registration, totaling approximately $30 million annually. EFMP is designed to encourage low-income drivers to retire their older, high-emitting vehicles and replace them with newer, cleaner, more fuel-efficient vehicles. EFMP was established by AB 118 (Núñez, Chapter 750, Statutes of 2007) and comprises two components: retirement-only and retirement and replacement. These are sometimes referred to as the EFMP base program. Under the retirement only component, eligible applicants can receive $1,000 to $1,500, depending on income, for retiring an eligible vehicle through the EFMP portion of the car scrap program administered by the BAR’s Consumer Assistance Program. This element of the program is offered statewide.

The second component of the EFMP base program, the retire and replacement component, is offered only in the South Coast and San Joaquin Valley air districts, and only to low income drivers (income less than 400 percent of the Federal Poverty Line) of eligible vehicles. EFMP retirement and replacement provides up to $4,500 to low-income drivers who purchase a vehicle eight years old or newer. The exact incentive amount varies, depending on household income, and can be used toward the purchase of a new or used clean replacement vehicle or an alternate mode of transportation, such as a transit pass. Each implementing local air district tailors and markets the EFMP retirement and replacement program uniquely. In the South Coast, the program is called Replace Your Ride, and in the San Joaquin Valley, the program is called Valley Clean Air Now.

The Plus-Up pilot project is a complementary incentive program funded with GGRF moneys and augments the EFMP base program by adding up to an additional $5,000 in incentives for the subset of participants living in or near a disadvantaged community census tract and who choose an advanced technology replacement vehicle (e.g. hybrid, plug-in hybrid, and battery electric vehicles), but may not be used for a mobility option like a transit pass. The highest incentive amount is available to the lowest income drivers choosing the cleanest replacement vehicles. For example, a low-income participant who lives in or near a disadvantaged community can receive up to $9,500 toward the purchase of a plug-in hybrid vehicle: $4,500 from the EFMP base program and $5,000 from Plus-Up pilot project. The actual amount of the additional Plus-Up incentive depends on income and choice of replacement vehicle. The following table illustrates how incentives from the EFMP base program and Plus-Up pilot project can be combined or “stacked.” Note that these programs apply for both new and used vehicles up to eight years old. To note, this table does not include additional incentives available under the Clean Vehicle Rebate Project.

EFMP and Plus-Up: Stacking of Incentives

Comments

Purpose of bill. According to the author, “AB 630 places the Enhanced Fleet Modernization Program Plus-Up (EFMP Plus-Up) in statute and will help facilitate program expansion to additional air districts with poor air quality providing a significant opportunity to remove more high polluting vehicles from the roads, improve air quality in disadvantaged communities, and help low-income individuals move into cleaner new or used vehicles resulting in maintenance and other cost savings.”

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

According to the Senate Appropriations Committee:

• ARB estimates ongoing costs of approximately $670,000 annually and four PY of new staff to implement and administer the expanded program, including adopting updated regulations and guidelines, setting annual measurable program goals, ensuring coordination and consistency with other programs, and conducting and posting annual performance analysis data. (GGRF)
• Unknown, significant additional program costs, potentially in the tens of millions annually, to expand the replacement or mobility option components of both the EFMP and the Clean Cars 4 All Programs. For illustrative purposes, these components of the current EFMP and EFMP Plus-Up programs, which only applied in the San Joaquin Valley and South Coast air districts, received $67.4 million in 2016-17. (EFM Subaccount, High Polluter Repair or Removal Account, Vehicle Inspection and Repair Fund, and/or GGRF)

SUPPORT: (Verified 9/1/17)

California Electric Transportation Coalition

Southern California Edison

Valley Clean Air Now

OPPOSITION: (Verified 9/1/17)

None received

ASSEMBLY FLOOR: 54-20, 5/31/17

AYES: Aguiar-Curry, Arambula, Berman, Bloom, Bocanegra, Bonta, Burke, Caballero, Calderon, Cervantes, Chau, Chiu, Chu, Cooley, Cooper, Dababneh, Daly, Flora, Frazier, Friedman, Eduardo Garcia, Gipson, Gloria, Gomez, Gonzalez Fletcher, Gray, Grayson, Holden, Irwin, Jones-Sawyer, Kalra, Levine, Limón, Low, McCarty, Medina, Mullin, Muratsuchi, Nazarian, O'Donnell, Quirk, Quirk-Silva, Reyes, Ridley-Thomas, Rodriguez, Rubio, Salas, Santiago, Mark Stone, Thurmond, Ting, Weber, Wood, Rendon

NOES: Acosta, Travis Allen, Baker, Bigelow, Brough, Chávez, Dahle, Fong, Gallagher, Harper, Kiley, Lackey, Maienschein, Mathis, Mayes, Obernolte, Patterson, Steinorth, Voepel, Waldron

NO VOTE RECORDED: Chen, Choi, Cunningham, Eggman, Cristina Garcia, Melendez

Prepared by:

9/11/17 9:37:28

**** END ****

SENATE COMMITTEE ON

Senator Ricardo Lara, Chair

2017 - 2018 Regular Session

AB 630 (Cooper) - Vehicles: retirement and replacement

*********** ANALYSIS ADDENDUM – SUSPENSE FILE ***********

The following information is revised to reflect amendments

adopted by the committee on September 1, 2017

Bill Summary:

AB 630 would establish the Clean Cars 4 All Program, which would be administered by the California Air Resources Board (ARB) to achieve air quality improvements and benefit low-income residents by replacing high-polluter vehicles with cleaner and more efficient vehicles or a specified mobility option. The bill effectively codifies the existing Enhanced Fleet Modernization Program’s Plus-Up Pilot Project (EFMP Plus-Up), and makes specified revisions to the program.

Fiscal Impact:

• ARB estimates ongoing costs of approximately $670,000 annually and 4 PY of new staff to implement and administer the expanded program, including adopting updated regulations and guidelines, setting annual measurable program goals, ensuring coordination and consistency with other programs, and conducting and posting annual performance analysis data. (Greenhouse Gas Reduction Fund – GGRF)
  
• Unknown, significant additional program costs, potentially in the tens of millions annually, to expand the replacement or mobility option components of both the EFMP and the Clean Cars 4 All Programs. For illustrative purposes, these components of the current EFMP and EFMP Plus-Up programs, which only applied in the San Joaquin Valley and South Coast air districts, received $67.4 million in 2016-17. (EFM Subaccount, High Polluter Repair or Removal Account [HPRRA], Vehicle Inspection and Repair Fund [VIRF], and/or GGRF)

Committee Amendments:

Delay the timeframe by which ARB must update its guidelines for the Clean Cars 4 All Program and the EFMP to January 1, 2019.

-- END --

 THIRD READING  

Bill No: AB 630

Author:

Amended: 9/1/17 in Senate

Vote:

SENATE ENVIRONMENTAL QUALITY COMMITTEE: 5-1, 7/5/17

AYES: Wieckowski, Hill, Lara, Skinner, Stern

NOES: Gaines

NO VOTE RECORDED: Stone

SENATE TRANS. & HOUSING COMMITTEE: 8-3, 7/11/17

AYES: Beall, Allen, Atkins, McGuire, Mendoza, Roth, Skinner, Wiener

NOES: Cannella, Morrell, Vidak

NO VOTE RECORDED: Gaines, Wieckowski

SENATE APPROPRIATIONS COMMITTEE: 5-2, 9/1/17

AYES: Lara, Beall, Bradford, Hill, Wiener

NOES: Bates, Nielsen

ASSEMBLY FLOOR: 54-20, 5/31/17 - See last page for vote

SUBJECT:

SOURCE: Author

DIGEST:

This bill establishes the Clean Cars 4 All Program, which will be administered by the California Air Resources Board (ARB) to achieve air quality improvements and benefit low-income residents by replacing high-polluter vehicles with cleaner and more efficient vehicles or a specified mobility option. This bill effectively codifies the existing Enhanced Fleet Modernization Program’s Plus-Up Pilot Project (EFMP Plus-Up), and makes specified revisions to the program.

ANALYSIS: Existing federal law establishes the Federal Clean Air Act (FCAA). FCAA’s implementing regulations set National Ambient Air Quality Standards (NAAQS) for six criteria pollutants, designate air basins that do not achieve NAAQS as nonattainment, allow only California to set vehicular emissions standards stricter than the federal government, and allow other states to adopt either the federal or California vehicular emissions standards. (42 U.S.C. §7401 et seq.)

Existing state law establishes the Air Resources Board (ARB) as the air pollution control agency in California and requires the ARB, among other things, to control emissions from a wide array of mobile sources and implement the FCAA. (Health and Safety Code (HSC) §39500 et seq.)

(NOTE: see the Senate Environmental Quality Committee analysis for more details on relevant existing state law.)

This bill:

1. Defines:
   
   1. “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.
      
   2. “Disadvantaged community” means a community identified by the CalEnviroScreen tool created pursuant to HSC Section 39711.
      
   3. “High polluter” means a high-emission motor vehicle, including, but not limited to, a gross polluter.
      
   4. “Low-income state resident” and “low-income motor vehicle owner” means a person whose income does not exceed 225% of the federal poverty level, as published quarterly in the Federal Register by the United States Department of Health and Human Services.
      
   5. “Mobility option” means a voucher for public transit or car sharing.
      
   6. “Clean Cars 4 All Program” means the program established by the bill.
      
   7. “Program” means EFMP established in HSC Section 44125.
      
2. Establishes the Clean Cars 4 All Program to be administered by ARB to focus on achieving reductions in the emissions of greenhouse gases (GHGs), improvements in air quality, and benefits to low-income state residents through the replacement of high-polluting motor vehicles with cleaner alternative or a mobility option.
   
3. Requires annually, beginning in the 2018–19 fiscal year, ARB, in consultation with the Bureau of Automotive Repair (BAR), to set specific, measurable goals for the retirement and replacement of passenger vehicles and light- and medium-duty trucks that are high polluters.
   
4. Requires ARB and BAR to meet the goals they set and to update the EFMP and Plus-Up programs in furtherance of those goals by January 1, 2019, and clarifies BAR administers EFMP pursuant to ARB guidelines and ARB administers Plus-Up.
   
5. Requires, when applicable, improved coordination relating to other programs that target disadvantaged communities and receive Greenhouse Gas Reduction Fund (GGRF) moneys.
   
6. Requires ARB to determine if enhanced prescreening of applicants to either program is appropriate.
   
7. Requires ARB to post on its Internet Web site annually, starting July 1, 2019, a variety of performance, accounting, and evaluation information, as specified.
   
