Existing state law authorizes the Department of Transportation to designate certain lanes for the exclusive use of high-occupancy vehicles (HOVs).

Existing federal law authorizes, until September 30, 2025, a state to allow specified alternate fuel and plug-in electric or hybrid vehicles to use lanes designated for HOVs.

Existing state law authorizes the Department of Motor Vehicles to issue decals or other identifiers to qualified vehicles, as specified. Existing state law allows a vehicle displaying a valid decal or identifier issued pursuant to these provisions to be operated in a lane designated for the exclusive use of HOVs regardless of the occupancy of the vehicle.

These existing state laws, by operation of their provisions, become inoperative on the date the federal authorization expires. Existing state law also repeals these provisions on September 30, 2025.

This bill would extend the repeal date of these provisions until January 1, 2027.

Existing state law authorizes the Department of Transportation to designate certain lanes for the exclusive use of high-occupancy vehicles (HOVs).

Existing federal law authorizes, until September 30, 2025, a state to allow specified alternate fuel and plug-in electric or hybrid vehicles to use lanes designated for HOVs.

Existing state law authorizes the Department of Motor Vehicles to issue decals or other identifiers to qualified vehicles, as specified. Existing state law allows a vehicle displaying a valid decal or identifier issued pursuant to these provisions to be operated in a lane designated for the exclusive use of HOVs regardless of the occupancy of the vehicle.

These existing state laws, by operation of their provisions, become inoperative on the date the federal authorization expires. Existing state law also repeals these provisions on September 30, 2025.

This bill would extend the repeal date of these provisions until January 1, 2027.

Existing state law authorizes the Department of Transportation to designate certain lanes for the exclusive use of high-occupancy vehicles (HOVs).

Existing federal law authorizes, until September 30, 2025, a state to allow specified alternate fuel and plug-in electric or hybrid vehicles to use lanes designated for HOVs.

Existing state law authorizes the Department of Motor Vehicles to issue decals or other identifiers to qualified vehicles, as specified. Existing state law allows a vehicle displaying a valid decal or identifier issued pursuant to these provisions to be operated in a lane designated for the exclusive use of HOVs regardless of the occupancy of the vehicle.

These existing state laws, by operation of their provisions, become inoperative on the date the federal authorization expires. Existing state law also repeals these provisions on September 30, 2025.

Existing state law authorizes the Department of Transportation to designate certain lanes for the exclusive use of high-occupancy vehicles (HOVs).

Existing federal law authorizes, until September 30, 2025, a state to allow specified alternate fuel and plug-in electric or hybrid vehicles to use lanes designated for HOVs.

Existing state law authorizes the Department of Motor Vehicles to issue decals or other identifiers to qualified vehicles, as specified. Existing state law allows a vehicle displaying a valid decal or identifier issued pursuant to these provisions to be operated in a lane designated for the exclusive use of HOVs regardless of the occupancy of the vehicle.

These existing state laws, by operation of their provisions, become inoperative on the date the federal authorization expires. Existing state law also repeals these provisions on September 30, 2025.

This bill would cancel the repeal of these provisions on September 30, 2025, and continue the operation of these provisions until the expiration of the federal authorization, currently September 30, 2025.

 THIRD READING  

Bill No: AB 2678

Author: Wallis (R)

Amended: 3/18/24 in Assembly

Vote: 21

SENATE TRANSPORTATION COMMITTEE: 13-1, 6/25/24

AYES: Cortese, Allen, Archuleta, Becker, Blakespear, Dodd, Gonzalez, Laird, Limón, Newman, Nguyen, Seyarto, Umberg

NOES: Dahle

NO VOTE RECORDED: Niello

SENATE APPROPRIATIONS COMMITTEE: 5-1, 8/15/24

AYES: Caballero, Ashby, Becker, Seyarto, Wahab

NOES: Jones

NO VOTE RECORDED: Bradford

ASSEMBLY FLOOR: 71-0, 5/22/24 - See last page for vote

SUBJECT: Vehicles: high-occupancy vehicle lanes

SOURCE: Author

DIGEST:

This bill extends the repeal date of provisions authorizing vehicles with a Clean Air Vehicle (CAV) decal to drive in High Occupancy Vehicle (HOV) lanes to January 1, 2027, if permitted by federal law.

ANALYSIS:

Existing federal law:

Authorizes states to authorize CAVs in HOV lanes until September 30, 2025. (23 United States Code 166)

Existing state law:

1. Directs DMV to issue CAV decals until January 1, 2019, as follows:

1. White decals are available for an unlimited number of vehicles that meet California’s super ultra-low emission vehicle standard for exhaust emissions and the federal inherently low-emission vehicle evaporative emission standard. Vehicles that meet these requirements are certified pure zero-emission vehicles (ZEV) (100% battery electric or hydrogen fuel cell). Liquefied petroleum gas (LPG) and compressed natural gas (CNG) fueled vehicles also qualify for white CAV decals.
2. Green decals are available for vehicles that meet California's enhanced advanced technology partial zero-emission vehicle (AT PZEV) requirement or transitional zero-emission vehicles (TZEV) standard. Vehicles that meet these requirements are usually plug-in Hybrids. (Vehicle Code Section (VEH) 5205.5)
   
3. Requires white and green decals that were issued prior to January 1, 2017, to expire on January 1, 2019.
4. Provides that a decal for a CAV (that has the same emission standards as the white and green decal vehicles) that has been issued between January 1, 2017, and January 1, 2019, to be valid until January 1, 2022.
   
5. Provides that a decal for a CAV (that has the same emission standards as the white and green decal vehicles) that has been issued on or after January 1, 2019, to be valid until January 1st of the fourth year after issuance.
   
6. Sunsets the CAV program on September 30, 2025.

1. Authorizes drivers displaying a CAV decal to use HOV lanes and freeway ramps, regardless of occupancy level, until such time as the Department of Transportation (Caltrans) determines that federal law does not authorize the state to allow these vehicles to use HOV lanes or ramps. (VEH 21655.9)
2. Requires Caltrans to remove individual HOV lanes, or HOV lane segments, during periods of peak congestion from these CAVs access provisions if it finds that the lane exceeds a level of service C (generally meaning at or near free-flowing traffic with minimal delays) and that the operation or projected operation of CAVs will significantly increase HOV lane congestion.
3. Requires that, if Caltrans determines HOV lane access is no longer authorized for CAVs under federal law, Caltrans is to notify the Secretary of State; subsequently, the authority to access HOV lanes by these vehicles will become inoperative (VEH 5205.5).

This bill:

Extends the repeal date of provisions authorizing ultra-low emission vehicles (ULEVs), super ultra-low emission vehicles (SULEVs), AT PZEVs, and TZEVs with a CAV decal issued by DMV to drive in HOV lanes to January 1, 2027, if permitted by federal law (the Federal authorization currently expires on September 30, 2025).

Comments

1. Purpose of the bill. According to the author, “California’s current program allowing HOV lane access for ZEVs has proven to be an incentive for Californians to make the transition to ZEVs. Assuming continued federal authorization, a one year extension of the program will continue to provide incentives to buyers to transition to ZEVs and give the state additional data on ZEV adoption. Previous guardrails placed on this program to protect HOV lanes from degradation remain in place. While California leads the country in ZEV adoption, recent reports have indicated a slower growth rate for sales, making it is prudent to leave the program in place for an additional year for continued evaluation and to avoid a major disruption of adoption rates.”
2. History of CAV decals and HOV access. HOV lane access for single-occupant clean vehicles was first authorized in 1999 with the passage of AB 71 (Cunneen, Chapter 330, Statutes of 1999). Over the years, this access has expanded and shifted to encourage the purchase of more fuel-efficient vehicles. Recently, AB 544 (Bloom, Chapter 630, Statutes of 2017) established the current version of the CAV decal program, until the expiration of federal authorization on September 30, 2025. Under this version of the program, decals issued in 2019 and later have staggered expiration dates on January 1 of the fourth year after the year of issuance. This bill would extend this program until January 1, 2027 if permitted by federal law.

