44100. The Legislature hereby finds and declares as follows:
(a) Emission reduction programs based on market principles have
the potential to provide equivalent or superior environmental
benefits when compared to existing controls at a lower cost to the
citizens of California than traditional emission control
requirements.
(b) Several studies have demonstrated that a small percentage of
light-duty vehicles contribute disproportionately to the on-road
emissions inventory. Programs to reduce or eliminate these excess
emissions can significantly contribute to the attainment of the state'
s air quality goals.
(c) Programs to accelerate fleet turnover can enhance the
effectiveness of the state's new motor vehicle standards by bringing
more low-emission vehicles into the on-road fleet earlier.
(d) The California State Implementation Plan for Ozone (SIP),
adopted November 15, 1994, and submitted to the Environmental
Protection Agency, calls for added reductions in reactive organic
gases (ROG) and oxides of nitrogen (NOx) from light-duty vehicles by
the year 2010. One of the more market-oriented approaches reflected
in the SIP, known as the M-1 strategy, calls for accelerating the
retirement of older light-duty vehicles in the South Coast Air
Quality Management District to achieve the following emission
reductions:
Emissions, TPD (tons per day)
Year (ROG + NOx)
1999 9
2002 14
2005 20
2007 22
2010 25
(e) A program for achieving those and more emission reductions
should be based on the following principles:
(1) If the program receives adequate funding, the first two years
should include a thorough assessment of the costs and short-term and
long-term emission reduction benefits of the program, compared with
other emission reduction programs for light-duty vehicles, which
shall be reflected in a report and recommendations by the state board
to the Governor and the Legislature on strategies and funding needs
for meeting the emission reduction requirements of the M-1 strategy
of the 1994 SIP for the years 1999 to 2010, inclusive.
(2) The program should first contribute to the achievement of the
emission reductions required by the inspection and maintenance
program and the M-1 strategy of the 1994 SIP, and should permit the
use of mobile source emission reduction credits for other purposes
currently authorized by the state board or a district. Remaining
credits may be used to achieve other emission reductions, including
those required by the 1994 SIP, in a manner consistent with
market-based strategies. Emission credits shall not be used to offset
emission standards or other requirements for new vehicles, except as
authorized by the state board.
(3) Participation by the vehicle owner shall be entirely voluntary
and the program design should be sensitive to the concerns of car
collectors and to consumers for whom older vehicles provide
affordable transportation.
(4) The program design shall provide for real, surplus, and
quantifiable emission reductions, based on an evaluation of the
purchased vehicles, taking into account factors that include per-mile
emissions, annual miles driven, remaining useful life of retired
vehicles, and emissions of the typical or average replacement
vehicle, as determined by the state board. The program shall ensure
that there is no double counting of emission credits among the
various vehicle removal programs.
(5) The program should specify the emission reductions required
and then utilize the market to ensure that these reductions are
obtained at the lowest cost.
(6) The program should be privately operated. It should utilize
the experience and expertise gained from past successful programs.
Existing entities that are authorized by, contracted with, or
otherwise sanctioned by a district and approved by the state board
and the United States Environmental Protection Agency shall be fully
utilized for purposes of implementing this article. Nothing in this
paragraph restricts the Department of Consumer Affairs from selecting
qualified contractors to operate or administer any program specified
pursuant to this chapter.
(7) The program should be designed insofar as possible to
eliminate any benefit to any participants from vehicle tampering and
other forms of cheating. To the extent that tampering and other forms
of cheating might be advantageous, the program design shall include
provisions for monitoring the occurrence of tampering and other forms
of cheating.
(8) Emission credits should be expressed in pounds or other units,
and their value should be set by the marketplace. Any contract
between a public entity and a private party for the purchase of
emission credits should be based on a price per pound which reflects
the market value of the credit at its time of purchase. Emission
reductions required by the M-1 and other strategies of the 1994 SIP
shall be accomplished by competitive bid among private businesses
solicited by the oversight agency designated pursuant to Section
44105.
44101. Not later than December 31, 1998, the state board shall
adopt, by regulation, a statewide program to commence in 1999 that
does all of the following:
(a) Provides for the creation, exchange, use, and retirement of
light-duty vehicle mobile source emission reduction credits. The
credits shall be fungible and exchangeable in the marketplace, and
shall reflect the actual emissions of the vehicles that are retired
or otherwise disposed of, by measurement, appropriate sampling, or
correlations developed from appropriate sampling. The numerical value
of credits may be constant over a defined lifetime, or may decline
with age measured from the time of origination of the credits. In all
cases, the numerical value of the credits shall reflect the useful
life expectancies and the projected in-use emissions of the retired
vehicles in a manner consistent with the assumptions used in
determining the emissions inventory. The credits shall be fully
recognized by the United States Environmental Protection Agency, the
state board, and the districts.
(b) Sets out the criteria for retiring or otherwise disposing of
high-emitting vehicles purchased for this program.
(c) Authorizes the issuance of those credits to private entities
that purchase and properly retire high-emitting vehicles.
(d) Authorizes the resale of those credits to public or private
entities to be used to achieve the emission reduction requirements of
the 1994 state implementation plan, meet the requirements of the
inspection and maintenance program, satisfy compliance with other
emission reduction mandates, as determined by the district or the
state board, create local growth allowances, or satisfy new or
modified source emission offset requirements. Nothing in this article
limits a district's authority to apply emission discount factors
pursuant to district rules that regulate emissions banks, trades, or
offsets.
(e) Provides for the retirement of those credits when used.
(f) Includes accounting procedures to credit emissions reductions
achieved through vehicle scrappage to the M-1 strategy of the 1994
SIP and the inspection and maintenance program.
(g) Contains a program plan pursuant to Section 44104.5.
(h) Satisfies the attributes described in subdivision (e) of
Section 44100.
44102. (a) The state board, the Department of Motor Vehicles, and
the department shall harmonize the requirements and implementation of
this program with the motor vehicle inspection program and other
programs contained in this chapter, particularly the provisions
relating to gross polluters in Article 8 (commencing with Section
44080) and the repair or removal of high polluters in Article 9
(commencing with Section 44090).
(b) Insofar as practicable, these programs shall be seamless to
the participants and the public.
