Amended in Senate June 2, 2015

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 for the funding of 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 project that is a covered source, as defined, or a specified eligible project; 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 moneys for use by the program 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 liquidate, as defined, the moneys by a specified date 4 years following the year of allocation and to return, as defined, 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
2amended 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
13 program 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 new schoolbuses or the purchase for the
31repower or retrofit of emissions control equipment for existing
32schoolbuses pursuant to the Lower-Emission School Bus Program
33adopted 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
38standards 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 effective
6on either April 1 or October 1, as provided in the resolution adopted
7by 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
19of 1988 (Chapter 1568 of the Statutes of 1988), 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 (1988end deletebegin insert 1988end insert (Chapter 1568 of the Statutes of
5begin delete 1988),end deletebegin insert 1988).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 new schoolbuses or the purchase for the
29repower or retrofit of emissions control equipment for existing
30schoolbuses pursuant to the Lower-Emission School Bus Program
31adopted 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 fueling dispensers of fueling infrastructure,
38pursuant to the Lower-Emission School Bus Program adopted by
39the 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
14and 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:

begin delete

34(1) (A) “Ancillary benefits” means air quality, climate, and
35public health benefits beyond the reductions in covered emissions.
36Those benefits may include greenhouse gas reductions, short-lived
37climate pollutant reductions, benefits to communities described in
38subdivision (a) of Section 43023.5, fuel-efficiency improvements,
39or the deployment of advanced technology.

P9    1(B) The state board shall identify ancillary benefits pursuant to
2the process described in Section 44287.

end delete
begin insert

3(1) [Reserved]

end insert

4(2) “Btu” means British thermal unit.

5(3) “Commission” means the State Energy Resources
6Conservation and Development Commission.

7(4) “Cost-effectiveness” means dollars provided to a project
8pursuant to subdivision (d) of Section 44283 for each ton of
9covered emission reduction attributed to a project or to the program
10as a whole. In calculating cost-effectiveness, one-time grants of
11funds made at the beginning of a project shall be annualized using
12a time value of public funds or discount rate determined for each
13project by the state board, taking into account the interest rate on
14bonds, interest earned by state funds, and other factors as
15determined appropriate by the state board. Cost-effectiveness shall
16be calculated by dividing annualized costs by average annual
17emissions reduction. The state board, in consultation with the
18districts and concerned members of the public, shall establish
19appropriate cost-effective limits for oxides of nitrogen, particulate
20matter, and reactive organic gases and a reasonable system for
21comparing the cost-effectiveness of proposed projects as described
22in subdivision (a) of Section 44283.

23(5) “Covered emissions” include emissions of oxides of nitrogen,
24particulate matter, and reactive organic gases from any covered
25source.

26(6) “Covered engine” includes any internal combustion engine
27or electric motor and drive powering a covered source.

28(7) “Covered source” includes onroad vehicles, off-road
29nonrecreational equipment and vehicles, locomotives, marine
30vessels, agricultural sources of air pollution, as defined in Section
3139011.5, and, as determined by the state board, other categories
32necessary for the state and districts to meet air quality goals.

33(8) “Covered vehicle” includes any vehicle or piece of
34equipment powered by a covered engine.

35(9) “District” means a county air pollution control district or an
36air quality management district.

37(10) “Fund” means the Air Pollution Control Fund established
38pursuant to Section 43015.

39(11) “Incremental cost” means the cost of the project less a
40baseline cost that would otherwise be incurred by the applicant in
P10   1the normal course of business. Incremental costs may include
2added lease, energy, or fuel costs pursuant to Section 44283 as
3well as incremental capital costs.

4(12) “Liquidated” means that all moneys for a specified fiscal
5year have been spent by a district to reimburse grantees for valid
6and eligible project invoices and district administrative costs.
7Payments withheld from the grantee by a district until all
8contractual reporting requirements are met may be excluded from
9these amounts for the purposes of liquidation.

10(13) “Mobile Source Air Pollution Reduction Review
11Committee” means the Mobile Source Air Pollution Reduction
12Review Committee created by Section 44244.

