Existing law requires all new state fleet purchases made by the Department of General Services and other state entities of certain passenger vehicles and light-duty trucks to meet the fuel economy standard established by the department, in consultation with the State Energy Resources Conservation and Development Commission. Existing law requires the Secretary of Government Operations, in consultation with the department and other state agencies, to develop and implement a plan to improve the overall state fleets use of alternative fuels, synthetic lubricants, and fuel-efficient vehicles by reducing or displacing the consumption of petroleum products by the state fleet.

This bill would, except as provided, require, beginning December 31, 2025, at least 15% of newly purchased vehicles with a gross vehicle weight rating of 19,000 pounds or more purchased by the department and other state entities for the state fleet to be zero emission, and beginning December 31, 2030, at least 30% of those vehicles to be zero emission. The bill would require, if the department finds, in a public hearing on or after December 31, 2026, that it cannot meet the needs of the state while meeting this requirement, the department to disclose this finding at the hearing and to the Legislature. The bill would require, upon disclosure of this finding, the department to take certain steps to address the issues preventing the department and other state agencies from meeting this state fleet requirement. The bill would require, after a specified time period, if the department finds, in a public hearing, that it still cannot meet the needs of the state after taking those steps, the department to disclose this finding at the hearing and to the Legislature. The bill would provide that the requirement would be inoperative on the latter date on which the department notifies the Legislature.

Existing law requires all new state fleet purchases made by the Department of General Services and other state entities of certain passenger vehicles and light-duty trucks to meet the fuel economy standard established by the department, in consultation with the State Energy Resources Conservation and Development Commission. Existing law requires the Secretary of Government Operations, in consultation with the department and other state agencies, to develop and implement a plan to improve the overall state fleets use of alternative fuels, synthetic lubricants, and fuel-efficient vehicles by reducing or displacing the consumption of petroleum products by the state fleet.

This bill would, except as provided, require, beginning December 31, 2025, at least 15% of newly purchased vehicles with a gross vehicle weight rating of 19,000 pounds or more purchased by the department and other state entities for the state fleet to be zero emission, and beginning December 31, 2030, at least 30% of those vehicles to be zero emission. The bill would require, if the department finds, in a public hearing on or after December 31, 2026, that it cannot meet the needs of the state while meeting this requirement, the department to disclose this finding at the hearing and to the Legislature. The bill would require, upon disclosure of this finding, the department to take certain steps to address the issues preventing the department and other state agencies from meeting this state fleet requirement. The bill would require, after a specified time period, if the department finds, in a public hearing, that it still cannot meet the needs of the state after taking those steps, the department to disclose this finding at the hearing and to the Legislature. The bill would provide that the requirement would be inoperative on the latter date on which the department notifies the Legislature.

Existing law requires all new state fleet purchases made by the Department of General Services and other state entities of certain passenger vehicles and light-duty trucks to meet the fuel economy standard established by the department, in consultation with the State Energy Resources Conservation and Development Commission. Existing law requires the Secretary of the Government Operations Agency, Operations, in consultation with the department and other state agencies, to develop and implement a plan to improve the overall state fleets use of alternative fuels, synthetic lubricants, and fuel-efficient vehicles by reducing or displacing the consumption of petroleum products by the state fleet.

This bill would, except as provided, require, beginning December 31, 2025, at least 15% of newly purchased vehicles with a gross vehicle weight rating of 19,000 pounds or more purchased by the department and other state entities for the state fleet to be zero-emission zero emission and beginning December 31, 2030, at least 30% of those vehicles to be zero-emission. zero emission. The bill would require, if the department finds, in a public hearing, hearing on or after December 31, 2026, that it cannot meet the needs of the state while meeting this requirement, the department to disclose this finding at the hearing and to the Legislature. The bill would require, upon disclosure of this finding, the department to take certain steps to address the issues preventing the department and other state agencies from meeting the state fleet requirement. The bill would require, after a specified time period, if the department finds, in a public hearing, that it still cannot meet the needs of the state after taking those steps, the department to disclose this finding at the hearing and to the Legislature. The bill would provide that the requirement would be inoperative on the date on which the department notifies the Legislature.

Existing law requires all new state fleet purchases made by the Department of General Services and other state entities of certain passenger vehicles and light-duty trucks to meet the fuel economy standard established by the department, in consultation with the State Energy Resources Conservation and Development Commission. Existing law requires the Secretary of the Government Operations Agency, in consultation with the department and other state agencies, to develop and implement a plan to improve the overall state fleets use of alternative fuels, synthetic lubricants, and fuel-efficient vehicles by reducing or displacing the consumption of petroleum products by the state fleet.

This bill would, except as provided, require, by beginning December 31, 2025, at least 15% of newly purchased vehicles with a gross vehicle weight rating of 19,000 pounds or more purchased by the department and other state entities for the state fleet to be zero-emission and by beginning December 31, 2030, at least 30% of those vehicles to be zero-emission. The bill would require, if the department finds, in a public hearing, that it cannot meet the needs of the state while meeting this requirement, the department to disclose this finding at the hearing and to the Legislature. The bill would provide that the requirement would be inoperative on the date on which the department notifies the Legislature.

Existing law requires all new state fleet purchases made by the Department of General Services and other state entities of certain passenger vehicles and light-duty trucks to meet the fuel economy standard established by the department, in consultation with the State Energy Resources Conservation and Development Commission. Existing law requires the Secretary of the Government Operations Agency, in consultation with the department and other state agencies, to develop and implement a plan to improve the overall state fleets use of alternative fuels, synthetic lubricants, and fuel-efficient vehicles by reducing or displacing the consumption of petroleum products by the state fleet.

This bill would, except as provided, require, by December 31, 2025, at least 15% of vehicles with a gross vehicle weight rating of 19,000 pounds or more purchased by the department and other state entities for the state fleet to be zero-emission and by December 31, 2030, at least 30% of those vehicles to be zero-emission. The bill would require, if the department finds, in a public hearing, that it cannot meet the needs of the state while meeting this requirement, the department to disclose this finding at the hearing and to the Legislature. The bill would provide that the requirement would be inoperative on the date on which the department notifies the Legislature.

Existing law requires all new state fleet purchases made by the Department of General Services and other state entities of certain passenger vehicles and light-duty trucks to meet the fuel economy standard established by the department, in consultation with the State Energy Resources Conservation and Development Commission. Existing law requires the Secretary of the Government Operations Agency, in consultation with the department and other state agencies, to develop and implement a plan to improve the overall state fleets use of alternative fuels, synthetic lubricants, and fuel-efficient vehicles by reducing or displacing the consumption of petroleum products by the state fleet.

This bill would would, except as provided, require, by December 31, 2025, at least 15% of vehicles with a gross vehicle weight rating of 19,000 pounds or more purchased by the department and other state entities for the state fleet to be zero-emission and by December 31, 2030, at least 30% of heavy-duty those vehicles purchased by the department and other state agencies for the state fleet to be zero-emission.

Existing law requires all new state fleet purchases made by the Department of General Services and other state entities of certain passenger vehicles and light-duty trucks to meet the fuel economy standard established by the department, in consultation with the State Energy Resources Conservation and Development Commission. Existing law requires the Secretary of the Government Operations Agency, in consultation with the department and other state agencies, to develop and implement a plan to improve the overall state fleets use of alternative fuels, synthetic lubricants, and fuel-efficient vehicles by reducing or displacing the consumption of petroleum products by the state fleet.