44103. Notwithstanding any other provision of law, the program
shall also do both of the following:
(a) Authorize the Department of Motor Vehicles, at the request of
persons engaged in the purchase and retirement of vehicles under the
program, to send notices to vehicle owners who are candidates for the
sale of vehicles under the program describing the opportunity to
participate in the program. The Department of Motor Vehicles may
recover all costs of those notifications from the requesting party or
parties.
(b) Allow the issuance of nonrevivable junk certificates for
vehicles retired under the program, which shall allow program
vehicles to be scrapped only for parts, except those parts identified
pursuant to subdivision (a) of Section 44120.
44104. (a) Funds shall be available to the state board from the
High Polluter Repair or Removal Account created pursuant to
subdivision (a) of Section 44091. Those funds shall be used to
perform the rulemaking, vehicle testing, and other technical work
necessary to achieve the objectives set forth in Sections 44101 and
44104.5. Those administrative expenditures shall not exceed a total
of three million dollars ($3,000,000) over the first three years of
the program.
(b) Funds available to the state board pursuant to paragraph (1)
of subdivision (d) of Section 44091 shall be used to purchase and
retire mobile source emission reduction credits resulting from the
retirement of light-duty vehicles pursuant to this article for the
purpose of achieving the emission reductions required by the M-1
strategy of the 1994 SIP. If offers from authorized private scrapping
entities are deemed, by the department, consistent with the criteria
set forth in Section 44101, to be noncompetitive in
cost-effectiveness, in terms of dollars per ton of emissions reduced,
the department shall directly purchase vehicles from owners in order
to achieve the greatest reduction in emissions at the least cost. If
these purchases, in turn, are deemed by the department to be not
cost-competitive, in terms of dollars per ton of emissions reduced,
with other strategies identified by the state board, the department
shall use the funds to pursue other more cost-effective strategies
identified by the state board. All emission reduction credits
purchased with the funds described in this paragraph shall be retired
and credited to the M-1 strategy of the 1994 SIP.
(c) This article shall not create an obligation on the part of any
state or local agency to expend money, incur substantial
administrative costs, or purchase credits to meet the M-1
requirements of the 1994 State Implementation Plan until the Director
of Finance certifies that there are sufficient funds in the High
Polluter Repair or Removal Account for purposes of the article.
(d) This article shall not create an obligation to use existing
funds that are currently used to meet other air quality mandates,
including funds collected pursuant to Sections 44223, 44225, 44227,
and 44243, for purchasing credits to satisfy the M-1 or other
strategies of the 1994 SIP.
(e) The state board and the department shall seek federal funds to
be deposited in the High Polluter Repair or Removal Account, and
shall explore the availability of other funding sources, such as
private contributions, the Petroleum Violation Escrow Account, and
proceeds from fees, fines, or other penalties resulting from fuel
specification violations.
44104.5. (a) The regulations adopted pursuant to subdivision (a) of
Section 44101 shall include a plan to guide the execution of the
first two years of the program, to assess the results, and to
formulate recommendations. The plan shall also verify whether the
light-duty vehicle scrapping program included in the state
implementation plan adopted on November 15, 1994, can reasonably be
expected to yield the required emissions reductions at reasonable
cost-effectiveness. Scrapping of any vehicles under this program for
program development or testing or for generating emission reductions
to be credited against the M-1 strategy of the 1994 SIP may proceed
before the state board adopts the regulations pursuant to subdivision
(a) of Section 44101 or the plan required by this subdivision. The
emission credits assigned to these vehicles shall be adjusted as
necessary to ensure that those credits are consistent with the
credits allowed under the regulations adopted pursuant to Section
44101. The plan shall include a baseline study, for the geographical
area or areas representative of those to be targeted by this program
and by measure M-1 in the SIP, of the current population of vehicles
by model year and market value and the current turnover rate of
vehicles, and other factors that may be essential to assessing
program effectiveness, cost-effectiveness, and market impacts of the
program.
(b) At the end of each of the two calendar years after the
adoption of the program plan, if the program receives adequate
funding, the state board, in consultation with the department, shall
adopt and publish a progress report evaluating each year of the
program. These reports shall address the following topics for those
vehicles scrapped to achieve both the M-1 SIP objectives and those
vehicles scrapped or repaired to generate mobile-source emission
reduction credits used for other purposes:
(1) The number of vehicles scrapped or repaired by model year.
(2) The measured emissions of the scrapped or repaired vehicles
tested during the report period, using suitable inspection and
maintenance test procedures.
(3) Costs of the vehicles in terms of amounts paid to sellers, the
costs of repair, and the cost-effectiveness of scrappage and repair
expressed in dollars per ton of emissions reduced.
(4) Administrative and testing costs for the program.
(5) Assessments of the replacement vehicles or replacement travel
by model year or emission levels, as determined from interviews,
questionnaires, diaries, analyses of vehicle registrations in the
study region, or other methods as appropriate.
(6) Assessments of the net emission benefits of scrapping in the
year reported, considering the scrapped vehicles, the replacement
vehicles, the effectiveness of repair, and other effects of the
program on the mix of vehicles and use of vehicles in the geographic
area of the program, including in-migration of other vehicles into
the area and any tendencies to increased market value of used
vehicles and prolonged useful life of existing vehicles, if any.
(7) Assessments of whether the M-1 strategy of the 1994 SIP can
reasonably be expected to yield the required emission reductions.
(c) Not later than June 30, 1999, and every three years
thereafter, if the programs receive adequate funding, the state
board, in consultation with the department, shall evaluate the
performance of the programs specified in Article 9 (commencing with
Section 44090) and this article and, based on that evaluation, report
to the Governor and Legislature. The report shall evaluate the
overall performance of the program, including its cost-effectiveness
in terms of dollars per ton of credited or reduced emissions,
description of the methods and procedures to assure that the emission
reductions are real, surplus, and quantifiable, the extent of the
market for eligible vehicles, a recommendation for an appropriate
allocation of expenditures between removal or repair of vehicles that
reflects the relative cost-effectiveness of the options, and any
other recommendation for improving the effectiveness of these
programs. This report shall also contain all of the following:
(1) Identification of procedures for distinguishing the emission
reductions attributed to scrapping for the purpose of generating
emission reductions credits and scrapping that occurs or would have
occurred as a result of the inspection and maintenance program
managed by the Department of Consumer Affairs and other programs.