AB 544 also modified the Clean Air Vehicle Rebate Project’s (CVRP) eligibility requirements. This modification prohibited the DMV from issuing a decal for a vehicle purchased on or after January 1, 2018, if the applicant received a CVRP rebate and has an income above a specified limit ($150,000 for single filers, $204,000 for head-of-household filers and $300,000 for joint filers). SB 957 (Lara, Chapter 367, Statutes of 2018) allowed the DMV to issue a CAV decal for a CAV that had previously been issued a decal, if the owner of the vehicles household income is at or below 80% of the state’s median income and the owner has not obtained a CAV decal for that same vehicle prior to January 1, 2017. Those decals were in effect from January of 2020 to January of 2024.  

1. CAV decals and ZEV goals. The Legislature has set several goals to reduce GHG emissions and address climate change. The Global Warming Solutions Act of 2006, AB 32 (Nuñez, Chapter 488, Statutes of 2006), and subsequent companion legislation SB 32 (Pavley, Chapter 249, Statutes of 2016) required California to reduce statewide GHG emissions to 40% below the 1990 level by 2030. CARB is responsible for developing a Scoping Plan to detail how the state will achieve its GHG emissions reduction targets.

Nearly 40% of California's GHG emissions are generated by the transportation sector, which includes both the light-duty (passenger) and medium- and heavy-duty fleets. In the transportation sector, measures to reduce GHG emissions include requiring the use of low-carbon fuels, cleaner vehicles, and strategies to promote sustainable communities and improved transportation choices that reduce growth in the number of vehicle miles traveled.

At the end of 2020, Governor Newsom issued Executive Order (EO) N-79-20, which requires 100% of in-state sales of new passenger cars and trucks to be zero-emission by 2035. EO N-79-20 charges CARB with developing and proposing passenger vehicle and truck regulations requiring increasing volumes of new ZEVs sold in the State towards that goal.

CAV decals were designed to be one of the benefits of purchasing a ZEV. Besides providing single occupancy access to HOV lanes, they are required to provide discounted or free tolls for bridges and in high occupancy toll (HOT) lanes. Of the 11 HOT lanes in the state, four charge no toll for vehicles with a CAV decal. The other HOT lanes provide a discount on tolls. These benefits of the decal were meaningful to consumers. In 2014, a University of California Institute of Transportation Studies (UCITS) report on the subject, when asked about their primary motivation to buy a car 57% of Plug-in Prius, 34% of Chevrolet Volt, and 38% of Nissan LEAF owners identified the CAV decal. Additionally the California Energy Commission found that, ZEV sales in 2014 accounted for 2.98% of the State’s new car sales while today they account for 25% of new car sales. These increases in new CAV sales have also created a more robust used CAV market in the state benefiting those who cannot afford new CAVs. Together, these data provide evidence that the program has indeed been successful in driving consumer behavior towards clean vehicles. Other ongoing state incentives and outside factors like rising gas prices, the availability of higher performing ZEVs, and an increasingly accessible charging network have played roles as well. This makes it difficult to quantify the exact impact the CAV decal program has currently on CAV purchasing in the state.

This question is further explored in a 2023 report from UCITS. It notes that the incentive the CAV decal provides would likely only support a small increase in ZEV sales moving forward. Moreover, car owners disproportionally from middle and high-income suburban commuter populations are the largest beneficiaries. Data presented above from 2014 indicates that the CAV program affected consumer behavior influencing them to buy CAVs. However, the updated report from UCITS argues that those consumers that were influenced by the program have already made the switch and continuing the incentive into the future will not result in the same significant increase in CAV sales seen from 2014 to 2023.

1. HOV lane degradation, congestion, and vehicle miles traveled. The federal government requires traffic in HOV lanes to move at a certain speed. Annually, Caltrans must complete an HOV Facilities Degradation Report to assess if the state is in compliance with federal law. An HOV facility is considered degraded if the average traffic speed during the morning or evening weekday peak hour period is less than 45 mph for more than 10% of the time over a consecutive 180-day period. Recent reports have found that 22% to 40% of the state’s HOV facilities do not meet federal requirements. According to the July 2023 report, in 2022 “Of the 1,130 lane-miles monitored during the morning peak hour period, about 22% (245 lane-miles) were degraded. Of the 1,130 lane-miles monitored during the afternoon peak hour period, approximately 36% (410 lane-miles) were degraded. District 7 (Los Angeles area), District 8 (Riverside and San Bernardino Counties), and District 12 (Orange County) had the most degradation. Approximately 40% of District 7, District 8, and District 12 HOV facilities that operated in both peak hour periods experienced degradation in both peak hour periods.” During that same period, Los Angeles accounted for 29% of the state’s active CAV decals, Orange County accounted for 18% of the state’s active CAV decals and San Bernardino/Riverside accounted for 8% of the state's active decals. Under the program, Caltrans is allowed to remove lanes or portions of lanes from the program if congestion occurs and the segment exceeds a specified level of service. However, degradation alone is not sufficient to prompt removal of a lane or portion of a lane from the program.

The CAV decal program by nature increases the ease with which drivers of CAVs can travel by opening up HOV lane access and decreasing or eliminating the price of tolls. While this has likely contributed to increased ZEV sales in the state it has also likely contributed to the steady increase in VMT statewide from 2013 to 2019. Beginning on July 1, 2020, agencies analyzing the transportation impacts of new projects were required to consider VMT instead of level of service when determining the appropriateness of a project. If the state is asking agencies to consider VMT when designing and planning projects should this also be a consideration for proposed legislation around programs that may impact VMT?

Reducing VMT has become one of the state’s major strategies to decrease transportation emissions, congestion, and road degradation. By making it cheaper and faster for CAVs to travel on the state’s roadways this program incentivizes driving and likely contributes to increasing VMT. While these increases would be coming from vehicles that release limited emissions, simply having more vehicles on the road, regardless of how clean, may lead to higher demands for road repair and increase the need for highway expansion.

1. Federal preemption. Federal authorization for states to enact programs allowing CAVs to operate in HOV lanes regardless of the number of passengers expires on September 30, 2025, as does the state’s authorization for issuing CAV decals. Should the federal government decide late next year to extend the authority for states to permit CAVs in HOV and HOT lanes, the Legislature would not have an opportunity to weigh in on whether we should extend or modify the state’s existing program.

By extending the sunset for this program until January 1, 2027, the Legislature has the opportunity in 2026 to evaluate if the state should have a CAV decal program. However, this evaluation could also happen in the event of a lapse in the program during 2026. A one year lapse could provide interesting data and a more updated comparison of CAV sales with and without the program. Based on this yearlong pause and evaluation, the Legislature could then reinstate the program in 2027 if extended by the Federal government. Either way, if the Federal government does not extend the authority for states to operate these programs beyond September 30, 2025, this bill and existing law would end the program on that date, keeping California in compliance with federal law.  

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

According to the Senate Appropriations Committee:

The Department of Motor Vehicles (DMV) estimates one-time costs of approximately $260,000 for staff time, printing, and postage to identify and notify existing decal holders of their new CAV decal expiration dates. Staff estimates additional DMV administrative costs in the range of $1.5 million annually to process new CAV decal applications through the extended operative period of the program. These costs would be fully offset by the payment of the $22 fee paid by applicants. See Staff Comments. (Motor Vehicle Account*)

The California Air Resources Board (CARB) estimates additional ongoing costs of approximately $152,000 annually for 1.0 PY of staff through the extended operative period of the program, to continue to evaluate and verify vehicles eligible for the CAV decal program, coordinate with DMV, and respond to customer inquiries about the program. (Motor Vehicle Account*)

The Department of Transportation (Caltrans) indicates that it would incur absorbable costs related to continued analysis and reporting activities required under federal law through the extended operative period of the program. (State Highway Account*)

* Staff notes that these costs would only be incurred to the extent federal authorization is extended beyond the current September 30, 20255 expiration date.