13(14) “New very low emission vehicle” means a heavy-duty
14vehicle that qualifies as a very low emission vehicle when it is a
15new vehicle, where new vehicle has the same meaning as defined
16in Section 430 of the Vehicle Code, or that is modified with the
17approval and warranty of the original equipment manufacturer to
18qualify as a very low emission vehicle within 12 months of delivery
19to an owner for private or commercial use.

20(15) “NOx” means oxides of nitrogen.

21(16) “Program” means the Carl Moyer Memorial Air Quality
22Standards Attainment Program created by subdivision (a) of
23Section 44280.

24(17) “Recaptured” means those moneys that are returned to a
25district or the state board by a grantee because that grantee did not
26meet contractual obligations.

27(18) “Repower” means replacing an engine with a different
28engine. The term repower, as used in this chapter, generally refers
29to replacing an older, uncontrolled engine with a new,
30emissions-certified engine, although replacing an older
31emissions-certified engine with a newer engine certified to lower
32emissions standards may be eligible for funding under this program.

33(19) “Retrofit” means making modifications to the engine and
34fuel system so that the retrofitted engine does not have the same
35specifications as the original engine.

36(20) “Returned” means those moneys sent by a district to the
37state board for reallocation because those moneys are not liquidated
38by a liquidation deadline.

39(21) “Very low emission vehicle” means a heavy-duty vehicle
40with emissions significantly lower than otherwise applicable
P11   1baseline emission standards or uncontrolled emission levels
2pursuant to Section 44282.

3(b) 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

SEC. 7.  

Section 44275 of the Health and Safety Code, as
7amended by Section 16 of Chapter 401 of the Statutes of 2013, is
8amended to read:

9

44275.  

(a) As used in this chapter, the following terms have
10the following meanings:

begin delete

11(1) “Advisory board” means the Carl Moyer Program Advisory
12Board created by Section 44297.

end delete
begin insert

13(1) [Reserved]

end insert

14(2) “Btu” means British thermal unit.

15(3) “Commission” means the State Energy Resources
16Conservation and Development Commission.

17(4) “Cost-effectiveness” means dollars provided to a project
18pursuant to subdivision (d) of Section 44283 for each ton of NOx
19 reduction attributed to a project or to the program as a whole. In
20calculating cost-effectiveness, one-time grants of funds made at
21the beginning of a project shall be annualized using a time value
22of public funds or discount rate determined for each project by the
23state board, taking into account the interest rate on bonds, interest
24earned by state funds, and other factors as determined appropriate
25by the state board. Cost-effectiveness shall be calculated by
26dividing annualized costs by average annual emissions reduction
27of NOx in this state.

28(5) “Covered engine” includes any internal combustion engine
29or electric motor and drive powering a covered source.

30(6) “Covered source” includes onroad vehicles of 14,000 pounds
31gross vehicle weight rating (GVWR) or greater, off-road
32nonrecreational equipment and vehicles, locomotives, diesel marine
33vessels, stationary agricultural engines, and, as determined by the
34state board, other high-emitting diesel engine categories.

35(7) “Covered vehicle” includes any vehicle or piece of
36equipment powered by a covered engine.

37(8) “District” means a county air pollution control district or an
38air quality management district.

39(9) “Fund” means the Air Pollution Control Fund established
40pursuant to Section 43015.

P12   1(10) “Incremental cost” means the cost of the project less a
2baseline cost that would otherwise be incurred by the applicant in
3the normal course of business. Incremental costs may include
4added lease or fuel costs pursuant to Section 44283 as well as
5incremental capital costs.

6(11) “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.

12(12) “Mobile Source Air Pollution Reduction Review
13Committee” means the Mobile Source Air Pollution Reduction
14Review Committee created by Section 44244.

15(13) “New very low emission vehicle” means a vehicle that
16qualifies as a very low emission vehicle when it is a new vehicle,
17where new vehicle has the same meaning as defined in Section
18430 of the Vehicle Code, or that is modified with the approval and
19warranty of the original equipment manufacturer to qualify as a
20very low emission vehicle within 12 months of delivery to an
21owner for private or commercial use.

22(14) “NOx” means oxides of nitrogen.