(2) A projection of the emissions reductions and
cost-effectiveness that might be realized by scrapping or repairing
light-duty vehicles through the year 2010, considering changes
expected in the vehicle fleet and likely impacts of scrapping or
repair on the mix and emissions of vehicles.
(3) A comparison of the effectiveness of scrappage, repair, or
upgrade to other programs for light-duty vehicles.
(4) A recommended scrapping program, or other more cost-effective
means, for continuing to achieve the emissions reductions required by
the M-1 strategy of the 1994 State Implementation Plan, considering
likely emission reductions in the attainment year costs,
cost-effectiveness, issues of monitoring and verification, and status
of the Environmental Protection Agency's approval of the state's
1994 SIP.
44105. The regulations shall specify that the program shall be
operated as a privately operated program under the oversight of a
state agency to be designated by the Governor. In consultation with
the districts and interested parties, the state oversight agency
shall be responsible for the implementation of the program, including
the following:
(a) Solicitation and analysis of public comments on the overall
program goals, objectives, and design.
(b) Development of the program structure.
(c) Overall quality control, including verifying emission
reductions and certification of the emission reduction credits.
(d) Definition of terms such as "high emitter," "collector
interest vehicles," and "nonrevivable junk certificates."
44106. The program shall include provisions for monitoring and
preventing all forms of tampering or other forms of cheating, and
shall effectively address "avoidance vehicles" such as nonregistered
vehicles and vehicles lacking a sufficient inspection and maintenance
history. If fraud is detected, the program shall include provisions
for suspending all new transactions with the entity suspected of
fraud until problems are corrected and revaluing all credits used to
meet the emissions reduction requirements. Contracts with authorized
entities shall include remedies in cases of fraud.
44107. The program shall discourage tampering and other forms of
cheating, and effectively address "avoidance vehicles," such as
nonregistered vehicles and vehicles lacking a sufficient inspection
and maintenance history.
44109. The program shall include appropriate means to solicit
vehicle owners, including mass mailings, media advertising, news
coverage, and direct mail to owners of candidate vehicles, and may
include high-emitting vehicles based on smog check or remote sensing
or high-emitter profile information.
44115. The program shall ensure that vehicle purchase transactions
are convenient to vehicle owners, including advance screening to
reasonably assure that vehicles qualify for the program.
44120. Vehicle disposal under the program shall be consistent with
appropriate state board guidance and provisions of the Vehicle Code
dealing with vehicle disposal and parts reuse, and shall do both of
the following:
(a) Allow for trading, sale, and resale of the vehicles between
licensed auto dismantlers or other appropriate parties to maximize
the salvage value of the vehicles through the recycling, sales, and
use of parts of the vehicles, consistent with the Vehicle Code and
appropriate state board guidelines.
(b) Set aside and resell to the public any vehicles with special
collector interest. No emission reduction credit shall be generated
for vehicles that are resold to the public. Vehicles acquired for
their collector interest shall be properly repaired to meet minimum
established vehicle emission standards before reregistration, unless
the vehicle is sold with a nonrepairable vehicle certificate or a
nonrevivable junk certificate.
44121. The state board shall develop standards for the
certification and use of emission reduction credits to ensure that
the credits are real, surplus, and quantifiable after accounting for
program uncertainties.
44122. Emission reductions achieved from retired vehicles shall be
quantified as follows:
(a) Vehicle emissions shall be based on either direct testing,
statistical sampling, or emission modeling methods. Sampling of a
statistically significant portion of the vehicles may be used to
estimate emission benefits or to develop and validate correlations
for use in estimating emission benefits.
(b) A reasonably reliable mechanism shall be applied to estimate
vehicle miles traveled and the remaining useful life of each
purchased vehicle. The odometer reading shall be matched on each
purchased vehicle with the records of the Department of Motor
Vehicles and smog check records to verify driving history, or
statistical data shall be used to estimate vehicle use.
(c) An annual survey shall be performed of a statistically
meaningful number of participants to determine replacement vehicle
and post-participation behavior and also to determine the extent, if
any, of in-migration of low-cost vehicles due to price increases in
the scrapping market area resulting from the scrap program.
44100. The Legislature hereby finds and declares as follows:
(a) Emission reduction programs based on market principles have
the potential to provide equivalent or superior environmental
benefits when compared to existing controls at a lower cost to the
citizens of California than traditional emission control
requirements.
(b) Several studies have demonstrated that a small percentage of
light-duty vehicles contribute disproportionately to the on-road
emissions inventory. Programs to reduce or eliminate these excess
emissions can significantly contribute to the attainment of the state'
s air quality goals.
(c) Programs to accelerate fleet turnover can enhance the
effectiveness of the state's new motor vehicle standards by bringing
more low-emission vehicles into the on-road fleet earlier.
(d) The California State Implementation Plan for Ozone (SIP),
adopted November 15, 1994, and submitted to the Environmental
Protection Agency, calls for added reductions in reactive organic
gases (ROG) and oxides of nitrogen (NOx) from light-duty vehicles by
the year 2010. One of the more market-oriented approaches reflected
in the SIP, known as the M-1 strategy, calls for accelerating the
retirement of older light-duty vehicles in the South Coast Air
Quality Management District to achieve the following emission
reductions:
Emissions, TPD (tons per day)
Year (ROG + NOx)
1999 9
2002 14
2005 20
2007 22
2010 25
(e) A program for achieving those and more emission reductions
should be based on the following principles:
(1) If the program receives adequate funding, the first two years
should include a thorough assessment of the costs and short-term and
long-term emission reduction benefits of the program, compared with
other emission reduction programs for light-duty vehicles, which
shall be reflected in a report and recommendations by the state board
to the Governor and the Legislature on strategies and funding needs
for meeting the emission reduction requirements of the M-1 strategy
of the 1994 SIP for the years 1999 to 2010, inclusive.
(2) The program should first contribute to the achievement of the
emission reductions required by the inspection and maintenance
program and the M-1 strategy of the 1994 SIP, and should permit the
use of mobile source emission reduction credits for other purposes
currently authorized by the state board or a district. Remaining
credits may be used to achieve other emission reductions, including
those required by the 1994 SIP, in a manner consistent with
market-based strategies. Emission credits shall not be used to offset
emission standards or other requirements for new vehicles, except as
authorized by the state board.