SUPPORT: (Verified 8/15/24)

Alliance for Automotive Innovation

OPPOSITION: (Verified 8/15/24)

None received

ASSEMBLY FLOOR: 71-0, 5/22/24

AYES: Addis, Aguiar-Curry, Alanis, Alvarez, Arambula, Bains, Bauer-Kahan, Berman, Boerner, Bonta, Bryan, Juan Carrillo, Wendy Carrillo, Chen, Connolly, Davies, Dixon, Flora, Mike Fong, Vince Fong, Gabriel, Gallagher, Garcia, Gipson, Grayson, Haney, Hart, Hoover, Irwin, Jackson, Jones-Sawyer, Kalra, Lackey, Lee, Low, Lowenthal, Maienschein, McCarty, McKinnor, Muratsuchi, Stephanie Nguyen, Ortega, Pacheco, Papan, Jim Patterson, Joe Patterson, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Rendon, Reyes, Rodriguez, Blanca Rubio, Sanchez, Santiago, Schiavo, Soria, Ta, Ting, Valencia, Villapudua, Waldron, Wallis, Ward, Weber, Wicks, Wilson, Wood, Zbur, Robert Rivas

NO VOTE RECORDED: Bennett, Calderon, Cervantes, Megan Dahle, Essayli, Friedman, Holden, Mathis, Luz Rivas

Prepared by: Benjamin O'Brien-Hokanson / TRANS. / (916) 651-4121

8/18/24 9:19:27

**** END ****

SENATE COMMITTEE ON

Senator Anna Caballero, Chair

2023 - 2024 Regular Session

AB 2678 (Wallis) - Vehicles: high-occupancy vehicle lanes

Bill Summary:

AB 2678 would extend the sunset on the Clean Air Vehicle (CAV) program, which authorizes the operation of certain vehicles displaying a CAV decal in high-occupancy vehicle (HOV) lanes, regardless of occupancy levels, from September 30, 2025 until January 1, 2027, contingent upon extended federal authorization.

Fiscal Impact:

• The Department of Motor Vehicles (DMV) estimates one-time costs of approximately $260,000 for staff time, printing, and postage to identify and notify existing decal holders of their new CAV decal expiration dates. Staff estimates additional DMV administrative costs in the range of $1.5 million annually to process new CAV decal applications through the extended operative period of the program. These costs would be fully offset by the payment of the $22 fee paid by applicants. See Staff Comments. (Motor Vehicle Account*)
  
• The California Air Resources Board (CARB) estimates additional ongoing costs of approximately $152,000 annually for 1.0 PY of staff through the extended operative period of the program, to continue to evaluate and verify vehicles eligible for the CAV decal program, coordinate with DMV, and respond to customer inquiries about the program. (Motor Vehicle Account*)
  
• The Department of Transportation (Caltrans) indicates that it would incur absorbable costs related to continued analysis and reporting activities required under federal law through the extended operative period of the program. (State Highway Account*)

* Staff notes that these costs would only be incurred to the extent federal authorization is extended beyond the current September 30, 20255 expiration date.

Background:

Existing federal law authorizes states to allow certain alternative fuel, plug-in electric, and plug-in hybrid motor vehicles with a single occupant to use high-occupancy vehicle (HOV) lanes until September 30, 2025. If the vehicles cause a degradation of HOV lane operations, the state must limit or discontinue clean air vehicle use of the lanes. Existing law authorizes Caltrans to ban clean air vehicles from HOV lanes if unacceptable congestion levels can be attributed to those vehicles.

Existing law, the CAV program, exempts certain clean air and alternative fuel vehicles from HOV lane occupancy requirements until September 30, 2025 if the vehicle displays a specified decal issued by DMV. CAV decals may be issued to qualifying applicants upon payment of a fee sufficient to cover DMV’s costs to implement and administer the CAV program, which is currently set at $22 for all new and replacement decals. CAV decals are valid until the fourth year after the year of issuance, or until the program’s expiration date. In addition to providing single occupancy access to HOV lanes, vehicles displaying a CAV decal may also benefit from free or reduced tolls on bridges and high-occupancy toll (HOT) lanes.

Proposed Law:

AB 2678 would extend the repeal date of the CAV program, which authorizes eligible vehicles displaying a CAV decal to drive in HOV lanes, regardless of occupancy requirements, from September 30, 2025 until January 1, 2027. This extension would only be valid to the extent federal authorization for qualified vehicles to operate in HOV lanes is also extended.

Related Legislation:

SB 957 (Lara), Chap. 367/2018, authorized DMV to issue a CAV decal for a CAV that has previously been issued a decal, if the owner of the vehicle is low-income and has not obtained a CAV decal for that same vehicle prior to January 1, 2017. Decals issued under this provision expired as of January 1, 2024.

AB 544 (Bloom), Chap. 630/2017, modified the CAV program to limit eligibility and specify a four-year decal validity period, and extended the program to September 30, 2025, as specified.

Staff Comments:

Existing law authorizes DMV to charge a fee sufficient to cover its costs in implementing the CAV program, which is currently set at $22 for all new and replacement decals. DMV indicates that extending the program until January 1, 2027 will result in ongoing administrative costs to continue to process over 100,000 transactions annually through the 2026 calendar year. All DMV costs for processing and issuance of decals would be covered by the payment of the $22 fee. DMV would incur one-time costs to notify existing decal holders of the revised expiration date of their CAV decals, as follows:

• Approximately 81,000 customers who were issued CAV decals in 2022 (yellow decals), which would expire January 1, 2026 under the bill.
• Approximately 90,000 customers who were issued CAV decals in 2023 (green decals), which would expire January 1, 2027 under the bill.
• Likely over 100,000 customers who will be issued a CAV decal in 2024 (red decals), which would expire January 1, 2027 under the bill.

Under existing law, CARB establishes the official list of vehicles eligible for CAV decals. To accomplish this, CARB staff evaluate vehicle eligibility based on vehicle emissions certification and legislative criteria, assess eligibility of specialty vehicles, coordinate with automakers to interpret vehicle identification number decoders, maintain shared datasets on eligibility approvals and zero-emission vehicle models with DMV staff, maintain a public vehicle eligibility list, and respond to public inquiries about the program. Since 2020, the number of eligible vehicles has increased by 430%, and the number of decals issued has increased by about 60%. These figures are expected to continue to increase, considering market acceleration of clean cars in California.

The Legislative Analyst’s Office (LAO) recently published a report as part of its analysis of the Governor’s proposed 2024-25 Budget entitled “Insolvency Risks for Environmental and Transportation Special Funds” that includes an evaluation of the Motor Vehicle Account (MVA). The report noted that the MVA is expected to fully exhaust its reserves and become insolvent in 2025-26 (Budget Year +1). Specifically, the administration projects expenditures will exceed available resources by roughly $140 million in 2025-26. Absent actions to address the MVA fund condition, approving any new proposals that would increase MVA expenditures would exacerbate the structural imbalance and hasten the insolvency timeline.

-- END --

SENATE COMMITTEE ON TRANSPORTATION

Senator Dave Cortese, Chair

2023 - 2024 Regular

Bill No: Hearing Date: 6/25/2024

SUBJECT:

DIGEST: This bill extends the repeal date of provisions authorizing vehicles with a Clean Air Vehicle (CAV) decal to drive in High Occupancy Vehicle (HOV) lanes to January 1, 2027, if permitted by federal law.

ANALYSIS:

Existing Federal law:

1. Authorizes states to authorize CAVs in HOV lanes until September 30, 2025. (23 United States Code 166)

Existing State Law:

1. Directs DMV to issue CAV decals until January 1, 2019, as follows:

1. White decals are available for an unlimited number of vehicles that meet California’s super ultra-low emission vehicle standard for exhaust emissions and the federal inherently low-emission vehicle evaporative emission standard. Vehicles that meet these requirements are certified pure zero-emission vehicles (ZEV) (100% battery electric or hydrogen fuel cell). Liquefied petroleum gas (LPG) and compressed natural gas (CNG) fueled vehicles also qualify for white CAV decals.
   
