BILL NUMBER: SB 225	CHAPTERED
	BILL TEXT

	CHAPTER  627
	FILED WITH SECRETARY OF STATE  SEPTEMBER 29, 2006
	APPROVED BY GOVERNOR  SEPTEMBER 29, 2006
	PASSED THE SENATE  AUGUST 31, 2006
	PASSED THE ASSEMBLY  AUGUST 31, 2006
	AMENDED IN ASSEMBLY  AUGUST 28, 2006
	AMENDED IN ASSEMBLY  AUGUST 17, 2006

INTRODUCED BY   Senator Soto
   (Coauthor: Assembly Member Chu)

                        FEBRUARY 15, 2005

   An act to amend Sections 44283, 44299.1, and 44299.2 of the Health
and Safety Code, relating to air quality.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 225, Soto  Carl Moyer program.
   Existing law establishes the Carl Moyer Memorial Air Quality
Standards Attainment Program (Carl Moyer program), which provides
grants to offset the incremental cost of eligible projects that
reduce oxides of nitrogen from heavy-duty mobile sources in the
state. Existing law, until January 1, 2015, prohibits grants for
projects with a cost-effectiveness of more than $13,600 per ton of
NOx reduced in California, and on and after that date reduces that
dollar amount to $12,000.
   This bill would allow the State Air Resources Board to determine a
higher value that reflects state consumer price index adjustments.
   Existing provisions of the Carl Moyer program specify a scheme for
allocation of program funding to air pollution control districts and
air quality management districts and limit how much of the
allocations may be used for certain expenses.
   This bill would revise or limit the percentages of program funding
that may be allocated to air pollution control districts and air
quality management districts for specified purposes, with different
limits for districts with a population of less than 1,000,000 and for
districts with a population of 1,000,000 or more. The bill would
increase the percentages of the allocation to districts that are
based on population and severity of the air quality problems, would
award severity points based, in part, upon the annual diesel
particulate emissions in an air basin, and would reduce the
percentage of the allocation that is based on other specified
criteria. These changes would remain in effect only until January 1,
2015.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  Section 44283 of the Health and Safety Code, as amended
by Section 9 of Chapter 707 of the Statutes of 2004, is amended to
read:
   44283.  (a) Grants shall not be made for projects with a
cost-effectiveness, calculated in accordance with this section, of
more than thirteen thousand six hundred dollars ($13,600) per ton of
NOx reduced in California or a higher value that reflects state
consumer price index adjustments on or after January 1, 2006, as
determined by the state board. For projects obtaining reactive
organic gas and particulate matter reductions, the state board shall
determine appropriate adjustment factors to calculate a weighted
cost-effectiveness.
   (b) Only covered emission reductions occurring in this state shall
be included in the cost-effectiveness determination. The extent to
which emissions generated at sea contribute to air quality in
California nonattainment areas shall be incorporated into these
methodologies based on a reasonable assessment of currently available
information and modeling assumptions.
   (c) The state board shall develop protocols for calculating the
surplus covered emission reductions in California from representative
project types over the life of the project.
   (d) The cost of the covered emission reduction is the amount of
the grant from the program, including matching funds provided
pursuant to subdivision (e) of Section 44287, plus any other state
funds, or funds under the district's budget authority or fiduciary
control, provided toward the project. The state board shall establish
reasonable methodologies for evaluating project cost-effectiveness,
consistent with the definition contained in paragraph (4) of
subdivision (a) of Section 44275, and with accepted methods, taking
into account a fair and reasonable discount rate or time value of
public funds.
   (e) A grant shall not be made that, net of taxes, provides the
applicant with funds in excess of the incremental cost of the
project. Incremental lease costs may be capitalized according to
guidelines adopted by the state board so that these incremental costs
may be offset by a one-time grant award.
   (f) Funds under a district's budget authority or fiduciary control
may be used to pay for the incremental cost of liquid or gaseous
fuel, other than standard gasoline or diesel, which is integral to a
covered emission reducing technology that is part of a project
receiving grant funding under the program. The fuel shall be approved
for sale by the state board. The incremental fuel cost over the
expected lifetime of the vehicle may be offset by the district if the
project as a whole, including the incremental fuel cost, meets all
of the requirements of this chapter, including the maximum allowed
cost-effectiveness. The state board shall develop an appropriate
methodology for converting incremental fuel costs over the vehicle
lifetime into an initial cost for the purposes of determining project
cost-effectiveness. Incremental fuel costs may not be included in
project costs for fuels dispensed from any facility that was funded,
in whole or in part, from the fund.