(3) Participation by the vehicle owner shall be entirely voluntary
and the program design should be sensitive to the concerns of car
collectors and to consumers for whom older vehicles provide
affordable transportation.
(4) The program design shall provide for real, surplus, and
quantifiable emission reductions, based on an evaluation of the
purchased vehicles, taking into account factors that include per-mile
emissions, annual miles driven, remaining useful life of retired
vehicles, and emissions of the typical or average replacement
vehicle, as determined by the state board. The program shall ensure
that there is no double counting of emission credits among the
various vehicle removal programs.
(5) The program should specify the emission reductions required
and then utilize the market to ensure that these reductions are
obtained at the lowest cost.
(6) The program should be privately operated. It should utilize
the experience and expertise gained from past successful programs.
Existing entities that are authorized by, contracted with, or
otherwise sanctioned by a district and approved by the state board
and the United States Environmental Protection Agency shall be fully
utilized for purposes of implementing this article. Nothing in this
paragraph restricts the Department of Consumer Affairs from selecting
qualified contractors to operate or administer any program specified
pursuant to this chapter.
(7) The program should be designed insofar as possible to
eliminate any benefit to any participants from vehicle tampering and
other forms of cheating. To the extent that tampering and other forms
of cheating might be advantageous, the program design shall include
provisions for monitoring the occurrence of tampering and other forms
of cheating.
(8) Emission credits should be expressed in pounds or other units,
and their value should be set by the marketplace. Any contract
between a public entity and a private party for the purchase of
emission credits should be based on a price per pound which reflects
the market value of the credit at its time of purchase. Emission
reductions required by the M-1 and other strategies of the 1994 SIP
shall be accomplished by competitive bid among private businesses
solicited by the oversight agency designated pursuant to Section
44105.
44101. Not later than December 31, 1998, the state board shall
adopt, by regulation, a statewide program to commence in 1999 that
does all of the following:
(a) Provides for the creation, exchange, use, and retirement of
light-duty vehicle mobile source emission reduction credits. The
credits shall be fungible and exchangeable in the marketplace, and
shall reflect the actual emissions of the vehicles that are retired
or otherwise disposed of, by measurement, appropriate sampling, or
correlations developed from appropriate sampling. The numerical value
of credits may be constant over a defined lifetime, or may decline
with age measured from the time of origination of the credits. In all
cases, the numerical value of the credits shall reflect the useful
life expectancies and the projected in-use emissions of the retired
vehicles in a manner consistent with the assumptions used in
determining the emissions inventory. The credits shall be fully
recognized by the United States Environmental Protection Agency, the
state board, and the districts.
(b) Sets out the criteria for retiring or otherwise disposing of
high-emitting vehicles purchased for this program.
(c) Authorizes the issuance of those credits to private entities
that purchase and properly retire high-emitting vehicles.
(d) Authorizes the resale of those credits to public or private
entities to be used to achieve the emission reduction requirements of
the 1994 state implementation plan, meet the requirements of the
inspection and maintenance program, satisfy compliance with other
emission reduction mandates, as determined by the district or the
state board, create local growth allowances, or satisfy new or
modified source emission offset requirements. Nothing in this article
limits a district's authority to apply emission discount factors
pursuant to district rules that regulate emissions banks, trades, or
offsets.
(e) Provides for the retirement of those credits when used.
(f) Includes accounting procedures to credit emissions reductions
achieved through vehicle scrappage to the M-1 strategy of the 1994
SIP and the inspection and maintenance program.
(g) Contains a program plan pursuant to Section 44104.5.
(h) Satisfies the attributes described in subdivision (e) of
Section 44100.
44102. (a) The state board, the Department of Motor Vehicles, and
the department shall harmonize the requirements and implementation of
this program with the motor vehicle inspection program and other
programs contained in this chapter, particularly the provisions
relating to gross polluters in Article 8 (commencing with Section
44080) and the repair or removal of high polluters in Article 9
(commencing with Section 44090).
(b) Insofar as practicable, these programs shall be seamless to
the participants and the public.
44103. Notwithstanding any other provision of law, the program
shall also do both of the following:
(a) Authorize the Department of Motor Vehicles, at the request of
persons engaged in the purchase and retirement of vehicles under the
program, to send notices to vehicle owners who are candidates for the
sale of vehicles under the program describing the opportunity to
participate in the program. The Department of Motor Vehicles may
recover all costs of those notifications from the requesting party or
parties.
(b) Allow the issuance of nonrevivable junk certificates for
vehicles retired under the program, which shall allow program
vehicles to be scrapped only for parts, except those parts identified
pursuant to subdivision (a) of Section 44120.
44104. (a) Funds shall be available to the state board from the
High Polluter Repair or Removal Account created pursuant to
subdivision (a) of Section 44091. Those funds shall be used to
perform the rulemaking, vehicle testing, and other technical work
necessary to achieve the objectives set forth in Sections 44101 and
44104.5. Those administrative expenditures shall not exceed a total
of three million dollars ($3,000,000) over the first three years of
the program.
(b) Funds available to the state board pursuant to paragraph (1)
of subdivision (d) of Section 44091 shall be used to purchase and
retire mobile source emission reduction credits resulting from the
retirement of light-duty vehicles pursuant to this article for the
purpose of achieving the emission reductions required by the M-1
strategy of the 1994 SIP. If offers from authorized private scrapping
entities are deemed, by the department, consistent with the criteria
set forth in Section 44101, to be noncompetitive in
cost-effectiveness, in terms of dollars per ton of emissions reduced,
the department shall directly purchase vehicles from owners in order
to achieve the greatest reduction in emissions at the least cost. If
these purchases, in turn, are deemed by the department to be not
cost-competitive, in terms of dollars per ton of emissions reduced,
with other strategies identified by the state board, the department
shall use the funds to pursue other more cost-effective strategies
identified by the state board. All emission reduction credits
purchased with the funds described in this paragraph shall be retired
and credited to the M-1 strategy of the 1994 SIP.
(c) This article shall not create an obligation on the part of any
state or local agency to expend money, incur substantial
administrative costs, or purchase credits to meet the M-1
requirements of the 1994 State Implementation Plan until the Director
of Finance certifies that there are sufficient funds in the High
Polluter Repair or Removal Account for purposes of the article.
