Existing law establishes the Air Quality Improvement Program that is administered by the State Air Resources Board for the purposes of funding projects related to, among other things, the reduction of criteria air pollutants and improvement of air quality. Existing law creates the Air Quality Improvement Fund and requires the state board, upon appropriation by the Legislature, to expend moneys in the fund for purposes of the Air Quality Improvement Program.

This bill would make a nonsubstantive change to the provision creating the fund.

SENATE COMMITTEE ON TRANSPORTATION

Senator Jim Beall, Chair

2019 - 2020 Regular

Bill No: AB 126 Hearing Date: 7/9/2019

SUBJECT: Air Quality Improvement Program: Clean Vehicle Rebate Project

DIGEST: This bill would require the California Air Resources Board (ARB) to (1) provide a Clean Vehicle Rebate Project (CVRP) rebate at least $500 above the standards rate for low-income applicants, (2) only offer rebates for plug-in hybrids that have an all-electric range of at least 40 miles, and consider making changes to the program to increase the number of rebates provided in low income areas or areas with significant air pollution. The bill’s provisions would sunset January 1, 2022.

ANALYSIS:

Existing law:

1. Establishes the Air Quality Improvement Program (AQIP), administered by the ARB in consultation with local air districts, to fund programs that reduce criteria air pollutants, improve air quality, and provide research for alternative fuels and vehicles, vessels, and equipment technologies. Creates the CVRP under the AQIP. (Health and Safety Code (HSC) §44274 et seq.)
   
2. Requires the ARB to limit CVRP rebate eligibility based on income. (HSC §44258.4(c)(3))
   
3. Requires, as part of the CVRP, the ARB to do both of the following until January 1, 2022:
   1. Provide outreach to low-income households and low-income communities to increase consumer awareness of the Clean Vehicle Rebate Project.
   2. Prioritize rebate payments to low-income applicants. (HSC §44274.6)
      
4. Defines “low income” as a resident of the state whose household income is less than or equal to 300 percent of the federal poverty level. (HSC §44274.6)
   
5. Defines “low-income communities” as census tracts with median household incomes at or below 80 percent of the statewide median income or with median household incomes at or below the threshold designated as low income by the Department of Housing and Community Development’s list of state income limits. (HSC §44274.6)
   
6. Establishes a number of other programs aimed at decreasing vehicular pollution including, but not limited to:
   1. The Enhanced Fleet Modernization Program, which provides financial incentives to Californians for retiring and replacing old cars with less polluting options. (HSC §44125 et seq.)
   2. The Clean Cars 4 All Program, which builds on the EFMP by providing additional inventive to participant living near a disadvantaged community and who choose a hybrid, plug-in hybrid, or electric replacement. (HSC §44124.5)

This bill:

1. Directs the ARB to, starting, January 1, 2020 and under the Clean Vehicle Rebate Project established as a part of the Air Quality Improvement Program, do the following:
   1. Increase the rebate payment by five hundred dollars ($500) for a low-income applicant for all eligible vehicle types.
      
   2. Only offer rebates for plug-in hybrids that have an electric range of at least 40 miles.
      
   3. Consider, through a public process, changing the eligibility requirements to increase the number of rebates provided to all of the following:
      1. People who qualify as being low income.
      2. People who live in low-income communities.
      3. People who live in disadvantaged communities.
      4. People who live in an air basin that is designated as being in nonattainment for any criteria air pollutant.
         
   4. Consider all of the following when considering changing the eligibility requirements as described above:
      1. Income eligibility requirements, geographic eligibility requirements, vehicle type eligibility requirements, and vehicle cost eligibility requirements.
      2. Impacts each eligibility requirement change could have on the cost-effectiveness of increasing the number of zero-emission vehicles operating in the state.
      3. Whether each eligibility requirement change would further the purposes of both the existing goals of the Clean Vehicle Rebate Program and the goal of increasing the number of rebates to people meeting the criteria described above.
         
2. Sunsets the bill’s provisions January 1, 2022.

COMMENTS:

1. Author’s Statement. According to the author, “AB 126 makes improvements to the Clean Vehicle Rebate Project to make clean vehicles more accessible to a greater number of California drivers at all income levels.”
   
2. California has established ambitious zero-emission vehicle (ZEV) goals.
   In order to mitigate the climate crisis, California has set a series of ambitious goals promoting the roll out of ZEVs and near-ZEVs in the state. The CVRP was initially adopted to meet the goal set in Executive Order B-16-12 of 2012: 1.5 million ZEVs on California’s roads by 2025. Since then the path towards this goal has been further developed and additional, more ambitious goals set. SB 1275 (De León, Chapter 530, Statutes of 2014) established the Charge Ahead California Initiative, which aims to place one million electric cars, trucks, and buses on California’s roads by 2023. In addition, Executive Order B-48-18, signed by Governor Brown on January 26, 2018, establishes a new target: five million ZEVs in the state by 2030. AB 1046 (Ting, 2019), which will also be heard in this committee July 9, would use rebates as the primary means of achieving this five million ZEV goal. Finally, ZEV regulation commonly known as the ZEV mandate set a goal for ZEVs and near-ZEVs to comprise 15% of new cars sold in California by 2025. If a manufacturer fails to meet its ZEV requirement, it is subject to financial penalties.
   
   California accounts for almost 50% of total electric car sales in the US with 594,918 electric cars sold in the state to date.^[1]
3. California has a number of long standing programs aimed at reducing vehicular pollution, including the AQIP, under which the CVRP was established, and the EFMP. Both the AQIP and the EFMP were established in statute in 2007 AB 118 (Núñez). The CVRP is funded by Greenhouse Gas Reduction Funds and provides rebates to incentivize the purchase or lease of clean vehicles: $5,000 for a hydrogen fuel cell vehicle; $2,500 for a battery electric vehicle; $1,500 for a plug-in hybrid electric vehicle; or $900 for a zero-emission motorcycle. An individual can apply for a rebate on an eligible vehicle within 18 months of purchase or lease. In addition to setting a ZEV goal, SB 1275 (De León, 2014) requires the ARB to ensure eligibility for CVRP rebates is limited by income. Regardless of whether other legislation sets specific income caps in statute, the ARB will still be required to maintain some kind of income caps because of this provision. See below for further discussion.

EFMP is designed specifically to incentivize low-income Californians to voluntarily retire (scrap) or replace high-polluting passenger vehicles and light- and medium-duty trucks. It is funded by an additional $1 surcharge on the vehicle registration fee. The retirement-only portion of the program provides up to $1,500 to lower-income drivers to retire their cars. The scrap and replace program provides up to $4,500 to lower-income drivers who scrap an old car and purchase a cleaner and more fuel-efficient (35 miles per gallon or better fuel economy rating) vehicle or $7,500 for mobility options such as transit passes, in lieu of a replacement vehicle. Beyond the EFMP base incentives, the Clean Cars 4 All (CC4A) program, which was formerly called the EFMP Plus-Up project and was established in statute by AB 630 (Cooper, Chapter 636, Statutes of 2017)), provides additional incentives for individuals in disadvantaged communities who retire high-polluting vehicles and replace them with used or new hybrid, plug-in hybrid (PHEV), or battery-electric vehicle (BEV). Eligible participants can receive incentives ranging from $1,500 to $5,000, depending on the vehicle type that is purchased.

The EFMP, CC4A, and CVRP rebates can be “stacked” for a total rebate of up to $12,000 in state rebates, (federal rebates may also be available). In 2018, the Clean Vehicle Assistant Program, run by the nonprofit Beneficial State Foundation, was launched with $5 million in ARB funding to help lower-income Californians purchase a used or new hybrid, PEV, or BEV through personal grants of up to $5,000.

In addition to these programs, the ARB and Public Utilities Commission are currently developing a new “Clean Fuel Reward” point-of-sale rebate as part of a separate program, the Low Carbon Fuel Standard.