8. Allows ARB, upon appropriation of funds from the Legislature into specified accounts or from GGRF, to expand the replacement or mobility option components of Clean Cars 4 All Program.
   
9. Makes technical and clarifying amendments.

Background

1. Air quality standards. FCAA passed in 1963 and has been revised many times thereafter. The FCAA and its implementing regulations are intended to protect public health and environmental quality by limiting and reducing pollution from various sources. Under the FCAA, the United States Environmental Protection Agency (US EPA) establishes NAAQS that apply to outdoor air throughout the country.
   
   In 1969 and 1971, ARB set the first air quality standards for ozone, Particulate Matter (PM), oxides of nitrogen (NOx), oxides of sulfur (SOx), and carbon monoxide due to their negative impacts on public health above specified concentrations.
   
   The federal government followed suit and set NAAQS for six “criteria pollutants.” These included ground-level ozone, PM, NOx, SOx, and carbon monoxide, and added lead. Now, the US EPA reviews each NAAQS at five-year intervals to ensure that the standards are based on the most recent scientific information.
   
   Regions that do not meet the national standards for any one of the standards are designated “nonattainment areas.” The FCAA sets deadlines for attainment based on the severity of nonattainment and requires states to develop comprehensive plans, known as the state implementation plan (SIP), to attain and maintain air-quality standards for each area designated nonattainment for an NAAQS.
   
   The FCAA specifies which entities qualify as major sources of air pollutants, and requires those sources to be permitted and regulated under the requirements in Title V of the FCAA, which is implemented in California by local air districts. Certain sources of air emissions, including combustion facilities and incinerators, are subject to specific Title V requirements regardless of size. A Title V permit authorizes those sources to operate.
   
   In July of 2011, sources not previously subject to Title V requirements became subject to Title V if they had GHG emissions at least 100,000 tons per year (tpy) of carbon dioxide equivalent (CO₂e). For air pollutants besides GHGs, the threshold for determining which sources qualify as Title V changes depending on whether the pollutants are hazardous and whether the source is located in a non-attainment area. The default standard for qualifying as a major source of air pollutants is 100 tpy, although nonattainment areas have lower threshold emission levels for the pollutants that are not in attainment.
   
   Within severe non-attainment areas, sources that emit over 10 tpy of NOx or volatile organic compounds (VOCs) are Title V sources. Common Title V sources include large factories, refineries and power plants. Major source thresholds for hazardous air pollutants (HAPs, in California these are called Toxic Air Contaminants or TACs) are 10 tpy for a single TAC or 25 tpy for any combination of TACs. Examples of TACs include benzene, found in gasoline; perchlorethlyene, emitted from some dry cleaning facilities; and methylene chloride, used as a solvent and paint stripper by a number of industries.
   
   Due to the lower emission thresholds for air pollutants that are in nonattainment air basins, a larger fraction of facilities are required to be permitted under Title V in the South Coast Air Quality Management District and San Joaquin Valley Unified Air Pollution Control District, which are nonattainment areas for ozone and PM.
   
2. Health impacts of air pollution. When not adequately controlled, air pollution has dire consequences on the health and safety of both people and the environment. Poor air quality causes the lungs to constrict, resulting in wheezing, shortness of breath and chest tightness, especially during exercise or physical activity.
   
   It is well known that air pollution causes asthma. According to the Centers for Disease Control and Prevention, nationwide 7.4% of adults and 8.6% of children have been diagnosed with asthma. In California, the numbers are significantly higher: 13.1% of adults and 12.5% of children have been diagnosed with asthma. Lower income and minority groups are disproportionately affected by asthma due to their increased exposure to air pollution.
   
   Depending on exposure, air pollution alone can cause an increased risk of cardiovascular and respiratory illness, lung disease, cancerous tumors, birth defects, premature births, developmental disorders, central nervous system damage, intellectual disability, persistent memory impairments, epilepsy, dementia, and premature death.
   
   A June 2017 study published by Harvard researchers in the New England Journal of Medicine found that there is no safe level of long-term exposure to PM 2.5 (PM that is less than 2.5 micrometers in diameter) and ozone below which there is no risk of premature death. The study followed over 60 million Americans over 65 years old for seven years. Two key findings in the study are that reducing PM 2.5 concentrations by 1 microgram per cubic meter nationwide would save about 12,000 lives each year and that reducing ozone concentrations by 1 part per billion nationwide would save about 1,900 lives each year.
   
3. Vehicles and air pollution. Vehicles are one of the primary sources of air pollution nationally. As such, the FCAA authorizes US EPA to establish and regulate emissions standards for mobile sources.
   
   California, due to its preexisting vehicle-emission standards and severe motor vehicle air pollution problems, is authorized under the FCAA to implement separate mobile emission standards from the federal government. Other states may choose to follow either the national standard or the stricter California standards.
   
   State law assigns the ARB with primary responsibility for control of mobile-source air pollution, including adoption of rules for reducing vehicle emissions, the specification of vehicular fuel composition, emissions control devices, and engine standards.
   
4. EFMP and EFMP Plus-Up. EFMP is an incentive program funded through a $1 surcharge on vehicle registration, totaling approximately $30 million annually. EFMP is designed to encourage low-income drivers to retire their older, high-emitting vehicles and replace them with newer, cleaner, more fuel-efficient vehicles. EFMP was established by AB 118 (Núñez, Chapter 750, Statutes of 2007) and comprises two components: retirement-only and retirement and replacement. These are sometimes referred to as the EFMP base program. Under the retirement only component, eligible applicants can receive $1,000 to $1,500, depending on income, for retiring an eligible vehicle through the EFMP portion of the car scrap program administered by the BAR’s Consumer Assistance Program. This element of the program is offered statewide.
   
   The second component of the EFMP base program, the retire and replacement component, is offered only in the South Coast and San Joaquin Valley air districts, and only to low income drivers (income less than 400 percent of the Federal Poverty Line) of eligible vehicles. EFMP retirement and replacement provides up to $4,500 to low-income drivers who purchase a vehicle eight years old or newer. The exact incentive amount varies, depending on household income, and can be used toward the purchase of a new or used clean replacement vehicle or an alternate mode of transportation, such as a transit pass. Each implementing local air district tailors and markets the EFMP retirement and replacement program uniquely. In the South Coast, the program is called Replace Your Ride, and in the San Joaquin Valley, the program is called Valley Clean Air Now.
   
   The Plus-Up pilot project is a complementary incentive program funded with GGRF moneys and augments the EFMP base program by adding up to an additional $5,000 in incentives for the subset of participants living in or near a disadvantaged community census tract and who choose an advanced technology replacement vehicle (e.g. hybrid, plug-in hybrid, and battery electric vehicles), but may not be used for a mobility option like a transit pass. The highest incentive amount is available to the lowest income drivers choosing the cleanest replacement vehicles. For example, a low-income participant who lives in or near a disadvantaged community can receive up to $9,500 toward the purchase of a plug-in hybrid vehicle: $4,500 from the EFMP base program and $5,000 from Plus-Up pilot project. The actual amount of the additional Plus-Up incentive depends on income and choice of replacement vehicle. The following table illustrates how incentives from the EFMP base program and Plus-Up pilot project can be combined or “stacked.” Note that these programs apply for both new and used vehicles up to eight years old. To note, this table does not include additional incentives available under the Clean Vehicle Rebate Project.
   

EFMP and Plus-Up: Stacking of Incentives

Comments

Purpose of bill. According to the author, “AB 630 places the Enhanced Fleet Modernization Program Plus-Up (EFMP Plus-Up) in statute and will help facilitate program expansion to additional air districts with poor air quality providing a significant opportunity to remove more high polluting vehicles from the roads, improve air quality in disadvantaged communities, and help low-income individuals move into cleaner new or used vehicles resulting in maintenance and other cost savings.”

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

According to the Senate Appropriations Committee:

• ARB estimates ongoing costs of approximately $670,000 annually and 4 PY of new staff to implement and administer the expanded program, including adopting updated regulations and guidelines, setting annual measurable program goals, ensuring coordination and consistency with other programs, and conducting and posting annual performance analysis data. (GGRF)
• Unknown, significant additional program costs, potentially in the tens of millions annually, to expand the replacement or mobility option components of both the EFMP and the Clean Cars 4 All Programs. For illustrative purposes, these components of the current EFMP and EFMP Plus-Up programs, which only applied in the San Joaquin Valley and South Coast air districts, received $67.4 million in 2016-17. (EFM Subaccount, High Polluter Repair or Removal Account, Vehicle Inspection and Repair Fund, and/or GGRF)

SUPPORT: (Verified 9/1/17)

California Electric Transportation Coalition

Southern California Edison

Valley Clean Air Now

OPPOSITION: (Verified 9/1/17)

None received

ASSEMBLY FLOOR: 54-20, 5/31/17

AYES: Aguiar-Curry, Arambula, Berman, Bloom, Bocanegra, Bonta, Burke, Caballero, Calderon, Cervantes, Chau, Chiu, Chu, Cooley, Cooper, Dababneh, Daly, Flora, Frazier, Friedman, Eduardo Garcia, Gipson, Gloria, Gomez, Gonzalez Fletcher, Gray, Grayson, Holden, Irwin, Jones-Sawyer, Kalra, Levine, Limón, Low, McCarty, Medina, Mullin, Muratsuchi, Nazarian, O'Donnell, Quirk, Quirk-Silva, Reyes, Ridley-Thomas, Rodriguez, Rubio, Salas, Santiago, Mark Stone, Thurmond, Ting, Weber, Wood, Rendon

NOES: Acosta, Travis Allen, Baker, Bigelow, Brough, Chávez, Dahle, Fong, Gallagher, Harper, Kiley, Lackey, Maienschein, Mathis, Mayes, Obernolte, Patterson, Steinorth, Voepel, Waldron

NO VOTE RECORDED: Chen, Choi, Cunningham, Eggman, Cristina Garcia, Melendez

Prepared by: 9/5/17 9:41:28

**** END ****

SENATE COMMITTEE ON APPROPRIATIONS

Senator Ricardo Lara, Chair

2017 - 2018 Regular Session

AB 630 (Cooper) - Vehicles: retirement and replacement

This bill meets the criteria for referral to the Suspense File.

Bill Summary:

AB 630 would establish the Clean Cars 4 All Program, which would be administered by the California Air Resources Board (ARB) to achieve air quality improvements and benefit low-income residents by replacing high-polluter vehicles with cleaner and more efficient vehicles or a specified mobility option. The bill effectively codifies the existing Enhanced Fleet Modernization Program’s Plus-Up Pilot Project (EFMP Plus-Up), and makes specified revisions to the program.

