Amended in Senate May 12, 2015

Amended in Senate April 6, 2015

Senate BillNo. 513


Introduced by Senator Beall

February 26, 2015


An act to amend Sections 41081, 44223, 44225, 44229, 44233, 44275, 44281, 44282, 44283, 44286, 44287, 44287.1, 44287.2, 44288, 44291, and 44299.2 of, and to amend and repeal Section 44299.1 of, the Health and Safety Code, relating to vehicular air pollution.

LEGISLATIVE COUNSEL’S DIGEST

SB 513, as amended, Beall. Carl Moyer Memorial Air Quality Standards Attainment Program: fees.

(1) Existing law authorizes the Sacramento Metropolitan Air Quality Management District to adopt a $6 surcharge on motor vehicle registration fees applicable to motor vehicles registered within the district. Existing law requires the collected fees to be used for specified purposes, including, among others, awarding grants eligible for funding under the Carl Moyer Memorial Air Quality Standards Attainment Program.

This bill would additionally authorize those fees to be used for projects that involve alternative fuel and electric infrastructure, as specified.

(2) Existing law authorizes an air pollution control or air quality management district, except the Sacramento district, that has been designated by the State Air Resources Board as a state nonattainment area for any pollutant emitted by motor vehicles to levy a fee of up to $6 on motor vehicles registered within the air district, subject to specified conditions.

This bill instead would authorize any air district, except the Sacramento district, regardless of its state attainment designation to levy a fee of up to $6 on motor vehicles registered within the air district. The bill also would authorize those fees to be used for the attainment or maintenance of state or federal ambient air quality standards or the reduction of toxic air contaminant emissions from motor vehicles and for alternative fuel and electric infrastructure projects, as specified.

(3) Existing law establishes the Carl Moyer Memorial Air Quality Standards Attainment Program, which is administered by the state board, to provide grants to offset the incremental cost of eligible projects that reduce emissions of air pollutants from vehicular sources in the state and forbegin insert theend insert fundingbegin insert ofend insert a fueling infrastructure demonstration program and technology development efforts.

This bill would revise and recast provisions of the program, including, among others, changing the definition of covered source to include any marine vessel and any other category necessary for the state and air districts to meet air quality goals; authorizing the state board to adjust, rather than just reduce, the values of the maximum grant award criteria to improve the ability of the program to achieve its goals; authorizing the state board to reserve up to 10% of the program moneys available each year to directly fund any projectbegin delete the state board determines contributes toward the achievement of state air quality goalsend deletebegin insert that is a covered source, as defined, or a specified eligible projectend insert; removing the prohibition on using specified motor vehicle registration fees as matching funds; requiring the state board, instead of the State Energy Resources Conservation and Development Commission, to publish procedures to monitor and audit infrastructure projects; increasing the authorization for support and outreach costs from not more than 2% to not more than 2.5% of the moneysbegin insert for use by the programend insert in the Air Pollution Control Fund; removing the repeal date of January 1, 2024, from the provisions on how moneys in the Air Pollution Control Fund are allocated and segregated; removing the repeal date of January 1, 2024, from the provisions regarding the terms and conditions for an allocation of moneys to an air district; and requiring an air district to liquidatebegin insert, as defined,end insert the moneys by a specified date 4 years following the year of allocation and to returnbegin insert, as defined,end insert those moneys that have not been liquidated to the state board within 90 days.

(4) The California Global Warming Solutions Act of 2006 establishes the state board as the state agency responsible for monitoring and regulating sources emitting greenhouse gases. The act authorizes the state board to include the use of market-based compliance mechanisms. Existing law requires all moneys, except for fines and penalties, collected by the state board from the auction or sale of allowances as part of a market-based compliance mechanism to be deposited in the Greenhouse Gas Reduction Fund and to be available upon appropriation by the Legislature.

This bill would authorize the state board to allocate moneys from the Greenhouse Gas Reduction Fund and other specified sources for the Carl Moyer Memorial Air Quality Standards Attainment Program without those other moneys being required to be factored into the criteria emission reduction cost-effectiveness calculations.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

P3    1

SECTION 1.  

Section 41081 of the Health and Safety Code, as
2 amended by Section 1 of Chapter 401 of the Statutes of 2013, is
3amended to read:

4

41081.  

(a) Subject to Article 3.7 (commencing with Section
553720) of Chapter 4 of Part 1 of Division 2 of Title 5 of the
6Government Code, or with the approval of the board of supervisors
7of each county included, in whole or in part, within the Sacramento
8district, the Sacramento district board may adopt a surcharge on
9the motor vehicle registration fees applicable to all motor vehicles
10registered in those counties within the Sacramento district whose
11boards of supervisors have adopted a resolution approving the
12surcharge. The surcharge shall be collected by the Department of
13Motor Vehicles and, after deducting the department’s
14administrative costs, the remaining funds shall be transferred to
15the Sacramento district. Prior to the adoption of any surcharge
16pursuant to this subdivision, the district board shall make a finding
17that any funds allocated to the district as a result of the adoption
18of a county transportation sales and use tax are insufficient to carry
19out the purposes of this chapter.

20(b) The surcharge shall not exceed six dollars ($6).

21(c) After consulting with the Department of Motor Vehicles on
22the feasibility thereof, the Sacramento district board may provide,
23in the surcharge adopted pursuant to subdivision (a), to exempt
P4    1from all or part of the surcharge any category of low-emission
2motor vehicle.

3(d) Funds received by the Sacramento district pursuant to this
4section shall be used by that district as follows:

5(1) The revenues resulting from the first four dollars ($4) of
6each surcharge shall be used to implement reductions in emissions
7from vehicular sources, including, but not limited to, a clean fuels
8program and motor vehicle use reduction measures.

9(2) The revenues resulting from the next two dollars ($2) of
10each surcharge shall be used to implement the following programs
11that achieve emission reductions from vehicular sources and
12off-road engines, to the extent that the district determines the
13program remediates air pollution harms created by motor vehicles
14on which the surcharge is imposed:

15(A) Projects eligible for grants under the Carl Moyer Memorial
16Air Quality Standards Attainment Program (Chapter 9
17(commencing with Section 44275) of Part 5).

18(B) The new purchase, retrofit, repower, or add-on of equipment
19for previously unregulated agricultural sources of air pollution, as
20defined in Section 39011.5, within the Sacramento district, for a
21minimum of three years from the date of adoption of an applicable
22rule or standard, or until the compliance date of that rule or
23standard, whichever is later, if the state board has determined that
24the rule or standard complies with Sections 40913, 40914, and
2541503.1, after which period of time, a new purchase, retrofit,
26repower, or add-on of equipment shall not be funded pursuant to
27this chapter. The district shall follow any guidelines developed
28under subdivision (a) of Section 44287 for awarding grants under
29this program.

30(C) The purchase of newbegin delete schoolbuses,end deletebegin insert schoolbusesend insert or the
31purchase for the repower or retrofit of emissions control equipment
32 for existing schoolbuses pursuant to the Lower-Emission School
33Bus Program adopted by the state board.

34(D) An accelerated vehicle retirement or repair program that is
35adopted by the state board pursuant to authority granted hereafter
36by the Legislature by statute.

37(E) The replacement of onboard natural gas fuel tanks on
38schoolbuses that are 14 years or older or the enhancement of
39deteriorating natural gas fueling dispensers of fueling infrastructure,
P5    1pursuant to the Lower-Emission School Bus Program adopted by
2the state board.

3(F) The funding of alternative fuel and electric infrastructure
4projects solicited and selected through a competitive bid process.

5(e) Not more than 6.25 percent of the funds collected pursuant
6to this section shall be used by the district for administrative
7expenses.