1. Demand for CVRP rebates outpaces available funding, so rebates should be structured efficiently to produce the most bang for state bucks. As part of Governor Brown’s 2018 Executive Order, his administration proposed a CVRP has a budget of $200 million per year through 2025. While there is no cap on the number of rebates that may be issued, rebates are subject to funding availability. Once funds run out, applicants are placed on a waitlist until additional funds are allocated through the State Budget. CVRP has exhausted its current funding, but, through the recently signed 2019-2020 budget, will received $238 million from the Greenhouse Gas Reduction Fund, of which $25 million shall be used to fund increased rebates for low-income recipients. That being said, ARB estimates that its total funding need through September 2020 will be in $390 to $546 million range, far exceeding its budget. Over the next three years, ARB anticipates demand of 401,000 to 726,000 rebates to the tune of $1-2 billion dollars. Therefore, for the CVRP to meet its goal for getting over a million ZEVs on the streets, it is crucial that CVRP rebates be structured as cost-effectively as possible.
2. This bill addresses three aspects of the CVRP: an increased rebate payment of at least $500 for low-income applicants, criteria for PHEVs to be eligible for rebates, and how to increase the number of rebates to people who qualify as low-income. Until 2016, CVRP was available to applicants of all income levels. Amid concerns that CVRP was primarily benefitting wealthy car buyers who would have likely bought a clean vehicle regardless of the rebate, SB 1275 of 2014 directed ARB to establish income caps on the program. In response to SB 1275, ARB established the following income caps effective March 29, 2016: $250,000 for single filers, $340,000 for head of household filers, and $500,000 for joint filers. ARB pointed to Proposition 30, a 2012 state ballot initiative that increased personal income tax rates for filers with incomes exceeding these amounts, as the source of these income limits. Five months later, the Legislature and Governor established lower caps in the state budget agreement (SB 859, 2016): $150,000 for single filers, $204,000 for head of household filers, and $300,000 for joint filers. The new caps, which ARB implemented effective November 1, 2016, were intended to further focus the program toward low- and middle-income consumers. SB 859 also required that rebate payments for low-income applicants be increased by $500 and specified that only PHEV with an electric range (i.e. the number of miles for which the car can run on battery only) of at least 20 miles would be eligible for rebates.
   
   Under SB 859 these three provisions would have sunset on June 30, 2017, but AB 615 (Cooper, Chapter 631, Statutes of 2017) extended them until January 1, 2019. Since then, though they have expired in statute, all three requirements continue in practice. In fact, the ARB provides a rebate $2,000 above the standard rebate amount for low-income applicants.^[2] This bill would reinstate in statute the requirement that, at a minimum, the ARB provide a rebate $500 above the standard rebate amount for low-income applicants.

This bill would also reinstate a minimum PHEV electric range in statute. Amendments taken in the Assembly Natural Resources Committee double this range from 20 to 40 miles. Under the current 20 mile minimum, 18 models spanning 12 makes. With a 40 mile minimum, that would quickly be paired down to five models made by five makes. One of these, the Chevrolet Volt, was discontinued by GM, which announced all its future EVs would be BEVs. For comparison, there are about 15 BEV models available in the US. They have an average range of 200 miles and all have a range over 40 miles. However moving the PHEV minimum from 20 to 40 miles, effective January 1, 2020, does not give the market time to comply with the new requirements before they kick in. Furthermore, SUVs are growing in popularity in California and doubling the electric range would reduce the number of eligible SUVs/vans from seven to one. All that being said, PHEVs are not zero-emission whether they have an electric range of 20 miles or of 40 miles and the ARB should focus on shifting California to carbon neutral vehicles.

Notably, this spring ARB has been analyzing multiple potential CVRP program change scenarios. With respect to variables in this bill, they are considering increasing the minimum required PEV all-electric range from 20 miles to a minimum of 25, 30, 40 (the figure in this bill), 50, or 100 miles. Current law requires the ARB to ensure eligibility for CVRP rebates is limited by income, but leaves the exact criteria to ARB’s digression. Though the income caps mandated by AB 615 (Copper, 2017) expired, the ARB has continued to use the same values and in their change scenarios they contemplate only one alternative: $150,000 for single filers, $204,000 for head of household filers, and $250,000 for joint filers i.e. either maintaining the status quo or, in the case of joint filers, instituting a more stringent cap. Therefore, it appears that income caps are not going anywhere for the time being, whether written in statute or not.

As introduced, this bill would have statutorily reinstated the existing income caps. However, the Assembly amended the bill to lower the income caps to $125,000 for single filers, $175,000 for head of household filers, and $250,000 for joint filers. On the other hand, the Senate Environmental Quality Committee amended the bill to strike the income caps and instead direct the ARB to consider changing eligibility requirements to increase the number of rebates issued to low-income people, while taking into account whether this change would further the overarching climate change mitigation goals of the CVRP.

1. Should specific CVRP income caps be codified in statute? AB 615 (Cooper, Chapter 631, Statutes of 2017) required the ARB to submit a report to the Legislature on the impacts that income caps are having on CVRP in order for the Legislature to evaluate the effect income caps are having on the CVRP. As of yet, this report has not been delivered to the Legislature. Furthermore, this bill would require ARB to, by January 1, 2022, carry out a public process to consider methods of increasing the number of rebates to low-income people, to people living in especially polluted areas, and other populations. It may be beneficial to maintain the currently used income caps in statute until this information is provided to the Legislature to inform further decision-making around income caps.
   
   Furthermore, as noted above, the ARB is currently planning updates to the CVRP to improve its impact within budgetary constraints. Their process is exploring the potential outcomes of various combinations of changes including increases to the electric range (to 25, 30, 40, 50, or 100 miles) and to aspects of the program not considered in this bill (rebate amounts, MSRP caps, no rebates for PHEVs, and per-person application limitations). It is important that this bill support and guide that process in the right direction.
2. Committee concerns.
   
   (1) Minimum PHEV electric range. In order to ensure the Legislature does not select a small number of winners among PHEVs while still encouraging longer electric ranges, the author and committee many wish to consider amending the bill to lower and delay implementation of the electric range requirement.

(2) Reinstate income caps. Given that the report mandated by AB 615 (Copper, 2017) to inform legislative decision-making around CVRP income caps was due December 31, 2018 but has not been received and that the income caps in AB 615 lapsed January 1, 2019, the author and committee may wish to consider amending the bill to reinstate the income caps previously in statute.

(3) Report to the legislature. So that both the report and the public process (on increasing rebates to low income and other communities) mandated by this bill can inform legislative decisions-making before these income caps expire the author and committee may wish to consider requiring ARB to prepare a report to the Legislature on the outcome of this public process.

1. Double Referral. This bill passed out of the Environmental Quality Committee, as amended, on June 19 on a 5 – 1 vote.

Related Legislation:

CVRP-related bills

AB 2885 (Rodriguez, Chapter 366, Statutes of 2018) — Requires ARB to provide outreach to low-income households and low-income communities to increase consumer awareness of the CVRP. This bill also requires, until January 1, 2022, ARB to prioritize rebate payments to low-income applicants.

AB 615 (Cooper, Chapter 631, Statutes of 2017) — Extended the sunset on income eligibility restrictions under CVRP until January 1, 2019.

AB 2564 (Cooper, 2016) — Would have lowered CVRP income limits to specified levels; prioritized rebates for low-income consumers; increased rebate amounts as specified; and provided outreach to low-income households. This bill failed passage in the Senate Environmental Quality Committee.

SB 859 (Committee on Budget and Fiscal Review, Chapter 368, Statutes of 2016) — among other things, required outreach to low-income households for CVRP and set the following income caps for CVRP eligibility: $150K for applicants that file taxes as a single individual, $204K for those that file head of household, and $300K for those that file jointly.

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

Bills on related clean vehicle programs

AB 1046 (Ting, 2019) — Would establish the California Electric Vehicle Initiative to provide financial incentives to the market to achieve a statewide deployment of 5,000,000 electric vehicles by December 2030. This double referred to the Senate Environmental Quality Committee, where is to set to be heard July 3, 2019, and the Senate Transportation Committee.

AB 193 (Cervantes, Chapter 363, Statutes of 2018) — Requires ARB to establish a Clean Reused Vehicle Rebate Program.

AB 630 (Cooper, Chapter 636, Statutes of 2017) — Establishes EFMP Plus-Up in statute and renames it the Clean Cars 4 All Program.

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

Assembly Votes:

Floor 75 – 0

Appropriations 17 – 0

Natural Resources 11 – 0

Transportation 14 – 0

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

According to the Assembly Appropriations Committee, “ARB costs of approximately $180,000 per year (1 PY) to adopt new caps, conduct consumer and dealership outreach, manage customer appeals, and present programmatic changes to the board.