Fiscal Impact:

• ARB estimates ongoing costs of approximately $670,000 annually and 4 PY of new staff to implement and administer the expanded program, including adopting updated regulations and guidelines, setting annual measurable program goals, ensuring coordination and consistency with other programs, and conducting and posting annual performance analysis data. (Greenhouse Gas Reduction Fund – GGRF)
  
• Unknown, significant additional program costs, potentially in the tens of millions annually, to expand the replacement or mobility option components of both the EFMP and the Clean Cars 4 All Programs. For illustrative purposes, these components of the current EFMP and EFMP Plus-Up programs, which only applied in the San Joaquin Valley and South Coast air districts, received $67.4 million in 2016-17. (EFM Subaccount, High Polluter Repair or Removal Account [HPRRA], Vehicle Inspection and Repair Fund [VIRF], and/or GGRF)

Background:

Existing law establishes the Motor Vehicle Inspection Program, commonly known as the smog check program, as a means to measure motor vehicle related pollutants. The program is administered by the Bureau of Automotive Repair (BAR) and generally requires gas-powered motor vehicles to pass a biennial smog check inspection with specified exceptions, such as vehicles manufactured prior to the 1976 model year, alternative fuel vehicles, and vehicles six model years old or newer. Existing law establishes the High Polluter Repair or Removal Account (HPRRA) in the Vehicle Inspection and Repair Fund (VIRF), and specifies all moneys in the account are available, upon appropriation, to implement a program for the repair or removal of high polluters as part of the smog check program.

Existing law establishes the Air Quality Improvement Program (AQIP), which is administered by 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. AQIP encompasses several programs and is partially funded through surcharges on vehicle registration fees and a portion of the Smog Abatement Fee (paid to register vehicles less than six model years old and therefore exempt from smog check), as well as GGRF monies.

Existing law establishes the Clean Vehicle Rebate Program (CVRP), within the AQIP, to promote accelerated widespread commercialization of zero-emission vehicles by providing rebates of up to $5,000 for the purchase or lease of an eligible light-duty vehicle. This program was not created through statute, but developed and initiated by ARB pursuant to its existing statutory authority through AQIP. Specified income limits apply for applicants purchasing a vehicle after November 1, 2016. As of June 1, 2017, 193,186 CVRP rebates had been issued since March 2010, at a cost of approximately $420 million. There is no cap on the number of rebates that may be issued, but rebates are subject to funding availability and the program has been oversubscribed in recent years. When funding is exhausted, applicants are placed on a wait list, and issued rebates in the order that they applied when funding is allocated in the next funding cycle.

Existing law establishes the Enhanced Fleet Modernization Subaccount within the HPRRA to implement the Enhanced Fleet Modernization Program (EFMP), which was developed by ARB in consultation with BAR, and allows for the voluntary retirement of high-polluting passenger vehicles and light-duty and medium-duty trucks. EFMP is funded by an additional $1 surcharge on vehicle registrations, and has both a local and state administered component.

Under the statewide component, BAR administers a “retirement-only” program as part of its Consumer Assistance Program (CAP) that provides $1,500 vouchers to low-income vehicle owners, or a $1,000 voucher to other owners, to retire a high-polluting vehicle. CAP is funded by $6 of the Smog Abatement Fee and citation fees imposed by BAR on smog stations.

Under the local component, ARB administers a program, authorized in the San Joaquin Valley and South Coast air districts, to replace high-polluting vehicles. In addition to the “retirement” vouchers described above, the local EFMP program offers a $2,500 “replacement” voucher to low-income vehicle owners to replace a high-polluting vehicle by either purchasing a vehicle eight years old or newer, or using the voucher towards specified alternative transportation mobility options.

ARB also administers the EFMP Plus-Up Program in the San Joaquin and South Coast air districts. Plus-Up provides additional incentives above and beyond EFMP base incentives for individuals in disadvantaged communities who retire high-polluting vehicles and replace them with used or new hybrid, plug-in hybrid, or zero-emission vehicles. Eligible participants can receive additional incentives ranging from $1,500 to $5,000, depending on the vehicle type that is purchased and the applicant’s income level. The EFMP, Plus-Up, and CVRP rebates can be “stacked” for a maximum of $14,000 in total incentives. The ARB is currently working with local air districts to expand EFMP Plus-Up to disadvantaged communities in Sacramento, San Diego, and the San Francisco Bay Area.

Proposed Law:

AB 630 would codify and revise the EFMP Plus-Up program, and rename it the Clean Cars 4 All Program. Specifically, this bill would:

• Establish the Clean Cars 4 All Program, which would be administered by ARB to focus on achieving greenhouse gas emission reductions, improvements in air quality, and benefits to low-income residents by replacing high-polluter motor vehicles with cleaner and more efficient motor vehicles or a mobility option.
• Require ARB, in consultation with BAR where applicable, to annually set specific, measurable goals for the replacement of passenger vehicles and light- and medium-duty trucks that are high polluters.
• Require ARB and BAR to take steps to meet those measurable goals, including updating the guidelines for both the Clean Cars 4 All and EFMP programs by July 1, 2018.
• Require the Clean Cars 4 All regulation to ensure the following: (1) there is improved coordination, integration, and partnerships with other programs that target disadvantaged communities and receive GGRF funds; (2) the replacement or mobility option is consistent with similar EFMP provisions; and (3) provisions enhance the prescreening of applicants, if determined by ARB to be appropriate.
• Require the EFMP guidelines to ensure the following: (1) the program is focused on achieving air quality improvements and benefits to low-income residents through retirement of their high-polluter passenger vehicles; (2) there is improved coordination, integration, and partnerships with other programs that target disadvantaged communities and receive GGRF funds; and (3) that provisions enhance the prescreening of applicants, if determined by ARB to be appropriate.
• Require ARB, by July 1, 2019 and annually thereafter, to collect and post specified performance, accounting, and evaluation information for both the EFMP and Clean Cars 4 All Programs on its website.
• Authorize ARB to allocate money, upon appropriation by the Legislature, for the expansion of the replacement or mobility option components of EFMP or Clean Cars 4 All from any of the following sources: the Enhanced Fleet Modernization Subaccount, the HPRRA, and the VIRF.
• Authorize ARB to allocate GGRF moneys, upon appropriation by the Legislature, consistent with law for the Clean Cars 4 All Program.

Related Legislation:

AB 1965 (Cooper), which failed passage in the Senate Environmental Quality Committee last year, was substantially similar to this bill.

Staff Comments:

This bill would expand and revise the existing EFMP Plus-Up Program, and codify the program in statute as the Clean Cars 4 All Program. The bill authorizes the expansion of the replacement or mobility option components of the EFMP and the Clean Cars 4 All Programs to be funded from the EFM Subaccount, the HPRRA, and the VIRF, and allows ARB to allocate GGRF funds for the Clean Cars 4 All Program, upon appropriation by the Legislature. Staff notes that the EFM Subaccount, which currently supports both the retirement-only and the retire-and-replacement components of the EFMP, is structurally imbalanced, with annual revenues of approximately $33 million, and annual expenditures of approximately $40 million. Both the HPRRA and the VIRF are structurally in balance, but neither could support sustained funding of an ongoing expansion of the EFMP or Clean Cars 4 All Programs. Staff notes that allocations from the HPRRA or the VIRF would likely result in reductions in funding available for existing BAR programs, including those that provide pollution reductions. As a result, staff assumes that any expansion of the EFMP and Clean Cars 4 All Programs would be borne by the GGRF.

-- END --

SENATE COMMITTEE ON TRANSPORTATION AND HOUSING

Senator Jim Beall, Chair

2017 - 2018 Regular

Bill No: Hearing Date: 7/11/2017

SUBJECT:

DIGEST: This bill establishes the Enhanced Fleet Modernization Program, Plus-Up Pilot Project (EFMP Plus-Up) in statute and renames it the Clean Cars 4 All Program.

ANALYSIS:

Smog check

Existing law establishes the smog check program, administered by the Bureau of Automotive Repair (BAR). This program generally requires vehicles to undergo emissions testing every two years, with some exceptions including gas-powered vehicles manufactured prior to 1976, alternatively fueled vehicles, and vehicles six years old or newer.

Consumer Assistance Program (CAP)

Existing law establishes the CAP, also administered by BAR. CAP provides assistance to low-income owners of vehicles that have failed a smog test, in the form of a repair cost waiver, repair cost assistance, or a monetary incentive of up to $1,500 to retire the vehicle.

Enhanced Fleet Modernization Program (EFMP) and EFMP Plus-Up

Existing law establishes EFMP, administered by the state Air Resources Board (ARB) and BAR. EFMP provides for the voluntary “retirement” (scrappage) of high-polluting passenger vehicles and light- and medium-duty trucks. The vehicle must be currently registered as operable and must have been continuously registered for two years prior to the application; unless the owner can demonstrate that the vehicle has been operated in California during that period. EFMP is funded by an additional $1 surcharge on the vehicle registration fee. The program has a statewide component and a local component.

Under the statewide component of EFMP, ARB administers a program, authorized in the San Joaquin Valley and South Coast air districts, to replace high-polluting vehicles. In addition to the “retirement” vouchers described above, the local EFMP program offers a $2,500 “replacement” voucher to low-income vehicle owners to replace a high-polluting vehicle by either purchasing a vehicle eight years old or newer, or using the voucher toward public transit.

In addition, ARB administers EFMP Plus-Up in the San Joaquin and South Coast air districts. Plus-Up provides additional incentives above and beyond EFMP base incentives for individuals in disadvantaged communities (DACs) who retire high-polluting vehicles and replace them with used or new hybrid, plug-in hybrid, or zero emission vehicles. Eligible participants can receive additional incentives ranging from $1,500 to $5,000, depending on the vehicle type that is purchased. EFMP, Plus-Up, and Clean Vehicle Rebate Program (CVRP) rebates can be “stacked” for a total of up to $12,000.

Clean Vehicle Rebate Project (CVRP)

CVRP is administered by ARB’s contractor, the California Center for Sustainable Energy. CVRP provides rebates to incentivize the purchase or lease of clean vehicles, as follows: $5,000 for a hydrogen fuel cell vehicle, $2,500 for a battery electric vehicle, $1,500 for a plug-in hybrid vehicle, and $900 for a zero emission motorcycle. For vehicles purchased after November 1, 2016, income limits apply (with the exception of fuel cell vehicles). In addition, individuals with household incomes of less than 300% of the federal poverty level are eligible for an additional rebate of $2,000. There is no cap on the number of rebates that may be issued, but rebates are subject to funding availability. As of June 1, 2017, CVRP had issued 193,186 rebates ($420 million), mostly in the Bay Area and South Coast air districts.