(d) This article shall not create an obligation to use existing
funds that are currently used to meet other air quality mandates,
including funds collected pursuant to Sections 44223, 44225, 44227,
and 44243, for purchasing credits to satisfy the M-1 or other
strategies of the 1994 SIP.
(e) The state board and the department shall seek federal funds to
be deposited in the High Polluter Repair or Removal Account, and
shall explore the availability of other funding sources, such as
private contributions, the Petroleum Violation Escrow Account, and
proceeds from fees, fines, or other penalties resulting from fuel
specification violations.
44104.5. (a) The regulations adopted pursuant to subdivision (a) of
Section 44101 shall include a plan to guide the execution of the
first two years of the program, to assess the results, and to
formulate recommendations. The plan shall also verify whether the
light-duty vehicle scrapping program included in the state
implementation plan adopted on November 15, 1994, can reasonably be
expected to yield the required emissions reductions at reasonable
cost-effectiveness. Scrapping of any vehicles under this program for
program development or testing or for generating emission reductions
to be credited against the M-1 strategy of the 1994 SIP may proceed
before the state board adopts the regulations pursuant to subdivision
(a) of Section 44101 or the plan required by this subdivision. The
emission credits assigned to these vehicles shall be adjusted as
necessary to ensure that those credits are consistent with the
credits allowed under the regulations adopted pursuant to Section
44101. The plan shall include a baseline study, for the geographical
area or areas representative of those to be targeted by this program
and by measure M-1 in the SIP, of the current population of vehicles
by model year and market value and the current turnover rate of
vehicles, and other factors that may be essential to assessing
program effectiveness, cost-effectiveness, and market impacts of the
program.
(b) At the end of each of the two calendar years after the
adoption of the program plan, if the program receives adequate
funding, the state board, in consultation with the department, shall
adopt and publish a progress report evaluating each year of the
program. These reports shall address the following topics for those
vehicles scrapped to achieve both the M-1 SIP objectives and those
vehicles scrapped or repaired to generate mobile-source emission
reduction credits used for other purposes:
(1) The number of vehicles scrapped or repaired by model year.
(2) The measured emissions of the scrapped or repaired vehicles
tested during the report period, using suitable inspection and
maintenance test procedures.
(3) Costs of the vehicles in terms of amounts paid to sellers, the
costs of repair, and the cost-effectiveness of scrappage and repair
expressed in dollars per ton of emissions reduced.
(4) Administrative and testing costs for the program.
(5) Assessments of the replacement vehicles or replacement travel
by model year or emission levels, as determined from interviews,
questionnaires, diaries, analyses of vehicle registrations in the
study region, or other methods as appropriate.
(6) Assessments of the net emission benefits of scrapping in the
year reported, considering the scrapped vehicles, the replacement
vehicles, the effectiveness of repair, and other effects of the
program on the mix of vehicles and use of vehicles in the geographic
area of the program, including in-migration of other vehicles into
the area and any tendencies to increased market value of used
vehicles and prolonged useful life of existing vehicles, if any.
(7) Assessments of whether the M-1 strategy of the 1994 SIP can
reasonably be expected to yield the required emission reductions.
(c) Not later than June 30, 1999, and every three years
thereafter, if the programs receive adequate funding, the state
board, in consultation with the department, shall evaluate the
performance of the programs specified in Article 9 (commencing with
Section 44090) and this article and, based on that evaluation, report
to the Governor and Legislature. The report shall evaluate the
overall performance of the program, including its cost-effectiveness
in terms of dollars per ton of credited or reduced emissions,
description of the methods and procedures to assure that the emission
reductions are real, surplus, and quantifiable, the extent of the
market for eligible vehicles, a recommendation for an appropriate
allocation of expenditures between removal or repair of vehicles that
reflects the relative cost-effectiveness of the options, and any
other recommendation for improving the effectiveness of these
programs. This report shall also contain all of the following:
(1) Identification of procedures for distinguishing the emission
reductions attributed to scrapping for the purpose of generating
emission reductions credits and scrapping that occurs or would have
occurred as a result of the inspection and maintenance program
managed by the Department of Consumer Affairs and other programs.
(2) A projection of the emissions reductions and
cost-effectiveness that might be realized by scrapping or repairing
light-duty vehicles through the year 2010, considering changes
expected in the vehicle fleet and likely impacts of scrapping or
repair on the mix and emissions of vehicles.
(3) A comparison of the effectiveness of scrappage, repair, or
upgrade to other programs for light-duty vehicles.
(4) A recommended scrapping program, or other more cost-effective
means, for continuing to achieve the emissions reductions required by
the M-1 strategy of the 1994 State Implementation Plan, considering
likely emission reductions in the attainment year costs,
cost-effectiveness, issues of monitoring and verification, and status
of the Environmental Protection Agency's approval of the state's
1994 SIP.
44105. The regulations shall specify that the program shall be
operated as a privately operated program under the oversight of a
state agency to be designated by the Governor. In consultation with
the districts and interested parties, the state oversight agency
shall be responsible for the implementation of the program, including
the following:
(a) Solicitation and analysis of public comments on the overall
program goals, objectives, and design.
(b) Development of the program structure.
(c) Overall quality control, including verifying emission
reductions and certification of the emission reduction credits.
(d) Definition of terms such as "high emitter," "collector
interest vehicles," and "nonrevivable junk certificates."
44106. The program shall include provisions for monitoring and
preventing all forms of tampering or other forms of cheating, and
shall effectively address "avoidance vehicles" such as nonregistered
vehicles and vehicles lacking a sufficient inspection and maintenance
history. If fraud is detected, the program shall include provisions
for suspending all new transactions with the entity suspected of
fraud until problems are corrected and revaluing all credits used to
meet the emissions reduction requirements. Contracts with authorized
entities shall include remedies in cases of fraud.
44107. The program shall discourage tampering and other forms of
cheating, and effectively address "avoidance vehicles," such as
nonregistered vehicles and vehicles lacking a sufficient inspection
and maintenance history.
44109. The program shall include appropriate means to solicit
vehicle owners, including mass mailings, media advertising, news
coverage, and direct mail to owners of candidate vehicles, and may
include high-emitting vehicles based on smog check or remote sensing
or high-emitter profile information.