According to the ARB, this bill would be signed after ARB’s normal cycle for funding plan development and, as such, would require additional presentation to the board outside of the normal process.”

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

July 3, 2019.)

SUPPORT:

Coalition for Clean Air

Communities for a Better Environment

Environment California

Natural Resources Defense Council

San Diego Board of Supervisors

The Greenlining Institute

Valley Clean Air Now (Valley CAN)

OPPOSITION:

Alliance of Automobile Manufacturers

California Electric Transportation Coalition

CALETC

CALSTART

Global Automakers

-- END --

1. Veloz Sales Dashboard, https://www.veloz.org/sales-dashboard/, Retrieved June 29, 2019 ↑

2. California Clean Vehicle Rebate Project, Income Eligibility, Retrieved on June 29, 2019 https://cleanvehiclerebate.org/eng/income-eligibility#income-level ↑

SENATE COMMITTEE ON ENVIRONMENTAL QUALITY

Senator Allen, Chair

2019 - 2020 Regular

Bill No: AB 126

SUBJECT: Air Quality Improvement Program: Clean Vehicle Rebate Project

DIGEST: This bill requires the Air Resources Board to (1) impose specified income cap limits for Clean Vehicle Rebate Project eligibility; (2) increase the rebate payment by $500 for a low-income applicant for all eligible vehicle types; and (3) only offer rebates for plug-in hybrids that have an electric range of at least 40 miles.

ANALYSIS:

Existing 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. (Health and Safety Code (HSC) §39500 et seq.)
   
2. Establishes Sections 1962.1, 1962.2, and 1962.3 of Title 13 of the California Code of Regulations (Zero-Emission Vehicle (ZEV) Mandate) that requires large volume and intermediate volume vehicle manufacturers that sell cars in California to produce ZEVs, as specified.
   
3. Requires ARB to ensure that statewide GHG emissions are reduced to at least 40% below the 1990 level by December 31, 2030 (i.e., SB 32); and allows ARB, until December 31, 2030, to adopt regulations that utilize market-based compliance mechanisms (i.e., the cap-and-trade program) to reduce GHG emissions. (HSC §§ 38566, 38562)
   
4. Establishes the Greenhouse Gas Reduction Fund (GGRF) in the State Treasury, requires all moneys, except for fines and penalties, collected pursuant to a market-based mechanism be deposited in the fund. (Government Code (GOV) §16428.8)
   
5. Establishes the Air Quality Improvement Program (AQIP), administered by ARB in consultation with local air districts, to fund programs that reduce criteria air pollutants, improve air quality, and provide research for alternative fuels and vehicles, vessels, and equipment technologies. (HSC §44274 et seq.)
   
   1. Establishes the Clean Vehicle Rebate Project (CVRP) under the AQIP.
      

This bill:

1. Requires ARB in the administration of CVRP, beginning January 1, 2020, to do the following:
   
   1. Only offer rebates to applicants who purchase an eligible vehicle and have a gross annual income, as reported on the Internal Revenue Service Form 1040, the Internal Revenue Service Form 1040A, or the Internal Revenue Service Form 1040EZ, that does not exceed the following:
      
      1. $125,000 for single filers.
         
      2. $175,000 for head-of-household filers.
         
      3. $250,000 for joint filers.
         
2. Requires ARB to increase the rebate payment by $500 for a low-income applicant for all eligible vehicle types.
   
3. Requires ARB to only offer rebates for plug-in hybrids that have an electric range of at least 40 miles.

Background

1. Zero Emission Vehicle (ZEV) regulation. The Zero Emission Vehicle (ZEV) Regulation requires large volume and intermediate volume vehicle manufacturers that sell cars in California to produce ZEVs (such as battery electric and fuel cell vehicles), clean plug-in hybrids, clean hybrids and clean gasoline vehicles with near-zero tail pipe emissions. In general, the ZEV regulation requires that 15% of new car sales be ZEVs by 2025. This target is intended to achieve 1.5 million ZEVs on the road by 2025 as directed under Governor Brown’s Executive Order B-16-2012.
   
2. California’s 2016 ZEV Action Plan Update. According to the 2016 update to California’s ZEV Action Plan, California is one of the world’s largest markets for light-duty ZEVs, with Plug-In Electric Vehicle (PEV) ownership in the state exceeding 230,000 vehicles. As of last year, Californians drive 47% of all ZEVs on the road in the United States; the United States as a whole accounts for approximately one-third of the world ZEV market. Battery Electric Vehicles (BEV) and Plug-in Hybrid Electric Vehicles (PHEV) comprise the majority of ZEVs on California’s roads today.
   
   The metropolitan regions of Los Angeles, San Diego and the San Francisco Bay Area lead the state in PEV sales. ZEV adoption has been greatest in Los Angeles County and Santa Clara County, followed by Alameda, Orange, and San Diego Counties. Statewide, nearly 60% of issued rebates have been for BEVs, while 40% have been for PHEVs.
   
3. 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.
   
   On March 29, 2016, pursuant to SB 1275 (de León, Chapter 530, Statutes of 2014)—which established the Charge Ahead California Initiative to place in service at least 1,000,000 zero-emission and near-zero-emission vehicles by January 1, 2023—ARB was tasked with the goals of focusing on ZEV adoption in disadvantaged and low -and-moderate-income communities. In doing so, ARB implemented the following income cap eligibility requirements for participation in CVRP: $250K for applicants that file taxes as a single individual, $204K for those that file head of household, and $500K for those that file jointly.
   
   Five months later, the Legislature and Governor modified those income cap requirements as follows: $150K for applicants that file taxes as a single individual, $240K for those that file head of household, and $300K for those that file jointly.
   
   The newest set of income caps were implemented November 1, 2016. Although it appears that more CVRP dollars are being funneled into disadvantaged communities and low- and moderate-income households, ARB cautions that attempting to draw any kind of conclusion about the impacts the income caps have had on CVRP would be premature for a couple of reasons.
   
   First, without longer term data and without normalizing the data to new car sales, the trends may not be reliable.
   
   Second, the Legislature enacted the income caps simultaneously with other policy directives to the ARB regarding CVRP, most importantly was the direction to increase outreach to low-income households, so it is impossible to disentangle the effects each has had with such limited data.
   
4. Enhanced Fleet Modernization Program (EFMP) and Clean Cars 4 All. 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, was initially 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.
   
   AB 630 (Cooper, Chapter 636, Statutes of 2017) codified the Plus-Up portion of the EFMP as Clean Cars 4 All (CC4A) which 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 CC4A. The actual amount of the additional CC4A incentive depends on income and choice of replacement vehicle. The following table illustrates how incentives from the EFMP base program and CC4A 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 CVRP.
   

EFMP and CC4A: Stacking of Incentives

ARB is currently working with local air districts to expand CC4A to disadvantaged communities outside of the South Coast and San Joaquin Valley air basins.

Comments

1. Purpose of Bill. According to the author, “AB 126 makes improvements to the Clean Vehicle Rebate Project to make clean vehicles more accessible to a greater number of California drivers at all income levels.”
   
2. Failed policy. As noted in the background, there has been a flurry of activity regarding income caps and CVRP eligibility.
   
   In March of 2016, pursuant to SB 1275 (de León, Chapter 530, Statutes of 2014), ARB adopted one set of income caps for CVRP eligibility.
   
   In June of 2016, the Senate Environmental Quality Committee did not approve AB 2564 (Cooper), which would have lowered CVRP income limits, among other things.
   
   In August of 2016, the Legislature implemented many aspects of AB 2564 through the budget process. These reduced income caps were implemented in November of 2016.
   
   AB 615 (Cooper, Chapter 631, Statutes of 2017) extending the sunset on income eligibility restrictions under CVRP until January 1, 2019. As such, the income caps have not been in place for six months.
   
   It is important to note that there is no data to support that any of these income cap changes helped more lower-income people access CVRP, nor did they help more people in disadvantaged communities access CVRP.
   