   (g) For purposes of determining any grant amount pursuant to this
chapter, the incremental cost of any new purchase, retrofit, repower,
or add-on equipment shall be reduced by the value of any current
financial incentive that directly reduces the project price,
including any tax credits or deductions, grants, or other public
financial assistance. Project proponents applying for funding shall
be required to state in their application any other public financial
assistance to the project.
   (h) For projects that would repower offroad equipment by replacing
uncontrolled diesel engines with new, certified diesel engines, the
state board may establish maximum grant award amounts per repower. A
repower project shall also be subject to the incremental cost maximum
pursuant to subdivision (e).
   (i) After study of available emission reduction technologies and
costs and after public notice and comment, the state board may reduce
the values of the maximum grant award criteria stated in this
section to improve the ability of the program to achieve its goals.
Every year the state board shall adjust the maximum
cost-effectiveness amount established in subdivision (a) and any
per-project maximum set by the state board pursuant to subdivision
(h) to account for inflation.
   (j) This section shall remain in effect only until January 1,
2015, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2015, deletes or extends
that date.
  SEC. 2.  Section 44283 of the Health and Safety Code, as added by
Section 9.5 of Chapter 707 of the Statutes of 2004, is amended to
read:
   44283.  (a) Grants shall not be made for projects with a
cost-effectiveness, calculated in accordance with this section, of
more than twelve thousand dollars ($12,000) per ton of NOx reduced in
California or a higher value that reflects state consumer price
index adjustments on or after January 1, 2015, as determined by the
state board.
   (b) Only NOx reductions occurring in this state shall be included
in the cost-effectiveness determination. The extent to which
emissions generated at sea contribute to air quality in California
nonattainment areas shall be incorporated into these methodologies
based on a reasonable assessment of currently available information
and modeling assumptions.
   (c) The state board shall develop protocols for calculating the
surplus NOx reductions in California from representative project
types over the life of the project.
   (d) The cost of the NOx reduction is the amount of the grant from
the program, including matching funds provided pursuant to
subdivision (e) of Section 44287, plus any other state funds, or
funds under the district's budget authority or fiduciary control,
provided toward the project. The state board shall establish
reasonable methodologies for evaluating project cost-effectiveness,
consistent with the definition contained in subdivision (c) of
Section 44275, and with accepted methods, taking into account a fair
and reasonable discount rate or time value of public funds.
   (e) A grant shall not be made that, net of taxes, provides the
applicant with funds in excess of the incremental cost of the
project. Incremental lease costs may be capitalized according to
guidelines adopted by the state board so that these incremental costs
may be offset by a one-time grant award.
   (f) Funds under a district's budget authority or fiduciary control
may be used to pay for the incremental cost of liquid or gaseous
fuel, other than standard gasoline or diesel, which is integral to a
NOx reducing technology that is part of a project receiving grant
funding under the program. The fuel shall be approved for sale by the
state board. The incremental fuel cost over the expected lifetime of
the vehicle may be offset by the district if the project as a whole,
including the incremental fuel cost, meets all of the requirements
of this chapter, including the maximum allowed cost-effectiveness.
The state board shall develop an appropriate methodology for
converting incremental fuel costs over the vehicle lifetime into an
initial cost for the purposes of determining project
cost-effectiveness. Incremental fuel costs may not be included in
project costs for fuels dispensed from any facility that was funded,
in whole or in part, from the fund.
   (g) For purposes of determining any grant amount pursuant to this
chapter, the incremental cost of any new purchase, retrofit, repower,
or add-on equipment shall be reduced by the value of any current
financial incentive that directly reduces the project price,
including any tax credits or deductions, grants, or other public
financial assistance. Project proponents applying for funding shall
be required to state in their application any other public financial
assistance to the project.
   (h) For projects that would repower offroad equipment by replacing
uncontrolled diesel engines with new, certified diesel engines, the
state board may establish maximum grant award amounts per repower. A
repower project shall also be subject to the incremental cost maximum
pursuant to subdivision (e).