Charge Ahead Initiative

In March 2012, Governor Brown issued an Executive Order setting a goal of 1.5 million zero emission vehicles on California roads by 2025. SB 1275 of 2014 builds on this goal by establishing the Charge Ahead Initiative at ARB, which outlines a vision of placing one 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 for disadvantaged, low-income, and moderate-income communities and consumers. It also directs ARB to establish income limits for CVRP eligibility (as noted above).

This bill:

1. Establishes the Clean Cars 4 All Program under ARB to reduce greenhouse gas (GHG) emissions, improve air quality, and benefit low-income individuals by replacing high-polluter motor vehicles with cleaner and more efficient motor vehicles or a mobility option.
2. Requires ARB to set measureable goals, update program guidelines, and establish regulations, as specified, for both Clean Cars 4 All and EFMP and requires ARB to ensure coordination between the two programs and with other incentive programs.
3. Requires ARB to annually post on its website the following for both EFMP and Clean Cars 4 All: program performance relative to the goals set pursuant to this bill; an accounting of allocations and expenditures for both programs; and a performance analysis by district to identify areas of emphasis for future goals or updated program guidelines. Requires the analysis to include information relating to any backlog or waitlist, an evaluation of whether targeted outreach in low-income or DACs should be increased or decreased, and how incentive levels might be modified to maximize participation and emissions reductions.
4. Authorizes ARB to, upon appropriation by the Legislature, allocate GGRF or other specified monies for Clean Cars 4 All or EFMP.

COMMENTS:

1. Purpose. The author states that this bill will help facilitate expansion of EFMP into additional air districts with poor air quality. This will provide a significant opportunity to remove more high-polluting vehicles from the road, improve air quality in disadvantaged communities, and help low-income individuals move into cleaner new or used vehicles, resulting in maintenance and other cost savings.
2. Older vehicles, higher emissions. According to ARB, transportation accounts for approximately 40% of the state’s total GHG emissions; in addition, just 25% of vehicles account for 75% of vehicle emissions on California’s roads. This is partly because the smog check program does not hold older cars to the same emissions standards as newer cars due to less stringent manufacturer requirements in older vehicles, and allowances for normal wear and tear in a vehicle’s emissions control system as it ages. Thus, even if an older vehicle passes a smog test, it is still higher emitting than a newer vehicle. Even with lower emissions standards, many older vehicles fail smog tests. BAR data indicate that in the first quarter of this year, more than 49,000 vehicles (21% of all vehicles tested) failed a smog test; of these, most (about 45,000) were model years 1976 through 1999. Getting older cars off the road creates significant benefits for the state’s air quality. Since lower-income owners tend to keep their car much longer due to affordability issues, programs like EFMP Plus-Up are key in encouraging and assisting them to retire their older, high-polluting vehicles.
3. Background: EFMP and EMP Plus-Up. The Legislature has successfully pushed in recent years to ramp up both EFMP and EFMP Plus-Up in recent years. Between 2010, when the program began, and 2013, less than two dozen replacement vouchers were issued, all in the South Coast air district. In response, SB 459 of 2013 required ARB to update the EFMP guidelines to, among other things, allow for larger voucher amounts, focus the program more heavily on lower-income owners, and streamline program requirements to facilitate participation. As noted above, SB 1275 of 2014 established the Charge Ahead Initiative to place in service at least 1 million zero-emission and near-zero-emission vehicles by January 1, 2023, with a focus on disadvantaged and low- and moderate-income communities. Among other provisions, SB 1275 required ARB to develop a long-term funding plan with the intent to improve all its incentive programs by making them more accessible to all segments of the population.
4. Amendments. As it left the Assembly, this bill codified EFMP Plus-Up and included provisions requiring ARB to make the program available in additional air districts and to prioritize retirement of vehicles 15 years or older with 75,000 miles or more. These provisions were removed in the Environmental Quality Committee, and the program name was changed to Clean Cars 4 All to help ease marketing and outreach efforts. ARB is already working with local air districts to expand the program into Sacramento, San Diego, and the Bay Area, so requiring ARB to do so seems redundant. Regarding the mileage provision, the Environmental Quality Committee felt that the program should not be limited, but rather should take every car that qualifies for retirement.
5. Double referred. This bill was passed by the Environmental Quality Committee on July 5^th on a 5-1 vote.

Related Legislation:

AB 188 (Salas, 2017) — expands eligibility for light-duty pickup trucks as replacement vehicles under EFMP. This bill passed out of this committee on a 12-0 vote and is scheduled to be heard in the Environmental Quality Committee on July 5^th.

AB 193 (Cervantes, 2017) — requires ARB to establish a Clean Reused Vehicle Rebate Project. This bill passed out of this committee on a 9-3 vote and is scheduled to be heard in the Environmental Quality Committee on July 5^th.

AB 615 (Cooper, 2017) — extends the sunset on the income eligibility restrictions under CVRP. This bill is also being heard in this committee today.

AB 1965 (Cooper, 2016) — would have required ARB to expand EFMP Plus-Up in disadvantaged communities and in areas with poor air quality. This bill was passed by the Transportation and Housing Committee but failed passage in the Environmental Quality Committee.

AB 1691 (Gipson, 2016) — would have required ARB to update EFMP Plus-Up to help increase efficiencies and reduce program abuse. This bill was held on the suspense file by the Senate Appropriations Committee.

SB 1275 (De Leon, Chapter 530, Statutes of 2014) — establishes the Charge Ahead Initiative to provide incentives to increase the availability of zero-emission vehicles and near-zero-emission vehicles, particularly to low-income and moderate-income consumers and disadvantaged communities.

SB 459 (Pavley, Chapter 437, Statutes of 2013) — required ARB to update the EFMP guidelines by June 30, 2015 to, among other things, focus program assistance on lower-income vehicle owners.

Assembly Votes:

Floor: 54-20

Appr: 12-5

Trans: 10-4

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

POSITIONS: (Communicated to the committee before noon on Wednesday,

July 5, 2017.)

SUPPORT:

California Electric Transportation Coalition

Southern California Edison

Valley Clean Air Now

OPPOSITION:

None received.

-- END --

SENATE COMMITTEE ON ENVIRONMENTAL QUALITY

Senator Wieckowski, Chair

2017 - 2018 Regular

Bill No: AB 630

SUBJECT: Vehicles: retirement and replacement.

ANALYSIS:

Existing federal law:

1. The Federal Clean Air Act (FCAA) and its implementing regulations set National Ambient Air Quality Standards (NAAQS) for six criteria pollutants, designate air basins that do not achieve NAAQS as nonattainment, allow only California to set vehicular emissions standards stricter than the federal government, and allow other states to adopt either the federal or California vehicular emissions standards. (42 U.S.C. §7401 et seq.)
   

Existing state law:

1. Establishes the Air Resources Board (ARB) as the air pollution control agency in California and requires the ARB, among other things, to control emissions from a wide array of mobile sources and implement the FCAA. (Health and Safety Code (HSC) §39500 et seq.)
   
2. Requires, under the California Global Warming Solutions Act of 2006 (also known as AB 32), the Air Resources Board (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. (HSC §38500 et seq.)
   
3. Allows the ARB until December 31, 2020, under certain circumstances, to adopt regulations that utilize market-based compliance mechanisms. (HSC §38562)
   
4. Requires ARB to ensure that statewide GHG emissions are reduced to at least 40% below the 1990 level by December 31, 2030. (HSC §38566)
   
5. 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)
   
6. Establishes the Motor Vehicle Inspection Program, commonly known as the smog check program, to, among other things, help the state meet federal air quality standards and requires administrative fines to be deposited into the High Polluter Repair or Removal Account within the Vehicle Inspection and Repair Fund. (HSC §44000 et seq.)
   
7. Establishes the Automotive Repair Act to, among other things, protect the public in regards to automobile repair and requires the Department of Consumer Affairs to deposit fees collected under the Act into the Vehicle Inspection and Repair Fund. (Business and Professions Code §9880 et seq.)
   
8. Establishes, as a part of the Charge Ahead Initiative, the Enhanced Fleet Modernization Program (EFMP)—funded with moneys from the Enhanced Fleet Modernization Subaccount within the High Polluter Repair or Removal Account within the Vehicle Inspection and Repair Fund—to incentivize the voluntary retirement of passenger vehicles and light- and medium-duty trucks. (HSC §44125 et seq.).
   

This bill:

1. Defines:
   
   1. “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.
      
   2. “Disadvantaged community” means a community identified by the CalEnviroScreen tool created pursuant to HSC §39711.
      
   3. “High polluter” means a high-emission motor vehicle, including, but not limited to, a gross polluter.
      
   4. “Low-income state resident” and “low-income motor vehicle owner” means a person whose income does not exceed 225% of the federal poverty level, as published quarterly in the Federal Register by the United States Department of Health and Human Services.
      
   5. “Mobility option” means a voucher for public transit or car sharing.
      
   6. “Clean Cars 4 All Program” means the program established by the bill.
      
   7. “Program” means EFMP established in HSC §44125.
      
2. Establishes the Clean Cars 4 All Program to be administered by ARB to focus on achieving reductions in the emissions of GHGs, improvements in air quality, and benefits to low-income state residents through the replacement of high-polluting motor vehicles with cleaner alternative or a mobility option.
   
3. Requires annually, beginning in the 2018–19 fiscal year, ARB, in consultation with the Bureau of Automotive Repair (BAR), to set specific, measurable goals for the retirement and replacement of passenger vehicles and light- and medium-duty trucks that are high polluters.
   
4. Requires ARB and BAR to meet the goals they set and to update the EFMP and Plus-Up programs in furtherance of those goals by July 1, 2018, and clarifies BAR administers EFMP pursuant to ARB guidelines and ARB administers Plus-Up.
   
5. Requires, when applicable, improved coordination relating to other programs that target disadvantaged communities and receive GGRF moneys.
   
6. Requires ARB to determine if enhanced prescreening of applicants to either program is appropriate.
   
7. Requires ARB to post on its Internet Web site annually, starting July 1, 2019, a variety of performance, accounting, and evaluation information, as specified.
   
8. Allows ARB, upon appropriation of funds from the Legislature into specified accounts or from GGRF, to expand the replacement or mobility option components of Clean Cars 4 All Program.
   