3. Different programs accomplish different goals. As noted in the background, the purpose of CVRP is to promote the production and use of ZEVs given Governor Brown’s Executive Order B-16-2012 requiring 1.5 million ZEVs on the road by 2025. With limited funds, CVRP is designed to get as much “bang for the buck” as possible. For example, if CVRP could spend $40K to get one person into a ZEV, or split that $40K up into smaller $5K incentives and get eight people into ZEVs, the same amount of money could increase the number of ZEVs on the road from one to eight.
   
   Although ZEVs are coming down in price, ZEVs are expensive and have been more readily adopted by higher-income earners. It is undeniable that wealthy people who do not need a rebate in order to afford a ZEV have received a rebate under CVRP. Regardless of that point, however, data collected by ARB demonstrates that over half of the ZEV purchases prior to income caps would not have been made without those rebates.
   
   CVRP, as initially designed without income caps, more than doubled California’s progress toward the goals of getting 1.5 million ZEVs on the road by 2025 and 1.0 million ZEVs on the road by 2023.
   
   The goal of getting low- and moderate-income earners into cleaner vehicles is important and already state policy. EFMP and CC4A are specifically targeted at getting high-polluting vehicles off the road, with a focus on low-income individuals, respectively.
   
   Given the existence of programs that accomplish the author’s goal of providing lower-income households more access to cleaner vehicles, there is a question as to whether the approach in this bill will result in an added benefit to both the environment and the people it attempts to serve. This legislation may have the unintended consequence of jeopardizing the only program at ARB that is designed specifically to reach the goals of SB 1275 and the Governor’s Executive Order on increasing ZEVs in California.
   
4. How are we spending GGRF? Proponents of this measure argue that since CVRP is funded with GGRF it should be restricted from higher income households. Currently, 35% of GGRF is mandated to be spent in disadvantaged communities identified as the bottom 25% on a variety of measures by the CalEnviroScreen tool developed pursuant to Health and Safety Code §39711. According to the last report by ARB, the state is exceeding that mandate and spending approximately 50% of GGRF in disadvantaged communities. This means the state is spending half of all GGRF moneys on a quarter of all Californians.
   
   The argument that certain Californians shouldn’t receive a benefit under CVRP based on their income—despite the fact that a small incentive to those people doubled California’s progress to its ZEV goal—loses sight of the larger context of California’s climate goals.
   
5. Suggested amendments.
   
   In order to help the author achieve his goals, the Committee may wish to consider amending the bill to:
   
   1) Provide ARB direction to consider how to increase CVRP participation of people with low-income, people living in low-income communities, people living in disadvantaged communities as defined in HSC §39711, and people living in air basins with nonattainment status for any criteria air pollutant.
   
   2) Require ARB to consider, at a minimum, income eligibility requirements, geographic eligibility requirements, vehicle type eligibility requirements, and vehicle cost eligibility requirements.
   
   3) Require ARB to determine the impacts each eligibility requirement change would have on the cost-effectiveness of increasing the number of zero-emission vehicles operated in the state.
   
   4) Require ARB to determine whether each eligibility requirement change would further the purposes of both the existing goals of the Clean Vehicle Rebate Project and the goals of amendment 1.
   

Related/Prior Legislation

AB 615 (Cooper, Chapter 631, Statutes of 2017) extended the sunset on income eligibility restrictions under CVRP until January 1, 2019.

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

SB 859 (Committee on Budget and Fiscal Review, Chapter 368, Statutes of 2016), among other things, required outreach to low-income households for CVRP and set the following income caps for CVRP eligibility: $150K for applicants that file taxes as a single individual, $204K for those that file head of household, and $300K for those that file jointly.

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 1851 (Gray, 2016) would have created and expanded a broad array of incentive programs to increase the sale and use of certain clean air vehicles. AB 1851 died in the Assembly Appropriations Committee.

AB 1710 (Calderon, 2016) would have required ARB, in coordination with the California Energy Commission, on or before January 1, 2019, to develop and implement a comprehensive program to promote advanced-technology light-duty vehicle deployment in the state to increase the use of ZEVs to meet the state’s emissions reduction goals. AB 1710 died in the Assembly Appropriations Committee.

AB 2564 (Cooper, 2016) would have required ARB to adopt regulations for CVRP to lower CVRP income limits, prioritize rebate payments for low-income consumers, increase rebate payments for low-income applicants, and increase outreach to low-income households. AB 2564 died in the Senate Environmental Quality Committee.

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 Committee.

SOURCE:

SUPPORT:

Coalition for Clean Air

Communities for a Better Environment

Environment California

Natural Resources Defense Council

San Diego Board of Supervisors

The Greenlining Institute

Valley Clean Air Now (Valley CAN)

OPPOSITION:

Alliance of Automobile Manufacturers

CALSTART

-- END --

ASSEMBLY THIRD READING

ATR Bill Id:AB 126

Author:(Cooper)

As Amended Ver:April 25, 2019

Majority vote

SUMMARY:

Modifies, until January 1, 2022, the Clean Vehicle Rebate Project (CVRP) under the Air Quality Improvement Program (AQIP) at the California Air Resources Board (ARB) by lowering eligibility income limits for the purchase of an electric or plug-in hybrid electric vehicle, and instituting new income limits for the purchase of a fuel cell vehicle.

Major Provisions:

1. Establishes CVRP income limits for the purchase of an eligible vehicle as follows: $125,000 for single filers; $175,000 for head-of-household filers; and $250,000 for joint filers. Eligible vehicles include fuel cell, battery electric and plug-in hybrid electric vehicles.
2. Requires ARB to increase individual rebate amounts by $500 for applicants with household incomes less than or equal to 300% of the federal poverty level.
3. Requires ARB to offer CVRP rebates for only those plug-in hybrids that have an electric range of at least 40 miles.
4. Sunsets this bill on January 1, 2022.

COMMENTS:

Pursuant to its authority under AQIP, the ARB developed CVRP. The CVRP is intended to encourage and accelerate the purchase and use of electric, plug-in hybrid electric and fuel cell vehicles to help improve air quality, reduce greenhouse gas emissions, and achieve the state's goal of placing millions of these types of vehicles on California roads by specified dates.

The program offers vehicle rebates on a first-come, first-served basis and has been typically oversubscribed each year. When the funding is exhausted, applicants are "waitlisted" and are issued rebates in the order they applied when monies are allocated in the next funding cycle. With these rebates, California's clean vehicle market has grown significantly. While the CVRP has been effective in creating a market for these vehicles, it has come under criticism that the majority of individuals receiving rebates are wealthy, living in affluent communities that, comparatively, experience better air quality than other areas of the state. To address these concerns, ARB established income caps and, in 2016, the Legislature approved a budget trailer bill (SB 859 (Committee on Budget), Chapter 368, Statutes of 2016) that established an income cap for the CVRP of $150,000 for single filers, $204,000 for head-of-household filers and $300,000 for joint filers and exempted fuel-cell electric cars rebates from the new income cap. AB 859 also required ARB to conduct outreach to low-income communities, offer additional rebate payments of $500 for low-income applicants, and prioritize rebate payments for low-income applicants. SB 859 had a sunset date of July 1, 2017, and AB 615 (Cooper), Chapter 631, Statutes of 2017, extended the sunset date to January 1, 2019. While the income caps in state law have already expired, ARB is currently continuing to use the AB 615 income caps for rebate eligibility. Additionally as it relates to this bill, ARB is currently only offering rebates for the purchase of a plug-in hybrid vehicle that has an electric range of at least 20 miles.

Through the CVRP, the Center for Sustainable Energy, the administrator on behalf of ARB, offers a rebate of $5,000 for fuel cell, $2,500 for battery electric, and $1,500 for plug-in hybrid electric vehicles and an additional $2,000 for low income drivers. Currently, applicants who wish to buy a fuel cell vehicle are exempt from the CVRP income caps. However, fuel cell vehicle consumers who exceed certain income limits must choose between a Clean Air Decal (a decal that allows single-rider eligible clean vehicle drivers to use carpool lanes) and a CVRP rebate.