This bill would require, by December 31, 2030, at least 30% of heavy-duty vehicles purchased by the department and other state agencies for the state fleet to be zero-emission.

CONCURRENCE IN SENATE AMENDMENTS

CSA1 Bill Id:AB 739

Author:(Chau)

As Amended Ver:September 1, 2017

Majority vote

Original Committee Reference: A. & A.R.

SUMMARY: Requires at least 15% of specified heavy-duty (HD) vehicles newly purchased by state agencies to be zero-emission (ZEV) beginning in 2025, and at least 30% of those vehicles to be ZEV beginning in 2030.

The Senate amendments:

1. Specify additional procedures for the Department of General Services (DGS) to follow, including a requirement to conduct a technological assessment, if it finds that it cannot meet the needs of the state while meeting the mandated targets required in this bill.
2. Make other technical and clarifying changes.

EXISTING LAW requires, through Executive Order B-16-2012, 10% of state light-duty fleet purchases to be ZEVs by 2015 and 25% to be ZEVs by 2020.

FISCAL EFFECT: According to the Senate Appropriations Committee:

1. Starting 2025, ongoing costs of $872,000 annually for six newly purchased HD ZEVs per year. Starting 2030, ongoing costs of $1.6 million annually for 11 newly purchased HD ZEVs per year.
2. Unknown, potentially significant cost pressures to DGS if the department determines that it cannot meet the requirements of this bill. These costs would include public hearings, conducting a technological assessment, and developing and implementing a plan to address the implementation issues.

COMMENTS: The Senate amendments require DGS to take additional actions prior to ceasing implementation of this bill. Specifically, the amendments require DGS, upon publicly finding that it cannot meet the needs of the state while meeting the requirements of this bill, to conduct a specified technological assessment of HD ZEVs. The assessment would need to include a plan to address the issues preventing DGS and other state entities from achieving the targets mandated in this bill and the plan would have to be implemented for at least a year. If, after that year, DGS and other state entities still cannot achieve compliance, the Senate amendments provide that DGS shall cease implementation upon disclosing this finding at a public hearing and notifying the Legislature.

Analysis Prepared by: Cassie Royce / A. & A.R. / (916) 319-3600 FN: 0001803

 THIRD READING  

Bill No: AB 739

Author:

:

Vote:

SENATE GOVERNMENTAL ORG. COMMITTEE: 9-4, 7/11/17

AYES: Dodd, Bradford, Galgiani, Glazer, Hill, Hueso, Lara, Mendoza, Portantino

NOES: Berryhill, Cannella, Gaines, Vidak

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

AYES: Lara, Beall, Bradford, Hill, Wiener

NOES: Bates, Nielsen

ASSEMBLY FLOOR: 51-20, 5/31/17 - See last page for vote

SUBJECT:

SOURCE: Author

DIGEST: This bill requires that at least 15 % of specified heavy-duty vehicles purchased by the Department of General Services (DGS) and other state agencies be zero emission by 2025 and at least 30% of those vehicles purchased be zero emission by 2030.

ANALYSIS:

Existing law:

1. Requires all new state fleet purchases made by DGS and other state entities of certain passenger vehicles and light-duty trucks to meet the fuel economy standard established by DGS, in consultation with the State Energy Resources Conservation and Development Commission.
2. Requires the Secretary of Government Operations, in consultation with DGS and other state agencies, to develop and implement, and submit to the Legislature and the Governor, a plan to improve the overall state fleet’s use of alternative fuels, synthetic lubricants, and fuel-efficient vehicles by reducing or displacing the consumption of petroleum products by the state fleet when compared to the 2003 consumption level based on a specified schedule.
3. Sets, pursuant to Executive Order B-16-2012, a target of one million zero emission vehicles (ZEVs) on California’s roads by 2020 and 1.5 million by 2025. Included in the Executive Order, was a requirement that, California's state vehicle fleet increase the number of its ZEVs through the normal course of fleet replacement so that at least 10% of fleet purchases of light-duty vehicles be zero emission by 2015 and at least 25% of fleet purchases of light-duty vehicles be zero emission by 2020.
4. Defines “heavy-duty” as a vehicle with a manufacturer's gross vehicle weight rating of 8,501 pounds or more.
5. Establishes the Air Quality Improvement Program (AQIP), administered by the California Air Resources Board (ARB), to fund projects that reduce criteria air pollutants, improve air quality, and provide research for alternative fuels and vehicles, vessels, and equipment technologies. The two primary programs adopted by ARB pursuant to AQIP are the Clean Vehicle Rebate Project and the Hybrid and Zero Emissions Truck and Bus Voucher Incentive Program.
6. Establishes the Alternative and Renewable Fuel and Vehicle Technology Program, administered by the California Energy Commission, to provide grants and other financial incentives to accelerate the development and deployment of clean, efficient, low carbon alternative fuels and technologies.
7. Establishes the Carl Moyer Memorial Air Quality Standards Attainment Program, administered by ARB and local air districts, to fund the incremental cost of cleaner-than-required vehicles, engines, and equipment. The primary objective of the program is to achieve air quality emission reductions that would not otherwise occur through regulations or other legal mandates.
8. Requires ARB, pursuant to California Global Warming Solutions Act of 2006, to adopt a statewide greenhouse gas (GHG) emissions limit equivalent to 1990 levels by 2020 and adopt regulations to achieve maximum technologically feasible and cost-effective GHG emission reductions. Further, requires ARB, pursuant to SB 32 (Pavley, Chapter 249, Statutes of 2016) to ensure that statewide GHG emissions are reduced to at least 40% below 1990 levels by 2030.
9. Establishes the Greenhouse Gas Reduction Fund and requires all moneys, except for fines and penalties, collected by ARB from the auction or sale of allowances pursuant to a market-based compliance mechanism to be deposited into the fund and available for appropriation by the Legislature.
10. Requires that the Greenhouse Gas Reduction Fund Investment Plan allocate a minimum of 25% of the available moneys in the Greenhouse Gas Reduction Fund to projects that provide benefits to disadvantaged communities and a minimum of 10% of the available moneys to projects located within identified disadvantaged communities.
11. Establishes the Clean Truck Program to use Greenhouse Gas Reduction Fund moneys for development, demonstration, pre-commercial pilot, and early commercial deployment of zero and near-zero emission truck, bus, and off-road vehicle and equipment technologies including, but not necessarily limited to, medium- and heavy-duty trucks, vocational trucks, short-haul and long-haul trucks, buses, and off-road vehicles and equipment, port equipment, agricultural equipment, marine equipment, and rail equipment.

This bill:

1. Requires that by December 31, 2025, at least 15% of vehicles with a gross vehicle weight rating of 19,000 pounds or more purchased by DGS and other state entities for the state fleet be zero emission.
2. Requires that by December 31, 2030, at least 30% of vehicles with a gross vehicle weight rating of 19,000 pounds or more purchased by DGS and other state entities for the state fleet be zero emission.
3. Exempts vehicles that have special performance requirements necessary for the protection of public safety, as defined by DGS.
4. States that if, on or after December 31, 2026, DGS, in a public hearing, finds that it cannot meet the needs of the state while meeting the requirements of this bill, DGS shall disclose that finding at the hearing and shall notify the Legislature of the finding, as specified.
5. Specifies the procedures that DGS must follow if the department finds that it cannot meet the needs of the state while meeting the requirements set forth in the bill.
6. Provides that the requirements outlined in this bill would be inoperative on the date on which DGS notifies the Legislature and repealed on January 1 of the following year.