44115. The program shall ensure that vehicle purchase transactions
are convenient to vehicle owners, including advance screening to
reasonably assure that vehicles qualify for the program.
44120. Vehicle disposal under the program shall be consistent with
appropriate state board guidance and provisions of the Vehicle Code
dealing with vehicle disposal and parts reuse, and shall do both of
the following:
(a) Allow for trading, sale, and resale of the vehicles between
licensed auto dismantlers or other appropriate parties to maximize
the salvage value of the vehicles through the recycling, sales, and
use of parts of the vehicles, consistent with the Vehicle Code and
appropriate state board guidelines.
(b) Set aside and resell to the public any vehicles with special
collector interest. No emission reduction credit shall be generated
for vehicles that are resold to the public. Vehicles acquired for
their collector interest shall be properly repaired to meet minimum
established vehicle emission standards before reregistration, unless
the vehicle is sold with a nonrepairable vehicle certificate or a
nonrevivable junk certificate.
44121. The state board shall develop standards for the
certification and use of emission reduction credits to ensure that
the credits are real, surplus, and quantifiable after accounting for
program uncertainties.
44122. Emission reductions achieved from retired vehicles shall be
quantified as follows:
(a) Vehicle emissions shall be based on either direct testing,
statistical sampling, or emission modeling methods. Sampling of a
statistically significant portion of the vehicles may be used to
estimate emission benefits or to develop and validate correlations
for use in estimating emission benefits.
(b) A reasonably reliable mechanism shall be applied to estimate
vehicle miles traveled and the remaining useful life of each
purchased vehicle. The odometer reading shall be matched on each
purchased vehicle with the records of the Department of Motor
Vehicles and smog check records to verify driving history, or
statistical data shall be used to estimate vehicle use.
(c) An annual survey shall be performed of a statistically
meaningful number of participants to determine replacement vehicle
and post-participation behavior and also to determine the extent, if
any, of in-migration of low-cost vehicles due to price increases in
the scrapping market area resulting from the scrap program.
44100. The Legislature hereby finds and declares as follows:
(a) Emission reduction programs based on market principles have
the potential to provide equivalent or superior environmental
benefits when compared to existing controls at a lower cost to the
citizens of California than traditional emission control
requirements.
(b) Several studies have demonstrated that a small percentage of
light-duty vehicles contribute disproportionately to the on-road
emissions inventory. Programs to reduce or eliminate these excess
emissions can significantly contribute to the attainment of the state'
s air quality goals.
(c) Programs to accelerate fleet turnover can enhance the
effectiveness of the state's new motor vehicle standards by bringing
more low-emission vehicles into the on-road fleet earlier.
(d) The California State Implementation Plan for Ozone (SIP),
adopted November 15, 1994, and submitted to the Environmental
Protection Agency, calls for added reductions in reactive organic
gases (ROG) and oxides of nitrogen (NOx) from light-duty vehicles by
the year 2010. One of the more market-oriented approaches reflected
in the SIP, known as the M-1 strategy, calls for accelerating the
retirement of older light-duty vehicles in the South Coast Air
Quality Management District to achieve the following emission
reductions:
Emissions, TPD (tons per day)
Year (ROG + NOx)
1999 9
2002 14
2005 20
2007 22
2010 25
(e) A program for achieving those and more emission reductions
should be based on the following principles:
(1) If the program receives adequate funding, the first two years
should include a thorough assessment of the costs and short-term and
long-term emission reduction benefits of the program, compared with
other emission reduction programs for light-duty vehicles, which
shall be reflected in a report and recommendations by the state board
to the Governor and the Legislature on strategies and funding needs
for meeting the emission reduction requirements of the M-1 strategy
of the 1994 SIP for the years 1999 to 2010, inclusive.
(2) The program should first contribute to the achievement of the
emission reductions required by the inspection and maintenance
program and the M-1 strategy of the 1994 SIP, and should permit the
use of mobile source emission reduction credits for other purposes
currently authorized by the state board or a district. Remaining
credits may be used to achieve other emission reductions, including
those required by the 1994 SIP, in a manner consistent with
market-based strategies. Emission credits shall not be used to offset
emission standards or other requirements for new vehicles, except as
authorized by the state board.
(3) Participation by the vehicle owner shall be entirely voluntary
and the program design should be sensitive to the concerns of car
collectors and to consumers for whom older vehicles provide
affordable transportation.
(4) The program design shall provide for real, surplus, and
quantifiable emission reductions, based on an evaluation of the
purchased vehicles, taking into account factors that include per-mile
emissions, annual miles driven, remaining useful life of retired
vehicles, and emissions of the typical or average replacement
vehicle, as determined by the state board. The program shall ensure
that there is no double counting of emission credits among the
various vehicle removal programs.
(5) The program should specify the emission reductions required
and then utilize the market to ensure that these reductions are
obtained at the lowest cost.
(6) The program should be privately operated. It should utilize
the experience and expertise gained from past successful programs.
Existing entities that are authorized by, contracted with, or
otherwise sanctioned by a district and approved by the state board
and the United States Environmental Protection Agency shall be fully
utilized for purposes of implementing this article. Nothing in this
paragraph restricts the Department of Consumer Affairs from selecting
qualified contractors to operate or administer any program specified
pursuant to this chapter.
(7) The program should be designed insofar as possible to
eliminate any benefit to any participants from vehicle tampering and
other forms of cheating. To the extent that tampering and other forms
of cheating might be advantageous, the program design shall include
provisions for monitoring the occurrence of tampering and other forms
of cheating.
(8) Emission credits should be expressed in pounds or other units,
and their value should be set by the marketplace. Any contract
between a public entity and a private party for the purchase of
emission credits should be based on a price per pound which reflects
the market value of the credit at its time of purchase. Emission
reductions required by the M-1 and other strategies of the 1994 SIP
shall be accomplished by competitive bid among private businesses
solicited by the oversight agency designated pursuant to Section
44105.