9. Makes technical and clarifying amendments.
   

Background

1. Health Impacts of Air Pollution. When not adequately controlled, air pollution has dire consequences on the health and safety of both people and the environment. Poor air quality causes the lungs to constrict, resulting in wheezing, shortness of breath and chest tightness, especially during exercise or physical activity.
   
   It is well known that air pollution causes asthma. According to the Centers for Disease Control and Prevention, nationwide 7.4% of adults and 8.6% of children have been diagnosed with asthma. In California, the numbers are significantly higher: 13.1% of adults and 12.5% of children have been diagnosed with asthma. Lower income and minority groups are disproportionately affected by asthma due to their increased exposure to air pollution.
   
   Depending on exposure, air pollution alone can cause an increased risk of cardiovascular and respiratory illness, lung disease, cancerous tumors, birth defects, premature births, developmental disorders, central nervous system damage, intellectual disability, persistent memory impairments, epilepsy, dementia, and premature death.
   
2. Air Quality Standards. The Federal Clean Air Act (FCAA) passed in 1963 and has been revised many times thereafter. The FCAA and its implementing regulations are intended to protect public health and environmental quality by limiting and reducing pollution from various sources. Under the FCAA, the US EPA establishes National Ambient Air Quality Standards (NAAQS) that apply to outdoor air throughout the country.
   
   In 1969 and 1971, ARB set the first air quality standards for ozone, Particulate Matter (PM), oxides of nitrogen (NOx), oxides of sulfur (SOx), and carbon monoxide due to their negative impacts on public health above specified concentrations.
   
   The federal government followed suit and set NAAQS for six “criteria pollutants.” These included ground-level ozone, PM, NOx, SOx, and carbon monoxide, and added lead. Now, the US EPA reviews each NAAQS at five-year intervals to ensure that the standards are based on the most recent scientific information.
   
   Regions that do not meet the national standards for any one of the standards are designated “nonattainment areas.” The FCAA sets deadlines for attainment based on the severity of nonattainment and requires states to develop comprehensive plans, known as the state implementation plan (SIP), to attain and maintain air-quality standards for each area designated nonattainment for an NAAQS.
   
3. Vehicles and Air Pollution. Vehicles are one of the primary sources of air pollution nationally. As such, the FCAA authorizes US EPA to establish and regulate emissions standards for mobile sources.
   
   California, due to its preexisting vehicle-emission standards and severe motor vehicle air pollution problems, is authorized under the FCAA to implement separate mobile emission standards from the federal government. Other states may choose to follow either the national standard or the stricter California standards.
   
   State law assigns the ARB with primary responsibility for control of mobile-source air pollution, including adoption of rules for reducing vehicle emissions, the specification of vehicular fuel composition, emissions control devices, and engine standards.
   
4. Enhanced Fleet Modernization Program (EFMP) and EFMP Plus-Up. EFMP is an incentive program funded through a $1 surcharge on vehicle registration, totaling approximately $30 million annually. EFMP is designed to encourage low-income drivers to retire their older, high-emitting vehicles and replace them with newer, cleaner, more fuel-efficient vehicles. EFMP was established by AB 118 (Núñez, Chapter 750, Statutes of 2007) and comprises two components: retirement-only and retirement and replacement. These are sometimes referred to as the EFMP base program. Under the retirement only component, eligible applicants can receive $1,000 to $1,500, depending on income, for retiring an eligible vehicle through the EFMP portion of the car scrap program administered by the Bureau of Automotive Repair’s Consumer Assistance Program. This element of the program is offered statewide.
   
   The second component of the EFMP base program, the retire and replacement component, is offered only in the South Coast and San Joaquin Valley air districts, and only to low income drivers (income less than 400 percent of the Federal Poverty Line) of eligible vehicles. EFMP retirement and replacement provides up to $4,500 to low-income drivers who purchase a vehicle eight years old or newer. The exact incentive amount varies, depending on household income, and can be used toward the purchase of a new or used clean replacement vehicle or an alternate mode of transportation, such as a transit pass. Each implementing local air district tailors and markets the EFMP retirement and replacement program uniquely. In the South Coast, the program is called Replace Your Ride, and in the San Joaquin Valley, the program is called Valley Clean Air Now.
   
   The Plus-Up pilot project is a complementary incentive program funded with GGRF moneys and augments the EFMP base program by adding up to an additional $5,000 in incentives for the subset of participants living in or near a disadvantaged community census tract and who choose an advanced technology replacement vehicle (e.g. hybrid, plug-in hybrid, and battery electric vehicles), but may not be used for a mobility option like a transit pass. The highest incentive amount is available to the lowest income drivers choosing the cleanest replacement vehicles. For example, a low-income participant who lives in or near a disadvantaged community can receive up to $9,500 toward the purchase of a plug-in hybrid vehicle: $4,500 from the EFMP base program and $5,000 from Plus-Up pilot project. The actual amount of the additional Plus-Up incentive depends on income and choice of replacement vehicle. The following table illustrates how incentives from the EFMP base program and Plus-Up pilot project can be combined or “stacked.” Note that these programs apply for both new and used vehicles up to eight years old. To note, this table does not include additional incentives available under the Clean Vehicle Rebate Project (CVRP, see background #5).
   

EFMP and Plus-Up: Stacking of Incentives

ARB is currently working with local air districts to expand EFMP Plus-Up to disadvantaged communities in Sacramento, San Diego, and the bay area.

AB 630 would codify EFMP Plus-Up as the Clean Cars 4 All Program.

1. Clean Vehicle Rebate Project (CVRP). The CVRP is funded by ARB and administered by the Center for Sustainable Energy, in order to promote the production and use of zero-emission vehicles, including electric, plug-in hybrid electric and fuel cell vehicles. CVRP enables the purchaser or lessee of an eligible vehicle to receive a rebate. A consumer can apply for a rebate within 18 months of purchasing or leasing an eligible vehicle. The consumer must retain ownership of the vehicle in California for at least 30 consecutive months after the purchase or lease date or reimburse ARB for part of or the entire rebate amount. Rebates are distributed on a first-come, first-served basis and issued within 90 days of application approval.
   
   CVRP provides a rebate of up to $5,000 for purchasing or leasing a new zero-emission vehicle or plug-in hybrid electric vehicle. Specifically, a consumer may obtain a $5,000 rebate for a hydrogen fuel-cell vehicle; a $2,500 rebate for a zero-emission, battery electric vehicle; a $1,500 voucher for a plug-in hybrid electric vehicle; or, a $900 rebate for a neighborhood electric vehicle or a zero-emission motorcycle. There is no cap on the number of rebates that may be issued, but rebates are subject to funding availability and the program has more than once been forced to stop issuing rebates and create a waiting list due to funds running out.
   
   CVRP was initially designed to achieve 1.5 million ZEVs on the road by 2025 as directed under Governor Brown’s Executive Order B-16-2012.
   
2. Use of Cap-and-Trade Auction Revenue. Since November 2012, ARB has conducted eight California-only and 11 joint California-Québec cap-and-trade auctions. To date, $3.4 billion has been appropriated by the Legislature to 12 state agencies that have distributed $1.2 billion to projects that have been completed or are under way.
   

State law specifies that the auction revenues must be used to facilitate the achievement of measurable GHG emissions reductions and outlines various categories of allowable expenditures. Statute further requires the Department of Finance, in consultation with ARB and any other relevant state agency, to develop a three-year investment plan for the auction proceeds, which are deposited in the GGRF. ARB is required to develop guidance for administering agencies on reporting and quantifying methodologies for programs and projects funded through the GGRF to ensure the investments further the regulatory purposes of AB 32.

Proceeds from cap-and-trade auctions provide an opportunity for the state to invest in projects that help California achieve its climate goals and provide benefits to disadvantaged communities. Several bills in 2012, one in 2014, and one in 2016 provide legislative direction for the expenditure of auction proceeds including SB 535 (de León, Chapter 830, Statutes of 2012), AB 1532 (J. Pérez, Chapter 807, Statutes of 2012), SB 1018 (Committee on Budget and Fiscal Review, Chapter 39, Statutes of 2012), SB 862 (Committee on Budget and Fiscal Review, Chapter 36, Statutes of 2014), and AB 1550 (Gomez, Chapter 369, Statutes of 2016).

SB 535 (de León, Chapter 830, Statutes of 2012) requires that 25% of auction revenue be used to benefit disadvantaged communities and requires that 10% of auction revenue be invested in disadvantaged communities.

AB 1532 (J. Pérez, Chapter 807, Statutes of 2012) directs the Department of Finance to develop and periodically update a three-year investment plan that identifies feasible and cost-effective GHG emission reduction investments to be funded with cap-and-trade auction revenues and specifies that reduction of GHG emissions through strategic planning and development of sustainable infrastructure projects, are eligible investments of GGRF.

SB 1018 (Committee on Budget and Fiscal Review, Chapter 39, Statutes of 2012) created the GGRF, into which all auction revenue is to be deposited. The legislation requires that before departments can spend moneys from the GGRF, they must prepare a record specifying: (1) how the expenditures will be used, (2) how the expenditures will further the purposes of AB 32 (Núñez and Pavley, Chapter 488, Statutes of 2006), (3) how the expenditures will achieve GHG emission reductions, (4) how the department considered other non-GHG-related objectives, and (5) how the department will document the results of the expenditures.

SB 862 (Committee on Budget and Fiscal Review, Chapter 36, Statutes of 2014) established a long-term cap-and-trade expenditure plan by continuously appropriating portions of the funds for designated programs or purposes. The legislation appropriates 25% for the state’s high-speed rail project, 20% for affordable housing and sustainable communities grants, 10% to the Transit and Intercity Rail Capital Program, and 5% for low-carbon transit operations. The remaining 40% is available for annual appropriation by the Legislature.

AB 1550 (Gomez, Chapter 369, Statutes of 2016) requires a minimum of 25% of GGRF moneys be spent on projects located within and benefiting disadvantaged communities and an additional minimum of 10% of GGRF moneys be spent on projects that benefit low-income households or are within, and benefit low-income communities.

These statutes also require a state agency, prior to expending any money appropriated to it by the Legislature from the fund, to prepare a description of 1) proposed expenditures, 2) how they will further the regulatory purposes of AB 32, 3) how they will achieve specified greenhouse gas emission reductions, 4) how the agency considered other objectives of that act, and 5) how the agency will document expenditure results.

1. Fees versus Taxes: Legal Consideration of Cap-and-Trade Auction Revenues. Regulatory fees established prior to 2010 (due to Proposition 26) are subject to the Sinclair Paint test, which helps determine whether a levy is a fee or a tax.
   