Background

Purpose of the bill. According to the author’s office, “fossil fuel trucks and buses produce disproportionately higher GHG and air pollution emissions. Heavy-duty vehicles account for 33% of California’s smog-causing nitrogen oxides emissions and 40% of the harmful particulate matter created by burning fossil fuels. More and more manufacturers are developing commercially-available advanced technologies, like battery electric trucks and buses, which can more efficiently perform the same jobs without emitting any pollutants or GHGs into the air.”

The author’s office notes that California is home to the majority of the nation’s most polluted urban areas, and communities closest to ports, rail yards, freeways, distribution centers, and other freight hot spots bear the greatest health burdens. ARB estimates that pollution from goods movement causes $20 billion in health damages per year in the form of 2,200 deaths and over 1,200 hospital and emergency room visits. As the freight sector continues to expand and California residents face air pollution challenges, the author’s office contends that support for advanced technologies is needed to secure healthy air. Further, the author’s office provided information indicating that opportunities for deploying heavy-duty ZEVs are growing quickly in California, and that battery electric and hydrogen fuel cell electric zero‐emission technologies are available today. Further, as technology continues to evolve it is expected that there will be more to come in every class of vehicle.

Additionally, the author’s office states that, “several companies have elected to locate their manufacturing facilities in California because of its climate policies and programs. Indeed, California is already seeing these vehicles, including those in the super-heavy Class 8 category, in action at rail, port and goods distribution facilities across the state. Many of these deployments are supported by proceeds from the Cap and Trade program.”

Executive Order. In 2012, Governor Brown issued Executive Order B-16-2012, which called for 1.5 million ZEVs to be on the road in California by 2025, as a means of helping the state reach its GHG emissions reduction goals.

The Executive Order did not contain any requirements for larger, heavy-duty trucks and buses. This bill seeks to establish phased-in targets for incorporating more ZEVs into the state’s heavy-duty fleet.

ZEV Action Plan. To continue the momentum initiated by the Executive Order, the Governor's Office convened an interagency working group that culminated in the release of the 2013 ZEV Action Plan. The ZEV Action Plan, which was updated in 2016, established goals for the advancement of ZEVs and outlined strategies to achieve those goals.

The 2016 ZEV Action Plan stated that while light-duty ZEVs are the most viable step forward toward transportation electrification, the state’s transportation and climate goals require a broad, multi-modal approach to transportation electrification beyond individual passenger vehicles.

Further, the 2016 ZEV Action Plan notes that to spur additional innovation and broader transportation electrification, several state programs are aimed at accelerating development and commercialization of near zero- or zero emission applications for medium and heavy-duty vehicles. The California Hybrid and Zero Emission Truck and Bus Voucher Incentive Program, administered by the ARB, provides vouchers to help California fleet owners purchase hybrid and ZEV trucks and buses. In addition, the Alternative Renewable Fuel and Vehicle Technology Program provides grant funding to develop innovative medium- and heavy-duty technologies. This bill seeks to expand transportation electrification by fostering heavy-duty ZEV deployment.

Expanding use of ZEVs in state government. State agencies fulfilled the Governor’s Executive Order directive that ZEVs must comprise 10% of state light-duty fleet purchases by 2015. For fiscal year 2014/2015, ZEVs accounted for 11.74 % of the state’s light-duty fleet purchases.

Currently, there are no mandates in place for heavy-duty ZEVs, which this bill seeks to address. DGS reports that, currently, 38 % of the state's vehicle fleet is comprised of heavy-duty vehicles. DGS considers any vehicle with a gross vehicle weight rating of 8,501 pounds and up to be heavy-duty. Specifically, this bill applies a phased-in state fleet mandate of 15% heavy-duty ZEVs by 2025 and 30% by 2030 to vehicles with a gross vehicle weight rating of at least 19,000 pounds. Examples of these types of vehicles include various delivery and storage trucks, buses, garbage trucks, and cement or dump trucks.

In June 2016, DGS reported that it executed statewide contracts for heavy-duty ZEV trucks for state entities to purchase. To date, no state departments have utilized these contracts due to the high cost and limited mileage range and battery life associated with these vehicles. DGS estimates these ZEVs range in price from $165,000 to $254,000 per vehicle, compared to costs ranging from $41,000 to $81,000 for a conventional heavy-duty. These factors could make it potentially cost prohibitive and operationally difficult for state entities to purchase these types of ZEVs, even with the pricing offset by Hybrid and Zero Emission Truck and Bus Voucher Incentive Program vouchers.

The author’s office notes that despite higher purchase costs, electric vehicles can reduce the total cost of owning heavy-duty vehicles through lower fuel and maintenance costs. Further, the bill applies only to new vehicles purchased.

Related/Prior Legislation

SB 498 (Skinner, 2017) requires, among other things, DGS to ensure that ZEVs comprise at least 50% of the state's light-duty vehicle fleet purchases by the 2024-25 fiscal year. (Pending on the Assembly Floor)

AB 476 (Gipson, 2017) would have redefined "heavy duty" vehicles, for the purposes of the ARB programs, as a vehicle with a gross vehicle weight rating of 26,001 or more pounds. (Failed Passage in Assembly Transportation Committee)

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

SB 1204 (Lara, Chapter 524, Statutes of 2014) created a California Clean Truck, Bus, and Off-Road Vehicle and Equipment Technology Program to fund development, demonstration, precommercial pilot, and early commercial deployment of zero- and near-zero emission truck, bus, and off-road vehicle technologies.

SB 1275 (De León, Chapter 530, Statutes of 2014) established the Charge Ahead California Initiative to provide incentives that increase the availability of ZEVs and near-zero emission vehicles, particularly in disadvantaged and low-and-moderate-income communities.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

According to the Senate Appropriations Committee, starting 2025, ongoing costs of $872,000 annually for six newly purchased heavy-duty ZEVs per year. Starting 2030, ongoing costs of $1.6 million annually for 11 newly purchased heavy-duty ZEVs per year. Additionally, unknown, potentially significant cost pressures to DGS if the department determines that it cannot meet the requirements of the bill. These costs would include public hearings, conducting a technological assessment, and developing and implementing a plan to address the implementation issues.

SUPPORT: (Verified 9/1/17)

Advanced Energy Economy

American Cancer Society Cancer Action Network

American Lung Association

BYD America

California Electric Transportation Coalition

California Environmental Justice Alliance

California Hydrogen Business Council

Coalition for Clean Air

E2 (Environmental Entrepreneurs)

Motiv Power Systems

Natural Resources Defense Council

Proterra

Sierra Club California

Tesla, Inc.

Union of Concerned Scientists

Western States Council of International Association of Sheet Metal, Air, Rail and Transportation Workers

OPPOSITION: (Verified 9/1/17)

Bioenergy Association of California

California Natural Gas Vehicle Association

Clean Energy

Coalition for Renewable Natural Gas

Los Angeles Area Chamber of Commerce

Natural Gas Vehicles for America

ARGUMENTS IN SUPPORT: Supporters contend that in California, transportation is the largest source of air pollution and emissions. The Coalition for Clean Air states that, “by requiring at least 30% of heavy-duty purchased by state agencies for their fleets to be zero emission by the end of 2030, AB 739 can also play an important part in helping California meet multiple federal and state environmental standards that are critical to improving air quality and public health.”