2. Green decals are available for vehicles that meet California's enhanced advanced technology partial zero-emission vehicle (AT PZEV) requirement or transitional zero-emission vehicles (TZEV) standard. Vehicles that meet these requirements are usually plug-in Hybrids. (Vehicle Code Section (VEH) 5205.5)
   
3. Requires white and green decals that were issued prior to January 1, 2017, to expire on January 1, 2019.
4. Provides that a decal for a CAV (that has the same emission standards as the white and green decal vehicles) that has been issued between January 1, 2017, and January 1, 2019, to be valid until January 1, 2022.
   
5. Provides that a decal for a CAV (that has the same emission standards as the white and green decal vehicles) that has been issued on or after January 1, 2019, to be valid until January 1st of the fourth year after issuance.
   
6. Sunsets the CAV program on September 30, 2025.

1. Authorizes drivers displaying a CAV decal to use HOV lanes and freeway ramps, regardless of occupancy level, until such time as the Department of Transportation (Caltrans) determines that federal law does not authorize the state to allow these vehicles to use HOV lanes or ramps. (VEH 21655.9)
2. Requires Caltrans to remove individual HOV lanes, or HOV lane segments, during periods of peak congestion from these CAVs access provisions if it finds that the lane exceeds a level of service C (generally meaning at or near free-flowing traffic with minimal delays) and that the operation or projected operation of CAVs will significantly increase HOV lane congestion.
3. Requires that, if Caltrans determines HOV lane access is no longer authorized for CAVs under federal law, Caltrans is to notify the Secretary of State; subsequently, the authority to access HOV lanes by these vehicles will become inoperative. (VEH 5205.5)

This bill:

1. Extends the repeal date of provisions authorizing ultra-low emission vehicles (ULEVs), super ultra-low emission vehicles (SULEVs), AT PZEVs, and TZEVs with a CAV decal issued by DMV to drive in HOV lanes to January 1, 2027, if permitted by federal law (the Federal authorization currently expires on September 30, 2025).

COMMENTS:

1. Purpose of the bill. According to the author, “California’s current program allowing HOV lane access for ZEVs has proven to be an incentive for Californians to make the transition to ZEVs. Assuming continued federal authorization, a one year extension of the program will continue to provide incentives to buyers to transition to ZEVs and give the state additional data on ZEV adoption. Previous guardrails placed on this program to protect HOV lanes from degradation remain in place. While California leads the country in ZEV adoption, recent reports have indicated a slower growth rate for sales, making it is prudent to leave the program in place for an additional year for continued evaluation and to avoid a major disruption of adoption rates.”
2. History of CAV decals and HOV access. HOV lane access for single-occupant clean vehicles was first authorized in 1999 with the passage of AB 71 (Cunneen). Over the years, this access has expanded and shifted to encourage the purchase of more fuel-efficient vehicles. Recently, AB 544 (Bloom, 2017) established the current version of the CAV decal program, until the expiration of federal authorization on September 30, 2025. Under this version of the program, decals issued in 2019 and later have staggered expiration dates on January 1 of the fourth year after the year of issuance. This bill would extend this program until January 1, 2027 if permitted by federal law.

AB 544 also modified the Clean Air Vehicle Rebate Project’s (CVRP) eligibility requirements. This modification prohibited the DMV from issuing a decal for a vehicle purchased on or after January 1, 2018, if the applicant received a CVRP rebate and has an income above a specified limit ($150,000 for single filers, $204,000 for head-of-household filers and $300,000 for joint filers). SB 957 (Lara, 2018) allowed the DMV to issue a CAV decal for a CAV that had previously been issued a decal, if the owner of the vehicles household income is at or below 80% of the state’s median income and the owner has not obtained a CAV decal for that same vehicle prior to January 1, 2017. Those decals were in effect from January of 2020 to January of 2024.  

1. CAV decals and ZEV goals. The Legislature has set several goals to reduce GHG emissions and address climate change. The Global Warming Solutions Act of 2006, AB 32 (Nuñez, 2006), and subsequent companion legislation SB 32 (Pavley, 2016) requires California to reduce statewide GHG emissions to 40% below the 1990 level by 2030. CARB is responsible for developing a Scoping Plan to detail how the state will achieve its GHG emissions reduction targets.

Nearly 40% of California's GHG emissions are generated by the transportation sector, which includes both the light-duty (passenger) and medium- and heavy-duty fleets. In the transportation sector, measures to reduce GHG emissions include requiring the use of low-carbon fuels, cleaner vehicles, and strategies to promote sustainable communities and improved transportation choices that reduce growth in the number of vehicle miles traveled.

At the end of 2020, Governor Newsom issued Executive Order (EO) N-79-20, which requires 100% of in-state sales of new passenger cars and trucks to be zero-emission by 2035. EO N-79-20 charges CARB with developing and proposing passenger vehicle and truck regulations requiring increasing volumes of new ZEVs sold in the State towards that goal.

CAV decals were designed to be one of the benefits of purchasing a ZEV. Besides providing single occupancy access to HOV lanes, they are required to provide discounted or free tolls for bridges and in high occupancy toll (HOT) lanes. Of the 11 HOT lanes in the state, four charge no toll for vehicles with a CAV decal. The other HOT lanes provide a discount on tolls. These benefits of the decal were meaningful to consumers. In 2014, a University of California Institute of Transportation Studies (UCITS) report on the subject, when asked about their primary motivation to buy a car 57% of Plug-in Prius, 34% of Chevrolet Volt, and 38% of Nissan LEAF owners identified the CAV decal. Additionally the California Energy Commission found that, ZEV sales in 2014 accounted for 2.98% of the State’s new car sales while today they account for 25% of new car sales. These increases in new CAV sales have also created a more robust used CAV market in the state benefiting those who cannot afford new CAVs. Together, these data provide evidence that the program has indeed been successful in driving consumer behavior towards clean vehicles. Other ongoing state incentives and outside factors like rising gas prices, the availability of higher performing ZEVs, and an increasingly accessible charging network have played roles as well. This makes it difficult to quantify the exact impact the CAV decal program has currently on CAV purchasing in the state.

This question is further explored in a 2023 report from UCITS. It notes that the incentive the CAV decal provides would likely only support a small increase in ZEV sales moving forward. Moreover, car owners disproportionally from middle and high-income suburban commuter populations are the largest beneficiaries. Data presented above from 2014 indicates that the CAV program affected consumer behavior influencing them to buy CAVs. However, the updated report from UCITS argues that those consumers that were influenced by the program have already made the switch and continuing the incentive into the future will not result in the same significant increase in CAV sales seen from 2014 to 2023.

1. HOV lane degradation, congestion, and vehicle miles traveled. The federal government requires traffic in HOV lanes to move at a certain speed. Annually, Caltrans must complete an HOV Facilities Degradation Report to assess if the state is in compliance with federal law. An HOV facility is considered degraded if the average traffic speed during the morning or evening weekday peak hour period is less than 45 mph for more than 10% of the time over a consecutive 180-day period. Recent reports have found that 22% to 40% of the state’s HOV facilities do not meet federal requirements. According to the July 2023 report, in 2022 “Of the 1,130 lane-miles monitored during the morning peak hour period, about 22% (245 lane-miles) were degraded. Of the 1,130 lane-miles monitored during the afternoon peak hour period, approximately 36% (410 lane-miles) were degraded. District 7 (Los Angeles area), District 8 (Riverside and San Bernardino Counties), and District 12 (Orange County) had the most degradation. Approximately 40% of District 7, District 8, and District 12 HOV facilities that operated in both peak hour periods experienced degradation in both peak hour periods.” During that same period, Los Angeles accounted for 29% of the state’s active CAV decals, Orange County accounted for 18% of the state’s active CAV decals and San Bernardino/Riverside accounted for 8% of the state's active decals. Under the program, Caltrans is allowed to remove lanes or portions of lanes from the program if congestion occurs and the segment exceeds a specified level of service. However, degradation alone is not sufficient to prompt removal of a lane or portion of a lane from the program.