8(f) A project funded by the program shall not be used for credit
9under any state or federal emissions averaging, banking, or trading
10program. An emission reduction generated by the program shall
11not be used as marketable emission reduction credits or to offset
12any emission reduction obligation of any person or entity. Projects
13involving new engines that would otherwise generate marketable
14credits under state or federal averaging, banking, and trading
15programs shall include transfer of credits to the engine end user
16and retirement of those credits toward reducing air emissions in
17order to qualify for funding under the program. A purchase of a
18low-emission vehicle or of equipment pursuant to a corporate or
19a controlling board’s policy, but not otherwise required by law,
20shall generate surplus emissions reductions and may be funded by
21the program.

22(g) This section shall remain in effect only until January 1, 2024,
23and as of that date is repealed, unless a later enacted statute, that
24is enacted before January 1, 2024, deletes or extends that date.

25

SEC. 2.  

Section 44223 of the Health and Safety Code is
26amended to read:

27

44223.  

(a)  In addition to any other fees specified in this code,
28the Vehicle Code, and the Revenue and Taxation Code, a district,
29except the Sacramento district, may levy a fee of up to two dollars
30($2) on motor vehicles registered within the district. A district may
31impose the fee only if the district board adopts a resolution
32providing for both the fee and a corresponding program for the
33reduction of air pollution from motor vehicles pursuant to, and for
34related planning, monitoring, enforcement, and technical studies
35necessary for the implementation of, the California Clean Air Act
36of 1988 (Chapter 1568 of the Statutes of 1988), or for the
37attainment or maintenance of state or federal ambient air quality
38 standards or the reduction of toxic air contaminant emissions from
39motor vehicles.

P6    1(b)  In districts with nonelected officials on their boards, a
2resolution adopted pursuant to subdivision (a) shall be approved
3by both a majority of the board and a majority of the board
4members who are elected officials.

5(c)  A fee imposed pursuant to this section shall become
6effective on either April 1 or October 1, as provided in the
7resolution adopted by the board pursuant to subdivision (a).

8

SEC. 3.  

Section 44225 of the Health and Safety Code, as
9amended by Section 6 of Chapter 401 of the Statutes of 2013, is
10amended to read:

11

44225.  

A district may increase the fee established under Section
1244223 to up to six dollars ($6). A district may increase the fee only
13if the following conditions are met:

14(a) A resolution providing for both the fee increase and a
15corresponding program for expenditure of the increased fees for
16the reduction of air pollution from motor vehicles pursuant to, and
17for related planning, monitoring, enforcement, and technical studies
18necessary for the implementation of, the California Clean Air Act
19ofbegin delete 1988,end deletebegin insert 1988 (Chapter 1568 of the Statutes of 1988),end insert or for the
20attainment or maintenance of state or federal ambient air quality
21standards or the reduction of toxic air contaminant emissions from
22motor vehicles, is adopted and approved by the governing board
23of the district.

24(b) In districts with nonelected officials on their governing
25boards, the resolution shall be adopted and approved by both a
26majority of the governing board and a majority of the board
27members who are elected officials.

28(c) An increase in fees established pursuant to this section shall
29become effective on either April 1 or October 1, as provided in
30the resolution adopted by the board pursuant to subdivision (a).

31(d) This section shall remain in effect only until January 1, 2024,
32and as of that date is repealed, unless a later enacted statute, that
33is enacted before January 1, 2024, deletes or extends that date.

34

SEC. 4.  

Section 44229 of the Health and Safety Code, as
35amended by Section 8 of Chapter 401 of the Statutes of 2013, is
36amended to read:

37

44229.  

(a) After deducting all administrative costs it incurs
38through collection of fees pursuant to Section 44227, the
39Department of Motor Vehicles shall distribute the revenues to
40districts, which shall use the revenues resulting from the first four
P7    1dollars ($4) of each fee imposed to reduce air pollution from motor
2vehicles and to carry out related planning, monitoring, enforcement,
3and technical studies necessary for implementation of the California
4Clean Air Act ofbegin delete 1988.end deletebegin insert (1988 (Chapter 1568 of the Statutes of
51988),end insert
Fees collected by the Department of Motor Vehicles
6pursuant to this chapter shall be distributed to districts based upon
7the amount of fees collected from motor vehicles registered within
8each district.

9(b) Notwithstanding Sections 44241 and 44243, a district shall
10use the revenues resulting from the next two dollars ($2) of each
11fee imposed pursuant to Section 44227 to implement the following
12programs that the district determines remediate air pollution harms
13created by motor vehicles on which the surcharge is imposed:

14(1) Projects eligible for grants under the Carl Moyer Memorial
15Air Quality Standards Attainment Program (Chapter 9
16(commencing with Section 44275) of Part 5).

17(2) The new purchase, retrofit, repower, or add-on equipment
18for previously unregulated agricultural sources of air pollution, as
19defined in Section 39011.5, for a minimum of three years from
20the date of adoption of an applicable rule or standard, or until the
21compliance date of that rule or standard, whichever is later, if the
22state board has determined that the rule or standard complies with
23Sections 40913, 40914, and 41503.1, after which period of time,
24a new purchase, retrofit, repower, or add-on of equipment shall
25not be funded pursuant to this chapter. The districts shall follow
26any guidelines developed under subdivision (a) of Section 44287
27for awarding grants under this program.

28(3) The purchase of newbegin delete schoolbuses,end deletebegin insert schoolbusesend insert or the
29purchase for the repower or retrofit of emissions control equipment
30for existing schoolbuses pursuant to the Lower-Emission School
31Bus Program adopted by the state board.

32(4) An accelerated vehicle retirement or repair program that is
33adopted by the state board pursuant to authority granted hereafter
34by the Legislature by statute.

35(5) The replacement of onboard natural gas fuel tanks on
36schoolbuses that are 14 years or older or the enhancement of
37deteriorating natural gas fuelingbegin delete dispensers,end deletebegin insert dispensers of fueling
38infrastructure,end insert
pursuant to the Lower-Emission School Bus
39Program adopted by the state board.

P8    1(6) The funding of alternative fuel and electric infrastructure
2projects solicited and selected through a competitive bid process.

3(c) The Department of Motor Vehicles may annually expend
4not more than 1 percent of the fees collected pursuant to Section
544227 on administrative costs.

6(d) A project funded by the program shall not be used for credit
7under any state or federal emissions averaging, banking, or trading
8program. An emission reduction generated by the program shall
9not be used as marketable emission reduction credits or to offset
10any emission reduction obligation of any person or entity. Projects
11involving new engines that would otherwise generate marketable
12credits under state or federal averaging, banking, and trading
13programs shall include transfer of credits to the engine end user
14 and retirement of those credits toward reducing air emissions in
15order to qualify for funding under the program. A purchase of a
16low-emission vehicle or of equipment pursuant to a corporate or
17a controlling board’s policy, but not otherwise required by law,
18shall generate surplus emissions reductions and may be funded by
19the program.

20(e) This section shall remain in effect only until January 1, 2024,
21and as of that date is repealed, unless a later enacted statute, that
22is enacted before January 1, 2024, deletes or extends that date.

23

SEC. 5.  

Section 44233 of the Health and Safety Code is
24amended to read:

25

44233.  

Not more than 6.25 percent of the fees distributed to
26any district pursuant to Section 44229, or distributed by a district
27to any other public agency pursuant to this chapter, shall be used
28by the district or other public agency for administrative costs.

29

SEC. 6.  

Section 44275 of the Health and Safety Code, as
30amended by Section 15 of Chapter 401 of the Statutes of 2013, is
31amended to read:

32

44275.  