23(15) “Program” means the Carl Moyer Memorial Air Quality
24Standards Attainment Program created by subdivision (a) of
25Section 44280.

26(16) “Recaptured” means those moneys that are returned to a
27district or the state board by a grantee because that grantee did not
28meet contractual obligations.

29(17) “Repower” means replacing an engine with a different
30engine. The term repower, as used in this chapter, generally refers
31to replacing an older, uncontrolled engine with a new,
32emissions-certified engine, although replacing an older
33emissions-certified engine with a newer engine certified to lower
34emissions standards may be eligible for funding under this program.

35(18) “Retrofit” means making modifications to the engine and
36fuel system such that the retrofitted engine does not have the same
37specifications as the original engine.

38(19) “Returned” means those moneys sent by a district to the
39state board for reallocation because those moneys are not liquidated
40by a liquidation deadline.

P13   1(20) “Very low emission vehicle” means a vehicle with
2emissions significantly lower than otherwise applicable baseline
3emission standards or uncontrolled emission levels pursuant to
4Section 44282.

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

6

SEC. 8.  

Section 44281 of the Health and Safety Code, as
7amended by Section 19 of Chapter 401 of the Statutes of 2013, is
8amended to read:

9

44281.  

(a) Eligible projects include, but are not limited to, any
10of the following:

11(1) Purchase of new very low or zero-emission covered vehicles
12or covered heavy-duty engines.

13(2) Emission-reducing retrofit of covered engines, or
14replacement of old engines powering covered sources with newer
15engines certified to more stringent emissions standards than the
16engine being replaced, or with electric motors or drives.

17(3) Purchase and use of emission-reducing add-on equipment
18that has been verified by the state board for covered vehicles.

19(4) Development and demonstration of practical, low-emission
20retrofit technologies, repower options, and advanced technologies
21for covered engines and vehicles with very low emissions of NOx.

22(5) Light- and medium-duty vehicle projects in compliance with
23guidelines adopted by the state board pursuant to Title 13 of the
24California Code of Regulations.

25(b) No project shall be funded under this chapter after the
26compliance date required by any local, state, or federal statute,
27rule, regulation, memoranda of agreement or understanding, or
28other legally binding document, except that an otherwise qualified
29project may be funded even if the state implementation plan
30assumes that the change in equipment, vehicles, or operations will
31occur, if the change is not required by the compliance date of a
32statute, regulation, or other legally binding document in effect as
33of the date the grant is awarded. No project funded by the program
34shall be used for credit under any state or federal emissions
35averaging, banking, or trading program. No covered emission
36reduction generated by the program shall be used as marketable
37emission reduction credits or to offset any emission reduction
38obligation of any person or entity. Projects involving new engines
39that would otherwise generate marketable credits under state or
40federal averaging, banking, and trading programs shall include
P14   1transfer of credits to the engine end user and retirement of those
2credits toward reducing air emissions in order to qualify for funding
3under the program. A purchase of a low-emission vehicle or of
4equipment pursuant to a corporate or a controlling board’s policy,
5but not otherwise required by law, shall generate surplus emissions
6reductions and may be funded by the program.

7(c) The program may also provide funding toward the
8installation of fueling or energy infrastructure to fuel or power
9covered sources.

10(d) Eligible applicants may be any individual, company, or
11public agency that owns one or more covered vehicles that operate
12primarily within California or otherwise contribute substantially
13to the NOx, particulate matter (PM), or reactive organic gas (ROG)
14emissions inventory in California.

15(e) It is the intent of the Legislature that all emission reductions
16generated by this chapter shall contribute to public health by
17reducing, for the life of the vehicle being funded, the total amount
18of emissions in California.

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

22

SEC. 9.  

Section 44282 of the Health and Safety Code, as
23amended by Section 21 of Chapter 401 of the Statutes of 2013, is
24amended to read:

25

44282.  

The following criteria apply to all projects to be funded
26through the program except for projects funded through the
27infrastructure demonstration program and infrastructure projects,
28pursuant to subdivision (c) of Section 44281 and Section 44284:

29(a) The state board may establish project criteria, including
30minimum project life for source categories, in the guidelines
31described in Section 44287. For previously unregulated source
32categories, project criteria shall consider the timing of newly
33established regulatory requirements.