Further, supporters state that, this bill “keeps California at the forefront of reducing air pollutants and GHG emissions. In addition to reducing air and climate pollution, and improving public health, AB 739 will help sustain and create jobs in California, drive innovation in heavy-duty ZEV market, and showcase California’s continued leadership in the fight for clean air and climate protection.”

ARGUMENTS IN OPPOSITION: Opponents from various near-zero industry groups object to this bill unless it is amended to include near-zero heavy-duty vehicles.

Clean Energy states that, “without sufficient representation of near-zero vehicles in statute, this bill is picking winners and losers. Furthermore, without the inclusion of near-zero vehicles, a vacuum would persist where the state would be able to continue using dirty diesel vehicles in perpetuity for up to 70% of the fleet. ARB supports near-zero emission vehicles as part of their strategy to improve air quality and meet the state’s environmental goals. This bill would go against state policy. In addition, it would send the wrong signal to the near-zero marketplace as business decisions are made and investment certainty is imperative.”

ASSEMBLY FLOOR: 51-20, 5/31/17

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

NOES: Acosta, Travis Allen, Bigelow, Brough, Caballero, Chávez, Dahle, Flora, Fong, Gallagher, Harper, Kiley, Mathis, Mayes, Obernolte, Patterson, Salas, Steinorth, Voepel, Waldron

NO VOTE RECORDED: Chen, Choi, Cunningham, Eggman, Gray, Melendez, Quirk, Rodriguez, Rubio

Prepared by:

9/4/17 12:33:35

**** END ****

SENATE COMMITTEE ON APPROPRIATIONS

Senator Ricardo Lara, Chair

2017 - 2018 Regular Session

AB 739 (Chau) - State vehicle fleet: purchases

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

The following information is revised to reflect amendments

adopted by the committee on September 1, 2017

Bill Summary:

AB 739 would require that, beginning December 31, 2025, at least 15% of specified heavy-duty vehicles, newly purchased by the Department of General Services (DGS) and other state agencies for the state fleet be zero emission, and beginning December 31, 2030, at least 30% of those newly purchased vehicles be zero emission.

Fiscal Impact:

• Starting 2025, ongoing costs of $872,000 annually for six newly purchased heavy-duty zero-emission vehicles (ZEVs) per year. Starting 2030, ongoing costs of $1.6 million annually for 11 newly purchased heavy-duty zero-emission vehicles (ZEVs) per year.
• Unknown, potentially significant cost pressures to DGS if the department determines that it cannot meet the requirements of the bill. These costs would include public hearings, conducting a technological assessment, and developing and implementing a plan to address the implementation issues.

Author Amendments:

• Specifies the procedures that DGS must follow if the department finds that it cannot meet the needs of the state while meeting the bill’s requirements.
• Makes technical and clarifying changes.

-- END --

SENATE COMMITTEE ON

Senator Ricardo Lara, Chair

2017 - 2018 Regular Session

AB 739 (Chau) - State vehicle fleet: purchases

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

Bill Summary:

AB 739 would require that, beginning December 31, 2025, at least 15% of specified heavy-duty vehicles, newly purchased by the Department of General Services (DGS) and other state agencies for the state fleet be zero-emission, and beginning December 31, 2030, at least 30% of those newly purchased vehicles be zero-emission.

Fiscal Impact:

• Starting 2025, ongoing costs of $872,000 annually for six newly purchased heavy-duty zero-emission vehicles (ZEVs) per year. Starting 2030, ongoing costs of $1.6 million annually for 11 newly purchased heavy-duty zero-emission vehicles (ZEVs) per year.

Background:

In 2012, Governor Brown issued an Executive Order which called for 1.5 million ZEVs to be on the road in California by 2025, as a means of helping the state reach its greenhouse gas (GHG) emission reduction goals. The Executive Order included a requirement that California’s state vehicle fleet increase the number of its ZEVs so that at least 10% of fleet purchases of light-duty vehicles be zero-emission 2015 and at least 25% of such purchases be zero emission by 2020. The Executive Order, however, did not contain any requirements for larger, heavy-duty trucks and buses.

The Governor’s Office convened an interagency working group that released the 2013 ZEV Action Plan. The ZEV Action Plan established goals for the advancement of ZEVs and outlined strategies to achieve those goals, and the updated 2016 ZEV Action Plan highlighted “making ZEV technologies commercially viable in targeted applications the medium-duty, heavy-duty and freight sectors,” as a priority. The California Hybrid and Zero-Emission Truck and Bus Voucher Incentive Program, administered by the ARB, provides vouchers to help California fleet owners purchase hybrid and ZEV trucks and buses. Additionally, the Alternative Renewable Fuel and Vehicle Technology Program provides grant funding to develop innovative medium- and heavy-duty technologies.

In June 2016, DGS reported that it executed statewide contracts for heavy-duty ZEV trucks for state entities to purchase. To date, no state departments have utilized these contracts due to the high cost and limited mileage range and battery life associated with these vehicles. DGS estimates these ZEVs range in price from $165,000 to $254,000 per vehicle, compared to costs ranging from $41,000 to $81,000 for a conventional heavy-duty vehicle.

DGS reports that currently, 38% of the state’s vehicle fleet is composed of heavy-duty vehicles (vehicles with a gross vehicle weight rating (GVWR) of at least 8,501 pounds).

Proposed Law:

This bill would require that, beginning December 31, 2025, at least 15% of newly purchased vehicles with a GVWR of 19,000 pounds or more (except vehicles that have special performance requirements necessary for the protection of public safety) purchased by DGS and other state entities for the state fleet shall be zero-emission, and beginning December 31, 2030, at least 30% of such vehicles be zero-emission. Additionally this bill would provide that if DGS, in a public hearing, finds that it cannot meet the needs of the state while meeting the requirements of this section, DGS shall disclose that finding at the hearing and notify the Legislature of the finding. The provisions of this bill would be inoperative on the date on which DGS notifies the Legislature and is repealed on January 1 of the following year.

Related Legislation:

SB 498 (Skinner, 2017) among other things, would require DGS to ensure that ZEVs comprise at least 50% of the state's light-duty vehicle fleet purchases FY 2024-25. This bill is pending in the Assembly Appropriations Committee Suspense File.

AB 476 (Gipson, 2017) would have redefined "heavy duty" vehicles, for the purposes of the ARB programs, as a vehicle with a gross vehicle weight rating of 26,001 or more pounds. This bill failed passage in the Assembly Transportation Committee.

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

SB 1204 (Lara, Chapter 524, Statutes of 2014) created a California Clean Truck, Bus, and Off-Road Vehicle and Equipment Technology Program to fund development, demonstration, precommercial pilot, and early commercial deployment of zero- and near-zero-emission truck, bus, and off-road vehicle technologies.

SB 1275 (de León, Chapter 530, Statutes of 2014) established the Charge Ahead California Initiative to provide incentives that increase the availability of ZEVs and near-zero-emission vehicles, particularly in disadvantaged and low-and-moderate-income communities, specifically requiring the ARB to adopt programs that provide grants for fleet managers to replace polluting medium- and heavy-duty vehicles with cleaner vehicles.