(a) As used in this chapter, the following terms have
33the following meanings:

34(1) (A) “Ancillary benefits”begin delete includes additional projectend deletebegin insert means
35air quality, climate, and public healthend insert
benefits beyond the
36reductions in coveredbegin delete emissions, including reductions inend deletebegin insert emissions.
37Those benefits may includeend insert
greenhousebegin delete gases,end deletebegin insert gas reductions,end insert
38 short-lived climatebegin delete pollutants, and other benefits, such asend deletebegin insert pollutant
39reductions,end insert
benefits to communities described in subdivision (a)
P9    1of Section 43023.5, fuel-efficiency improvements, or the
2deployment of advanced technology.

3(B) The state board shallbegin delete defineend deletebegin insert identifyend insert ancillary benefits
4pursuant to the process described in Section 44287.

5(2) “Btu” means British thermal unit.

6(3) “Commission” means the State Energy Resources
7Conservation and Development Commission.

8(4) “Cost-effectiveness” means dollars provided to a project
9pursuant to subdivision (d) of Section 44283 for each ton of
10covered emission reduction attributed to a project or to the program
11as a whole. In calculating cost-effectiveness, one-time grants of
12funds made at the beginning of a project shall be annualized using
13a time value of public funds or discount rate determined for each
14project by the state board, taking into account the interest rate on
15bonds, interest earned by state funds, and other factors as
16determined appropriate by the state board. Cost-effectiveness shall
17be calculated by dividing annualized costs by average annual
18emissions reduction. The state board, in consultation with the
19districts and concerned members of the public, shall establish
20appropriate cost-effective limits for oxides of nitrogen, particulate
21matter, and reactive organic gases and a reasonable system for
22comparing the cost-effectiveness of proposed projects as described
23in subdivision (a) of Section 44283.

24(5) “Covered emissions” include emissions of oxides of nitrogen,
25particulate matter, and reactive organic gases from any covered
26source.

27(6) “Covered engine” includes any internal combustion engine
28or electric motor and drive powering a covered source.

29(7) “Covered source” includes onroad vehicles, off-road
30nonrecreational equipment and vehicles, locomotives, marine
31vessels, agricultural sources of air pollution, as defined in Section
3239011.5, and, as determined by the state board, other categories
33necessary for the state and districts to meet air quality goals.

34(8) “Covered vehicle” includes any vehicle or piece of
35equipment powered by a covered engine.

36(9) “District” means a county air pollution control district or an
37air quality management district.

38(10) “Fund” means the Air Pollution Control Fund established
39pursuant to Section 43015.

begin insert

P10   1(11) “Incremental cost” means the cost of the project less a
2baseline cost that would otherwise be incurred by the applicant
3in the normal course of business. Incremental costs may include
4added lease, energy, or fuel costs pursuant to Section 44283 as
5well as incremental capital costs.

end insert
begin insert

6(12) “Liquidated” means that all moneys for a specified fiscal
7year have been spent by a district to reimburse grantees for valid
8and eligible project invoices and district administrative costs.
9Payments withheld from the grantee by a district until all
10contractual reporting requirements are met may be excluded from
11these amounts for the purposes of liquidation.

end insert
begin delete

12(11)

end delete

13begin insert(13)end insert “Mobile Source Air Pollution Reduction Review
14Committee” means the Mobile Source Air Pollution Reduction
15Review Committee created by Section 44244.

begin delete

16(12) “Incremental cost” means the cost of the project that would
17not otherwise be incurred by the applicant in the normal course of
18business. Incremental costs may include added lease, energy, or
19fuel costs pursuant to Section 44283 as well as incremental capital
20costs.

21(13)

end delete

22begin insert(14)end insert “New very low emission vehicle” means a heavy-duty
23vehicle that qualifies as a very low emission vehicle when it is a
24new vehicle, where new vehicle has the same meaning as defined
25in Section 430 of the Vehicle Code, or that is modified with the
26approval and warranty of the original equipment manufacturer to
27qualify as a very low emission vehicle within 12 months of delivery
28to an owner for private or commercial use.

begin delete

29(14)

end delete

30begin insert(15)end insert “NOx” means oxides of nitrogen.

begin delete

31(15)

end delete

32begin insert(16)end insert “Program” means the Carl Moyer Memorial Air Quality
33Standards Attainment Program created by subdivision (a) of
34Section 44280.

begin insert

35(17) “Recaptured” means those moneys that are returned to a
36district or the state board by a grantee because that grantee did
37not meet contractual obligations.

end insert
begin delete

38(16)

end delete

39begin insert(18)end insert “Repower” means replacing an engine with a different
40engine. The term repower, as used in this chapter, generally refers
P11   1to replacing an older, uncontrolled engine with a new,
2emissions-certified engine, although replacing an older
3emissions-certified engine with a newer engine certified to lower
4emissions standards may be eligible for funding under this program.

begin delete

5(17)

end delete

6begin insert(19)end insert “Retrofit” means making modifications to the engine and
7fuel system so that the retrofitted engine does not have the same
8specifications as the original engine.

begin insert

9(20) “Returned” means those moneys sent by a district to the
10state board for reallocation because those moneys are not
11liquidated by a liquidation deadline.

end insert
begin delete

12(18)

end delete

13begin insert(21)end insert “Very low emission vehicle” means a heavy-duty vehicle
14with emissions significantly lower than otherwise applicable
15baseline emission standards or uncontrolled emission levels
16pursuant to Section 44282.

17(b) This section shall remain in effect only until January 1, 2024,
18and as of that date is repealed, unless a later enacted statute, that
19is enacted before January 1, 2024, deletes or extends that date.

20begin insert

begin insertSEC. 7.end insert  

end insert

begin insertSection 44275 of the end insertbegin insertHealth and Safety Codeend insertbegin insert, as
21amended by Section 16 of Chapter 401 of the Statutes of 2013, is
22amended to read:end insert

23

44275.  

(a) As used in this chapter, the following terms have
24the following meanings:

25(1) “Advisory board” means the Carl Moyer Program Advisory
26Board created by Section 44297.

27(2) “Btu” means British thermal unit.

28(3) “Commission” means the State Energy Resources
29Conservation and Development Commission.

30(4) “Cost-effectiveness” means dollars provided to a project
31pursuant to subdivision (d) of Section 44283 for each ton of NOx
32 reduction attributed to a project or to the program as a whole. In
33calculating cost-effectiveness, one-time grants of funds made at
34the beginning of a project shall be annualized using a time value
35of public funds or discount rate determined for each project by the
36state board, taking into account the interest rate on bonds, interest
37earned by state funds, and other factors as determined appropriate
38by the state board. Cost-effectiveness shall be calculated by
39dividing annualized costs by average annual emissions reduction
40of NOx in this state.

P12   1(5) “Covered engine” includes any internal combustion engine
2or electric motor and drive powering a covered source.

3(6) “Covered source” includes onroad vehicles of 14,000 pounds
4gross vehicle weight rating (GVWR) or greater, off-road
5nonrecreational equipment and vehicles, locomotives, diesel marine
6vessels, stationary agricultural engines, and, as determined by the
7state board, other high-emitting diesel engine categories.

8(7) “Covered vehicle” includes any vehicle or piece of
9equipment powered by a covered engine.

10(8) “District” means a county air pollution control district or an
11air quality management district.