34(b) To be eligible, projects shall meet the cost-effectiveness per
35ton of covered emissions reduced requirements of Section 44283.

36(c) To be eligible, retrofits, repowers, and installation of add-on
37equipment for covered vehicles shall be performed, or new covered
38vehicles delivered to the end user, or covered vehicles scrapped
39on or after the date the program is implemented.

P15   1(d) Retrofit technologies, new engines, and new vehicles shall
2be certified for sale or under experimental permit for operation in
3California.

4(e) Repower projects that replace older, uncontrolled engines
5with new, emissions-certified engines or that replace
6emissions-certified engines with new engines certified to a more
7stringent NOx emissions standard are approvable subject to the
8other applicable selection criteria. The state board shall determine
9appropriate baseline emission levels for the uncontrolled engines
10being replaced.

11(f) For heavy-duty-vehicle projects, retrofit and add-on
12equipment projects shall document a NOx or PM emission
13reduction of at least 25 percent and no increase in other covered
14emissions compared to the applicable baseline emissions accepted
15by the state board for that engine year and application. The state
16board shall determine appropriate baseline emission levels.
17Acceptable documentation shall be defined by the state board.
18After study of available emission reduction technologies and after
19public notice and comment, the state board may revise the
20minimum percentage emission reduction criterion for retrofits and
21add-on equipment provided for in this section to improve the ability
22of the program to achieve its goals.

23(g) (1) For heavy-duty-vehicle projects involving the purchase
24of new very low or zero-emission vehicles, engines shall be
25certified to an optional low NOx emissions standard established
26by the state board, except as provided for in paragraph (2).

27(2) For heavy-duty-vehicle projects involving the purchase of
28new very low or zero-emission covered vehicles for which no
29optional low NOx emission standards are available, documentation
30shall be provided showing that the low or zero-emission engine
31emits not more than 70 percent of the NOx or NOx plus
32hydrocarbon emissions of a new engine certified to the applicable
33baseline NOx or NOx plus hydrocarbon emission standard for that
34engine and meets applicable particulate standards. The state board
35shall specify the documentation required. If no baseline emission
36standard exists for new vehicles in a particular category, the state
37board shall determine an appropriate baseline emission level for
38comparison.

P16   1(h) For projects other than heavy-duty-vehicle projects, the state
2 board shall determine appropriate criteria under the provisions of
3Section 44287.

4(i) This section shall remain in effect only until January 1, 2024,
5and as of that date is repealed, unless a later enacted statute, that
6is enacted before January 1, 2024, deletes or extends that date.

7

SEC. 10.  

Section 44283 of the Health and Safety Code, as
8amended by Section 23 of Chapter 401 of the Statutes of 2013, is
9amended to read:

10

44283.  

(a) (1) For all projects funded pursuant to this chapter,
11except for an infrastructure project described in subdivision (c) of
12Section 44281, the following cost-effectiveness criteria shall apply:

13(A) (i) Project grants shall not be made that exceed
14cost-effectiveness calculated in accordance with this section.

15(ii) The state board, in collaboration with the districts, shall
16establish cost-effectiveness values in the guidelines issued pursuant
17to Section 44287, taking into consideration factors, including, but
18not limited to, the following:

begin delete

19(I) The ability of the project to provide identified ancillary
20benefits, as defined in paragraph (1) of subdivision (a) of Section
2144275.

end delete
begin delete

22(II)

end delete

23begin insert(I)end insert The cost of emission control technologies identified in
24Section 44281.

begin delete

25(III)

end delete

26begin insert(II)end insert The cost-effectiveness values for NOx, particulate matter,
27or reactive organic gases for any adopted rule or control measure
28in any district’s approved state implementation plan, or rule
29adopted by the state board.

30(B) For projects obtaining reactive organic gas and particulate
31matter reductions, the state board shall determine appropriate
32adjustment factors to calculate a weighted cost-effectiveness.