Sinclair Paint Co. v. State Board of Equalization, 15 Cal. 4th 866 (1997) considered the legitimacy of a fee levied to support the implementation of the Childhood Lead Poisoning Prevention Act, which provided evaluation, screening, and medical follow-up services to children at risk of lead poisoning. The program was entirely supported by fees imposed on former and current manufacturers of lead or products containing lead, based on the manufacturers “market share” responsibility for the contamination. The California Supreme Court in Sinclair Paint found that a levy is a legitimate fee as long as the revenue of the levy does not exceed the costs of the regulatory activity and the levy is not imposed for an unrelated revenue purpose, and the levy allocated to the payer bears a fair or reasonable relationship to the payer’s burdens on or benefits from the regulatory activity. The Sinclair Paint test is a two-part test: 1) nexus and 2) proportionality.

Nexus. The Sinclair Paint nexus test, which is derived from the case above, requires that a clear nexus must exist between an activity for which a fee is used and the adverse effects related to the activity on which that fee is levied. In order to use a fee imposed to pay for remediation of the harm created by the release of GHGs, it appears that the funds should be used only to decrease the emissions or the harms directly caused by those activities that releases GHGs.

Proportionality. The Sinclair Paint test also has a proportionality component, which requires those burdened with the fee proportionally benefit from the fee – if assessing a fee to reduce GHG emissions on industry, then 100% of those funds are from industry. However, not all of the revenue from the fee is used to fund industrial projects. Some of those funds are used to pay for reducing emissions from other sources, such as wetlands restoration and stationary agriculture equipment, which are not assessed the fee.

The 2012-13 Budget analysis of cap-and-trade auction revenue by the Legislative Analyst’s Office (LAO) noted that, based on an opinion from the Office of Legislative Counsel, the auction revenues should be considered “mitigation” fee revenues, subject to the Sinclair Paint test. The LAO concluded, based on the opinion, that in order for their use to be valid as mitigation fees, revenues from the cap-and-trade auction must be used to mitigate GHG emissions or the harms caused by GHG emissions.

In 2012, the California Chamber of Commerce filed a lawsuit against the ARB claiming that cap-and-trade auction revenues constitute illegal tax revenue. In November 2013, the superior court ruling declined to hold the auction a tax, concluding that it is more akin to a regulatory fee. In February of 2014, the plaintiffs filed an appeal with the 3rd District Court of Appeal in Sacramento. Arguments were heard before the Appellate Court in January of 2017.

On April 6, 2017, the appellate court issued a ruling that again declined to hold that the cap-and-trade auctions are a tax.

1. Third Appellate Court District Ruling. The appellate court ruled that ARB did not exceed its authority in creating the cap-and-trade program, stating that “the Legislature gave broad discretion to the Board to design a distribution system, and a system including the auction of some allowances did not exceed the scope of legislative delegation. Further, the Legislature later ratified the auction system by specifying how to use the proceeds derived therefrom.”
   
   The appellate court also stated clearly “that the auction sales do not equate to a tax” explaining that “the hallmarks of a tax are: 1) that it is compulsory; and 2) that the payor receives nothing of particular value for payment of the tax, that is, the payor receives nothing of specific value for the tax itself. Contrary to plaintiffs’ view, the purchase of allowances is a voluntary decision driven by business judgments as to whether it is more beneficial to the company to make the purchase than to reduce emissions …these twin aspects of the auction system, voluntary participation and purchase of a specific thing of value, preclude a finding that the auction system has the hallmarks of a tax.”
   
   Going further than the superior court, the appellate court also found that “the purchase of emissions allowances, whether directly from the Board at auction or on the secondary market, is a business driven decision, not a governmentally compelled decision [and] unlike any other tax … the purchase of an emissions allowance conveys a valuable property interest—the privilege to pollute California’s air—that may be freely sold or traded on the secondary market.”
   
   As a result, the appellate court found that “the Sinclair Paint test is not applicable [to the cap-and-trade program], because the auction system is unlike other governmental charges that may raise the “tax or fee” question resolved thereby. The system is the voluntary purchase of a valuable commodity and not a tax under any test.”
   
2. Budget Allocations. SB 862 (Committee on Budget and Fiscal Review, Chapter 36, Statutes of 2014) established a long-term cap-and-trade expenditure plan by continuously appropriating portions of the funds for designated programs or purposes. The legislation appropriates 25% for the state’s high-speed rail project, 20% for affordable housing and sustainable communities grants, 10% to the Transit and Intercity Rail Capital Program, and 5% for low-carbon transit operations. The remaining 40% is available for annual appropriation by the Legislature.
   
   The Governor’s 2017-18 proposed budget proposes the following $2.2 billion expenditure plan: (1) $900 million continuously appropriated for state transit assistance ($75 million), transit and intercity rail ($150 million), the Sustainable Communities Strategy ($300 million), and the state’s high-speed rail project ($375 million), and; (2) $1.3 billion in discretionary funding for a variety of projects. This includes $500 million for public transit and active transportation projects and $363 million for clean transportation and petroleum use reduction, as well as $392 million for a variety of other greenhouse gas reducing programs.
   
   The Governor’s 2017-18 proposed budget makes the aforementioned funding for discretionary spending contingent on the Legislature reauthorizing ARB to utilize a market-based compliance mechanism to reduce GHG emissions (specifically, referencing a cap-and-trade program) beyond 2020 with a two-thirds vote. The budget approved by the legislature on June 15, 2017 did not include any discretionary GGRF expenditures since the Legislature did not reauthorizing ARB to utilize a market-based compliance mechanism to reduce GHG emissions.
   

Comments

1. Purpose of Bill. According to the author, “AB 630 places the Enhanced Fleet Modernization Program Plus-Up (EFMP Plus-Up) in statute and will help facilitate program expansion to additional air districts with poor air quality providing a significant opportunity to remove more high polluting vehicles from the roads, improve air quality in disadvantaged communities, and help low-income individuals move into cleaner new or used vehicles resulting in maintenance and other cost savings.”
   

Related/Prior Legislation

SB 498 (Skinner) requires ARB to study its programs relating to light-duty ZEVs and report to the Legislature on its findings. SB 498 is pending hearing in the Assembly Transportation Committee.

SB 79 (Allen) would have exempted from the state share of the sales and use tax purchases of used low- or zero-emission vehicles when the purchaser trades in an older vehicle. SB 79 was held on suspense in the Senate Appropriations Committee.

AB 33 (Quirk) would require the Public Utilities Commission by March 30, 2018, to authorize investor-owned utilities (IOUs) to offer programs and investments in residential electric vehicle service equipment. AB 33 is pending hearing in the Senate Energy, Utilities and Communications Committee.

AB 188 (Salas) would require ARB to update the EFMP guidelines to allow participants to replace their vehicles with a light-duty truck so long as they are retiring a pickup truck and the replacement truck meets fuel efficiency standard set for minivans. AB 188 is set for hearing on July 5, 2017 in the Senate Environmental Quality Committee.

AB 193 (Cervantes) would create the Clean Reused Vehicle Rebate Project to provide a CRVP-like rebate for qualifying used vehicles. AB 193 is set for hearing on July 5, 2017 in the Senate Environmental Quality Committee.

AB 544 (Bloom) would amend the current high occupancy vehicle lane sticker program for EVs. AB 544 is pending hearing in the Senate Transportation and Housing Committee.

AB 615 (Cooper) is an urgency measure that would make permanent the current income restrictions in the CVRP program that were imposed by last year’s budget. AB 615 is set for hearing on July 5, 2017 in the Senate Environmental Quality Committee.

AB 964 (Gomez) is similar to this bill in that it would create a new program to help low-income and high financial risk individuals buy low-emission vehicles using qualified loans. AB 964 is set for hearing on July 5, 2017 in the Senate Environmental Quality Committee.

AB 1081 (Burke) would exempt from state sales tax the value of a vehicle traded in to purchase a cleaner car. AB 1081 was held on Suspense in the Assembly Appropriations Committee.

AB 1082 (Burke) would require IOUs to develop a program for the installation of vehicle charging stations at school facilities for use by faculty, students, and parents with electricity provided at time-of-use rates. AB 1082 is pending hearing in the Senate Energy, Utilities and Communications Committee.

AB 1083 (Burke) would require IOUs to create a charging network at all state parks and beaches by July 31, 2018, with electricity provided at time-of-use rates. AB 1083 is pending hearing in the Senate Energy, Utilities and Communications Committee.

SB 32 (Pavley, Chapter 249, Statutes of 2016) requires ARB to ensure that statewide GHG emissions are reduced to at least 40% below the 1990 level by December 31, 2030.

AB 904 (Perea, 2015) would have created the Clean Reused Vehicle Rebate Project to provide a CRVP-like rebate for qualifying used vehicles. AB 904 was held on Suspense in the Senate Appropriations Committee.

SB 1275 (de León, Chapter 530, Statutes of 2014) established the Charge Ahead California Initiative to place in service at least 1.0 million zero-emission and near-zero-emission vehicles by January 1, 2023, with a focus on disadvantaged and low-and-moderate-income communities.

AB 118 (Núñez, Chapter 750, Statutes of 2007) established the EFMP, ARFVTP, and the AQIP.

AB 32 (Núñez, Pavley, Chapter 488, Statutes of 2006) establishes the California Global Warming Solutions Act of 2006, which requires ARB to monitor and regulate sources of GHG emissions that cause global warming in order to reduce emissions of GHG, as specified.

DOUBLE REFERRAL:

If this measure is approved by the Senate Environmental Quality Committee, the do pass motion must include the action to re-refer the bill to the Senate Transportation and Housing Committee.