   (i) After study of available emission reduction technologies and
costs and after public notice and comment, the state board may reduce
the values of the maximum grant award criteria stated in this
section to improve the ability of the program to achieve its goals.
Every year the state board shall adjust the maximum
cost-effectiveness amount established in subdivision (a) and any
per-project maximum set by the state board pursuant to subdivision
(h) to account for inflation.
   (j) This section shall become operative on January 1, 2015.
  SEC. 3.  Section 44299.1 of the Health and Safety Code, as amended
by Section 11 of Chapter 707 of the Statutes of 2004, is amended to
read:
   44299.1.  (a) To ensure that emission reductions are obtained as
needed from pollution sources, any money deposited in or appropriated
to the fund shall be segregated and administered as follows:
   (1) Not more than 2 percent of the moneys in the fund shall be
allocated to program support and outreach costs incurred by the state
board and the commission directly associated with implementing the
program pursuant to this chapter. These funds shall be allocated to
the state board and the commission in proportion to total program
funds administered by the state board and the commission.
   (2) Not more than 2 percent of the moneys in the fund shall be
allocated to direct program outreach activities.  The state board may
use these funds for program outreach contracts or may allocate
outreach funds to participating air districts in proportion to each
district's allocation from the Covered Vehicle Account. The state
board shall report on the use of outreach funds in their reports to
the Legislature pursuant to Section 44295.
   (3) The balance shall be deposited in the Covered Vehicle Account
to be expended to offset added costs of new very low or zero-emission
vehicle technologies, and emission reducing repowers, retrofits, and
add-on equipment for covered vehicles and engines, and other
projects specified in Section 44281.
   (b) Funds in the Covered Vehicle Account shall be allocated to a
district that submits an eligible application to the state board
pursuant to Section 44287. The state board shall determine the
maximum amount of annual funding from the Covered Vehicle Account
that each district may receive. This determination shall be based on
the population in each district as well as the relative importance of
obtaining covered emission reductions in each district, specifically
through the program.
   (c) Not more than 5 percent of the moneys allocated pursuant to
this chapter to a district with a population of one million or more
may be used by the district for indirect costs of implementation of
the program, including outreach costs that are subject to the
limitation in paragraph (2) of subdivision (a).
   (d) Not more than 10 percent of the moneys allocated pursuant to
this chapter to a district with a population of less than one million
may be used by the district for indirect costs of implementation of
the program, including outreach costs that are subject to the
limitation in paragraph (2) of subdivision (a).
   (e) This section shall remain in effect only until January 1,
2015, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2015, deletes or extends
that date.
  SEC. 4.  Section 44299.2 of the Health and Safety Code is amended
to read:
   44299.2.  Funds shall be allocated to local air pollution control
and air quality management districts, and shall be subject to
administrative terms and conditions as follows:
   (a) Available funds shall be distributed to districts taking into
consideration the population of the area, the severity of the air
quality problems experienced by the population, and the historical
allocation of the Carl Moyer Memorial Air Quality Standards
Attainment Trust Fund, except that the south coast district shall be
allocated a percentage of the total funds available to districts that
is proportional to the percentage of the total state population
residing within the jurisdictional boundaries of that district. For
the purposes of this subdivision, population shall be determined by
the state board based on the most recent data provided by the
Department of Finance.  The allocation to the south coast district
shall be subtracted from the total funds available to districts. Each
district, except the south coast district, shall be awarded a
minimum allocation of two hundred thousand dollars ($200,000), and
the remainder, which shall be known as the "allocation amount," shall
be allocated to all districts as follows:
   (1) The state board shall distribute 35 percent of the allocation
amount to the districts in proportion to the percentage of the total
residual state population that resides within each district's
boundaries. For purposes of this paragraph, "total residual state
population" means the total state population, less the total
population that resides within the south coast district.
   (2) The state board shall distribute 35 percent of the allocation
amount to the districts in proportion to the severity of the air
quality problems to which each district's population is exposed. The
severity of the exposure shall be calculated as follows:
   (A) Each district shall be awarded severity points based on the
district's attainment designation and classification, as most
recently promulgated by the federal Environmental Protection Agency
for the National Ambient Air Quality Standard for ozone averaged over
eight hours, as follows:
   (i) A district that is designated attainment for the federal
eight-hour ozone standard shall be awarded one point.