Staff Comments:

Between 2013 and 2016, there was an average of 36 heavy duty vehicles purchased that weighed between 19,000 to 26,000 GVWR. The estimates for the 15% and 30% thresholds were calculated based on an average of 36 newly purchased heavy duty vehicles per year; therefore starting in 2025, six heavy duty ZEVs would be purchased annually, and eleven heavy duty ZEVs purchased annually starting in 2030. ZEVs range in price from $165,000 to $254,000 per vehicle, compared to costs ranging from $41,000 to $81,000 for conventional heavy duty vehicles. Even with the availability of voucher programs, the costs for the zero-emission heavy duty vehicles would likely be significantly more than conventional heavy duty vehicles.

Staff notes that the estimate does not include vehicle maintenance and repairs costs that differ between conventional and zero-emission heavy-duty vehicles.

-- END --

SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION

Senator Bill Dodd

Chair

2017 - 2018 Regular

Bill No: AB Hearing Date: 7/11/2017

SUBJECT:

DIGEST: This bill requires that at least 15 percent of specified heavy-duty vehicles purchased by the Department of General Services (DGS) and other state agencies be zero-emission by 2025 and at least 30 percent of those vehicles purchased be zero-emission by 2030.

ANALYSIS:

Existing law:

1. Requires all new state fleet purchases made by DGS and other state entities of certain passenger vehicles and light-duty trucks to meet the fuel economy standard established by DGS, in consultation with the State Energy Resources Conservation and Development Commission.
2. Requires the Secretary of the Government Operations Agency, in consultation with DGS and other state agencies, to develop and implement, and submit to the Legislature and the Governor, a plan to improve the overall state fleet’s use of alternative fuels, synthetic lubricants, and fuel-efficient vehicles by reducing or displacing the consumption of petroleum products by the state fleet when compared to the 2003 consumption level based on the following schedule:
   1. By January 1, 2012, a 10 percent reduction or displacement.
   2. By January 1, 2020, a 20 percent reduction or displacement.
3. Sets, pursuant to Executive Order B-16-2012, a target of one million zero-emission vehicles (ZEVs) on California’s roads by 2020 and 1.5 million by 2025. Included in the Executive Order, was a requirement that, California's state vehicle fleet increase the number of its ZEVs through the normal course of fleet replacement so that at least 10 percent of fleet purchases of light-duty vehicles be zero-emission by 2015 and at least 25 percent of fleet purchases of light-duty vehicles be zero-emission by 2020.
4. Defines “heavy-duty” as a vehicle with a manufacturer's gross vehicle weight rating of 8,501 pounds or more.
5. Establishes the Air Quality Improvement Program (AQIP), administered by the California Air Resources Board (ARB), to fund projects that reduce criteria air pollutants, improve air quality, and provide research for alternative fuels and vehicles, vessels, and equipment technologies. The two primary programs adopted by ARB pursuant to AQIP are the Clean Vehicle Rebate Project and the Hybrid and Zero Emissions Truck and Bus Voucher Incentive Program.
6. Establishes the Alternative and Renewable Fuel and Vehicle Technology Program, administered by the California Energy Commission, to provide grants and other financial incentives to accelerate the development and deployment of clean, efficient, low carbon alternative fuels and technologies.
7. Establishes the Carl Moyer Memorial Air Quality Standards Attainment Program, administered by ARB and local air districts, to fund the incremental cost of cleaner-than-required vehicles, engines, and equipment. The primary objective of the program is to achieve air quality emission reductions that would not otherwise occur through regulations or other legal mandates.
8. Requires ARB, pursuant to California Global Warming Solutions Act of 2006, to adopt a statewide greenhouse gas (GHG) emissions limit equivalent to 1990 levels by 2020 and adopt regulations to achieve maximum technologically feasible and cost-effective GHG emission reductions. Further, requires ARB, pursuant to SB 32 (Pavley, Chapter 249, Statutes of 2016) to ensure that statewide GHG emissions are reduced to at least 40 percent below 1990 levels by 2030.
9. Establishes the Greenhouse Gas Reduction Fund and requires all moneys, except for fines and penalties, collected by ARB from the auction or sale of allowances pursuant to a market-based compliance mechanism to be deposited into the fund and available for appropriation by the Legislature.
10. Requires that the Greenhouse Gas Reduction Fund Investment Plan allocate a minimum of 25 percent of the available moneys in the Greenhouse Gas Reduction Fund to projects that provide benefits to disadvantaged communities and a minimum of 10 percent of the available moneys to projects located within identified disadvantaged communities.
11. Establishes the Clean Truck Program to use Greenhouse Gas Reduction Fund moneys for development, demonstration, pre-commercial pilot, and early commercial deployment of zero- and near-zero-emission truck, bus, and off-road vehicle and equipment technologies including, but not necessarily limited to, medium- and heavy-duty trucks, vocational trucks, short-haul and long-haul trucks, buses, and off-road vehicles and equipment, port equipment, agricultural equipment, marine equipment, and rail equipment.

This bill:

1. Requires that by December 31, 2025, at least 15 percent of vehicles with a gross vehicle weight rating of 19,000 pounds or more purchased by DGS and other state entities for the state fleet be zero-emission.
2. Requires that by December 31, 2030, at least 30 percent of vehicles with a gross vehicle weight rating of 19,000 pounds or more purchased by DGS and other state entities for the state fleet be zero-emission.
3. Exempts vehicles that have special performance requirements necessary for the protection of public safety, as defined by DGS.
4. States that if DGS, in a public hearing, finds that it cannot meet the needs of the state while meeting the requirements of this bill, DGS shall disclose that finding at the hearing and shall notify the Legislature of the finding, as specified.
5. Provides that the requirements outlined in this bill would be inoperative on the date on which DGS notifies the Legislature and repealed on January 1 of the following year.

Background

Purpose of the bill. According to the author’s office, “fossil fuel trucks and buses produce disproportionately higher GHG and air pollution emissions. Heavy-duty vehicles account for 33 percent of California’s smog-causing nitrogen oxides, or NOx, emissions and 40 percent of the harmful particulate matter created by burning fossil fuels. More and more manufacturers are developing commercially-available advanced technologies, like battery electric trucks and buses, which can more efficiently perform the same jobs without emitting any pollutants or GHGs into the air.”

The author’s office notes that California is home to the majority of the nation’s most polluted urban areas, and communities closest to ports, rail yards, freeways, distribution centers, and other freight hot spots bear the greatest health burdens. ARB estimates that pollution from goods movement causes $20 billion in health damages per year in the form of 2,200 deaths and over 1,200 hospital and emergency room visits. As the freight sector continues to expand and California residents face air pollution challenges, the author’s office contends that support for advanced technologies is needed to secure healthy air. Further, the author’s office provided information indicating that opportunities for deploying heavy-duty ZEVs are growing quickly in California, and that battery electric and hydrogen fuel cell electric zero‐emission technologies are available today. Further, as technology continues to evolve it is expected that there will be more to come in every class of vehicle.

Additionally, the author’s office states that, “several companies have elected to locate their manufacturing facilities in California because of its climate policies and programs. Indeed, California is already seeing these vehicles, including those in the super-heavy Class 8 category, in action at rail, port and goods distribution facilities across the state. Many of these deployments are supported by proceeds from the Cap and Trade program.”

Lastly, the author’s office states that, “AB 739 builds upon the Governor’s 2012 Executive Order by setting a requirement for the state’s heavy-duty vehicle fleet to be comprised of more ZEVs. This will help create jobs and a market that fosters heavy-duty ZEV development, provide for more fuel efficient vehicles, help the state meet its GHG emission reduction goals, and ensure the state is doing its part to meet those goals.”