State law requires ARB, by December 31, 2018, to prepare and submit to the Legislature a report on the impact the CVRP has had on the state's zero-emission vehicle market. In developing the report, ARB is required to consider the impact of income caps, increased rebates for low-income consumers, and increased outreach on the electric vehicle market, as well as a quantification of emissions reductions attributable to the CVRP. ARB has not submitted the report to the Legislature and has indicated that the report would be finalized in late spring or early summer of this year. As the number of clean vehicles purchased increases over time and demand significantly outweighs rebate availability, ARB has indicated that it will revise the program's income and vehicle eligibility requirements to target consumers that are most influenced by rebates. ARB has conducted several workshops to discuss these program changes. For purposes of the CVRP, this bill imposes statutory eligibility income caps for electric, plug-in hybrid electric vehicle purchases lower than ARB's current practice, newly institutes the income cap on fuel cell vehicle purchases, requires ARB to increase rebates by $500 for low-income applicants and sets a minimum electric range of 40 miles for plug-in hybrid vehicles, until January 1, 2022.

According to the Author:

According to the author, "AB 126 aims to make clean vehicles more accessible to California drivers living in communities with poor air quality by limiting eligibility by income and increasing rebate levels for low-income households."

Arguments in Support:

In support, Valley Clean Air Now states, "Keeping the income limits in place helps ensure that the people who need the rebates most are getting access to them."

Arguments in Opposition:

In Opposition, CALSTART writes, "Further lowering income caps creates new limitations on the program at just the time when zero-emission vehicles (ZEV) need more support. These

limitations cut out many consumers that we believe will likely not purchase a ZEV without the rebate. And the latest versions in print do not account for cost of living in communities in Los Angeles County and the Bay Area."

FISCAL COMMENTS:

ARB costs of approximately $180,000 per year (1 Personnel Year) to adopt new caps, conduct consumer and dealership outreach, manage customer appeals and present programmatic changes to the board.

According to the ARB, this bill would be signed after ARB's normal cycle for funding plan development and, as such, would require additional presentation to the board outside of the normal process.

VOTES:

ASM TRANSPORTATION: 14-0-1

YES: Frazier, Fong, Aguiar-Curry, Berman, Bigelow, Chu, Cunningham, Daly, Diep, Gipson, Grayson, Medina, Nazarian, O'Donnell

ABS, ABST OR NV: Friedman

ASM NATURAL RESOURCES: 11-0-0

YES: Friedman, Flora, Chau, Eggman, Cristina Garcia, Limón, Mathis, McCarty, Melendez, Muratsuchi, Mark Stone

ASM APPROPRIATIONS: 17-0-1

YES: Gonzalez, Bigelow, Bloom, Bonta, Brough, Calderon, Carrillo, Chau, Diep, Eggman, Fong, Gabriel, Eduardo Garcia, Maienschein, Petrie-Norris, Quirk, Robert Rivas

ABS, ABST OR NV: Obernolte

UPDATED:

VERSION: April 25, 2019

CONSULTANT: Cynthia Alvarez / TRANS. / (916) 319-2093 FN: 0000699

Date of Hearing: May 8, 2019

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez, Chair

ABPCA Bill Id:AB 126

Author:(Cooper) – As Amended Ver:April 25, 2019

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

SUMMARY:

This bill re-establishes and modifies the Clean Vehicle Rebate Project (CVRP) under the Air Quality Improvement Program at the California Air Resources Board (ARB) by lowering the income cap for electric and plug-in hybrid electric vehicles and instituting new income caps for fuel cell electric vehicles. Specifically, this bill:

1. Increases individual rebate amounts by $500 for applicants with household incomes less than or equal to 300% of the federal poverty level. Increased rebate amounts are available for fuel-cell electric vehicles, battery electric vehicles and plug-in hybrid electric vehicles.
2. Establishes CVRP income limits as follows:
   1. $125,000 for single filers.
   2. $175,00 for head-of-household filers.
   3. $250,000 for joint filers.
3. Requires the CVRP to offer rebates for only those plug-in hybrids that have an electric range of at least 40 miles.
4. Sunsets this bill on January 1, 2022.

FISCAL EFFECT:

ARB costs of approximately $180,000 per year (1 PY) to adopt new caps, conduct consumer and dealership outreach, manage customer appeals and present programmatic changes to the board.

According to the ARB, this bill would be signed after ARB’s normal cycle for funding plan development and, as such, would require additional presentation to the board outside of the normal process.

COMMENTS:

Background and Purpose. AB 118 (Núñez), Chapter 750, Statutes of 2007, established the Alternative and Renewable Fuels and Vehicle Technology (ARFVT) program, the Enhanced Fleet Modernization Program (EFMP) and the Air Quality Improvement Program (AQIP) to promote vehicle and fuel technology to reduce air pollution and GHG emissions.

Pursuant to its authority under AQIP, the Air Resources Board (ARB) developed CVRP. CVRP, which is administered by ARB’s contractor, the California Center for Sustainable Energy (CSE), is intended to encourage and accelerate the purchase and use of zero-emission vehicles (ZEVs) and near-zero-emission vehicles (NZEVs) to help improve air quality and reduce GHG emissions.

Since CVRP was launched in 2010, 300,000 rebates have been issued at a total cost of $854 million. The program is oversubscribed with demand outpacing funding nearly every year. When the funding is exhausted, applicants are "waitlisted" and are issued rebates in the order they applied when monies are allocated in the next funding cycle. The funding source for CVRP has been $708 million from the GGRF; $67 from AQIP; $49 million from ARFVTP; and $30 million from the vehicle inspection and repair fund.

In 2016, the Legislature approved AB 859 (Committee on Budget) to establish income limits and plug-in hybrid eligibility, increase rebates for lower-income individuals and increase outreach to low-income communities. The provisions of AB 859 were only applicable from November 1, 2016, to July 1, 2017.

AB 615 (Cooper), Chapter 631, Statutes of 2017, among other things, extended the sunset on the income restrictions for CVRP from July 1, 2017, to January 1, 2019. The specific income caps expired at the beginning of this year; however, ARB has maintained them.

This bill lowers the statutory income caps, increases rebates for low-income applicants and sets a minimum electric range of 40 miles until January 1, 2022.

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

Date of Hearing: April 22, 2019

ASSEMBLY COMMITTEE ON NATURAL RESOURCES

Laura Friedman, Chair

ABPCA Bill Id:AB 126 (

Author:Cooper) – As Amended Ver:March 21, 2019

SUBJECT: Air Quality Improvement Program: Clean Vehicle Rebate Project

SUMMARY: Reestablishes, until January 1, 2022, the Clean Vehicle Rebate Program (CVRP) eligibility income limits and increased rebate amounts for low-income filers.

EXISTING LAW:

1. Requires the California Air Resources Board (ARB), pursuant to the California Global Warming Solutions Act of 2006 [AB 32 (Núñez), Chapter 488, Statutes of 2006], to adopt a statewide greenhouse gas (GHG) emissions limit equivalent to 1990 levels by 2020 and adopt regulations to achieve maximum technologically feasible and cost-effective GHG emission reductions. AB 32 authorizes ARB to permit the use of market-based compliance mechanisms to comply with GHG reduction regulations once specified conditions are met. Requires ARB to approve a statewide GHG emissions limit equivalent to 40% below the 1990 level by 2030.
2. Establishes the Greenhouse Gas Reduction Fund (GGRF) and requires all moneys, except for fines and penalties, collected by ARB from the auction or sale of allowances pursuant to a market-based compliance mechanism (i.e., the cap-and-trade program adopted by ARB under AB 32) to be deposited in the GGRF and available for appropriation by the Legislature.
3. Establishes the GGRF Investment Plan and Communities Revitalization Act to set procedures for the investment of GHG allowance auction revenues. Authorizes a range of GHG reduction investments and establishes several policy objectives:
   1. Maximize economic, environmental, and public health benefits;
   2. Foster job creation;
   3. Complement efforts to improve air quality;
   4. Direct investment toward the most disadvantaged communities and households in the state;
   5. Provide opportunities for businesses, public agencies, nonprofits, and other community institutions to participate in and benefit from statewide efforts to reduce GHG emissions; and,
   6. Lessen the impacts and effects of climate change on the state's communities, economy, and environment.
4. Specifies that moneys appropriated from the GGRF for investments may include funding to reduce GHG emissions through:
   1. Energy efficiency, clean and renewable energy generation, distributed renewable energy generation, transmission and storage, and other related actions;
   2. The development of state-of-the-art systems to move goods and freight, advanced technology vehicles and vehicle infrastructure, advanced biofuels, and low-carbon and efficient public transportation;
   3. Strategic planning and development of sustainable infrastructure projects;
   4. Investments in programs implemented by local and regional agencies, local and regional collaboratives, and nonprofit organizations coordinating with local governments; and,
   5. Funding research, development, and deployment of innovative technologies, measures, and practices related to programs and projects funded pursuant to the Act.
5. Requires the investment plan to allocate a minimum of 25% of the available moneys in the GGRF to projects that provide benefits to identified disadvantaged communities, and additional minimum of 5% to projects that benefit low-income households or to projects located within and benefitting individuals living in low-income communities, and an additional minimum of 5% to projects that benefit low-income households that are outside of, but within a 1/2 mile of, disadvantaged communities, or to projects located within the boundaries of, and benefiting individuals living in, low-income communities that are outside of, but within a 1/2 mile of, disadvantaged communities.
6. Establishes the Charge Ahead California Initiative pursuant to SB 1275 (de León), Chapter 530, Statutes of 2014, that, among other things, included the goal of placing into service at least one million zero emissions vehicles (ZEVs) and near-zero emission vehicles (NZEVs) by January 1, 2023, and increasing access for disadvantaged, low-income, and moderate-income communities and consumers to ZEVs and NZEVs.
7. Requires ARB to provide outreach to low-income households and low-income communities to increase consumer awareness of the CVRP.
8. Requires, until January 1, 2022, ARB to prioritize rebate payments to low-income applicants.