The CAV decal program by nature increases the ease with which drivers of CAVs can travel by opening up HOV lane access and decreasing or eliminating the price of tolls. While this has likely contributed to increased ZEV sales in the state it has also likely contributed to the steady increase in VMT statewide from 2013 to 2019. Beginning on July 1, 2020, agencies analyzing the transportation impacts of new projects were required to consider VMT instead of level of service when determining the appropriateness of a project. If the state is asking agencies to consider VMT when designing and planning projects should this also be a consideration for proposed legislation around programs that may impact VMT?

Reducing VMT has become one of the state’s major strategies to decrease transportation emissions, congestion, and road degradation. By making it cheaper and faster for CAVs to travel on the state’s roadways this program incentivizes driving and likely contributes to increasing VMT. While these increases would be coming from vehicles that release limited emissions, simply having more vehicles on the road, regardless of how clean, may lead to higher demands for road repair and increase the need for highway expansion.

1. Federal preemption. Federal authorization for states to enact programs allowing CAVs to operate in HOV lanes regardless of the number of passengers expires on September 30, 2025, as does the state’s authorization for issuing CAV decals. Should the federal government decide late next year to extend the authority for states to permit CAVs in HOV and HOT lanes, the Legislature would not have an opportunity to weigh in on whether we should extend or modify the state’s existing program.

By extending the sunset for this program until January 1, 2027, the Legislature has the opportunity in 2026 to evaluate if the state should have a CAV decal program. However, this evaluation could also happen in the event of a lapse in the program during 2026. A one year lapse could provide interesting data and a more updated comparison of CAV sales with and without the program. Based on this yearlong pause and evaluation, the Legislature could then reinstate the program in 2027 if extended by the Federal government. Either way, if the Federal government does not extend the authority for states to operate these programs beyond September 30, 2025, this bill and existing law would end the program on that date, keeping California in compliance with federal law.  

Related Legislation:

SB 957 (Lara, Chapter 367, Statutes of 2018) - Allows the DMV to issue a CAV decal for a CAV that has previously been issued a decal, if the owner of the vehicle is low-income and has not obtained a CAV decal for that same vehicle prior to January 1, 2017.

AB 544 (Bloom, Chapter 630, Statutes of 2017) - Modifies the CAV program and creates a new program to take effect when the program sunsets in 2019.

SB 838 (Committee on Budget and Fiscal Review, Chapter 339, Statutes of 2016) - Eliminated the cap on the number of green HOV lane decals that could be issued.

AB 1964 (Bloom of 2016) - Was similar to AB 544. AB 1964 died on the Senate Floor.

AB 95 (Committee on Budget, Chapter 12, Statutes of 2015) - Further expanded the number of available green decals.

AB 1721 (Linder, Chapter 526, Statutes of 2014) - Provides toll-free or reduced-rate passage for single-occupant, low-emission vehicles with a CAV decal.

AB 2013 (Muratsuchi, Chapter 527, Statutes of 2014) - Expanded the number of available green decals.

SB 853 (Committee on Budget and Fiscal Review, Chapter 27, Statutes of 2014) -Expanded the number of available green decals.

SB 286 (Yee, Chapter 414, Statutes of 2013) - Extended the green decal program to January 1, 2019.

SB 266 (Blumenfield, Chapter 405, Statues of 2013) - Extended the white decal program to January 1, 2019.

SB 535 (Yee, Chapter 215, Statutes of 2010) - Replaced the hybrid yellow decal program with a new green and white decal program aimed at incentivizing the purchase of enhanced advanced technology partial zero-emission vehicles.

AB 2628 (Pavley, Chapter 725, Statutes of 2006) - Expanded the HOV lane access by allowing hybrid vehicles to use the lanes.

AB 71 (Cunneen, Chapter 330, Statutes of 1999) - First authorized access to HOV lanes for certain vehicles.

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

According to the Assembly Appropriations Committee:

Should the federal government extend the repeal date of the authorization for single occupant vehicles in HOV lanes, the Department of Motor Vehicles (DMV) would incur one-time costs of approximately $215,000 for staff time, printing, and postage to notify existing decal holders of the new expiration dates (Motor Vehicle Account (MVA.)) DMV notes its ongoing costs related to processing new decal applications will continue to be offset by an administrative service fee paid by decal applicants. The current fee is $22. 

The Air Resources Board (ARB) estimates ongoing annual costs of approximately $152,000 for one new position (MVA) to assist with vehicle eligibility verification and consumer assistance. See below for more details.

The MVA is expected to fully exhaust its reserves and become insolvent in fiscal year 2025‑26. The LAO further warns that the MVA, absent corrective action, such as revenue increases or spending reductions, will experience a negative fund balance of $1.4 billion in fiscal year 2028‑29.

The California Department of Transportation notes its costs are minor and absorbable.

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

June 19, 2024.)

SUPPORT:

Alliance for Automotive Innovation

OPPOSITION:

None Received

-- END --

ASSEMBLY THIRD READING

ATR Bill Id:AB 2678

Author:(Wallis)

As Amended Ver:March 18, 2024

Majority vote

SUMMARY

Extends the repeal date of provisions authorizing vehicles with a Clean Air Vehicle (CAV) decal to drive in High Occupancy Vehicle (HOV) lanes to January 1, 2027, if permitted by federal law.

Major Provisions

COMMENTS

CAV decals and zero-emission vehicles (ZEV) goals: The Legislature has set several goals to reduce GHG emissions and address climate change. The Global Warming Solutions Act of 2006, AB 32 (Nuñez), Chapter 488, Statutes of 2006 and subsequent companion legislation SB 32 (Pavley), Chapter 249, Statutes of 2016, requires California to reduce statewide GHG emissions to 40% below the 1990 level by 2030. The 1990 level is an aggregated statewide limit and is not sector- or facility-specific. CARB is responsible for developing a Scoping Plan to detail how the state will achieve its GHG emissions reduction targets mandated by law.

Nearly 40% of California's GHG emissions are generated by the transportation sector, which includes both the light-duty (passenger) and medium- and heavy-duty fleets. Heavy-duty diesel trucks also contribute to unhealthy levels of ozone, inhalable particulate matter, carbon monoxide, NOx, and sulfur dioxide, affecting local air quality. In the transportation sector, measures to reduce GHG emissions include requiring the use of low-carbon fuels, cleaner vehicles, and strategies to promote sustainable communities and improved transportation choices that reduce growth in number of vehicle miles traveled.

To further these efforts, at the end of 2020, Governor Newsom issued Executive Order (EO) N-79-20 which requires 100% of in-state sales of new passenger cars and trucks to be zero-emission by 2035. EO N-79-20 charges CARB with developing and proposing passenger vehicle and truck regulations requiring increasing volumes of new ZEVs sold in the State towards that goal.

CAV decals were designed to be one of the benefits of purchasing a ZEV. Besides providing single occupancy access to HOV lanes, they also are required to provide discounted or free tolls for bridges and in high occupancy toll (HOT) lanes. Of the 11 HOT lanes in the state, four charge no toll for vehicles with a CAV decal. The other HOT lanes provide a 15% or 50% discount on tolls.

Initially, the CAV decal provided an incentive for people to buy ZEVs and hybrids. According to the 2014 University of California Institute of Transportation Studies (UCITS) report Exploring the Impact of High Occupancy Vehicle (HOV) Lane Access on Plug-in Vehicle Sales and Usage in California "When asked about their primary motivation to buy a car 57% of Plug-in Priuses, 34% of Volts and 38% of LEAFs identified it as the HOV sticker."

According to the California Energy Commission, ZEV sales in 2014 only accounted for 2.98% of the state's car sales. Today, ZEVs account for 25% of the new car sales.

