BILL ANALYSIS
AB 493
Page 1
Date of Hearing: March 26, 2006
ASSEMBLY COMMITTEE ON TRANSPORTATION
Pedro Nava, Chair
AB 493 (Ruskin) - As Introduced: February 20, 2007
SUBJECT : Clean Vehicle Incentive Program: California Air
Resources Board
SUMMARY : Establishes the Clean Vehicle Incentive Program
(Program) as administered by the California Air Resources Board
(ARB). Specifically, this bill:
1) Makes findings and declarations relative to greenhouse gas
emissions in California and how rebates and surcharges on the
purchase of new motor vehicles, specifically passenger
vehicles and light duty trucks, could ultimately lead to the
purchase of cleaner vehicles as well as encourage
manufacturers to offer more low-emitting vehicles to
California consumers.
2) States legislative intent to establish a market-based Program
of one-time rebates, surcharges, or neither (zero-band) on
the purchase of new vehicles. Also, the Program is to be
self-financing and not increase expenditures from or reduce
revenues in the state General Fund.
3) Provides definitions to the following terms: carbon dioxide
equivalent, criteria air pollutants, emergency vehicle,
greenhouse gases factor, greenhouse gases, motor vehicle,
vehicle, program, and zero-band.
4) Requires a purchaser of a new motor vehicle eligible for a
rebate, to file a claim with the automobile dealer, who will
submit the rebate claim to the State Board of Equalization
(BOE).
5) Requires BOE to pay the rebate through electronic funds
transfer if so requested by the new vehicle purchaser.
Stipulates that no interest is to be paid on the rebate.
6) Requires that dealers collect the surcharges from the new
motor vehicle purchaser and to submit the surcharge to BOE.
7) Requires ARB, no later than July 1, 2009, in consultation
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with other agencies as appropriate, subsequent to at least
two public workshops, to develop regulations to implement the
Program.
8) Requires that the regulations establish a schedule of rebates
and surcharges to take effect July 1, 2010, and applies to
motor vehicles beginning with the 2011 model year. Requires
that the schedule of rebates and surcharges to be adjusted
annually and take effect on January 1 of each subsequent
year, as applied to new vehicles of that model year.
9) Requires ARB to calculate, using a linear scale, the rebate
or surcharge based on the vehicle's emissions of greenhouse
gases, compared to the emissions of all vehicles of the same
model year that are subject to the Program. Allows for
adjustments to the calculations based upon emissions of
contributory pollutants and emissions of criteria air
pollutants.
10)Requires the establishment of a zero-band that reflects
20-25% of a fleet of a given model that will neither receive
a rebate nor a surcharge. The zero-band is to be adjusted to
ensure that buyers have a variety of vehicles among various
types, including light trucks, that are not assessed a
surcharge. Requires ARB to consider sales-weighted data in
determining the placement of the zero-band.
11)Establishes maximum amounts of the rebates and surcharges to
be not less than $2,250 or more than $2,500. No rebate or
surcharge is to exceed the amount of the sales tax on the
vehicle purchase price.
12)Establishes a minimum limit on the surcharge or rebate at
$100. Any vehicle with an estimated surcharge or rebate of
less than $100 is to be placed in the zero-band.
13)Requires ARB to make annual adjustments to the applied
rebates and surcharges that will ensure that the surcharges
are sufficient to cover the cost of implementing the Program,
including administrative costs incurred by any state agency.
Also, a reserve of 15% of the estimated rebates is required.
14)Authorizes the Department of Finance (DOF) to direct ARB to
adjust the schedule of rebates and surcharges to maintain an
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adequate balance in the Clean Vehicle Incentive Account
(Account) and requires ARB to make any adjustments to the
schedule as directed.
15)Restricts adjustments to the schedule of rebates and
surcharges no more than once per model year.
16)Authorizes ARB, in consultation with BOE, to delay the first
year of Program implementation by enacting the rebate portion
of the Program up to 30 days after the surcharge element of
the Program is implemented.
17)Requires that the rebate or surcharge apply at the point of
sale at the price of the vehicle after the relevant taxes are
applied, not including the addition of sales taxes.
18)Establishes surcharge requirements for California residents
purchasing a vehicle outside of the state. Requires ARB,
BOE, and the Department of Motor Vehicles (DMV) to cooperate
to develop procedures for out-of-state purchases.
Establishes that a California resident purchasing a vehicle
outside the state is not eligible for a rebate.
19)Applies Program requirements upon eligible vehicles leased
for more than one year, as specified.
20)Requires BOE to collect the surcharges and to pay all rebates
and refunds of surcharges.
21)Requires ARB, by May 10, 2010, to communicate with the
public, including information to be posted on its website,
the surcharges and rebates on vehicles in the Program.
Requires ARB to provide information to licensed automobile
dealers and consumers on relevant details of the Program.
Authorizes ARB to modify information on the Program on air
pollution labels that are displayed on new vehicles.