THIS BILL:

1. Increases rebate amounts by $500 per rebate for consumers with household incomes less than or equal to 300% of the federal poverty level. Increased rebate amounts that are available for fuel-cell electric vehicles, battery electric vehicles, and plug-in hybrid electric vehicles.
2. Establishes CVRP income limits, except for fuel cell vehicles (FCVs), as follows:
   1. $150,000 for single filers;
   2. $204,000 for head-of-household filers; and,
   3. $300,000 for joint filers.
3. Requires the CVRP to only offer rebates for plug-in hybrids that have an electric range of at least 20 miles.
4. Sunsets provisions of this bill on January 1, 2022.

FISCAL EFFECT: Unknown

COMMENTS:

1. Author’s statement:

AB 126 makes improvements to the Clean Vehicle Rebate Project to make clean vehicles more accessible to a greater number of California drivers at all income levels. By boosting rebate levels for low-income Californians, AB 126 will make clean vehicles more accessible to California drivers living in communities with poor air quality.

1. Existing GGRF funding and programs. The 2014-15 Budget Act allocated GGRF revenues for the 2014-15 fiscal year and established a long-term plan for the allocation of GGRF revenues beginning in fiscal year 2015-16. Thirty-five percent of GGRF is continuously appropriated for investments in transit, affordable housing, and sustainable communities. Twenty-five percent is continuously appropriated to continue the construction of the high-speed rail project. The remaining 40% is subject to annual appropriation by the Legislature for investments in programs that include low-carbon transportation, energy efficiency and renewable energy, and natural resources and waste diversion. This year, the Administration has proposed a $1 billion cap on GGRF discretionary spending.
   
   The Administration’s 2018 annual report to the Legislature on cap and trade investments includes an analysis of funds spent within and benefiting disadvantaged communities, excluding high speed rail spending. According to the report, 31% of expenditures ($615 million) were for projects located within disadvantaged communities and 51% of the overall funding ($1 billion) benefited disadvantaged communities. (The Administration does not include high speed rail funding in this evaluation.)

Listed below are the major GGRF program areas and funding to date, totaling $8.4 billion:

• 1. ARB:
     1. Community air protection, $557 million
     2. Agricultural replacement measures for emissions reductions program, $197 million
     3. Low carbon transportation program, $1.727 billion
     4. Woodsmoke reduction program, $8 million
  2. California Department of Transportation:
     1. Active transportation program, $10 million
     2. Low carbon transit operations program, $301 million
  3. California High Speed Rail Authority:
     1. High-speed rail program, $1.638 billion
  4. California State Transportation Agency:
     1. Transit and intercity rail capital program, $715 million
  5. Strategic Growth Council:
     1. Affordable housing and sustainable communities program and sustainable agricultural lands conservation program, $1.24 billion
     2. California climate investments technical assistance program, $4 million
     3. Climate change research program, $29 million
     4. Transformative climate communities program, $190 million
  6. California Department of Community Services and Development:
     1. Low-income weatherization program, $202 million
  7. California Department of Food and Agriculture:
     1. Alternative renewable fuels program, $3 million
     2. State water efficiency and enhancement program, $66 million
     3. Alternative manure management programs and dairy digester research and development program, $260 million
     4. Healthy soils program, $12.5 million
  8. California Department of Water Resources:
     1. State water project turbines, $20 million
     2. Water-energy grant program, $50 million
  9. California Energy Commission:
     1. Food production investment program, $124 million
     2. Transportation technology and fuels, $12.5 million
     3. Renewable energy for agriculture program, $10 million
  10. California Conservation Corps:
      1. Training and workforce development program, $14 million
  11. California Department of Fish and Wildlife:
      1. Wetlands and watershed restoration program, $47 million
  12. California Department of Forestry and Fire Protection:
      1. Forest health program, fire prevention program, and urban and community forestry program, $467 million
      2. Prescribed fire and fuel reduction, $30 million
      3. Wildfire prevention program, $105 million
  13. California Department of Resources Recycling and Recovery:
      1. Waste diversion program, $137 million
  14. Natural Resources Agency:
      1. Regional forest health projects, $20 million
      2. Urban greening program, $126 million
  15. San Francisco Bay Conservation and Development Commission:
      1. Bay conservation and development, $1 million
  16. California Coastal Commission:
      1. Coastal management program, $3 million
  17. Coastal Conservancy:
      1. Climate ready coastal resilience planning, $7 million
  18. Wildlife Conservation Board:
      1. Climate adaptation and conservation easements, $20 million
  19. California Office of Emergency Services:
      1. Wildfire response and readiness, $50 million

The Governor's 2019-20 Budget proposes just over $1 billion in discretionary expenditures. (Note, the Administration no longer provides information on “baseline” expenditures to the Legislature, including continuous appropriations.)

• 1. ARB:
     1. AB 617, community air protection, $200 million
     2. AB 617, local air district implementation, $20 million
     3. Technical assistance to community groups, $10 million
     4. Clean vehicle rebate project, $200 million
     5. Clean trucks, buses, and off-road freight equipment, $132 million
     6. Enhanced fleet modernization program and school buses and transportation equity projects, $50
     7. Agricultural diesel engine replacement and upgrades, $25 million
  2. Department of Forestry and Fire Protection:
     1. Healthy and resilient forests, $165 million
     2. Prescribed fire and fuel reduction, $35
  3. California Department of Food and Agriculture:
     1. Healthy soils, $18 million
     2. Methane reduction, $25 million
  4. California Department of Resources Recycling and Recovery:
     1. Waste diversion, $25 million
  5. Strategic Growth Council:
     1. Climate change research, $10 million
     2. Transformative climate communities program, $40 million
  6. Coastal Commission and San Francisco Bay Conservation and Development Commission:
     1. Coastal resilience, $3 million
  7. California Department of Community Services and Development:
     1. Low-income weatherization, $10 million
  8. California Conservation Corps:
     1. Energy corps, $6 million
  9. Workforce Development Board:
     1. Apprenticeships for a green economy, $27 million

1. CVRP. In 2007, AB 118 (Núñez), Chapter 750, Statutes of 2007, established three new programs intended to promote vehicle and fuel technology that reduces air pollution and GHG emissions statewide. These programs are the Air Quality Improvement Program (AQIP), Enhanced Fleet Modernization Program, and the Alternative and Renewable Fuel and Vehicle Technology Program (ARFVTP).

AQIP provides financial incentives for public and private groups and individuals to adopt smog and diesel particulate pollution reducing technology that concurrently reduces GHG emissions. In the past, two of AQIP's flagship projects, CVRP and Hybrid and Zero Emissions Truck and Bus Voucher Incentive Program, represented the program’s largest funding commitments. AQIP has also provided incentives for biofuels research, hybrid truck testing, lawn and garden equipment replacement, zero-emission all-terrain agricultural work vehicle rebates, advanced technology demonstration, and hybrid off-road equipment pilot projects. CVRP provides rebates for ZEVs and NZEVs, including plug-in hybrid vehicles, battery electric vehicles, fuel cell electric vehicles, and neighborhood electric vehicles.