Executive Order. In 2012, Governor Brown issued Executive Order B-16-2012, which called for 1.5 million ZEVs to be on the road in California by 2025, as a means of helping the state reach its GHG emissions reduction goals.

As mentioned, the Executive Order further included a requirement that, California's state vehicle fleet increase the number of its ZEVs so that at least 10 percent of fleet purchases of light-duty vehicles be zero-emission by 2015 and at least 25 percent of fleet purchases of light-duty vehicles be zero-emission by 2020.

The Executive Order did not contain any requirements for larger, heavy-duty trucks and buses. This bill seeks to establish phased-in targets for incorporating more ZEVs into the state’s heavy-duty fleet.

ZEV Action Plan. To continue the momentum initiated by the Executive Order, the Governor's Office convened an interagency working group that culminated in the release of the 2013 ZEV Action Plan. The ZEV Action Plan, which was updated in 2016, established goals for the advancement of ZEVs and outlined strategies to achieve those goals. The 2016 ZEV Action Plan highlighted a couple priorities for ZEVs, including, “making ZEV technologies commercially viable in targeted applications the medium-duty, heavy-duty and freight sectors.”

Additionally, the 2016 ZEV Action Plan stated that while light-duty ZEVs are the most viable step forward toward transportation electrification, the state’s transportation and climate goals require a broad, multi-modal approach to transportation electrification beyond individual passenger vehicles.

Further, the 2016 ZEV Action Plan notes that to spur additional innovation and broader transportation electrification, several state programs are aimed at accelerating development and commercialization of near zero- or zero-emission applications for medium and heavy-duty vehicles. The California Hybrid and Zero-Emission Truck and Bus Voucher Incentive Program, administered by the ARB, provides vouchers to help California fleet owners purchase hybrid and ZEV trucks and buses. In addition, the Alternative Renewable Fuel and Vehicle Technology Program provides grant funding to develop innovative medium- and heavy-duty technologies.

This bill seeks to expand transportation electrification by fostering heavy-duty ZEV deployment.

Expanding use of ZEVs in state government. State agencies fulfilled the Governor’s Executive Order directive that ZEVs must comprise 10 percent of state light-duty fleet purchases by 2015. For fiscal year 2014/2015, ZEVs accounted for 11.74 percent of the state’s light-duty fleet purchases.

Currently, there are no mandates in place for heavy-duty ZEVs, which this bill seeks to address. DGS reports that, currently, 38 percent of the state's vehicle fleet is comprised of heavy-duty vehicles. DGS considers any vehicle with a gross vehicle weight rating of 8,501 pounds and up to be heavy-duty. Specifically, this bill would apply a phased-in state fleet mandate of 15 percent heavy-duty ZEVs by 2025 and 30 percent by 2030 to vehicles with a gross vehicle weight rating of at least 19,000 pounds. Examples of these types of vehicles include various delivery and storage trucks, buses, garbage trucks, and cement or dump trucks.

In June 2016, DGS reported that it executed statewide contracts for heavy-duty ZEV trucks for state entities to purchase. To date, no state departments have utilized these contracts due to the high cost and limited mileage range and battery life associated with these vehicles. DGS estimates these ZEVs range in price from $165,000 to $254,000 per vehicle, compared to costs ranging from $41,000 to $81,000 for a conventional heavy-duty. These factors could make it potentially cost prohibitive and operationally difficult for state entities to purchase these types of ZEVs, even with the pricing offset by Hybrid and Zero-Emission Truck and Bus Voucher Incentive Program vouchers.

The author’s office notes that despite higher purchase costs, electric vehicles can reduce the total cost of owning heavy-duty vehicles through lower fuel and maintenance costs. Further, the bill applies only to new vehicles purchased. The Assembly Appropriations committee cited that to meet the 15 percent and 30 percent thresholds, the state would need to purchase six heavy-duty ZEVs annually starting in 2025 and eleven heavy-duty ZEVs annually starting in 2030. The additional cost for these purchases would be approximately $825,000 starting in 2025 and approximately $1.6 million starting in 2030.

Additionally, the bill includes a provision that if the DGS determines that it cannot meet the needs of the state while fulfilling the requirements of this bill, DGS can hold a public hearing to make and disclose that finding, notify the Legislature of the finding, and cease to implement these requirements.

Suggested technical amendments. The author’s office has indicated that the intent of the bill is to be prospective, so that beginning in 2025, 15 percent of new vehicle purchases should be zero-emission. Then, the bill would additionally require that at least 30 percent of new vehicle purchases be zero-emission from 2030 onward.

Given the intent, the author may wish to consider amending the bill as follows:

(a) By Beginning December 31, 2025, at least 15 percent of newly purchased vehicles with a gross vehicle weight rating of 19,000 pounds or more purchased by the Department of General Services and other state entities for the state fleet shall be zero-emission. By Beginning December 31, 2030, at least 30 percent of newly purchased vehicles with a gross vehicle weight rating of 19,000 pounds or more purchased by the Department of General Services and other state entities for the state fleet shall be zero-emission.

Prior/Related Legislation

SB 498 (Skinner, 2017) among other things, would require DGS to ensure that ZEVs comprise at least 50 percent of the state's light-duty vehicle fleet purchases by the 2024-25 fiscal year. (Pending in Assembly Committee on Accountability and Administrative Review)

AB 476 (Gipson, 2017) would have redefined "heavy duty" vehicles, for the purposes of the ARB programs, as a vehicle with a gross vehicle weight rating of 26,001 or more pounds. (Failed Passage in Assembly Transportation Committee)

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

SB 1204 (Lara, Chapter 524, Statutes of 2014) created a California Clean Truck, Bus, and Off-Road Vehicle and Equipment Technology Program to fund development, demonstration, precommercial pilot, and early commercial deployment of zero- and near-zero-emission truck, bus, and off-road vehicle technologies.

SB 1275 (de León, Chapter 530, Statutes of 2014) established the Charge Ahead California Initiative to provide incentives that increase the availability of ZEVs and near-zero-emission vehicles, particularly in disadvantaged and low-and-moderate-income communities. More specifically, the bill required the ARB to adopt programs that provide grants for fleet managers to replace polluting medium- and heavy-duty vehicles with cleaner vehicles.

AB 118 (Núñez, Chapter 750, Statutes of 2007) established the Fleet Modernization Program, the Alternative and Renewable Fuel and Vehicle Technology Program, and the AQIP.

AB 32 (Núñez, Chapter 488, Statutes of 2006) required ARB to develop a plan of how to reduce emissions to 1990 levels by the year 2020 and also required ARB to ensure that, to the extent feasible, GHGs reduction requirement and programs direct public and private investment toward the most disadvantaged communities.

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

SUPPORT:

Advanced Energy Economy

American Cancer Society Cancer Action Network

American Lung Association

BYD America

California Electric Transportation Coalition

California Environmental Justice Alliance

Coalition for Clean Air

E2 (Environmental Entrepreneurs)

Motiv Power Systems

Natural Resources Defense Council

Proterra

Sierra Club California

Tesla, Inc.