Requires automobile dealers to clearly display the amount of
the surcharge or rebate on vehicles available for sale.
22)Establishes surcharge exemptions for:
a) Emergency vehicles purchased by any local agency;
b) Vehicles purchased by microbusinesses for work-related
purposes;
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c) Paratransit and other vehicles used to transport
persons with disabilities;
d) Vehicles purchased by the state for official state
business, with the exception of vehicles purchased or
leased by state legislators; and,
e) Vehicles purchased by very low income residents of the
state, as defined by ARB.
23)Exempts diesel powered vehicles from the provisions of this
bill.
24)Provides recourse to a purchaser who believes the vehicle
should be exempt from the Program. Requires ARB to make
available to automobile dealers and vehicle purchasers
applications for purchasers seeking reimbursement from the
surcharge.
25)Establishes the Account administered by ARB, in consultation
with BOE, and directs that surcharges collected be deposited
into the Account. Authorizes moneys in the Account to be
continuously appropriated without regard to fiscal year.
Authorizes payments from the Account for rebates, refunds,
and reimbursement of costs to BOE, ARB, and DMV.
26)Authorizes DOF to transfer $900,000 from the Motor Vehicle
Account into the Account, for initial Program startup.
Requires that any loan from the Motor Vehicle Account is
repaid with interest from the Account.
27)Authorizes ARB to collect information from motor vehicle
manufacturers to calculate a vehicle's emissions of
greenhouse gases. No additional testing is required of ARB
to make emission calculations.
28)Requires ARB to determine how to account for alternative
fueled vehicles in the surcharge and rebate calculations.
29)Requires ARB to consider "upstream emissions" or emissions of
global warming gases that occur during the extraction,
refining, transport, and local distribution of motor vehicle
fuels, in the promulgation of implementing regulations.
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EXISTING LAW :
1) Assigns responsibility for regulating vehicular emissions to
ARB and authorizes it to adopt and implement motor vehicle
emission standards and specifications.
2) Requires ARB to regulate greenhouse gas emissions emitted by
passenger vehicles and light-duty trucks to achieve maximum
feasible reductions. Requires ARB, not later than July 1,
2007, to rename labels for model year 2009 and subsequent
model year motor vehicles, information on the emissions of
global warming gases.
3) Requires ARB, on or before July 1, 2007, to adopt a list of
discrete early action emission reduction measures that can be
achieved prior to the adoption of market-based compliance
mechanisms and other measures and limits under AB 32
provisions. Requires ARB, on or before January 1, 2010, to
adopt and enforce those measures on the adopted list.
4) Authorizes DMV to register vehicles and license drivers in
the state.
5) Establishes and charges BOE with tax administration and fee
collection in the state. The areas of authority of BOE fall
into four broad areas: sales and use taxes, property taxes,
special taxes, and acting as an appellate body for franchise
and income tax appeals (which are collected by the Franchise
Tax Board).
FISCAL EFFECT : Unknown
COMMENTS : According to the sponsor, the Union of Concerned
Scientists, they are seeking to establish a program that reduces
vehicle emissions while protecting consumer choice. Thus, they
envision funding an incentive for buying clean and efficient
vehicles by imposing a surcharge on dirtier, less efficient
ones. They indicate that "Transportation is by far the largest
source of global warming pollution in California, accounting for
more than 40% of the state's heat-trapping emissions. There are
over 20 million passenger vehicles on the road in California,
and approximately 1.7 million new passenger cars and light-duty
trucks are purchased each year. Even with existing vehicle
regulations, the bulk of global warming emissions in California
are expected to continue to come from cars and trucks."
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The sponsor further indicates that "Californians have
demonstrated widespread and consistent enthusiasm for clean
vehicle solutions, such as the Clean Car Discount program, to
reduce global warming pollution. According to a 2006 poll, 82%
of California voters support giving rebates for the purchase of
clean vehicles and 62% support placing a one-time surcharge on
high-polluting new vehicles. Overall, 60% of registered voters
support the Clean Car Discount program, with an overwhelming
majority from every region, income level, and political
affiliation indicating support."
Also, as indicated on the ARB website, there are a number of
existing government and private programs that provide monetary
incentives to enhance the marketability of cleaner vehicles.
This bill would lead toward the establishment of another
incentive program.
Writing in opposition, the California Motor Car Dealers
Association indicates that "new vehicles offered for sale in
California are the cleanest in the world and achieve better fuel
economy than most used vehicles? Slapping a surcharge on new
trucks and Sport Utility Vehicles (SUVs) that are currently
required under federal law to meet Corporate Average Fuel
Economy (CAFE) standards of 22.2 miles per gallon, will
encourage consumers to buy or continue driving used vehicles
that emit higher amounts of greenhouse gas. A $2,500 surcharge
on a new 2011 model year SUV will act as a huge incentive to buy
a used 2010 or older model of the same vehicle." The
association further states that "AB 493 would hit low and middle
income Californians the hardest. It is a regressive tax that
discriminates."