SOURCE:

Author

SUPPORT:

California Electric Transportation Coalition

Southern California Edison

Valley Clean Air Now

OPPOSITION:

None received

-- END --

ASSEMBLY THIRD READING

ATR Bill Id:AB 630

Author:(Cooper)

As Introduced Ver:February 14, 2017

Majority vote

SUMMARY: Establishes the Plus-Up program and adds provisions to improve performance of the related Enhanced Fleet Modernization Program (EFMP). Specifically, this bill:

1. Codifies the Plus-Up program.
2. Requires California Air Resources Board (ARB), in consultation with the Bureau of Automotive Repair (BAR), beginning in 2018-19 fiscal year and every year thereafter, to set specific measurable goals for the retirement and replacement of high-polluting passenger vehicles and light- and medium-duty trucks.
3. Requires ARB to take steps necessary to meet program goals including, but not necessarily limited to, updating the program guidelines for both EFMP and Plus-Up no later than July 1, 2018, continuing to allow BAR to administer EFMP.
4. Requires ARB to update program guidelines (for both EFMP and Plus-Up) to include a focus on achieving air quality improvements and providing benefits to low-income Californians through the replacement of high-polluting passenger vehicles.
5. Provides, pursuant to available mobility options, that replacement compensation may be provided either through EFMP or Plus-Up.
6. Provides that compensation for replacement vehicles may be decreased, as needed, to maximize air quality benefits and participation by low-income motor vehicle owners and to meet program goals.
7. Requires enhancement of applicant pre-screening for both EFMP and Plus-Up, if ARB determines it is appropriate to do so.
8. Requires enhanced income eligibility verification for both EFMP and Plus-Up to ensure the programs are not misused.
9. Requires that specific steps be taken to ensure that EFMP and Plus-Up are available in air districts with more than one million residents.
10. Requires that priority be given to retire and replace programs for vehicles that are 15 years old or older and have more than 75,000 miles of usage.
11. Requires ARB to establish EFMP and Plus-Up program goals and objectives, collect specified program data, and report the information on its Internet Web site annually beginning on or before July 1, 2019, on its Internet Website.
12. Provides that, upon appropriation by the Legislature, ARB may allocate monies for the expansion of the replacement component or the mobility option component for either EFMP or Plus-Up from specified funding sources.

FISCAL EFFECT: According to the Assembly Appropriations Committee, increased ongoing annual ARB costs of $600,000 and four additional positions (variety of special funds) for:

1. Increased outreach to low-income communities and enhanced prescreening of applicants;
2. A possible rulemaking updating EFMP guidelines to set specific and measurable goals;
3. Assuring EFMP base and EFMP Plus Up are available to districts with more than one million residents; and,
4. Prioritizing the retirement and replacement of motor vehicles that are 15 years or older and have more than 75,000 miles of usage in both programs.

COMMENTS: Under the federal Clean Air Act, EPA establishes National Ambient Air Quality Standards (NAAQS) for outdoor air throughout the country. These federal standards exist for several air pollutants due to their negative impact on public health above specified concentrations, including ozone, particulate matter (PM), nitrogen oxide (NOx), oxides of sulfur (SOx), carbon monoxide, and lead. Regions that do not meet the NAAQS are designated non-attainment areas. In California, the South Coast and San Joaquin air basins are both non-attainment areas and as such are required develop and implement comprehensive plans to attain and maintain federal air quality standards. Since transportation emissions are considered a primary source of air pollutants (such as NOx and PM emissions), plans to help achieve attainment typically involve efforts to increase the retirement of old, dirty vehicles and replacing them with cleaner cars.

California has implemented a number of programs to help reduce vehicle emissions. Specifically, the Consumer Assistance Program (CAP) was created to encourage voluntary accelerated retirement of vehicles that fail smog check by providing a monetary incentive of $1,000 ($1,500 for low income consumers). Further, EFMP provides for additional voluntary retirement older, high-polluting passenger vehicles and light- and medium-duty trucks but unlike CAP, EFMP allows vehicles to be retired without first having to fail a smog test. Under EFMP, vehicle owners are offered a $1,000 voucher ($1,500 for low-income owners) for the retirement of high-polluting vehicles.

As a follow-on to EFMP, Plus-Up was created with the passage of SB 1275 (de León), Chapter 530, Statutes of 2014, to enhance retire and replace efforts specifically in extreme non-attainment areas. Specifically, Plus-Up includes two pilot programs, one in the San Joaquin Valley Air District and the other in the South Coast Air District, where low-income vehicle owners who live in one of these districts can get a $2,500 "replacement" voucher in addition to the $1,500 base EFMP "retirement" voucher to either purchase a car that is less than eight years old, or to obtain a public transit voucher. If a qualifying low-income individual lives in a disadvantaged community within one of these air districts and wants to purchase a hybrid, plug-in hybrid, or battery electric vehicle, he or she can "stack" additional incentives on top of the EFMP and Plus-Up incentives.

Plus-Up in the San Joaquin Valley (Tune-In Tune-Up) and in the South Coast Air Quality District (Replace Your Ride) have resulted in the retirement of many high-polluting vehicles. Both programs have unique advertising and outreach methods to reach low- and moderate-income vehicle owners to get them to participate. Some of the most successful methods include "events" where individuals can obtain a free smog test and undergo pre-screenings to determine whether they are eligible for various incentives.

The author points out that Plus-Up has been instrumental in reducing emissions and improving air quality in two non-attainment areas of the state. He believes, however, that the expansion of these programs will help keep other large metropolitan areas in the state from slipping into non-attainment status. For this reason, the author has introduced this bill which would authorize the expansion of Plus-Up into other areas of the state and improve the programs with respect to enhanced performance metrics, data collection and reporting.

This bill is similar to a bill introduced by the author last year (AB 1965 (Cooper) of 2016) that would have, among other things, expanded Plus-Up to areas in the state with one million or more residents. Despite the fact that AB 1965 was not signed into law, ARB used its administrative authority to expand Plus-Up in accordance with AB 1965 requirements. According to ARB, three air districts in California have initiated draft Plus-Up implementation plans and the programs are expected to be initiated this summer in the San Francisco Bay Area, the Sacramento region, and in San Diego area. As a result, this bill would serve primarily to codify existing efforts by ARB to expand Plus-Up statewide as well as establish program goals and metrics, provide program transparency and accountability requirements, and ensure that program dollars are being put to their highest and best use.

Please see the policy committee analysis for full discussion of this bill.

Analysis Prepared by: Victoria Alvarez / TRANS. / (916) 319-2093 FN: 0000751

Date of Hearing: April 26, 2017

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez Fletcher, Chair

ABPCA Bill Id:AB 630

Author:(Cooper) – As Introduced Ver:February 14, 2017

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

SUMMARY:

This bill codifies the Plus-Up program and modifies the Enhanced Fleet Modernization Program (EFMP). Specifically, this bill:

1. Requires the Air Resources Board (ARB), in consultation with the Bureau of Automotive Repair (BAR), beginning in 2018-19 and annually thereafter, to set specific measurable goals for the retirement and replacement of high polluting passenger vehicles and light-duty and medium-duty trucks and to meet these goals by updating EFMP and Plus-Up guidelines no later than July 1, 2018.
2. Requires EFMP to continue to be administered by BAR pursuant to guidelines adopted by ARB. Requires the Plus-Up program to be administered by ARB pursuant to guidelines adopted by ARB.
3. Stipulates that the updated guidelines are to ensure: 1) increased funding for low-income and disadvantaged communities (DACs); and 2) program expansion to areas at risk of being designated as federal extreme non-attainment areas and to all districts containing DACs.
4. Requires the ARB to collect and post specified information on program outcomes on its website, by July 1, 2018, and at least biennially thereafter.
5. Authorizes ARB, upon appropriation by the Legislature, to allocate monies for program expansion from the EFMP subaccount, the High Polluter Repair and Removal Account, or the Vehicle Inspection and Repair Fund. Authorizes ARB, upon appropriation by the Legislature, to allocate monies for the Plus-Up program from the Greenhouse Gas Reduction Fund.

FISCAL EFFECT:

Increased ongoing annual ARB costs of $600,000 and four additional positions (variety of special funds) for:

1. Increased outreach to low-income communities and enhanced prescreening of applicants;
2. A possible rulemaking updating EFMP guidelines to set specific and measurable goals;
3. Assuring EFMP base and EFMP Plus Up are available to districts with more than one million residents; and
4. Prioritizing the retirement and replacement of motor vehicles that are 15 years or older and have more than 75,000 miles of usage in both programs.

COMMENTS:

1. Background. The Plus-Up program was administratively initiated as part of the Charge Ahead Initiative of 2014, which called for enhanced retire and replace efforts in extreme non-attainment areas. Plus-Up includes two pilot programs, one in the San Joaquin Valley Air District and the other in the South Coast Air District, where low-income vehicle owners who live in one of these districts can get a $2,500 “replacement” voucher in addition to the $1,500 base EFMP “retirement” voucher to either purchase a car that is less than eight years old, or to obtain a public transit voucher. If a qualifying low-income individual lives within a disadvantaged community (DAC) in one of these air districts, and wants to purchase a hybrid, plug-in hybrid, or battery electric vehicle, he or she can “stack” additional incentives on top of the Plus-Up incentives.
2. Purpose. According to the author, the Plus-Up program has been instrumental in reducing GHG emissions and improving air quality in two non-attainment areas of the state (the San Joaquin Valley and the South Coast Air) by providing added incentive for low- and moderate income individuals living in DACs to retire their high-polluting vehicles and replace them with cleaner cars. The author contends that while these programs have been beneficial in these areas, the programs would be helpful in keeping other large metropolitan areas from slipping into non-attainment status.

This bill authorizes the expansion of Plus-Up into other areas of the state and provides enhanced legislative oversite and increased program goal setting, performance, and reporting for both the Plus-Up and EFMP programs.

1. Prior Legislation. This bill is similar to a bill introduced by the author last year (AB 1965) that would have, among other things, expanded Plus-Up to areas in the state with one million or more residents. Since the failure of AB 1965 in the Senate Environmental Quality Committee last year, ARB used its administrative authority to expanded Plus-Up in accordance with requirements set forth in AB 1965. To date, three air districts in California have initiated draft Plus-Up implementation plans and the programs are expected to begin this summer in the San Francisco Bay Area, the Sacramento region, and in San Diego and its environs.

This bill codifies Plus-Up in statute and provides program direction to ensure that both EFMP and Plus-Up provide maximum GHG reductions and air quality benefits in DACs. For example, this bill would require ARB to establish goals and performance metrics and to report annually on progress toward meeting those goals. Additionally, this bill would require ARB to report on program expenditures, overall and by region. The effect of requiring ARB to establish clear goals and performance metrics for EFMP and Plus-Up and to report annually will provide much needed transparency and accountability and ensure that program dollars are being put to their highest and best use.