12(9) “Fund” means the Air Pollution Control Fund established
13pursuant to Section 43015.

begin insert

14(10) “Incremental cost” means the cost of the project less a
15baseline cost that would otherwise be incurred by the applicant
16in the normal course of business. Incremental costs may include
17added lease or fuel costs pursuant to Section 44283 as well as
18incremental capital costs.

end insert
begin insert

19(11) “Liquidated” means that all moneys for a specified fiscal
20year have been spent by a district to reimburse grantees for valid
21and eligible project invoices and district administrative costs.
22Payments withheld from the grantee by a district until all
23contractual reporting requirements are met may be excluded from
24these amounts for the purposes of liquidation.

end insert
begin delete

25(10)

end delete

26begin insert(12)end insert “Mobile Source Air Pollution Reduction Review
27Committee” means the Mobile Source Air Pollution Reduction
28Review Committee created by Section 44244.

begin delete

29(11) “Incremental cost” means the cost of the project less a
30baseline cost that would otherwise be incurred by the applicant in
31the normal course of business. Incremental costs may include
32added lease or fuel costs pursuant to Section 44283 as well as
33 incremental capital costs.

34(12)

end delete

35begin insert(13)end insert “New very low emission vehicle” means a vehicle that
36qualifies as a very low emission vehicle when it is a new vehicle,
37where new vehicle has the same meaning as defined in Section
38430 of the Vehicle Code, or that is modified with the approval and
39warranty of the original equipment manufacturer to qualify as a
P13   1very low emission vehicle within 12 months of delivery to an
2owner for private or commercial use.

begin delete

3(13)

end delete

4begin insert(14)end insert “NOx” means oxides of nitrogen.

begin delete

5(14)

end delete

6begin insert(15)end insert “Program” means the Carl Moyer Memorial Air Quality
7Standards Attainment Program created by subdivision (a) of
8Section 44280.

begin insert

9(16) “Recaptured” means those moneys that are returned to a
10district or the state board by a grantee because that grantee did
11not meet contractual obligations.

end insert
begin delete

12(15)

end delete

13begin insert(17)end insert “Repower” means replacing an engine with a different
14engine. The term repower, as used in this chapter, generally refers
15to replacing an older, uncontrolled engine with a new,
16emissions-certified engine, although replacing an older
17emissions-certified engine with a newer engine certified to lower
18emissions standards may be eligible for funding under this program.

begin delete

19(16)

end delete

20begin insert(18)end insert “Retrofit” means making modifications to the engine and
21fuel system such that the retrofitted engine does not have the same
22 specifications as the original engine.

begin insert

23(19) “Returned” means those moneys sent by a district to the
24state board for reallocation because those moneys are not
25liquidated by a liquidation deadline.

end insert
begin delete

26(17)

end delete

27begin insert(20)end insert “Very low emission vehicle” means a vehicle with
28emissions significantly lower than otherwise applicable baseline
29emission standards or uncontrolled emission levels pursuant to
30Section 44282.

31(b) This section shall become operative on January 1, 2024.

32

begin deleteSEC. 7.end delete
33begin insertSEC. 8.end insert  

Section 44281 of the Health and Safety Code, as
34amended by Section 19 of Chapter 401 of the Statutes of 2013, is
35amended to read:

36

44281.  

(a) Eligible projects include, but are not limited to, any
37of the following:

38(1) Purchase of new very low or zero-emission covered vehicles
39or covered heavy-duty engines.

P14   1(2) Emission-reducing retrofit of covered engines, or
2replacement of old engines powering covered sources with newer
3engines certified to more stringent emissions standards than the
4engine being replaced, or with electric motors or drives.

5(3) Purchase and use of emission-reducing add-on equipment
6that has been verified by the state board for covered vehicles.

7(4) Development and demonstration of practical, low-emission
8retrofit technologies, repower options, and advanced technologies
9for covered engines and vehicles with very low emissions of NOx.

10(5) Light- and medium-duty vehicle projects in compliance with
11guidelines adopted by the state board pursuant to Title 13 of the
12California Code of Regulations.

13(b) No project shall be funded under this chapter after the
14compliance date required by any local, state, or federal statute,
15rule, regulation, memoranda of agreement or understanding, or
16other legally binding document, except that an otherwise qualified
17project may be funded even if the state implementation plan
18assumes that the change in equipment, vehicles, or operations will
19occur, if the change is not required by the compliance date of a
20statute, regulation, or other legally binding document in effect as
21of the date the grant is awarded. No project funded by the program
22shall be used for credit under any state or federal emissions
23averaging, banking, or trading program. No covered emission
24reduction generated by the program shall be used as marketable
25emission reduction credits or to offset any emission reduction
26obligation of any person or entity. Projects involving new engines
27that would otherwise generate marketable credits under state or
28federal averaging, banking, and trading programs shall include
29transfer of credits to the engine end user and retirement of those
30credits toward reducing air emissions in order to qualify for funding
31under the program. A purchase of a low-emission vehicle or of
32equipment pursuant to a corporate or a controlling board’s policy,
33but not otherwise required by law, shall generate surplus emissions
34reductions and may be funded by the program.

35(c) The program may also provide funding toward the
36installation of fueling or energy infrastructure to fuel or power
37covered sources.

38(d) Eligible applicants may be any individual, company, or
39public agency that owns one or more covered vehicles that operate
40primarily within California or otherwise contribute substantially
P15   1to the NOx, particulate matter (PM), or reactive organic gas (ROG)
2emissions inventory in California.

3(e) It is the intent of the Legislature that all emission reductions
4generated by this chapter shall contribute to public health by
5reducing, for the life of the vehicle being funded, the total amount
6of emissions in California.

7(f) This section shall remain in effect only until January 1, 2024,
8and as of that date is repealed, unless a later enacted statute, that
9is enacted before January 1, 2024, deletes or extends that date.

10

begin deleteSEC. 8.end delete
11begin insertSEC. 9.end insert  

Section 44282 of the Health and Safety Code, as
12amended by Section 21 of Chapter 401 of the Statutes of 2013, is
13amended to read:

14

44282.  

The following criteria apply to all projects to be funded
15through the program except for projects funded through the
16infrastructure demonstration program and infrastructure projects,
17pursuant to subdivision (c) of Section 44281 and Section 44284:

18(a) The state board may establish project criteria, including
19minimum project life for source categories, in the guidelines
20described in Section 44287. For previously unregulated source
21categories, project criteria shall consider the timing of newly
22established regulatory requirements.

23(b) To be eligible, projects shall meet the cost-effectiveness per
24ton of covered emissions reduced requirements of Section 44283.

25(c) To be eligible, retrofits, repowers, and installation of add-on
26equipment for covered vehicles shall be performed, or new covered
27vehicles delivered to the end user, or covered vehicles scrapped
28on or after the date the program is implemented.

29(d) Retrofit technologies, new engines, and new vehicles shall
30be certified for sale or under experimental permit for operation in
31California.

32(e) Repower projects that replace older, uncontrolled engines
33with new, emissions-certified engines or that replace
34emissions-certified engines with new engines certified to a more
35stringent NOx emissions standard are approvable subject to the
36other applicable selection criteria. The state board shall determine
37appropriate baseline emission levels for the uncontrolled engines
38being replaced.

39(f) For heavy-duty-vehicle projects, retrofit and add-on
40equipment projects shall document a NOx or PM emission
P16   1reduction of at least 25 percent and no increase in other covered
2emissions compared to the applicable baseline emissions accepted
3by the state board for that engine year and application. The state
4board shall determine appropriate baseline emission levels.
5Acceptable documentation shall be defined by the state board.
6After study of available emission reduction technologies and after
7public notice and comment, the state board may revise the
8minimum percentage emission reduction criterion for retrofits and
9add-on equipment provided for in this section to improve the ability
10of the program to achieve its goals.

11(g) (1) For heavy-duty-vehicle projects involving the purchase
12of new very low or zero-emission vehicles, engines shall be
13certified to an optional low NOx emissions standard established
14by the state board, except as provided for in paragraph (2).