According to the 2023 report Accessing the Potential Impacts of Toll Discounts on Zero-Emission Vehicle Adoption from the National Center for Sustainable Transportation at UC Davis ITS, the incentive the CAV decal provides would likely only support a small increase in ZEV sales. Moreover, car owners disproportionally from middle and high-income suburban commuters are the beneficiaries.

Under current law, California's successful program that allows ZEVs to access HOV lanes is scheduled to sunset in 2025. Efforts are underway at the federal level to extend the federal authorization for this state program. However due to the unusual timing of the existing sunset date in California statute (September 30, 2025) which aligns with the federal law, legislation is needed this year to ensure the program does not lapse, should a federal extension be granted."

HOV Lane Degradation: The federal government requires traffic in HOV lanes to move at a certain speed. Annually, Caltrans must complete an HOV Facilities Degradation Report to assess if the state is in compliance with federal law. An HOV facility is considered degraded if the average traffic speed during the morning or evening weekday peak hour period is less than 45 mph for more than 10% of the time over a consecutive 180-day period. Recent reports have found that 22% to 40% of the state's HOV facilities do not meet federal requirements. According to the July 2023 report, in 2022 "Of the 1,130 lane-miles monitored during the morning peak hour period, about 22% (245 lane-miles) were degraded. Of the 1,130 lane-miles monitored during the afternoon peak hour period, approximately 36% (410 lane-miles) were degraded. District 7 (Los Angeles area), District 8 (Riverside and San Bernardino Counties), and District 12 (Orange County) had the most degradation. Approximately 40% of District 7, District 8, and District 12 HOV facilities that operated in both peak hour periods experienced degradation in both peak hour periods." During that same period, Los Angeles accounted for 29% of the state's active CAV decals, Orange County accounted for 18% of the state's active CAV decals and San Bernardino/ Riverside accounted for 8% of the state's active decals. 

CAV History: HOV lane access for single-occupant clean vehicles was first authorized in 1999 with the passage of AB 71 (Cunneen), Chapter 330, Statutes of 1999. Over the years, this access was expanded to encourage the purchase of more fuel-efficient vehicles. However, the addition of hybrid vehicles in 2004 eventually resulted in lane degradation. As a result, that program was allowed to sunset and was replaced. Since then, numerous bills have been enacted that modified and expanded the program. More recently, AB 544 (Bloom), Chapter 630, Statutes of 2017 established a new CAV program, until the expiration of federal authorization on September 30, 2025, under which decals issued in 2019 and later will have staggered expiration dates on January 1 of the fourth year after the year of issuance.  AB 544 also modified the Clean Air Vehicle Rebate Project's (CVRP) eligibility requirements. This modification prohibited the DMV from issuing a decal for a vehicle purchased on or after January 1, 2018, if the applicant received a CVRP rebate and has an income above a specified limit ($150,000 for single filers, $204,000 for head-of-household filers and $300,000 for joint filers). Finally, SB 957 (Lara) Chapter 367, Statutes of 2018, authorized CAV decals whose sticker has expired to obtain a new one if the owner's household income is at or below 80% of the state median income and the owner has not previously obtained a CAV sticker for the same vehicle. Those stickers were only in effect from January of 2020 to January of 2024.  

Committee Comments: Federal authorization for CAV vehicles to operate in California expires on September 30, 2025, as does the state's authorization for issuing CAV decals. Should the federal government decide late next year to extend the authority for states to permit CAVs in HOV and HOT lanes, the Legislature would not have an opportunity to weigh in on whether we should extend or modify the state's existing program.

California ZEV adoption is far ahead of the rest of the country. In 2023, California accounted for 34% of all ZEV sales. By extending the sunset for this program until January 1, 2027, the Legislature has the opportunity in 2026 to evaluate if the state should have a CAV decal program. If the Federal government does not extend the authority for CAVs to operate beyond September 30, 2025, this bill and existing law would end the program on that date, keeping California in compliance with federal law.  

According to the Author

"California's current program allowing HOV lane access for ZEVs has proven to be an incentive for Californians to make the transition to ZEVs. Assuming continued federal authorization, a one year extension of the program will continue to provide incentives to buyers to transition to ZEVs and give the state additional data on ZEV adoption. Previous guardrails placed on this program to protect HOV lanes from degradation remain in place. While California leads the country in ZEV adoption, recent reports have indicated a slower growth rate for sales, making it is prudent to leave the program in place for an additional year for continued evaluation and to avoid a major disruption of adoption rates."

Arguments in Support

The Alliance for Automotive Innovation, writing in support of this bill, argues "The Auto Innovators have been a proud partner in helping California reach its ambitious climate goals. In 2023, 25% of new cars sold in California were ZEVs, which is well ahead of the California Air Resources Board's 2012 target of 15% by 2025. Helping in reaching that goal, no doubt, is the policy of letting ZEVs access HOV lanes: a significant incentive that encourages car buyers to choose a ZEV.

Arguments in Opposition

None on file

FISCAL COMMENTS

According to Assembly Appropriations Committee:

1) Should the federal government extend the repeal date of the authorization for single occupant vehicles in HOV lanes, the Department of Motor Vehicles (DMV) would incur one-time costs of approximately $215,000 for staff time, printing, and postage to notify existing decal holders of the new expiration dates (Motor Vehicle Account (MVA.)) DMV notes its ongoing costs related to processing new decal applications will continue to be offset by an administrative service fee paid by decal applicants. The current fee is $22. 

2) The Air Resources Board (ARB) estimates ongoing annual costs of approximately $152,000 for one new position (MVA) to assist with vehicle eligibility verification and consumer assistance. See below for more details.

The MVA is expected to fully exhaust its reserves and become insolvent in fiscal year 2025‑26. The LAO further warns that the MVA, absent corrective action, such as revenue increases or spending reductions, will experience a negative fund balance of $1.4 billion in fiscal year 2028‑29.

3) The California Department of Transportation notes its costs are minor and absorbable.

VOTES

ASM TRANSPORTATION: 15-0-0

YES: Wilson, Davies, Aguiar-Curry, Berman, Juan Carrillo, Hart, Hoover, Jackson, Lowenthal, Papan, Sanchez, Ting, Wallis, Ward, Wicks

ASM APPROPRIATIONS: 15-0-0

YES: Wicks, Sanchez, Arambula, Bryan, Calderon, Wendy Carrillo, Dixon, Mike Fong, Grayson, Haney, Hart, Jim Patterson, Pellerin, Ta, Villapudua

UPDATED

VERSION: March 18, 2024

CONSULTANT: David Sforza / TRANS. / (916) 319-2093 FN: 0003038

Date of Hearing: April 24, 2024

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Buffy Wicks, Chair

ABPCA Bill Id:AB 2678

Author:(Wallis) – As Amended Ver:March 18, 2024

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

SUMMARY:

This bill extends the repeal date of provisions authorizing vehicles with a Clean Air Vehicle (CAV) decal to drive in High Occupancy Vehicle (HOV) lanes to January 1, 2027, if permitted by federal law.

FISCAL EFFECT:

1) Should the federal government extend the repeal date of the authorization for single occupant vehicles in HOV lanes, the Department of Motor Vehicles (DMV) would incur one-time costs of approximately $215,000 for staff time, printing, and postage to notify existing decal holders of the new expiration dates (Motor Vehicle Account (MVA.)) DMV notes its ongoing costs related to processing new decal applications will continue to be offset by an administrative service fee paid by decal applicants. The current fee is $22. 

2) The Air Resources Board (ARB) estimates ongoing annual costs of approximately $152,000 for one new position (MVA) to assist with vehicle eligibility verification and consumer assistance. See below for more details.

The MVA is expected to fully exhaust its reserves and become insolvent in fiscal year 2025‑26. The LAO further warns that the MVA, absent corrective action, such as revenue increases or spending reductions, will experience a negative fund balance of $1.4 billion in fiscal year 2028‑29.