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

Date of Hearing: March 20, 2017

ASSEMBLY COMMITTEE ON TRANSPORTATION

Jim Frazier, Chair

ABPCA Bill Id:AB 630 (

Author:Cooper) – As Introduced Ver:February 14, 2017

SUBJECT: Vehicles: retirement and replacement

SUMMARY: Establishes the Plus-Up program and adds provisions to improve performance of the related Enhanced Fleet Modernization Program (EFMP). Specifically, this bill:

1. Codifies the Plus-Up program.
2. Requires California Air Resources Board (ARB), in consultation with the Bureau of Automotive Repair (BAR), beginning in 2018-19 fiscal year and every year thereafter, to set specific, measurable goals for the retirement and replacement of high-polluting passenger vehicles and light- and medium-duty trucks.
3. Requires ARB to take steps necessary to meet program goals including, but not necessarily limited to, the following:
   1. Update the program guidelines for both EFMP and Plus-Up no later than July 1, 2018; and,
   2. Continue to allow BAR to administer EFMP.
4. Requires ARB to update program guidelines (for both EFMP and Plus-Up) to include a focus on achieving air quality improvements and providing benefits to low-income Californians through the replacement of high-polluting passenger vehicles.
5. Provides, pursuant to available mobility options, that replacement compensation may be provided either through EFMP or Plus-Up.
6. Provides that compensation for replacement vehicles may be decreased, as needed, to maximize air quality benefits and participation by low-income motor vehicle owners and to meet program goals.
7. Requires enhancement of applicant pre-screening for both EFMP and Plus-Up, if ARB determines it is appropriate to do so.
8. Requires enhanced income eligibility verification for both EFMP and Plus-Up to ensure the programs are not misused.
9. Requires that specific steps be taken to ensure that EFMP and Plus-Up are available in air districts with more than one million residents.
10. Requires that priority be given to retire and replace programs for vehicles that are 15 years old or older and have more than 75,000 of usage.
11. Requires ARB, no later than July 1, 2019, and every year thereafter, to collect the following information for EFMP and Plus-Up and report it on their Internet Website:
    1. Program performance relative to established goals;
    2. Program allocations and expenditures by region;
    3. Program performance analysis, by air district, for the replacement component;
    4. Information on districts with program backlogs or waitlists along with recommendations on how to eliminate them; and,
    5. Evaluation of the funding for targeted outreach in low-income or disadvantaged communities (DACs) including whether or not funding should be enhanced or modified to reach established program goals.
12. Provides that, upon appropriation by the Legislature, ARB may allocate monies for the expansion of the replacement component or the mobility option component for either EFMP or Plus-Up from specified funding sources.
13. Revises and recasts existing EFMP requirements.
14. Defines a variety of terms.

EXISTING LAW:

1. Establishes the Clean Air Act, pursuant to federal law, that requires the U.S. Environmental Protection Agency (EPA) to establish National Ambient Air Quality Standards (NAAQS) for certain air pollutants due to their negative impact on public health above specified concentrations and provides that regions that do not meet the national standards for any one of the standards are designated as non-attainment areas.
2. Establishes the Global Warming Solutions Act of 2006, AB 32 (Núñez), Chapter 244, Statutes of 2006, 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.
3. Ensures that statewide GHG emissions are reduced to at least 40% below the 1990 level by 2030, pursuant to SB 32 (Pavley), Chapter 249, Statutes of 2016.

1. Establishes the smog check program, administered by BAR that generally requires vehicles registered in non-attainment areas to undergo emission inspections. Specifically, vehicle owners must have their vehicles tested every two years, with some exceptions, including gas-powered vehicles manufactured prior to 1976, alternatively-fueled vehicles, and vehicles six years old or newer.
2. Establishes the Consumer Assistance Program (CAP) under BAR, that provides assistance to low-income owners of vehicles that have failed a smog test in the form of a repair cost waiver, repair cost assistance, or a monetary incentive of up to $1,500 to “retire” (scrap) the vehicle.
3. Establishes EFMP, administered by the state ARB and BAR to provide for the voluntary retirement of passenger vehicles and light- and medium-duty trucks that are high polluters.
4. Establishes the Charge Ahead Initiative administered by ARB with the goals of reaching at least one million zero-emission (ZEV) and near-zero-emission (NZEV) 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.
   

FISCAL EFFECT: Unknown

COMMENTS: The federal Clean Air Act, and its implementing regulations, are intended to protect public health and environmental quality by reducing pollution from various sources. Under the federal Clean Air Act, EPA establishes NAAQS that apply for outdoor air throughout the country. These federal standards exist for several air pollutants due to their negative impact on public health above specified concentrations, including ozone, particulate matter (PM), nitrogen oxide (NOx), oxides of sulfur (SOx), carbon monoxide, and lead. EPA reviews NAAQS at five-year intervals to ensure that the standards are based on the most recent scientific information. Regions that do not meet the national standards are designated non-attainment areas. The Clean Air Act sets deadlines for attainment based on the severity of non-attainment and requires states to develop comprehensive plans, known as the state implementation plan, to attain and maintain air quality standards for each area designated non-attainment for an NAAQS.

California has some of the most severe air pollution problems in the country. The South Coast and San Joaquin air basins, which contain over half of the state’s population, are extreme non-attainment regions (the highest degree of severity) for ozone pollution and are both non-attainment regions for PM.

Nationally and statewide, the transportation sector is responsible for a major portion of air pollution, and in particular NOx, which contributes to both ozone and PM formation. Across the US, motor vehicles emit more than half of all NOx emissions. In California, the transportation sector accounts for approximately 80% of the NOx emissions, and according to ARB, 75% of vehicular air pollution in the state is caused by just 25% of the fleet.

CAP was created to encourage voluntary accelerated vehicle retirement and provides monetary incentives to vehicle owners to retire older, high-polluting vehicles. Under this program owners who scrap their vehicles are given $1,000 ($1,500 for low income consumers) for vehicles that have failed their last smog test.

EFMP, which is administered by ARB and BAR, provides for the voluntary retirement of passenger vehicles and light- and medium-duty trucks that are high polluters. Unlike CAP, EFMP allows vehicles to be retired without first having to fail a smog test, and offers a $1,000 voucher ($1,500 for low-income owners) to retire a high-polluting vehicle.

The Plus-Up program was administratively initiated as part of the Charge Ahead Initiative of 2014, which called for enhanced retire and replace efforts in extreme non-attainment areas. Plus-Up includes two pilot programs, one in the San Joaquin Valley Air District and the other in the South Coast Air District where low-income vehicle owners who live in one of these districts can get a $2,500 “replacement” voucher in addition to the $1,500 base EFMP “retirement” voucher to either purchase a car that is less than eight years old, or to obtain a public transit voucher. If a qualifying low-income individual lives within a DAC in one of these air districts, and wants to purchase a hybrid, plug-in hybrid, or battery electric vehicle, he or she can “stack” additional incentives on top of the Plus-Up incentives.

The Plus-Up program in the San Joaquin Valley (Tune-In Tune-Up) and in the South Coast Air Quality District (Replace Your Ride) have resulted in the retirement hundreds of high-polluting vehicles. Both programs have unique advertising and outreach methods to reach low- and moderate-income vehicle owners and get them to participate. Some of the most successful methods include "events” where individuals can obtain a free smog test and undergo pre-screenings to determine whether they are eligible for various incentives. This bill seeks to encourage methods used by both programs that result in the most successful outreach possible so that the highest-polluting vehicles receive priority.

Committee comments: The author points out that Plus-Up has been instrumental in reducing GHG emissions and improving air quality in two non-attainment areas of the state (the San Joaquin Valley and the South Coast Air) by providing added incentive for low- and moderate income individuals living in DACs to retire their high-polluting vehicles and replace them with cleaner cars. While these programs have been beneficial in these areas, the author believes that these programs would be helpful in keeping other large metropolitan areas from slipping into non-attainment status. For this reason, the author has introduced this bill to authorize the expansion of Plus-Up into other areas of the state. Additionally, the author has included added provisions in the bill that he believes would improve both EFMP and Plus-Up with respect to enhanced legislative oversite and increased attention to program goal setting, performance, and reporting.

This bill is similar to a bill introduced by the author last year (AB 1965) that would have, among other things, expanded Plus-Up to areas in the state with one million or more residents. Since the failure of AB 1965 in the Senate Environmental Quality Committee last year, ARB used its administrative authority to expanded Plus-Up in accordance with requirements set forth in AB 1965. To date, three air districts in California have initiated draft Plus-Up implementation plans and the programs are expected to begin this summer in the San Francisco Bay Area, the Sacramento region, and in San Diego and its environs.

Despite the fact that expansion of Plus-Up is already underway, this bill would add value by codifying Plus-Up in statute and providing important program direction to ensure that both EFMP and Plus-Up provide maximum GHG reductions and air quality benefits in DACs. For example, this bill would require ARB to establish goals and performance metrics and to report annually on progress toward meeting those goals. Additionally, this bill would require ARB to also report on with respect to program expenditures overall and by region. The effect of requiring ARB to establish clear goals and performance metrics for EFMP and Plus-Up and to report annually will provide much needed transparency and accountability and ensure that program dollars are being put to their highest and best use.

Related legislation: AB 188 (Salas) would update EFMP guidelines to make the program applicable to light-duty pickup trucks that have the same mile per gallon standard as minivans that are currently authorized under the program. AB 188 is awaiting a hearing by this committee.

AB 193 (Cervantes) would create a vehicle rebate program for used ZEVs and NZEVs.
AB 193 is awaiting a hearing by this committee.

AB 615 (Cooper) addresses provisions related to the Clean Air Vehicle Rebate Project ensuring that income "caps" remain in place and that the program continues to provide additional benefits for low-income residents of the state. AB 615 is scheduled to be heard by this committee on March 20, 2017.

Previous legislation: AB 32 (Núñez), Chapter 244, Statutes of 2006, requires ARB to determine the 1990 statewide 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.

AB 1691 (Gipson) of 2016, would have directed ARB to update the EFMP guidelines to reduce and eliminate backlogs and waitlists for Plus-Up, and prioritize older, higher-polluting vehicles for incentives. AB 1691 was held on the Senate Appropriations Committee suspense file.

AB 1965 (Cooper) of 2016, would have required ARB to update EFMP guidelines by July 1, 2018, expanded Plus-Up to include additional air districts, and included the development and reporting of program performance metrics. AB 1965 failed passage in the Senate Environmental Quality Committee.

SB 32 (Pavley), Chapter 249, Statutes of 2016, requires the ARB to ensure that statewide GHG emissions are reduced to at least 40% below the 1990 level by 2030.

SB 1275 (de León), Chapter 530, Statutes of 2014, established the Charge Ahead Initiative, to, among other things, provide incentives to increase the availability of ZEVs and NZEVs, particularly to low-income and moderate-income consumers and DACs.

SB 459 (Pavley), Chapter 437, Statutes of 2013, required ARB to update the EFMP guidelines by June 30, 2015 to, among other things, focus program assistance on lower-income vehicle owners.

REGISTERED SUPPORT / OPPOSITION:

Support

None on file

Opposition

None on file

Analysis Prepared by: Victoria Alvarez / TRANS. /