15(2) For heavy-duty-vehicle projects involving the purchase of
16new very low or zero-emission covered vehicles for which no
17optional low NOx emission standards are available, documentation
18shall be provided showing that the low or zero-emission engine
19emits not more than 70 percent of the NOx or NOx plus
20hydrocarbon emissions of a new engine certified to the applicable
21baseline NOx or NOx plus hydrocarbon emission standard for that
22engine and meets applicable particulate standards. The state board
23shall specify the documentation required. If no baseline emission
24standard exists for new vehicles in a particular category, the state
25board shall determine an appropriate baseline emission level for
26comparison.

27(h) For projects other than heavy-duty-vehicle projects, the state
28board shall determine appropriate criteria under the provisions of
29Section 44287.

30(i) This section shall remain in effect only until January 1, 2024,
31and as of that date is repealed, unless a later enacted statute, that
32is enacted before January 1, 2024, deletes or extends that date.

33

begin deleteSEC. 9.end delete
34begin insertSEC. 10.end insert  

Section 44283 of the Health and Safety Code, as
35amended by Section 23 of Chapter 401 of the Statutes of 2013, is
36amended to read:

37

44283.  

(a) (1) For all projects funded pursuant to this chapter,
38except for an infrastructure project described in subdivision (c) of
39Section 44281, the following cost-effectiveness criteria shall apply:

P17   1(A) (i) Project grants shall not be made that exceedbegin delete a
2cost-effectiveness,end delete
begin insert cost-effectivenessend insert calculated in accordance with
3this section.

4(ii) The state board, in collaboration with the districts, shall
5establish cost-effectiveness values in the guidelines issued pursuant
6to Section 44287, taking into consideration factors, including, but
7not limited to, the following:

8(I) The ability of the project to providebegin insert identifiedend insert ancillary
9benefits, as defined in paragraph (1) of subdivision (a) of Section
10begin delete 44275, such as reductions in greenhouse gases and short-lived
11climate pollutants, benefits to communities described in subdivision
12(a) of Section 43023.5, fuel-efficiency improvements, or the
13deployment of advanced technology.end delete
begin insert 44275.end insert

14(II) The cost of emission control technologies identified in
15Section 44281.

16(III) The cost-effectiveness values for NOx, particulate matter,
17or reactive organic gases for any adopted rule or control measure
18in any district’s approved state implementation plan, or rule
19adopted by the state board.

20(B) For projects obtaining reactive organic gas and particulate
21matter reductions, the state board shall determine appropriate
22adjustment factors to calculate a weighted cost-effectiveness.

23(2) When a district board approves funding for a project or
24project category, the district board:

25(A) May recognize the ancillary benefit, as defined in paragraph
26(1) of subdivision (a) of Section 44275, when determining the
27grant amount for a project or project category.

28(B) begin deleteShall,end deletebegin insert Shall include,end insert for the meeting approving funding for
29the project or project category,begin delete includeend delete in its agenda or supporting
30materials a brief statement of the rationale for funding that source
31category, including the basis for selection and the importance of
32that project type.

33(b) Only covered emission reductions occurring in this state
34shall be included in the cost-effectiveness determination. The
35extent to which emissions generated at sea contribute to air quality
36in California nonattainment areas shall be incorporated into these
37methodologies based on a reasonable assessment of currently
38available information and modeling assumptions.

P18   1(c) The state board shall develop protocols for calculating the
2surplus covered emission reductions in California from
3representative project types over the life of the project.

4(d) The cost of the covered emission reduction is the amount
5of the grant from the program, including matching funds provided
6pursuant to subdivision (e) of Section 44287, or funding provided
7pursuant to paragraph (2) of subdivision (d) of Section 41081 or
8subdivision (b) of Section 44229, not including funds described
9in subdivision (a) of Section 44287.2. The state board shall
10establish reasonable methodologies for evaluating project
11cost-effectiveness, consistent with the definition contained in
12paragraph (4) of subdivision (a) of Section 44275, and with
13accepted methods, taking into account a fair and reasonable
14discount rate or time value of public funds.

15(e) A grant shall not be made that, net of taxes, provides the
16applicant with funds in excess of the incremental cost of the project.
17Incremental lease costs may be capitalized according to guidelines
18adopted by the state board so that these incremental costs may be
19offset by a one-time grant award.

20(f) Funds under a district’s budget authority or fiduciary control
21may be used to pay for the incremental cost of energy or liquid or
22gaseous fuel, other than standard gasoline or diesel, which is
23integral to a covered emission reducing technology that is part of
24a project receiving grant funding under the program. The fuel shall
25be approved for sale in the state. The incremental energy or fuel
26cost over the expected lifetime of the vehicle may be offset by the
27district if the project as a whole, including the incremental energy
28or fuel cost, meets all of the requirements of this chapter, including
29the maximum allowed cost-effectiveness. The state board shall
30develop an appropriate methodology for converting incremental
31energy or fuel costs over the vehicle lifetime into an initial cost
32for the purposes of determining project cost-effectiveness.
33Incremental energy or fuel costs shall not be included in project
34costs for fuels dispensed from any facility that was funded, in
35whole or in part, from the fund.

36(g) For the purposes of determining any grant amount pursuant
37to this chapter, project proponents applying for funding shall be
38required to state in their application any other public financial
39assistance to the project.

P19   1(h) For projects that would repower off-road equipment by
2replacing uncontrolled diesel engines with new, certified diesel
3engines, the state board may establish maximum grant award
4amounts per repower. A repower project shall also be subject to
5the incremental cost maximum pursuant to subdivision (e).

6(i) After study of available emission reduction technologies and
7costs and after public notice and comment, the state board may
8 adjust the values of the maximum grant award criteria stated in
9this section to improve the ability of the program to achieve its
10goals. Every year the state board shall adjust the maximum
11cost-effectiveness amount established in subdivision (a) and any
12per-project maximum set by the state board pursuant to subdivision
13(h) to account for inflation and otherbegin delete economic factors, as
14determined by the state board.end delete
begin insert factors as authorized by this section.end insert

15(j) This section shall remain in effect only until January 1, 2024,
16and as of that date is repealed, unless a later enacted statute, that
17is enacted before January 1, 2024, deletes or extends that date.

18

begin deleteSEC. 10.end delete
19begin insertSEC. 11.end insert  

Section 44286 of the Health and Safety Code is
20amended to read:

21

44286.  

(a) The responsibilities of the state board include
22management of program funds and program oversight. The state
23board is responsible for producing guidelines, protocols, and
24criteria for covered vehicle projects and developing methodologies
25for evaluating project cost-effectiveness in accordance with this
26chapter. The state board shall have primary responsibility for the
27reporting aspects of the program.

28(b) The responsibilities of a district include local administration
29of project funds, monitoring funded projects, and reporting results
30to the state board, in accordance with this chapter. Any project
31funds awarded to a successful applicant shall be disbursed by the
32district.

33(c) Relative to the allocation of funds in the south coast district,
34for purposes of this program, Mobile Source Air Pollution
35Reduction Review Committee funds shall only be used as matching
36funds upon approval, by minute action, of the Mobile Source Air
37Pollution Reduction Review Committee.

38(d) The state board may reserve up to 10 percent of the program
39funds available each year to directly fund any project described in
40begin insert paragraph (7) of subdivision (a) of Section 44275 andend insert Section
P20   1begin delete 44281 that is multidistrict in nature or the state board determines
2contributes toward the achievement of state air quality goals.end delete

3begin insert 44281.end insert A project that is multidistrict in nature shall be funded by
4the state board in coordination with the appropriate districts. The
5state board shall coordinate outreach efforts with a participating
6district to ensure that any parallel availability of a district grant
7and a grant from the state board is clear to an eligible applicant.
8Reserved funds not committed to a project funded directly by the
9state board by the end of the fiscal year shall be made available to
10the districts in the following year.