CVRP is now funded through the GGRF and has issued almost 300,000 rebates since 2010 at a cost of $854 million. The funding source for CVRP has been $708 million from the GGRF; $67 from AQIP; $49 million from ARFVTP; and, $30 million from the vehicle inspection and repair fund. According to the non-profit Veloz, approximately 570,000 electric vehicles have been sold in California, which accounts for roughly half of the electric vehicles sold in the United States. There have been concerns about the equity of the program and its cost effectiveness These equity issues were recognized when the Legislature passed SB 1275 (de León), Chapter 530, Statutes of 2014, which established the Charge Ahead California Initiative to increase access to ZEVs and NZEVs for lower income Californians and disadvantaged communities. SB 1275 also required eligibility to be limited based on income. In response to SB 1275, ARB, on March 28, 2016, set an income cap of:

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

SB 859 (Committee on Budget), Chapter 368, Statutes of 2016, did the following:

• 1. Lowered the income cap for the CVRP to $150,000 for single filers; $204,000 for head-of-household filers; and, $300,000 for joint filers;
     
  2. Exempted fuel-cell electric cars rebates from the new income cap;
     
  3. Offered additional rebate payments of $500 for low-income applicants, and prioritized rebate payments for low-income applicants; and,
     
  4. Set a minimum electric range of at least 20 miles for plug-in hybrids.
     

SB 859 had a sunset date of July 1, 2017. AB 615 (Cooper), Chapter 631, Statutes of 2017, among other things, extended the sunset on the income restrictions for CVRP from July 1, 2017 to January 1, 2019. The specific income caps expired at the beginning of this year. However, ARB has maintained them. This bill would reinstate the statutory income caps, increased rebates for low-income applicants, and minimum electric range until January 1, 2022. The enhanced low-income rebate amount has provided over 10,000 rebates. The income cap limits have largely worked in lowering the percentage of ZEV and NZEV purchasers who received a rebate from 75% to 48%, which has improved the cost-effectiveness of the program. While some automakers have stopped making plug-in hybrid in favor of longer ranged pure battery electric vehicles, others have increased the range of their plug-in hybrids.

1. Uncertainty. According to a recent ARB workshop, monthly applications for rebates have doubled since July 2018. While demand for ZEVs and NZEVs has been dramatically increasing due to availability of lower priced and longer range battery electric vehicles, the certainty for policies that support the deployment of ZEVs and NZEVs are in question. Both Tesla and General Motors hit the 200,000 vehicles-sold cap and therefore, federal tax credits for their vehicles are being phased out. It is unclear whether Congress will increase the cap on the maximum number of vehicles an automaker is allowed to sell for consumers to receive the full value of the tax credit. In addition, the Trump administration is attempting to revoke California’s waiver to set its own emission standards and is proposing to weaken vehicle emission requirements post 2020. Finally, the $200 million appropriated for CVRP in Fiscal Year 2018-19 will likely not last through the fiscal year for non-low income rebates. It is projected that at its current growth pattern CVRP may need between $1 and $1.8 billion dollars to meet the estimated demand of 402,000 to 698,000 rebates over the next three years. This would require significantly larger appropriations from the GGRF.

ARB is working with energy utilities and the Public Utilities Commission to develop a new rebate program as part of the Low Carbon Fuel Standard. The program will likely be called the Clean Fuel Reward Program (CFRP) and will offer a point-of-sale incentive. A manufacturer's suggested retail price (MSRP) cap is being considered for the CFRP. ARB is also hosting a series of workshops to align the CVRP with its budget. It is considering an MSRP cap, lowering the income cap, increasing the electric-range requirements, limiting the number of rebates, and lowering the amount of rebates. This bill offers a vehicle for the Legislature to weigh in on the future of the CVRP. Changes that would prioritize equity, cost-effectiveness, and more environmentally beneficial vehicles may be the most appropriate principles for modifications to the CVRP. Therefore, the author and committee may wish to consider amending the bill to lower the income cap, increase the electric range requirement, and apply the income cap to FCVs.

1. Double referral. This bill was also referred to the Assembly Transportation Committee where it passed out with a 14-0 vote.
   
2. Previous/related legislation.

AB 40 (Ting) requires ARB to develop a comprehensive strategy to ensure that the sales of new motor vehicles and new light-duty trucks in the state have transitioned fully to zero-emission vehicles by 2040. This bill was held in Assembly Transportation Committee.

AB 1046 (Ting) sets the goal of at least 5,000,000 zero-emission vehicles by January 1, 2030. This bill requires ARB to develop the forecasting for the total state rebate investment necessary to facilitate reaching the goal of placing in service 5,000,000 zero-emission vehicles by 2030. This bill is awaiting hearing in the Assembly Transportation Committee.

AB 2885 (Rodriguez), Chapter 366, Statutes of 2018, requires ARB to provide outreach to low-income households and low-income communities to increase consumer awareness of the CVRP. This bill also requires, until January 1, 2022, ARB to prioritize rebate payments to low-income applicants.

REGISTERED SUPPORT / OPPOSITION:

Support

Coalition for Clean Air
Communities for a Better Environment
Environment California
Natural Resources Defense Council
The Greenlining Institute
Valley Can (Clean Air Now)

Opposition

None on file

Analysis Prepared by: Michael Jarred / NAT. RES. /

Date of Hearing: April 8, 2019

ASSEMBLY COMMITTEE ON TRANSPORTATION

Jim Frazier, Chair

ABPCA Bill Id:AB 126 (

Author:Cooper) – As Amended Ver:March 21, 2019

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

SUMMARY: Prohibits the Air Resources Board (ARB) until January 1, 2022, for purposes of the Clean Vehicle Rebate Project (CVRP), to offer rebates to applicants whose income exceeds a specified amount. Specifically, this bill:

1. Requires ARB until January 1, 2022 to only offer rebates for the purchase of eligible vehicles through the CVRP to applicants whose income does not exceed the following:
2. $150,000 for single filers;
3. $204,000 for head-of-household filers; or,
4. $300,000 for joint filers.
5. Requires ARB to provide an additional $500 rebate to low-income applicants for all eligible vehicle types.
6. Requires ARB to offer rebates only for plug-in hybrid vehicles that have an electric range of at least 20 miles.
7. Provides that the aforementioned income limits do not apply to the purchase of a fuel cell vehicle.

EXISTING LAW:

1. Requires ARB, pursuant to California Global Warming Solutions Act of 2006 [AB 32 (Núñez), Chapter 488, Statutes of 2006], to adopt a statewide greenhouse gas (GHG) emissions limit equivalent to 1990 levels by 2020 and to use market-based mechanisms (cap-and-trade) to achieve compliance with these regulations.
2. Requires, pursuant to SB 32 (Pavley), Chapter 249, Statutes of 2016, that ARB ensure that statewide GHG emissions are reduced to at least 40% below 1990 levels by 2030.
3. 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 and requires the Department of Finance, in consultation with ARB and any other relevant state agency, to develop, as specified, an investment plan for the moneys deposited in the GGRF.
4. Establishes the Charge Ahead California Initiative pursuant to SB 1275 (de León), Chapter 530, Statutes of 2014, that, among other things, includes the goal of placing at least one million zero-emission vehicles (ZEV) and near-zero emission vehicles (NZEV) into service by January 1, 2023, and increasing access to these vehicles for disadvantaged, low-income, and moderate-income communities and consumers.
5. Establishes the Air Quality Improvement Program (AQIP), administered by ARB in consultation with local air districts, to fund programs that reduce criteria air pollutants, improve air quality, and provide research for alternative fuels and vehicles, vessels, and equipment technologies.
6. Establishes the CVRP, as part of the AQIP, to provide incentives, in the form of rebates toward the purchase of certain new, light-duty vehicles.
7. Requires ARB to provide outreach to low-income households and low-income communities to increase consumer awareness of the CVRP.
8. Requires ARB until January 1, 2022, to prioritize rebate payments to low-income applicants.
9. Defines “low-income” as a resident of the state whose household income is less than or equal to 300 percent of the federal poverty level (i.e. less than $36,420 for a household of 1, less than $49,380 for a household of 2, less than $62,340 for a household of 3, and less than $75,300 for a household of 4).