44101. Not later than December 31, 1998, the state board shall
adopt, by regulation, a statewide program to commence in 1999 that
does all of the following:
(a) Provides for the creation, exchange, use, and retirement of
light-duty vehicle mobile source emission reduction credits. The
credits shall be fungible and exchangeable in the marketplace, and
shall reflect the actual emissions of the vehicles that are retired
or otherwise disposed of, by measurement, appropriate sampling, or
correlations developed from appropriate sampling. The numerical value
of credits may be constant over a defined lifetime, or may decline
with age measured from the time of origination of the credits. In all
cases, the numerical value of the credits shall reflect the useful
life expectancies and the projected in-use emissions of the retired
vehicles in a manner consistent with the assumptions used in
determining the emissions inventory. The credits shall be fully
recognized by the United States Environmental Protection Agency, the
state board, and the districts.
(b) Sets out the criteria for retiring or otherwise disposing of
high-emitting vehicles purchased for this program.
(c) Authorizes the issuance of those credits to private entities
that purchase and properly retire high-emitting vehicles.
(d) Authorizes the resale of those credits to public or private
entities to be used to achieve the emission reduction requirements of
the 1994 state implementation plan, meet the requirements of the
inspection and maintenance program, satisfy compliance with other
emission reduction mandates, as determined by the district or the
state board, create local growth allowances, or satisfy new or
modified source emission offset requirements. Nothing in this article
limits a district's authority to apply emission discount factors
pursuant to district rules that regulate emissions banks, trades, or
offsets.
(e) Provides for the retirement of those credits when used.
(f) Includes accounting procedures to credit emissions reductions
achieved through vehicle scrappage to the M-1 strategy of the 1994
SIP and the inspection and maintenance program.
(g) Contains a program plan pursuant to Section 44104.5.
(h) Satisfies the attributes described in subdivision (e) of
Section 44100.
44102. (a) The state board, the Department of Motor Vehicles, and
the department shall harmonize the requirements and implementation of
this program with the motor vehicle inspection program and other
programs contained in this chapter, particularly the provisions
relating to gross polluters in Article 8 (commencing with Section
44080) and the repair or removal of high polluters in Article 9
(commencing with Section 44090).
(b) Insofar as practicable, these programs shall be seamless to
the participants and the public.
44103. Notwithstanding any other provision of law, the program
shall also do both of the following:
(a) Authorize the Department of Motor Vehicles, at the request of
persons engaged in the purchase and retirement of vehicles under the
program, to send notices to vehicle owners who are candidates for the
sale of vehicles under the program describing the opportunity to
participate in the program. The Department of Motor Vehicles may
recover all costs of those notifications from the requesting party or
parties.
(b) Allow the issuance of nonrevivable junk certificates for
vehicles retired under the program, which shall allow program
vehicles to be scrapped only for parts, except those parts identified
pursuant to subdivision (a) of Section 44120.
44104. (a) Funds shall be available to the state board from the
High Polluter Repair or Removal Account created pursuant to
subdivision (a) of Section 44091. Those funds shall be used to
perform the rulemaking, vehicle testing, and other technical work
necessary to achieve the objectives set forth in Sections 44101 and
44104.5. Those administrative expenditures shall not exceed a total
of three million dollars ($3,000,000) over the first three years of
the program.
(b) Funds available to the state board pursuant to paragraph (1)
of subdivision (d) of Section 44091 shall be used to purchase and
retire mobile source emission reduction credits resulting from the
retirement of light-duty vehicles pursuant to this article for the
purpose of achieving the emission reductions required by the M-1
strategy of the 1994 SIP. If offers from authorized private scrapping
entities are deemed, by the department, consistent with the criteria
set forth in Section 44101, to be noncompetitive in
cost-effectiveness, in terms of dollars per ton of emissions reduced,
the department shall directly purchase vehicles from owners in order
to achieve the greatest reduction in emissions at the least cost. If
these purchases, in turn, are deemed by the department to be not
cost-competitive, in terms of dollars per ton of emissions reduced,
with other strategies identified by the state board, the department
shall use the funds to pursue other more cost-effective strategies
identified by the state board. All emission reduction credits
purchased with the funds described in this paragraph shall be retired
and credited to the M-1 strategy of the 1994 SIP.
(c) This article shall not create an obligation on the part of any
state or local agency to expend money, incur substantial
administrative costs, or purchase credits to meet the M-1
requirements of the 1994 State Implementation Plan until the Director
of Finance certifies that there are sufficient funds in the High
Polluter Repair or Removal Account for purposes of the article.
(d) This article shall not create an obligation to use existing
funds that are currently used to meet other air quality mandates,
including funds collected pursuant to Sections 44223, 44225, 44227,
and 44243, for purchasing credits to satisfy the M-1 or other
strategies of the 1994 SIP.
(e) The state board and the department shall seek federal funds to
be deposited in the High Polluter Repair or Removal Account, and
shall explore the availability of other funding sources, such as
private contributions, the Petroleum Violation Escrow Account, and
proceeds from fees, fines, or other penalties resulting from fuel
specification violations.
44104.5. (a) The regulations adopted pursuant to subdivision (a) of
Section 44101 shall include a plan to guide the execution of the
first two years of the program, to assess the results, and to
formulate recommendations. The plan shall also verify whether the
light-duty vehicle scrapping program included in the state
implementation plan adopted on November 15, 1994, can reasonably be
expected to yield the required emissions reductions at reasonable
cost-effectiveness. Scrapping of any vehicles under this program for
program development or testing or for generating emission reductions
to be credited against the M-1 strategy of the 1994 SIP may proceed
before the state board adopts the regulations pursuant to subdivision
(a) of Section 44101 or the plan required by this subdivision. The
emission credits assigned to these vehicles shall be adjusted as
necessary to ensure that those credits are consistent with the
credits allowed under the regulations adopted pursuant to Section
44101. The plan shall include a baseline study, for the geographical
area or areas representative of those to be targeted by this program
and by measure M-1 in the SIP, of the current population of vehicles
by model year and market value and the current turnover rate of
vehicles, and other factors that may be essential to assessing
program effectiveness, cost-effectiveness, and market impacts of the
program.
(b) At the end of each of the two calendar years after the
adoption of the program plan, if the program receives adequate
funding, the state board, in consultation with the department, shall
adopt and publish a progress report evaluating each year of the
program. These reports shall address the following topics for those
vehicles scrapped to achieve both the M-1 SIP objectives and those
vehicles scrapped or repaired to generate mobile-source emission
reduction credits used for other purposes:
(1) The number of vehicles scrapped or repaired by model year.