3) The California Department of Transportation notes its costs are minor and absorbable.

COMMENTS:

1) Purpose. According to the author:

California’s current program allowing HOV lane access for ZEVs has proven to be an incentive for Californians to make the transition to ZEVs. Assuming continued federal authorization, a one year extension of the program will continue to provide incentives to buyers to transition to ZEVs and give the state additional data on ZEV adoption. Previous guardrails placed on this program to protect HOV lanes from degradation remain in place.

2) Background. The DMV issues CAV decals that allow vehicles meeting specified emissions standards single occupancy use of HOV or carpool lanes. The program is intended to promote the increased adoption of cleaner vehicles. According to the California Energy Commission, zero-emission vehicle (ZEV) sales in 2014 accounted for only 2.98% of the state’s car sales. Today, ZEVs account for 25% of new car sales. In addition to providing single occupancy access to HOV lanes, vehicles with CAV decals are also eligible for reduced rates or exemptions from toll charges imposed on high occupancy toll (HOT) lanes. According to the Assembly Transportation Committee analysis of this bill, of the 11 HOT lanes in the state, four charge no toll for vehicles with a CAV decal, and the others provide a 15% or 50% discount on tolls. According to the DMV, since the program started in January 2001, the department has issued more than one million decals to cars that meet the state’s criteria.

States wishing to allow certain vehicles with a single occupant access to HOV lanes must receive federal authorization to do so. Federal authorization permitting CAVs in HOV and HOT lanes in California expires on September 30, 2025, as does the state’s authorization for issuing CAV decals. The Assembly Transportation Committee analysis of this bill notes that by extending the sunset for this program to January 1, 2027, the Legislature has the opportunity in 2026 to evaluate if the state should have a CAV decal program. If the federal government does not extend the authority for CAVs to operate beyond September 30, 2025, this bill and existing law would end the program on that date, keeping California in compliance with federal law.  

Writing in support, a coalition of organization contends:

Efforts are underway at the federal level to extend the federal authorization for this state program. However, due to the unusual timing of the existing sunset date in California statute (September 30, 2025) which aligns with the federal law, legislation is needed this year to ensure the program does not lapse, should a federal extension be granted.

The existing program, in place since January 2019, protects against congestion in HOV lanes by limiting HOV-lane access for new ZEVs to three years and allowing Cal Trans to remove lanes, or portions of lanes, from the program if congestion occurs. Should federal law be extended, AB 2678 allows California’s program to continue uninterrupted, while maintaining these protections against congestion.

ARB establishes the official list of vehicles eligible for HOV decals. ARB staff evaluate vehicle eligibility based on vehicle emissions certification and legislative criteria, assess eligibility of specialty and upfit vehicles, coordinate with automakers to interpret vehicle identification number decoders, maintain shared datasets on eligibility approvals and zero-emission vehicle models with DMV staff, maintain a public vehicle eligibility list, and respond to public inquiries about the program. Since 2020, the number of eligible vehicles has increased by 430%, and the number of decals issued has increased by about 60%. These numbers are expected to grow in the coming years given market acceleration of clean cars in California, thereby creating additional workload for ARB.

Analysis Prepared by: Nikita Koraddi / APPR. / (916) 319-2081

Date of Hearing: April 8, 2024

ASSEMBLY COMMITTEE ON TRANSPORTATION

Lori D. Wilson, Chair

ABPCA Bill Id:AB 2678 (

Author:Wallis) – As Amended Ver:March 18, 2024

SUBJECT: Vehicles: high-occupancy vehicle lanes

SUMMARY: Extends the repeal date of provisions authorizing vehicles with a Clean Air Vehicle (CAV) decal to drive in High Occupancy Vehicle (HOV) lanes to January 1, 2027, if permitted by federal law.

EXISTING LAW:

1. Existing federal law authorizes states to authorize CAVs in HOV lanes until September 30, 2025. (23 United States Code 166)
2. Directs DMV to issue CAV decals until January 1, 2019, as follows:

1. White decals are available for an unlimited number of vehicles that meet California’s super ultra-low emission vehicle standard for exhaust emissions and the federal inherently low-emission vehicle evaporative emission standard. Vehicles that meet these requirements are certified pure zero-emission vehicles (ZEV) (100% battery electric or hydrogen fuel cell). Liquefied petroleum gas (LPG) and compressed natural gas (CNG) fueled vehicles also qualify for white CAV decals.
   
2. Green decals are available for vehicles that meet California's enhanced advanced technology partial zero-emission vehicle (AT PZEV) requirement or transitional zero-emission vehicles (TZEV) standard. Vehicles that meet these requirements are usually plug-in Hybrids. (Vehicle Code Section (VEH) 5205.5)
   
3. Requires white and green decals that were issued prior to January 1, 2017, to expire on January 1, 2019. (VEH 5205.5)
4. Provides that a decal for a CAV (that has the same emission standards as the white and green decal vehicles) that has been issued between January 1, 2017, and January 1, 2019, to be valid until January 1, 2022. (VEH 5205.5)
   
5. Provides that a decal for a CAV (that has the same emission standards as the white and green decal vehicles) that has been issued on or after January 1, 2019, to be valid until January 1st of the fourth year after issuance. (VEH 5205.5)
   
6. Sunsets the CAV program on September 30, 2025. (VEH 5205.5)

1. Authorizes drivers displaying a CAV decal to use HOV lanes and freeway ramps, regardless of occupancy level, until such time as the Department of Transportation (Caltrans) determines that federal law does not authorize the state to allow these vehicles to use HOV lanes or ramps. (VEH 21655.9)
2. Requires Caltrans to remove individual HOV lanes, or HOV lane segments, during periods of peak congestion from these CAVs access provisions if it finds that the lane exceeds a level of service C (generally meaning at or near free-flowing traffic with minimal delays) and that the operation or projected operation of CAVs will significantly increase HOV lane congestion. (VEH 21655.9)
3. Requires that, if Caltrans determines HOV lane access is no longer authorized for CAVs under federal law, Caltrans is to notify the Secretary of State; subsequently, the authority to access HOV lanes by these vehicles will become inoperative. (VEH 5205.5)

FISCAL EFFECT: Unknown

COMMENTS:

CAV decals and ZEV goals: The Legislature has set several goals to reduce GHG emissions and address climate change. The Global Warming Solutions Act of 2006, AB 32 (Nuñez), Chapter 488, Statutes of 2006 and subsequent companion legislation SB 32 (Pavley), Chapter 249, Statutes of 2016, requires California to reduce statewide GHG emissions to 40% below the 1990 level by 2030. The 1990 level is an aggregated statewide limit and is not sector- or facility-specific. CARB is responsible for developing a Scoping Plan to detail how the state will achieve its GHG emissions reduction targets mandated by law.

Nearly 40% of California's GHG emissions are generated by the transportation sector, which includes both the light-duty (passenger) and medium- and heavy-duty fleets. Heavy-duty diesel trucks also contribute to unhealthy levels of ozone, inhalable particulate matter, carbon monoxide, NOx, and sulfur dioxide, affecting local air quality. In the transportation sector, measures to reduce GHG emissions include requiring the use of low-carbon fuels, cleaner vehicles, and strategies to promote sustainable communities and improved transportation choices that reduce growth in number of vehicle miles traveled.

To further these efforts, at the end of 2020, Governor Newsom issued Executive Order (EO) N-79-20 which requires 100% of in-state sales of new passenger cars and trucks to be zero-emission by 2035. EO N-79-20 charges CARB with developing and proposing passenger vehicle and truck regulations requiring increasing volumes of new ZEVs sold in the State towards that goal.

According to the author, “California’s current program allowing HOV lane access for ZEVs has proven to be an incentive for Californians to make the transition to ZEVs. Assuming continued federal authorization, a one year extension of the program will continue to provide incentives to buyers to transition to ZEVs and give the state additional data on ZEV adoption. Previous guardrails placed on this program to protect HOV lanes from degradation remain in place. While California leads the country in ZEV adoption, recent reports have indicated a slower growth rate for sales, making it is prudent to leave the program in place for an additional year for continued evaluation and to avoid a major disruption of adoption rates.”