   (ii) A district that is designated nonattainment for the federal
eight-hour ozone standard shall be awarded severity points based on
classification. Two points shall be awarded for transitional, basic,
or marginal classifications, three points for moderate
classification, four points for serious classification, five points
for severe classification, six points for severe-17 classification,
and seven points for extreme classification.
   (B) Each district shall be awarded severity points based on the
annual diesel particulate emissions in the air basin, as determined
by the state board. One point shall be awarded to the district, in
increments, for each 1,000 tons of diesel particulate emissions. In
making this determination, 0 to 999 tons shall be awarded no points,
1,000 to 1,999 tons shall be awarded one point, 2,000 to 2,999 tons
shall be awarded two points, and so forth. If a district encompasses
more than one air basin, the air basin with the greatest diesel
particulate emissions shall be used to determine the points awarded
to the district. The San Diego County Air Pollution Control District
and the Imperial County Air Pollution Control District shall be
awarded one additional point each to account for annual diesel
particulate emissions transported from Mexico.
   (C) The points awarded under subparagraphs (A) and (B), shall be
added together for each district, and the total shall be multiplied
by the population residing within the district boundaries, to yield
the local air quality exposure index.
   (D) The local air quality exposure index for each district shall
be summed together to yield a total state exposure index. Funds shall
be allocated under this paragraph to each district in proportion to
its local air quality exposure index divided by the total state
exposure index.
   (3) The state board shall distribute 30 percent of the allocation
amount to the districts in proportion to the allocation of funds from
the Carl Moyer Memorial Air Quality Standards Attainment Trust Fund,
as follows:
   (A) Because each district is awarded a minimum allocation pursuant
to subdivision (a), there shall be no additional minimum allocation
from the Carl Moyer historical allocation funds. The total amount
allocated in this way shall be subtracted from total funding
previously awarded to the district under the Carl Moyer Memorial Air
Quality Standards Attainment Program, and the remainder, which shall
be known as directed funds, shall be allocated pursuant to
subparagraph (B).
   (B) Each district with a population that is greater than or equal
to 1 percent of the state's population shall receive an additional
allocation based on the population of the district and the district's
relative share of emission reduction commitments in the State
Implementation Plan to attain the National Ambient Air Quality
Standard for ozone averaged over one hour. This additional allocation
shall be calculated as a percentage share of the directed funds for
each district, derived using a ratio of each district's share amount
to the base amount, which shall be calculated as follows:
   (i) The base amount shall be the total Carl Moyer program funds
allocated by the state board to the districts in the 2002-03 fiscal
year, less the total of the funds allocated through the minimum
allocation to each district in the 2002-03 fiscal year.
   (ii) The share amount shall be the allocation that each district
received in the 2002-03 fiscal year, not including the minimum
allocation. There shall be one share amount for each district.
   (iii) The percentage share shall be calculated for each district
by dividing the district's share amount by the base amount, and
multiplying the result by the total directed funds available under
this subparagraph.
   (b) Funds shall be distributed as expeditiously as reasonably
practicable, and a report of the distribution shall be made available
to the public.
   (c) All funds allocated pursuant to this section shall be expended
as provided in the guidelines adopted pursuant to Section 44287
within two years from the date of allocation. Funds not expended
within the two years shall be returned to the Covered Vehicle Account
within 60 days and shall be subject to further allocation as
follows:
   (1) Within 30 days of the deadline to return funds, the state
board shall notify the districts of the total amount of returned
funds available for reallocation, and shall list those districts that
request supplemental funds from the reallocation and that are able
to expend those funds within one year.
   (2) Within 90 days of the deadline to return funds, the state
board shall allocate the returned funds to the districts listed
pursuant to paragraph (1).
   (3) All supplemental funds distributed under this subdivision
shall be expended consistent with the Carl Moyer Air Quality
Standards Attainment Program within one year of the date of
supplemental allocation. Funds not expended within one year shall be
returned to the Covered Vehicle Account and shall be distributed at
the discretion of the state board to districts, taking into
consideration of each district's ability to expeditiously utilize the
remaining funds consistent with the Carl Moyer Air Quality Standards
Attainment Program.
   (d) This section shall remain in effect only until January 1,
2015, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2015, deletes or extends
that date.