(2) The measured emissions of the scrapped or repaired vehicles
tested during the report period, using suitable inspection and
maintenance test procedures.
(3) Costs of the vehicles in terms of amounts paid to sellers, the
costs of repair, and the cost-effectiveness of scrappage and repair
expressed in dollars per ton of emissions reduced.
(4) Administrative and testing costs for the program.
(5) Assessments of the replacement vehicles or replacement travel
by model year or emission levels, as determined from interviews,
questionnaires, diaries, analyses of vehicle registrations in the
study region, or other methods as appropriate.
(6) Assessments of the net emission benefits of scrapping in the
year reported, considering the scrapped vehicles, the replacement
vehicles, the effectiveness of repair, and other effects of the
program on the mix of vehicles and use of vehicles in the geographic
area of the program, including in-migration of other vehicles into
the area and any tendencies to increased market value of used
vehicles and prolonged useful life of existing vehicles, if any.
(7) Assessments of whether the M-1 strategy of the 1994 SIP can
reasonably be expected to yield the required emission reductions.
(c) Not later than June 30, 1999, and every three years
thereafter, if the programs receive adequate funding, the state
board, in consultation with the department, shall evaluate the
performance of the programs specified in Article 9 (commencing with
Section 44090) and this article and, based on that evaluation, report
to the Governor and Legislature. The report shall evaluate the
overall performance of the program, including its cost-effectiveness
in terms of dollars per ton of credited or reduced emissions,
description of the methods and procedures to assure that the emission
reductions are real, surplus, and quantifiable, the extent of the
market for eligible vehicles, a recommendation for an appropriate
allocation of expenditures between removal or repair of vehicles that
reflects the relative cost-effectiveness of the options, and any
other recommendation for improving the effectiveness of these
programs. This report shall also contain all of the following:
(1) Identification of procedures for distinguishing the emission
reductions attributed to scrapping for the purpose of generating
emission reductions credits and scrapping that occurs or would have
occurred as a result of the inspection and maintenance program
managed by the Department of Consumer Affairs and other programs.
(2) A projection of the emissions reductions and
cost-effectiveness that might be realized by scrapping or repairing
light-duty vehicles through the year 2010, considering changes
expected in the vehicle fleet and likely impacts of scrapping or
repair on the mix and emissions of vehicles.
(3) A comparison of the effectiveness of scrappage, repair, or
upgrade to other programs for light-duty vehicles.
(4) A recommended scrapping program, or other more cost-effective
means, for continuing to achieve the emissions reductions required by
the M-1 strategy of the 1994 State Implementation Plan, considering
likely emission reductions in the attainment year costs,
cost-effectiveness, issues of monitoring and verification, and status
of the Environmental Protection Agency's approval of the state's
1994 SIP.
44105. The regulations shall specify that the program shall be
operated as a privately operated program under the oversight of a
state agency to be designated by the Governor. In consultation with
the districts and interested parties, the state oversight agency
shall be responsible for the implementation of the program, including
the following:
(a) Solicitation and analysis of public comments on the overall
program goals, objectives, and design.
(b) Development of the program structure.
(c) Overall quality control, including verifying emission
reductions and certification of the emission reduction credits.
(d) Definition of terms such as "high emitter," "collector
interest vehicles," and "nonrevivable junk certificates."
44106. The program shall include provisions for monitoring and
preventing all forms of tampering or other forms of cheating, and
shall effectively address "avoidance vehicles" such as nonregistered
vehicles and vehicles lacking a sufficient inspection and maintenance
history. If fraud is detected, the program shall include provisions
for suspending all new transactions with the entity suspected of
fraud until problems are corrected and revaluing all credits used to
meet the emissions reduction requirements. Contracts with authorized
entities shall include remedies in cases of fraud.
44107. The program shall discourage tampering and other forms of
cheating, and effectively address "avoidance vehicles," such as
nonregistered vehicles and vehicles lacking a sufficient inspection
and maintenance history.
44109. The program shall include appropriate means to solicit
vehicle owners, including mass mailings, media advertising, news
coverage, and direct mail to owners of candidate vehicles, and may
include high-emitting vehicles based on smog check or remote sensing
or high-emitter profile information.
44115. The program shall ensure that vehicle purchase transactions
are convenient to vehicle owners, including advance screening to
reasonably assure that vehicles qualify for the program.
44120. Vehicle disposal under the program shall be consistent with
appropriate state board guidance and provisions of the Vehicle Code
dealing with vehicle disposal and parts reuse, and shall do both of
the following:
(a) Allow for trading, sale, and resale of the vehicles between
licensed auto dismantlers or other appropriate parties to maximize
the salvage value of the vehicles through the recycling, sales, and
use of parts of the vehicles, consistent with the Vehicle Code and
appropriate state board guidelines.
(b) Set aside and resell to the public any vehicles with special
collector interest. No emission reduction credit shall be generated
for vehicles that are resold to the public. Vehicles acquired for
their collector interest shall be properly repaired to meet minimum
established vehicle emission standards before reregistration, unless
the vehicle is sold with a nonrepairable vehicle certificate or a
nonrevivable junk certificate.
44121. The state board shall develop standards for the
certification and use of emission reduction credits to ensure that
the credits are real, surplus, and quantifiable after accounting for
program uncertainties.
44122. Emission reductions achieved from retired vehicles shall be
quantified as follows:
(a) Vehicle emissions shall be based on either direct testing,
statistical sampling, or emission modeling methods. Sampling of a
statistically significant portion of the vehicles may be used to
estimate emission benefits or to develop and validate correlations
for use in estimating emission benefits.
(b) A reasonably reliable mechanism shall be applied to estimate
vehicle miles traveled and the remaining useful life of each
purchased vehicle. The odometer reading shall be matched on each
purchased vehicle with the records of the Department of Motor
Vehicles and smog check records to verify driving history, or
statistical data shall be used to estimate vehicle use.
(c) An annual survey shall be performed of a statistically
meaningful number of participants to determine replacement vehicle
and post-participation behavior and also to determine the extent, if
any, of in-migration of low-cost vehicles due to price increases in
the scrapping market area resulting from the scrap program.