CAV decals were designed to be one of the benefits of purchasing a ZEV. Besides providing single occupancy access to HOV lanes, they also are required to provide discounted or free tolls for bridges and in high occupancy toll (HOT) lanes. Of the 11 HOT lanes in the state, four charge no toll for vehicles with a CAV decal. The other HOT lanes provide a 15% or 50% discount on tolls.

Initially, the CAV decal provided an incentive for people to buy ZEVs and hybrids. According to the 2014 University of California Institute of Transportation Studies (UCITS) report Exploring the Impact of High Occupancy Vehicle (HOV) Lane Access on Plug-in Vehicle Sales and Usage in California “When asked about their primary motivation to buy a car 57% of Plug-in Priuses, 34% of Volts and 38% of LEAFs identified it as the HOV sticker.”

According to the California Energy Commission, ZEV sales in 2014 only accounted for 2.98% of the state’s car sales. Today, ZEVs account for 25% of the new car sales.

According to the 2023 report Accessing the Potential Impacts of Toll Discounts on Zero-Emission Vehicle Adoption from the National Center for Sustainable Transportation at UC Davis ITS, the incentive the CAV decal provides would likely only support a small increase in ZEV sales. Moreover, car owners disproportionally from middle and high-income suburban commuters are the beneficiaries.

The Alliance for Automotive Innovation, writing in support of this bill, argues “The Auto Innovators have been a proud partner in helping California reach its ambitious climate goals. In 2023, 25% of new cars sold in California were ZEVs, which is well ahead of the California Air Resources Board’s 2012 target of 15% by 2025. Helping in reaching that goal, no doubt, is the policy of letting ZEVs access HOV lanes: a significant incentive that encourages car buyers to choose a ZEV.

Under current law, California’s successful program that allows ZEVs to access HOV lanes is scheduled to sunset in 2025. Efforts are underway at the federal level to extend the federal authorization for this state program. However due to the unusual timing of the existing sunset date in California statute (September 30, 2025) which aligns with the federal law, legislation is needed this year to ensure the program does not lapse, should a federal extension be granted.”

HOV Lane Degradation: The federal government requires traffic in HOV lanes to move at a certain speed. Annually, Caltrans must complete an HOV Facilities Degradation Report to assess if the state is in compliance with federal law. An HOV facility is considered degraded if the average traffic speed during the morning or evening weekday peak hour period is less than 45 mph for more than 10% of the time over a consecutive 180-day period. Recent reports have found that 22% to 40% of the state’s HOV facilities do not meet federal requirements. According to the July 2023 report, in 2022 “Of the 1,130 lane-miles monitored during the morning peak hour period, about 22% (245 lane-miles) were degraded. Of the 1,130 lane-miles monitored during the afternoon peak hour period, approximately 36% (410 lane-miles) were degraded. District 7 (Los Angeles area), District 8 (Riverside and San Bernardino Counties), and District 12 (Orange County) had the most degradation. Approximately 40% of District 7, District 8, and District 12 HOV facilities that operated in both peak hour periods experienced degradation in both peak hour periods.” During that same period, Los Angeles accounted for 29% of the state’s active CAV decals, Orange County accounted for 18% of the state’s active CAV decals and San Bernardino/ Riverside accounted for 8% of the state's active decals. 

CAV History: HOV lane access for single-occupant clean vehicles was first authorized in 1999 with the passage of AB 71 (Cunneen), Chapter 330, Statutes of 1999. Over the years, this access was expanded to encourage the purchase of more fuel-efficient vehicles. However, the addition of hybrid vehicles in 2004 eventually resulted in lane degradation. As a result, that program was allowed to sunset and was replaced. Since then, numerous bills have been enacted that modified and expanded the program. More recently, AB 544 (Bloom), Chapter 630, Statutes of 2017 established a new CAV program, until the expiration of federal authorization on September 30, 2025, under which decals issued in 2019 and later will have staggered expiration dates on January 1 of the fourth year after the year of issuance.  AB 544 also modified the Clean Air Vehicle Rebate Project’s (CVRP) eligibility requirements. This modification prohibited the DMV from issuing a decal for a vehicle purchased on or after January 1, 2018, if the applicant received a CVRP rebate and has an income above a specified limit ($150,000 for single filers, $204,000 for head-of-household filers and $300,000 for joint filers). Finally, SB 957 (Lara) Chapter 367, Statutes of 2018, authorized CAV decals whose sticker has expired to obtain a new one if the owner’s household income is at or below 80% of the state median income and the owner has not previously obtained a CAV sticker for the same vehicle. Those stickers were only in effect from January of 2020 to January of 2024.  

Committee Comments: Federal authorization for CAV vehicles to operate in California expires on September 30, 2025, as does the state’s authorization for issuing CAV decals. Should the federal government decide late next year to extend the authority for states to permit CAVs in HOV and HOT lanes, the Legislature would not have an opportunity to weigh in on whether we should extend or modify the state’s existing program.

California ZEV adoption is far ahead of the rest of the country. In 2023, California accounted for 34% of all ZEV sales. By extending the sunset for this program until January 1, 2027, the Legislature has the opportunity in 2026 to evaluate if the state should have a CAV decal program. If the Federal government does not extend the authority for CAVs to operate beyond September 30, 2025, this bill and existing law would end the program on that date, keeping California in compliance with federal law.  

Previous Legislation: SB 957 (Lara), Chapter 367, Statutes of 2018, authorized CAV decals whose sticker has expired to obtain a new one if the owner’s household income is at or below 80% of the state median income and the owner has not previously obtained a CAV sticker for the same vehicle. Those stickers were only in effect from January of 2020 to January of 2024.  

AB 544 (Bloom), Chapter 630, Statutes of 2017, modifies the CAV program and creates a new program to take effect when the program sunsets in 2019.

SB 838 (Committee on Budget and Fiscal Review), Chapter 339, Statutes of 2016, eliminated the cap on the number of green HOV lane decals that could be issued. SB 838 also required Caltrans to prepare and submit a report to the Legislature by December 1, 2017, on the degradation status of HOV lanes on the state highway system.

AB 1964 (Bloom) of 2016, was similar to AB 544. AB 1964 died on the Senate Floor.

AB 1721 (Linder), Chapter 526, Statutes of 2014, provides toll-free or reduced-rate passage for single-occupant, low-emission vehicles with a CAV decal.

SB 853 (Committee on Budget and Fiscal Review), Chapter 27, Statutes of 2014, among other provisions, expanded the number of available green decals from 40,000 to 55,000, AB 2013 (Muratsuchi), Chapter 527, Statutes of 2014, expanded the number from 55,000 to 70,000, and AB 95 (Committee on Budget), Chapter 12, Statutes of 2015, expanded the number from 70,000 to 85,000.

SB 535 (Yee), Chapter 215, Statutes of 2010, essentially replaced the hybrid yellow decal program with a new program aimed at incentivizing the purchase of enhanced advanced technology partial zero-emission vehicles. The new program was capped at 40,000 vehicles and was originally scheduled to sunset on January 1, 2015. Sunset dates for both the green decal and white decal programs were subsequently extended to January 1, 2019, by SB 286 (Yee), Chapter 414, Statutes of 2013, and AB 266 (Blumenfield), Chapter, 405, Statutes of 2013.

AB 2628 (Pavley), Chapter 725, Statutes of 2006, expanded the HOV lane access by allowing hybrid vehicles to use the lanes.

AB 71 (Cunneen), Chapter 330, Statutes of 1999, first authorized access to HOV lanes for certain vehicles.

 REGISTERED SUPPORT / OPPOSITION:

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Alliance for Automotive Innovation

Opposition

One Individual

Analysis Prepared by: David Sforza / TRANS. / (916) 319-2093