11(e) The commission, in consultation with the state board, shall
12manage the Advanced Technology Account and the Infrastructure
13Demonstration Program in accordance with this chapter.

14(f) The state board shall work closely with the commission and
15the districts for the duration of this program to maximize the ability
16of the program to achieve its goals.

17(g) The state board and the districts shall take all appropriate
18and necessary actions to ensure that emissions reductions achieved
19through the program are credited by the United States
20Environmental Protection Agency to the appropriate emission
21reduction objectives in the State Implementation Plan.

22

begin deleteSEC. 11.end delete
23begin insertSEC. 12.end insert  

Section 44287 of the Health and Safety Code, as
24amended by Section 25 of Chapter 401 of the Statutes of 2013, is
25amended to read:

26

44287.  

(a) The state board shall establish or update grant
27criteria and guidelines consistent with this chapter for covered
28vehicle and infrastructure projects as soon as practicable, but not
29later than July 1, 2017. The adoption of guidelines is exempt from
30the rulemaking provisions of the Administrative Procedurebegin delete Act,
31Chapterend delete
begin insert Act (Chapterend insert 3.5 (commencing with Section 11340) of
32Part 1 of Division 3 of Title 2 of the Governmentbegin delete Code.end deletebegin insert Code).end insert
33 The state board shall solicit input and comment from the districts
34during the development of the criteria and guidelines and shall
35make every effort to develop criteria and guidelines that are
36compatible with existing district programs that are also consistent
37with this chapter. Guidelines shall include protocols to calculate
38project cost-effectiveness. The grant criteria and guidelines shall
39include safeguards to ensure that the project generates surplus
40emissions reductions. Guidelines shall enable and encourage
P21   1districts to cofund projects that provide emissions reductions in
2more than one district. The state board shall make draft criteria
3and guidelines available to the public 45 days before final adoption,
4and shall hold at least one public meeting to consider public
5comments before final adoption. The state board may develop
6separate guidelines and criteria for the different types of eligible
7projects described in subdivision (a) of Section 44281.

8(b) The state board, in consultation with the participating
9districts, may propose revisions to the criteria and guidelines
10established pursuant to subdivision (a) as necessary to improve
11the ability of the program to achieve its goals. A proposed revision
12shall be made available to the public 45 days before final adoption
13of the revision and the state board shall hold at least one public
14meeting to consider public comments before final adoption of the
15revision.

16(c) The state board shall reserve funds for, and disburse funds
17to, districts from the fund for administration pursuant to this section
18and Section 44299.1.

19(d) The state board shall develop guidelines for a district to
20follow in applying for the reservation of funds, in accordance with
21this chapter. It is the intent of the Legislature that district
22administration of any reserved funds be in accordance with the
23project selection criteria specified in Sections 44281, 44282, and
2444283 and all other provisions of this chapter. The guidelines shall
25be established and published by the state board as soon as
26practicable, but not later than January 1, 2006.

27(e) Funds shall be reserved by the state board for administration
28by a district that adopts an eligible program pursuant to this chapter
29and offers matching funds at a ratio of one dollar ($1) of matching
30funds committed by the district or the Mobile Source Air Pollution
31Reduction Review Committee for every two dollars ($2) committed
32from the fund. Funds available to the Mobile Source Air Pollution
33Reduction Review Committee may be counted as matching funds
34for projects in the South Coast Air Basin only if the committee
35approves the use of these funds for matching purposes. Matching
36funds may be any funds under the district’s budget authority that
37are committed to be expended in accordance with the program.
38Funds committed by a port authority or a local government, in
39cooperation with a district, to be expended in accordance with the
40program may also be counted as district matching funds. Matching
P22   1funds provided by a port authority or a local government shall not
2exceed 30 percent of the total required matching funds in any
3district that applies for more than three hundred thousand dollars
4($300,000) of the state board funds. Only a district, or a port
5authority or a local government teamed with a district, may provide
6matching funds.

7(f) The state board may adjust the ratio of matching funds
8described in subdivision (e), if it determines that an adjustment is
9necessary in order to maximize the use of, or the air quality benefits
10provided by, the program, based on a consideration of the financial
11resources of the district.

12(g) Notwithstanding subdivision (e), a district need not provide
13matching funds for state board funds allocated to the district for
14program outreach activities pursuant to paragraph (4) of subdivision
15(a) of Section 44299.1.

16(h) A district may include within its matching funds a reasonable
17estimate of direct or in-kind costs for assistance in providing
18program outreach and application evaluation. In-kind and direct
19matching funds shall not exceed 15 percent of the total matching
20funds offered by a district. A district may also include within its
21matching funds any money spent on or after February 25, 1999,
22that would have qualified as matching funds but were not
23previously claimed as matching funds.

24(i) A district desiring a reservation of funds shall apply to the
25state board following the application guidelines established
26pursuant to this section. The state board shall approve or disapprove
27a district application not later than 60 days after receipt. Upon
28approval of any district application, the state board shall
29simultaneously approve a reservation of funding for that district
30to administer. Reserved funds shall be disbursed to the district so
31that funding of a district-approved project is not impeded.

32(j) Any funds reserved for a district by the state board pursuant
33to this section are available for disbursement to the district for a
34period of not more than two years from the time of reservation.
35Funds not liquidated by a district by June 30 of the fourth calendar
36year following the date of the reservation shall be returned to the
37state board within 90 days for future allocation pursuant to this
38chapter. Each reservation of funds shall be accounted for separately,
39and unused funds from each application shall revert back to the
P23   1state board for use pursuant to this chapter as specified in this
2subdivision.

3(k) The state board shall specify a date each year when district
4applications are due. If the eligible applications received in any
5year oversubscribe the available funds, the state board shall reserve
6funds on an allocation basis, pursuant to Section 44299.2. The
7state board may accept a district application after the due date for
8a period of months specified by the state board. Funds may be
9reserved in response to those applications, in accordance with this
10chapter, out of funds remaining after the original reservation of
11funds for the year.

12(l) Guidelines for a district application shall require information
13from an applicant district to the extent necessary to meet the
14requirements of this chapter, but shall otherwise minimize the
15information required of a district.

16(m) A district application shall be reviewed by the state board
17immediately upon receipt. If the state board determines that an
18application is incomplete, the applicant shall be notified within 10
19working days with an explanation of what is missing from the
20application. A completed application fulfilling the criteria shall be
21approved as soon as practicable, but not later than 60 working days
22after receipt.

23(n) The commission, in consultation with the districts, shall
24establish project approval criteria and guidelines for infrastructure
25projects consistent with Section 44284 as soon as practicable, but
26not later than February 15, 2000. The commission shall make draft
27criteria and guidelines available to the public 45 days before final
28adoption, and shall hold at least one public meeting to consider
29public comments before final adoption.

30(o) The commission, in consultation with the participating
31districts, may propose revisions to the criteria and guidelines
32established pursuant to subdivisionbegin delete (o)end deletebegin insert (n)end insert as necessary to improve
33the ability of the program to achieve its goals. A revision may be
34proposed at any time, or may be proposed in response to a finding
35made in the annual report on the program published by the state
36board pursuant to Section 44295. A proposed revision shall be
37made available to the public 45 days before final adoption of the
38revision and the commission shall hold at least one public meeting
39to consider public comments before final adoption of the revision.

P24   1(p) Unclaimed funds will be allocated by the state board in
2accordance with Section 44299.2.

3(q) This section shall remain in effect only until January 1, 2024,
4and as of that date is repealed, unless a later enacted statute, that
5is enacted before January 1, 2024, deletes or extends that date.