FISCAL EFFECT: Unknown.

COMMENTS: Pursuant to its authority under the AQIP, ARB developed the CVRP. The CVRP is intended to encourage and accelerate the purchase and use of ZEVs and NZEVs to help improve air quality, reduce GHG emissions, and achieve the Legislature's goal of placing 1 million ZEVs on California's roadways by 2023, Governor Brown’s 2012 goal of placing 1.5 million ZEVs on California's roadways by 2025 (Executive Order B-16-12) and Governor Brown’s latest goal of 5 million ZEVs on the road by 2030 (Executive Order B-48-18).

As of March 30, 2019, the CVRP has provided rebates for 285,164 vehicles at a cost of over $639 million since its launch in 2010. The program offers vehicle rebates on a first-come, first-served basis and has been typically oversubscribed each year. When the funding is exhausted, applicants are "waitlisted" and are issued rebates in the order they applied when monies are allocated in the next funding cycle. With these rebates, California’s ZEV market has grown significantly. The number of ZEVs passenger vehicles sold in California expanded from approximately 25,000 in 2012 to over 500,000 now—more than any other state, and about half of all the ZEVs nationwide. There are over 40 ZEV/NZEV models on the California market and in 2017, ZEVs accounted for about 7% of all new sales in California.

While the CVRP has been effective in creating a market for ZEVs, it has come under criticism that the majority of individuals receiving rebates are wealthy, living in affluent communities that, comparatively, experience better air quality than other areas of the state. To address these concerns, SB 1275 called upon ARB to establish the CVRP rebate eligibility based on income. In response, ARB established income caps and, in 2016, the Legislature approved a budget trailer bill [AB 859 (Committee on Budget), Chapter 368, Statutes of 2016] that established an income cap for the CVRP of $150,000 for single filers, $204,000 for head-of-household filers and $300,000 for joint filers and exempted fuel-cell electric cars rebates from the new income cap. AB 859 also required ARB to conduct outreach to low-income communities, offer additional rebate payments of $500 for low-income applicants, and prioritize rebate payments for low-income applicants. AB 859 had a sunset date of July 1, 2017, and AB 615 (Cooper), Chapter 631, Statutes of 2017, extended the sunset date to January 1, 2019. While the income caps in state law have already expired, ARB is currently using the same income caps for rebate eligibility. Additionally as it relates to this bill, ARB only offers rebates for the purchase of a plug-in hybrid vehicle that has an electric range of at least 20 miles.

To ensure that the CVRP is reaching its goal of ZEV market acceleration, AB 615 also required ARB, by December 31, 2018, to prepare and submit to the Legislature a report on the impact the CVRP has had on the state's zero-emission vehicle market. In developing the report, ARB is required to consider the impact of income caps, increased rebates for low-income consumers, and increased outreach on the electric vehicle market, as well as a quantification of emissions reductions attributable to the CVRP. ARB has not submitted the report to the Legislature and has indicated that the report would be finalized in late spring or early summer of this year.

Through the CVRP, the Center for Sustainable Energy, the administrator on behalf of ARB, offers a rebate of $5,000 for hydrogen electric (e.g. Hyundai Tucson Fuel Cell and the Toyota Mirai), $2,500 for battery electric (e.g. BMW i3, Nissan Leaf and the Tesla Model 3), and $1,500 for plug-in hybrid electric vehicles (e.g. Honda Clarity Plug-in Hybrid and the Ford Fusion Energi), and an additional $2,000 for low income drivers. The Center of Sustainable Energy also offers a rebate of $900 for zero-emission motorcycles (ZEM). Currently, applicants who wish to buy a fuel cell vehicle are exempt from the CVRP income caps. However, fuel cell vehicle consumers who exceed the aforementioned income cap must choose between a Clean Air Decal (a decal that allows single-rider eligible clean vehicle drivers to use carpool lanes) and a CVRP rebate.

CVRP rebates are a crucial part of Governor Brown’s 2018 Executive Order and eight-year initiative to accelerate sales of ZEVs. As part of this initiative, the Governor Brown’s administration proposed a total of $200 million annually from GGRF through 2025, which includes $175 million for CVRP and $25 for additional incentives for low-income consumers. In last year’s budget bill, the Legislature approved the appropriation of $200 million for CVRP of which at least $25 million is to be used to support low-income increased rebates. This year, Governor Newsom has proposed $200 million for the CVRP from GGRF monies as well.

As the number of clean vehicles purchased increases over time, ARB has indicated that it will revise the program’s income eligibility requirements to target moderate and low-income consumers that are most influenced by the availability of rebates. Additionally, ARB is planning to continue to grow their existing efforts of outreach and public education to low-income and disadvantaged communities by collaborating with community based organizations, developing educational materials, and coordinating ZEV test-drives.

According to the author, “AB 126 aims to make clean vehicles more accessible to California drivers living in communities with poor air quality by limiting eligibility by income and increasing rebate levels for low-income households.”

In support, Valley Clean Air Now states, “Keeping the income limits in place helps ensure that the people who need the rebates most are getting access to them.”

Committee Comments: There are many consumer behavior and market considerations impacting the development of this incentive program. A rebate can be expected to increase consumer demand for a ZEV because the rebate effectively reduces the price the consumer has to pay for the vehicle. There are a number of studies that find that rebates do increase ZEV (or other low‑emission vehicle) purchases in California and elsewhere. However, there are also many consumers that may have purchased a ZEV regardless of whether an incentive was available. These consumers may have the means to buy such a vehicle, prefer the technology, or simply believe in the environmental benefits that lower-emission vehicles have to offer. In fact, survey data compiled by the Center for Sustainable Energy shows more than half of consumers who received a CVRP rebate reported that they would have purchased a ZEV even if the program did not exist. Although the AB 615 report has not been completed, ARB staff does monitor CVRP participation rates. Historically, about 74% of ZEVs purchased or leased in California received a rebate prior to the introduction of income-based consumer eligibility. Since the introduction of the CVRP income cap, roughly 50% of ZEV purchases or leases in California have received rebates. This suggests that the income cap is having its intended effect. Considering that ARB needs to live “within its means” of $200 million and that ARB has indicated that applicants will be waitlisted as soon as September this year, it seems rational that the Legislature ensure that we are using monies as wisely and efficiently as possible. For these reasons, the committee strongly encourages the author to urge ARB to finalize and submit the AB 615 report to the Legislature to better inform the policy debate around this bill.

Double referral: This bill will be referred to the Assembly Natural Resources Committee should it pass out of this committee.

Related and Previous legislation: AB 1046 (Ting) of the current legislative session would require ARB to develop an annual forecast for the CVRP, until January 1, 2030 that includes, among other things, the total state rebate investment necessary to reach the goal of 5 million ZEV on California roads by 2030 and recommendations on changes to the project structure and rebate levels. AB 1046 is pending in this committee.

AB 2885 (Rodriguez), Chapter 366, Statutes of 2018, required ARB to provide outreach to low-income households and low-income communities to increase consumer awareness of the CVRP and requires ARB until January 1, 2022, to prioritize rebate payments to low-income applicants.

AB 615 (Cooper), Chapter 631, Statutes of 2017, among other things, extended the sunset on the income restrictions for CVRP from July 1, 2017 to January 1, 2019.

AB 2564 (Cooper) of 2016, would have required ARB to adopt regulations for CVRP to lower CVRP income limits, prioritize rebate payments for low-income consumers, increase rebate payments for low-income applicants, and increase outreach to low-income households. AB 2564 failed passage in the Senate Environmental Quality Committee.

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

SB 859 (Committee on Budget), Chapter 368, Statutes of 2016, among other things, imposed specified income eligibility limits on CVRP.

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

AB 32 (Núñez), Chapter 488, Statutes of 2006, required ARB to develop and implement regulations necessary to reduce emissions to 1990 levels by the year 2020.

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

REGISTERED SUPPORT / OPPOSITION:

Support

Valley Clean Air Now (Valley CAN)

Opposition

None on File

Analysis Prepared by: Cynthia Alvarez / TRANS. / (916) 319-2093