Union of Concerned Scientists

Western States Council of International Association of Sheet Metal, Air, Rail and Transportation Workers

OPPOSITION:

Bioenergy Association of California

California Natural Gas Vehicle Association

Clean Energy

Coalition for Renewable Natural Gas

Los Angeles Area Chamber of Commerce

Natural Gas Vehicles for America

ARGUMENTS IN SUPPORT: Supporters content that in California, transportation is the largest source of air pollution and emissions. The Coalition for Clean Air states that, “by requiring at least 30 percent of heavy-duty purchased by state agencies for their fleets to be zero-emission by the end of 2030, AB 739 can also play an important part in helping California meet multiple federal and state environmental standards that are critical to improving air quality and public health.”

Further, supporters state that, this bill “keeps California at the forefront of reducing air pollutants and GHG emissions. In addition to reducing air and climate pollution, and improving public health, AB 739 will help sustain and create jobs in California, drive innovation in heavy-duty ZEV market, and showcase California’s continued leadership in the fight for clean air and climate protection.”

ARGUMENTS IN OPPOSITION: Opponents from various near-zero industry groups object to this bill unless it is amended to include near-zero heavy-duty vehicles.

Clean Energy states that, “without sufficient representation of near-zero vehicles in statute, this bill is picking winners and losers. Furthermore, without the inclusion of near-zero vehicles, a vacuum would persist where the state would be able to continue using dirty diesel vehicles in perpetuity for up to 70 percent of the fleet. ARB supports near-zero emission vehicles as part of their strategy to improve air quality and meet the state’s environmental goals. This bill would go against state policy. In addition, it would send the wrong signal to the near-zero marketplace as business decisions are made and investment certainty is imperative.”

ASSEMBLY THIRD READING

ATR Bill Id:AB 739

Author:(Chau)

As Amended Ver:May 3, 2017

Majority vote

SUMMARY: Requires at least 15% of specified heavy-duty (HD) vehicles purchased by state agencies to be zero-emission (ZEV) by 2025 and at least 30% of those vehicles to be ZEV by 2030. Specifically, this bill:

1. Mandates that at least 15% of vehicles with a gross vehicle weight rating (GVWR) of 19,000 pounds or more purchased by state agencies must be ZEV by December 31, 2025, and at least 30% of those vehicles must be ZEV by December 31, 2030.
2. Exempts vehicles that have special performance requirements necessary for the protection of public safety, as defined by the Department of General Services (DGS), from this bill.
3. Requires DGS to cease implementing this bill if it determines that it cannot meet the mandated targets, as specified.

EXISTING LAW:

1. Requires, through Executive Order B-16-2012, 10% of state light-duty fleet purchases to be ZEVs by 2015 and 25% to be ZEVs by 2020.
2. Establishes the Hybrid and Zero-Emission Truck and Bus Voucher Incentive Project (HVIP), administered by the California Air Resources Board, to provide vouchers to help California fleet owners purchase hybrid and ZEV trucks and buses.

FISCAL EFFECT: According to the Assembly Appropriations Committee, to meet the 15% and 30% thresholds, the state would need to purchase six HD ZEVs annually starting in 2025 and 11 HD ZEVs annually starting in 2030. The additional cost for these purchases would be approximately $825,000 starting in 2025 and approximately $1.6 million starting in 2030.

COMMENTS: This bill establishes phased-in targets for incorporating more ZEVs into the state's HD fleet. ZEVs include plug-in electric vehicles and hydrogen fuel cell electric vehicles. The author states that this bill "will help create jobs and a market that fosters heavy-duty ZEV development, provide for more fuel efficient vehicles, help the State meet its greenhouse gas emissions reduction goals, and ensure the State is doing its part to meet those goals."

DGS reports that, currently, 38% of the state's vehicle fleet is comprised of HD vehicles. DGS considers any vehicle with a GVWR of 8,500 pounds to be HD. This bill would apply a phased-in state fleet mandate of 15% HD ZEVs by 2025 and 30% by 2030 to vehicles with a GVWR of at least 19,000 pounds. Examples of these types of vehicles include various delivery and storage trucks, buses, garbage trucks, and cement or dump trucks.

Current ZEV mandates apply to the state's light duty fleet. Executive Order B-16-2012 requires 10% of state light-duty fleet purchases to be ZEVs by 2015, climbing to 25% by 2020. DGS notes that the state has met the 15% ZEV purchasing goal in both fiscal years 2014-15 and 2015-16 at about 15% and 21%, respectively.

In October 2016, DGS took action to increase the annual ZEV light duty purchasing mandate by 5% beginning in 2017-18. The implementation of this policy is intended to allow departments to slowly ramp up to the 25% goal. DGS indicates that with this incremental ramp up approach and the anticipated availability of plug-in electric sport utility vehicles and vans in 2017 or 2018, the state is expected to be able to meet the 25% ZEV goal in 2020.

Currently, no mandates are in place for HD ZEVs, which this bill seeks to address. However, in September 2015 and again in June 2016, DGS reports that it executed statewide contracts for HD ZEV trucks for state entities to purchase. To date, no state departments have utilized these contracts due to the high cost and limited mileage range and battery life associated with these vehicles. DGS estimates these ZEVs range in price from $165,000 to $254,000 per vehicle, compared to costs ranging from $41,000 to $81,000 for a conventional HD. These factors could make it potentially cost prohibitive and operationally difficult for state entities to purchase these types of ZEVs, even with the pricing offset by HVIP vouchers.

The statewide ZEV Action Plan identifies specific actions for state government to take to build the state's ZEV market. It recognizes that "advancing the full range of electric-drive technologies rather than concentrating on one particular technology provides the state with the greatest opportunity to meet its ZEV goals" and the intent of this bill appears to be in line with that.

Analysis Prepared by: Cassie Royce / A. & A.R. / (916) 319-3600 FN: 0000639

Date of Hearing: May 17, 2017

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez Fletcher, Chair

ABPCA Bill Id:AB 739

Author:(Chau) – As Amended Ver:May 3, 2017

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

SUMMARY:

This bill requires at least 15% of specified heavy-duty (HD) vehicles purchased by state agencies to be zero-emission (ZEV) by 2025 and at least 30% of those vehicles to be ZEV by 2030. Specifically, this bill:

1. Mandates that at least 15% of vehicles with a gross vehicle weight rating (GVWR) of 19,000 pounds or more purchased by state agencies must be ZEV by December 31, 2025, and at least 30% of those vehicles must be ZEV by December 31, 2030.
2. Exempts vehicles that have special performance requirements necessary for the protection of public safety, as defined by the Department of General Services (DGS), from this bill.
3. Requires DGS, if it finds in a public hearing that it cannot meet this requirement, to disclose this finding at the hearing and to the Legislature. The requirement would become inoperative on the date DGS notifies the Legislature.

FISCAL EFFECT

To meet the 15% and 30% thresholds, the state would need to purchase six HD ZEVs annually starting in 2025 and 11 HD ZEVs annually starting in 2030. The additional cost for these purchases would be approximately $825,000 starting in 2025 and approximately $1.6 million starting in 2030.

COMMENTS:

Purpose. This bill establishes phased-in targets for incorporating more ZEVs into the state’s HD fleet. ZEVs include plug-in electric vehicles and hydrogen fuel cell electric vehicles. The author states that this bill "will help create jobs and a market that fosters heavy-duty ZEV development, provide for more fuel efficient vehicles, help the State meet its greenhouse gas emissions reduction goals, and ensure the State is doing its part to meet those goals."