The Alliance of Automobile Manufacturers indicates that "AB 493
is profoundly unfair. Audaciously, it exempts the State (and
others) from the surcharge imposed on California consumers.
However, no allowance is made for small business people, large
families, or other Californians who may require larger vehicles.
As importantly, there is no recognition that a large vehicle
may be driven very few miles while a smaller vehicle may be
driven very many miles. There is no effort to correlate actual
emissions with the surcharge or rebates."
Related bills : AB 99 (Feuer) 2006, would make legislative
findings and declarations regarding the use of clean,
alternative fuels. This bill would also declare the intent of
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the Legislature to ensure that, by January 1, 2012, no less than
50% of all new cars made available for sale in California are
powered by clean alternative fuels. The bill is in the Assembly
Rules Committee.
AB 255 (de Leon) 2007 would create the Clean Air and Energy
Independence Fund and would continuously appropriate moneys to
ARB to be used for specified purposes, including incentives for
alternative fuel and alternative fuel vehicles. The bill is in
the Assembly Transportation Committee.
AB 2791 (Ruskin) 2006, a similar bill, died in the Senate Rules
Committee. AB 2791, as passed out of the Assembly
Transportation Committee last year, is substantially the same as
AB 493.
AB 32 (Nunez and Pavley), Chapter 488, 2006, among other
requirements, requires greenhouse gas emission sources to
monitor and report their emissions to ARB; requires ARB, on or
before January 1, 2008, to adopt a statewide emissions limit on
greenhouse gas emissions; and, on or before July 1, 2007,
requires ARB to adopt a list of discrete early action emission
reduction measures that can be achieved prior to the adoption of
market-based compliance mechanisms and other measures and
limits.
AB 1012 (Nation) 2006, would have required ARB to adopt
regulations to ensure that one-half of new passenger and
light-duty trucks, beginning in 2020, sold in California are
clean alternative vehicles. That bill was vetoed by the
Governor.
AB 2906 (Nation) 2004, would have require vehicle smog index
labels to be changed to air pollution labels and, beginning in
2009, require the labels to display specified information about
global warming gases and include indices that compare a
vehicle's exhaust emissions and global warming gas emissions
with those from other vehicles of the same model year. That
bill died in the Senate Transportation Committee.
AB 1493 (Pavley), Chapter 200, Statutes of 2002, directed ARB to
achieve the maximum feasible and cost-effective reduction of
greenhouse gases from passenger vehicles and
light-duty trucks and any other vehicles determined by ARB to be
vehicles whose primary use is noncommercial personal
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transportation in the state. The law requires the reductions to
take into account the time allotted, environmental, economic,
social, and technological factors. AB 1493 also included an
extensive list of actions that ARB would be prohibited from
enacting through its regulations, including motor vehicle tax
surcharges, increased fuel taxes, vehicle miles traveled limits
or fees, sport utility vehicle or minivan bans, vehicle weight
reductions, or speed limit reductions.
SB 1905 (Hart) 1990, a similar bill, was vetoed by Governor
Deukmejian on grounds that could apply to AB 493 as follows:
That bill would include carbon dioxide emission (as a greenhouse
gas) in the credit/surcharge tax on vehicles. "Any carbon
dioxide provision is, in reality, a fuel economy requirement
since fuel economy is determined by measuring the amount of
carbon dioxide emissions and calculating the amount of fuel
consumed, based on the amount of carbon contained in a quantity
of gas. Since federal law preempts fuel economy standards, I
believe this bill will be unenforceable; It is very likely that
manufacturers will simply set their prices and incentive
programs to offset the impact of the program; and, it is unfair
to impose a higher tax on a new car purchaser who is purchasing
a vehicle that meets California's high air pollution emissions
standard just because the emissions are slightly higher than
another model."
REGISTERED SUPPORT / OPPOSITION :
Support
Union of Concerned Scientists (sponsor)
American Council for an Energy-Efficient Economy
American Lung Association
Bay Area Air Quality Management District
Bluewater Network - A Division of Friends of the Earth
Breathe California
California Public Interest Research Group
Clean Power Campaign
Coalition for Clean Air
Consumer Action
Consumers for Auto Reliability and Safety
Consumers Union
Energy Independence Now
Environment California
Environmental Defense
Environmental Defense Center
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Environmental Entrepreneurs (E2)
EV Rental Cars
Kirsch Foundation
Natural Resources Defense Council
Planning and Conservation League
Republicans for Environmental Protection
Sierra Club
The Interfaith Environmental Council
The Orange County Interfaith Coalition for the Environment
Working Assets
Email correspondence from six individuals
Opposition
Alliance of Automobile Manufacturers
Automobile Club of Southern California
California Motor Car Dealers Association
California State Automobile Association
Designline
Moeller International Inc.
Letter from one individual
Analysis Prepared by : Ed Imai / TRANS. / (916) 319-2093