6

begin deleteSEC. 12.end delete
7begin insertSEC. 13.end insert  

Section 44287.1 of the Health and Safety Code is
8amended to read:

9

44287.1.  

(a) The state board shall, at its first opportunity,
10revise the grant criteria and guidelines adopted pursuant to Section
1144287 to incorporate projects in which an applicant turns in
12nonroad internal combustion technology and equipment that the
13applicant owns and that still has some useful life, coupled with the
14purchase of new nonroad zero-emission technology and equipment
15that is in a similar category or that can perform the same work.

16(b) When it evaluates the benefits of a project described in
17subdivision (a), the state board shall count both of the following
18emission reduction streams, provided that they are real, enforceable,
19quantifiable, and surplus emission reductions:

20(1) The displacement of the emissions from the older nonroad
21internal combustion technology and equipment for its remaining
22life with the new nonroad zero-emission technology and equipment.

23(2) After the time period specified in paragraph (1), the
24displacement of emissions from new nonroad internal combustion
25technology and equipment meeting the emission standards in place
26at time of purchase, with the new nonroad zero-emission
27technology and equipment over its remaining life.

28(c) A project described in subdivision (a) shall meet the
29cost-effectiveness criteria in Section 44283 and all other criteria
30of the program, including the requirement that the emission
31reductions be real, enforceable, quantifiable, and surplus.

32(d) The incremental cost of a project described in subdivision
33(a) may include, at the discretion of the applicant, some or all of
34the reasonable salvage value of the nonroad internal combustion
35technology and equipment turned in, as determined by the state
36 board. However, an applicant that elects to include these costs
37shall be required to meet the cost-effectiveness criteria in Section
3844283.

P25   1

begin deleteSEC. 13.end delete
2begin insertSEC. 14.end insert  

Section 44287.2 of the Health and Safety Code is
3amended to read:

4

44287.2.  

(a) By July 1, 2017, the state board shall revise
5project grant criteria and guidelines pursuant to Section 44287 to
6allow funds from federal, state, and local programs or other public
7funding sources to be used for a project also funded under this
8chapter without those additional public funds being factored into
9the criteria emission reduction cost-effectiveness calculations, if
10the projects are eligible under those programs and meet all criteria
11associated with those funding sources. Those other projects include,
12but are not limited to, any of the following:

13(1) Federal funding from programs designed to reduce
14greenhouse gas emissions.

15(2) State and local funding from programs designed to reduce
16greenhouse gas emissions, including the Greenhouse Gas Reduction
17Fund, created pursuant to Section 16428.8 of the Government
18Code, and the Alternative and Renewable Fuel and Vehicle
19Technology Program (Article 2 (commencing with Section 44272)
20of Chapter 8.9).

21(3) Funding from programs designed to support energy diversity.

22(4) Funding from programs that are intended to provide covered
23emissions reductions but do not require those reductions to be able
24to be credited to the state implementation plan.

25(b) Nothing in this section authorizes the expenditure of funds
26for a project that does not meet all of the requirements of this
27chapter, including requirements that require cost sharing or the
28matching of funds. The sum of the total grants shall not exceed
29the project cost. The covered emissions reductions paid for pursuant
30to this chapter shall not be claimed by the other funding sources.

31(c) Subdivision (a) shall not apply to funds used pursuant to
32paragraph (2) of subdivision (d) of Section 41081 or subdivision
33(b) of Section 44229.

34

begin deleteSEC. 14.end delete
35begin insertSEC. 15.end insert  

Section 44288 of the Health and Safety Code is
36amended to read:

37

44288.  

(a) An application for a project grant shall be reviewed
38by the administering district immediately upon receipt. If the
39administering district determines that an application is incomplete,
40the applicant shall be notified within 30 working days with an
P26   1explanation of what is missing from the application. The date and
2time of receipt of each application determined to be complete shall
3be recorded and the completed application shall be evaluated with
4respect to the appropriate project selection criteria. A district shall
5make every effort to process an application and grant an award
6rapidly and to coordinate project approval with any purchase or
7installation timing constraint on an applicant. Notwithstanding
8any other provision of this chapter, the administering district may
9determine that an application is not in good faith, not credible, or
10not in compliance with this chapter and its objectives.

11(b) A participating district may request assistance from the state
12board on an as-needed basis to clarify project evaluation protocols
13or to obtain information necessary to properly evaluate an
14application.

15(c) An application for a grant for an infrastructure project shall
16be reviewed by the commission immediately upon receipt. If the
17commission determines that an application is incomplete, the
18applicant shall be notified within five working days with an
19explanation of what is missing from the application. The date and
20time of receipt of each application determined to be complete shall
21be recorded and the completed application shall be evaluated with
22respect to the appropriate project selection criteria. A complete
23grant application fulfilling the project selection criteria shall be
24approved as soon as practicable, but not later than 60 working days
25after receipt. Notwithstanding any other provision of this chapter,
26the commission may determine that an application is not in good
27faith, not credible, or not in compliance with this chapter and its
28objectives. The commission shall expedite the processing of an
29application and shall grant an award as rapidly as possible.

30(d) Funds shall be awarded in conjunction with the execution
31of a contract that obligates the state board or a participating district
32to make the grant and obligates the grantee to take the actions
33described in the grant application. A contract shall incorporate the
34recapturing provisions contained in subdivision (c) of Section
3544291.

36

begin deleteSEC. 15.end delete
37begin insertSEC. 16.end insert  

Section 44291 of the Health and Safety Code is
38amended to read:

39

44291.  

(a) The state board shall assist districts with developing
40procedures to monitor whether the emission reductions projected
P27   1in successful grant applications are actually achieved. Monitoring
2procedures may include project audits, and may also include
3requirements, as part of the contract between the state board or
4districts and the grant recipients, that each grant recipient provide
5information about the project on an annual basis. Information
6required from grant recipients should be minimized and the format
7for reporting the information should be made simple and
8convenient.

9(b) As soon as practicable, the state board, in consultation with
10 the districts, shall publish procedures to monitor and audit
11infrastructure projects. These procedures shall ensure that the
12amount of qualifying fuel dispensed annually is greater than or
13equal to the amount upon which the grant award is based and that
14any project qualifying for funding on the basis of public
15accessibility or limited public accessibility is, in fact, providing
16that accessibility.

17(c) The monitoring and auditing procedures shall be sufficient
18to allow emission reductions generated to be fully credited to air
19quality plans. The monitoring procedures shall contain provisions
20for recapturing grant awards in proportion to any loss of emission
21reductions or underachievement in dispensing qualifying fuel
22compared with the reductions and fuel dispensing projected in the
23grant application. Monitoring and auditing procedures shall be
24revised as appropriate to enhance program effectiveness.

25(d) The state board shall monitor district programs to ensure
26that participating districts conduct their programs consistent with
27the criteria and guidelines established by the state board and the
28commission pursuant to this chapter. The monitoring procedures
29shall contain provisions for return of funds not yet awarded to
30approved projects if a district fails to show that they are
31implementing a program consistent with the approved program.
32If the state board determines, pursuant to this subdivision, that
33moneys from the fund allocated to a district should be returned,
34the state board shall hold at least one public meeting to consider
35public comments prior to requiring the return of the allocated
36funds. The state board shall make every effort to assist districts to
37implement programs in an approved manner and shall only require
38the return of allocated funds if these efforts fail to address problems
39adequately. Returned funds shall be deposited in the fund. The
P28   1state board shall not require the return of funds already awarded
2to approved projects.

3(e) Program funds recaptured as a result of a settlement
4agreement executed by the state board shall be returned to the
5district that provided the funds to the grant recipient. A penalty
6resulting from a settlement agreement executed by the state board
7with a grant recipient or from a civil action brought by the Attorney
8General shall be deposited in the fund.