Background. Current ZEV mandates apply to the state's light duty fleet. Executive Order B-16-2012 requires 10% of state light-duty fleet purchases to be ZEVs by 2015, increasing to 25% by 2020. DGS notes that the state has met the 15% ZEV purchasing goal in both fiscal years 2014-15 and 2015-16 at about 15% and 21%, respectively.

In October 2016, DGS increased the annual ZEV light duty purchasing mandate by 5% beginning in 2017-18. This policy is intended to allow departments to slowly ramp up to the 25% goal. DGS indicates that with this approach and the anticipated availability of plug-in electric sport utility vehicles and vans in 2017 or 2018, the state is expected to meet the 25% ZEV goal in 2020.

There are no mandates for HD ZEVs, which this bill seeks to address. In June 2016, DGS executed statewide contracts for HD ZEV trucks for state entities to purchase. To date, no state departments have utilized these contracts due to the high cost and limited mileage range and battery life associated with these vehicles. DGS estimates these ZEVs range in price from $165,000 to $254,000 per vehicle, compared to $41,000 to $81,000 for a conventional HD. These factors make it potentially cost prohibitive and operationally difficult for state entities to purchase these types of ZEVs, even with the pricing offset by HVIP vouchers.

DGS reports that, currently, 38% of the state's vehicle fleet is comprised of HD vehicles. DGS considers any vehicle with a GVWR of 8,500 pounds to be HD. This bill would apply a phased-in state fleet mandate of 15% HD ZEVs by 2025 and 30% by 2030 to vehicles with a GVWR of at least 19,000 pounds. Examples of these types of vehicles include various delivery and storage trucks, buses, garbage trucks, and cement or dump trucks.

1. Related Legislation. SB 498 (Skinner) requires the state Air Resources Board to adopt ZEV targets for vehicle fleets and requires DGS to meet a 50% ZEV target for the state's light-duty vehicle fleet by 2024-25. This measure is pending in the Senate Appropriations Committee.
   

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

Date of Hearing: April 26, 2017

ASSEMBLY COMMITTEE ON ACCOUNTABILITY AND ADMINISTRATIVE REVIEW

Susan Talamantes Eggman, Chair

ABPCA Bill Id:AB 739 (

Author:Chau) – As Amended Ver:April 17, 2017

SUBJECT:

SUMMARY: Requires at least 15% of specified heavy-duty (HD) vehicles purchased by state agencies to be zero-emission (ZEV) by 2025 and at least 30% of those vehicles to be ZEV by 2030. Specifically, this bill:

1. Mandates that at least 15% of vehicles with a gross vehicle weight rating (GVWR) of 19,000 pounds or more purchased by state agencies must be ZEV by December 31, 2025, and at least 30% of those vehicles must be ZEV by December 31, 2030.
2. Exempts vehicles that have special performance requirements necessary for the protection of public safety, as defined by the Department of General Services (DGS), from this bill.

EXISTING LAW:

1. Requires, through Executive Order B-16-2012, 10% of state light-duty fleet purchases to be ZEVs by 2015 and 25% to be ZEVs by 2020.
2. Establishes the Hybrid and Zero-Emission Truck and Bus Voucher Incentive Project (HVIP), administered by the California Air Resources Board, to provide vouchers to help California fleet owners purchase hybrid and ZEV trucks and buses.

FISCAL EFFECT: Unknown

COMMENTS: This bill establishes phased-in targets for incorporating more ZEVs into the state’s HD fleet. ZEVs include plug-in electric vehicles and hydrogen fuel cell electric vehicles. The author states that this bill "will help create jobs and a market that fosters heavy-duty ZEV development, provide for more fuel efficient vehicles, help the State meet its greenhouse gas emissions reduction goals, and ensure the State is doing its part to meet those goals."

DGS reports that, currently, 38% of the state's vehicle fleet is comprised of HD vehicles. DGS considers any vehicle with a GVWR of 8,500 pounds to be HD. This bill would apply a phased-in state fleet mandate of 15% HD ZEVs by 2025 and 30% by 2030 to vehicles with a GVWR of at least 19,000 pounds. Examples of these types of vehicles include various delivery and storage trucks, buses, garbage trucks, and cement or dump trucks.

Current ZEV mandates apply to the state's light duty fleet. Executive Order B-16-2012 requires 10% of state light-duty fleet purchases to be ZEVs by 2015, climbing to 25% by 2020. DGS notes that the state has met the 15% ZEV purchasing goal in both fiscal years 2014-15 and 2015-16 at about 15% and 21%, respectively.

In October 2016, DGS took action to increase the annual ZEV light duty purchasing mandate by 5% beginning in 2017-18. The implementation of this policy is intended to allow departments to slowly ramp up to the 25% goal. DGS indicates that with this incremental ramp up approach and the anticipated availability of plug-in electric sport utility vehicles and vans in 2017 or 2018, the state is expected to be able to meet the 25% ZEV goal in 2020.

Currently, no mandates are in place for HD ZEVs, which this bill seeks to address. However, in June 2016, DGS reports that it executed statewide contracts for HD ZEV trucks for state entities to purchase. To date, no state departments have utilized these contracts due to the high cost and limited mileage range and battery life associated with these vehicles. DGS estimates these ZEVs range in price from $165,000 to $254,000 per vehicle, compared to costs ranging from $41,000 to $81,000 for a conventional HD. These factors could make it potentially cost prohibitive and operationally difficult for state entities to purchase these types of ZEVs, even with the pricing offset by HVIP vouchers.

The statewide ZEV Action Plan identifies specific actions for state government to take to build the state's ZEV market. It recognizes that "advancing the full range of electric-drive technologies rather than concentrating on one particular technology provides the state with the greatest opportunity to meet its ZEV goals" and the intent of this bill appears to be in line with that.

Supporters of this bill, representing various environmental groups and a HD ZEV manufacturer, state that this bill continues the state’s efforts to reduce greenhouse gas emissions and will help support and create jobs in the state's growing ZEV manufacturing sector.

Opponents from various near-zero industry groups object to this bill unless it is amended to include near-zero HD vehicles and a specified technical review every five years.

RELATED LEGISLATION: SB 498 (Skinner) requires the state Air Resources Board to adopt ZEV targets for vehicle fleets and requires DGS to meet a 50% ZEV target for the state's light-duty vehicle fleet by 2024-25. This measure is pending in the Senate Appropriations Committee.

PROPOSED AMENDMENT: The author will be presenting the following amendment at the hearing to provide DGS with flexibility to cease implementing this bill if it determines that it cannot meet the specified targets:

On page 2, after line 13, insert:

(c) If the Department of General Services determines that it cannot meet the needs of the state while fulfilling the requirements of this section, the department shall hold a public hearing to make and disclose that finding, notify the Legislature of the finding, and cease to implement this section.

This language is modeled after a similar provision contained in SB 498.

REGISTERED SUPPORT / OPPOSITION:

Support

American Lung Association in California
BYD America
California Electric Transportation Coalition
California Environmental Justice Alliance
Coalition for Clean Air
Sierra Club California
Union of Concerned Scientists

Opposition

Bioenergy Association of California
California Natural Gas Vehicle Coalition
Clean Energy
Coalition for Renewable Natural Gas
Los Angeles Area Chamber of Commerce
Natural Gas Vehicles for America
North American Renewable Natural Gas Industry

Analysis Prepared by: Cassie Royce / A. & A.R. /