9

begin deleteSEC. 16.end delete
10begin insertSEC. 17.end insert  

Section 44299.1 of the Health and Safety Code, as
11 amended by Section 28 of Chapter 401 of the Statutes of 2013, is
12amended to read:

13

44299.1.  

(a) To ensure that emission reductions are obtained
14as needed from pollution sources, any moneys deposited in the
15fund for use by the program or appropriated to the program shall
16be segregated and administered as follows:

17(1) Not more than 2.5 percent of the moneys in the fund for use
18by the program shall be allocated to program support and outreach
19costs incurred by the state board and the commission directly
20associated with implementing the program pursuant to this chapter.
21These funds shall be allocated to the state board and the
22commission in proportion to total program funds administered by
23the state board and the commission.

24(2) Not more than 2.5 percent of the moneys in the fund for use
25by the program shall be allocated to direct program outreach
26activities. The state board may use these funds for program
27outreach contracts or may allocate outreach funds to participating
28districts in proportion to each district’s allocation from the program
29moneys in the fund. The state board shall report on the use of
30outreach funds in their reports to the Legislature pursuant to Section
3144295.

32(3) The balance shall be deposited in the fund to be expended
33to offset added costs of new very low or zero-emission vehicle
34technologies, and emission reducing repowers, retrofits, and add-on
35equipment for covered vehicles and engines, and other projects
36specified in Section 44281.

37(b) Moneys in the fund shall be allocated to a district that
38submits an eligible application to the state board pursuant to
39Section 44287. The state board shall determine the maximum
40amount of annual funding from the fund for use by the program
P29   1that each district may receive. This determination shall be based
2on the population in each district as well as the relative importance
3of obtaining covered emission reductions in each district,
4specifically through the program.

5(c) Not more than 6.25 percent of the moneys allocated pursuant
6to this chapter to a district with a population of one million or more
7may be used by the district for indirect costs of implementation of
8the program, including outreach costs that are subject to the
9limitation in paragraph (2) of subdivision (a).

10(d) Not more than 12.5 percent of the moneys allocated pursuant
11to this chapter to a district with a population of less than one
12million may be used by the district for indirect costs of
13implementation of the program, including outreach costs that are
14subject to the limitation in paragraph (2) of subdivision (a).

15

begin deleteSEC. 17.end delete
16begin insertSEC. 18.end insert  

Section 44299.1 of the Health and Safety Code, as
17 amended by Section 29 of Chapter 401 of the Statutes of 2013, is
18repealed.

19

begin deleteSEC. 18.end delete
20begin insertSEC. 19.end insert  

Section 44299.2 of the Health and Safety Code is
21amended to read:

22

44299.2.  

Funds shall be allocated to districts, and shall be
23subject to administrative terms and conditions as follows:

24(a) Available funds shall be distributed to districts taking into
25consideration the population of the area, the severity of the air
26quality problems experienced by the population, and the historical
27allocation of the program funds, except that the south coast district
28shall be allocated a percentage of the total funds available to
29districts that is proportional to the percentage of the total state
30population residing within the jurisdictional boundaries of that
31district. For the purposes of this subdivision, population shall be
32determined by the state board based on the most recent data
33provided by the Department of Finance. The allocation to the south
34coast district shall be subtracted from the total funds available to
35districts. Each district, except the south coast district, shall be
36awarded a minimum allocation of two hundred thousand dollars
37($200,000), and the remainder, which shall be known as the
38“allocation amount,” shall be allocated to all districts as follows:

39(1) The state board shall distribute 35 percent of the allocation
40amount to the districts in proportion to the percentage of the total
P30   1residual state population that resides within each district’s
2boundaries. For purposes of this paragraph, “total residual state
3population” means the total state population, less the total
4population that resides within the south coast district.

5(2) The state board shall distribute 35 percent of the allocation
6amount to the districts in proportion to the severity of the air quality
7problems to which each district’s population is exposed. The
8 severity of the exposure shall be calculated as follows:

9(A) Each district shall be awarded severity points based on the
10district’s attainment designation and classification, as most recently
11promulgated by the federal Environmental Protection Agency for
12the National Ambient Air Quality Standard for ozone averaged
13over eight hours, as follows:

14(i) A district that is designated attainment for the federal
15eight-hour ozone standard shall be awarded one point.

16(ii) A district that is designated nonattainment for the federal
17eight-hour ozone standard shall be awarded severity points based
18on classification. Two points shall be awarded for transitional,
19basic, or marginal classifications, three points for moderate
20classification, four points for serious classification, five points for
21severe classification, six points for severe-17 classification, and
22seven points for extreme classification.

23(B) Each district shall be awarded severity points based on the
24annual diesel particulate emissions in the air basin, as determined
25by the state board. One point shall be awarded to the district, in
26increments, for each 1,000 tons of diesel particulate emissions. In
27making this determination, 0 to 999 tons shall be awarded no
28points, 1,000 to 1,999 tons shall be awarded one point, 2,000 to
292,999 tons shall be awarded two points, and so forth. If a district
30encompasses more than one air basin, the air basin with the greatest
31diesel particulate emissions shall be used to determine the points
32awarded to the district. The San Diego County Air Pollution
33Control District and the Imperial County Air Pollution Control
34District shall be awarded one additional point each to account for
35annual diesel particulate emissions transported from Mexico.

36(C) The points awarded under subparagraphs (A) and (B), shall
37be added together for each district, and the total shall be multiplied
38by the population residing within the district boundaries, to yield
39the local air quality exposure index.

P31   1(D) The local air quality exposure index for each district shall
2be summed together to yield a total state exposure index. Funds
3shall be allocated under this paragraph to each district in proportion
4to its local air quality exposure index divided by the total state
5exposure index.

6(3) The state board shall distribute 30 percent of the allocation
7amount to the districts in proportion to the allocation of funds from
8the program moneys in the fund, as follows:

9(A) Because each district is awarded a minimum allocation
10 pursuant to subdivision (a), there shall be no additional minimum
11allocation from the program historical allocation funds. The total
12amount allocated in this way shall be subtracted from total funding
13previously awarded to the district under the program, and the
14remainder, which shall be known as directed funds, shall be
15allocated pursuant to subparagraph (B).

16(B) Each district with a population that is greater than or equal
17to 1 percent of the state’s population shall receive an additional
18allocation based on the population of the district and the district’s
19relative share of emission reduction commitments in the state
20implementation plan to attain the National Ambient Air Quality
21Standard for ozone averaged over one hour. This additional
22allocation shall be calculated as a percentage share of the directed
23funds for each district, derived using a ratio of each district’s share
24amount to the base amount, which shall be calculated as follows:

25(i) The base amount shall be the total program funds allocated
26by the state board to the districts in the 2002-03 fiscal year, less
27the total of the funds allocated through the minimum allocation to
28each district in the 2002-03 fiscal year.

29(ii) The share amount shall be the allocation that each district
30received in the 2002-03 fiscal year, not including the minimum
31allocation. There shall be one share amount for each district.

32(iii) The percentage share shall be calculated for each district
33by dividing the district’s share amount by the base amount, and
34multiplying the result by the total directed funds available under
35this subparagraph.

36(b) Funds shall be distributed as expeditiously as reasonably
37practicable, and a report of the distribution shall be made available
38to the public.

39(c) All funds allocated pursuant to this section shall be liquidated
40as provided for in the guidelines adopted pursuant to Section 44287
P32   1by June 30 four years following the year of allocation. Funds not
2liquidated within the four years shall be returned to the state board
3within 90 days for future allocation pursuant to this chapter.



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