33(2) When a district board approves funding for a project or
34project category, the districtbegin delete board:end delete

begin delete

35(A) May recognize the ancillary benefit, as defined in paragraph
36(1) of subdivision (a) of Section 44275, when determining the
37grant amount for a project or project category.

end delete

38begin delete(B)end deletebegin deleteend deletebegin delete Shallend deletebegin insert board shallend insert include,begin insert in its agenda or supporting
39materialsend insert
for the meeting approving funding for the project or
40project category,begin delete in its agenda or supporting materialsend delete a brief
P17   1statement of the rationale for funding that source category,
2including the basis for selection and the importance of that project
3type.

4(b) Only covered emission reductions occurring in this state
5shall be included in the cost-effectiveness determination. The
6extent to which emissions generated at sea contribute to air quality
7in California nonattainment areas shall be incorporated into these
8methodologies based on a reasonable assessment of currently
9available information and modeling assumptions.

10(c) The state board shall develop protocols for calculating the
11surplus covered emission reductions in California from
12representative project types over the life of the project.

13(d) The cost of the covered emission reduction is the amount
14of the grant from the program, including matching funds provided
15pursuant to subdivision (e) of Section 44287, or funding provided
16pursuant to paragraph (2) of subdivision (d) of Section 41081 or
17subdivision (b) of Section 44229, not including funds described
18in subdivision (a) of Section 44287.2. The state board shall
19establish reasonable methodologies for evaluating project
20cost-effectiveness, consistent with the definition contained in
21paragraph (4) of subdivision (a) of Section 44275, and with
22accepted methods, taking into account a fair and reasonable
23discount rate or time value of public funds.

24(e) A grant shall not be made that, net of taxes, provides the
25applicant with funds in excess of the incremental cost of the project.
26Incremental lease costs may be capitalized according to guidelines
27adopted by the state board so that these incremental costs may be
28offset by a one-time grant award.

29(f) Funds under a district’s budget authority or fiduciary control
30may be used to pay for the incremental cost of energy or liquid or
31gaseous fuel, other than standard gasoline or diesel, which is
32integral to a covered emission reducing technology that is part of
33a project receiving grant funding under the program. The fuel shall
34be approved for sale in the state. The incremental energy or fuel
35cost over the expected lifetime of the vehicle may be offset by the
36district if the project as a whole, including the incremental energy
37or fuel cost, meets all of the requirements of this chapter, including
38the maximum allowed cost-effectiveness. The state board shall
39develop an appropriate methodology for converting incremental
40energy or fuel costs over the vehicle lifetime into an initial cost
P18   1for the purposes of determining project cost-effectiveness.
2Incremental energy or fuel costs shall not be included in project
3costs for fuels dispensed from any facility that was funded, in
4whole or in part, from the fund.

5(g) For the purposes of determining any grant amount pursuant
6to this chapter, project proponents applying for funding shall be
7required to state in their application any other public financial
8assistance to the project.

9(h) For projects that would repower off-road equipment by
10replacing uncontrolled diesel engines with new, certified diesel
11engines, the state board may establish maximum grant award
12amounts per repower. A repower project shall also be subject to
13the incremental cost maximum pursuant to subdivision (e).

14(i) After study of available emission reduction technologies and
15costs and after public notice and comment, the state board may
16adjust the values of the maximum grant award criteria stated in
17this section to improve the ability of the program to achieve its
18goals. Every year the state board shall adjust the maximum
19cost-effectiveness amount established in subdivision (a) and any
20per-project maximum set by the state board pursuant to subdivision
21(h) to account for inflation and other factors as authorized by this
22section.

23(j) This section shall remain in effect only until January 1, 2024,
24and as of that date is repealed, unless a later enacted statute, that
25is enacted before January 1, 2024, deletes or extends that date.

26

SEC. 11.  

Section 44286 of the Health and Safety Code is
27amended to read:

28

44286.  

(a) The responsibilities of the state board include
29management of program funds and program oversight. The state
30board is responsible for producing guidelines, protocols, and
31criteria for covered vehicle projects and developing methodologies
32for evaluating project cost-effectiveness in accordance with this
33chapter. The state board shall have primary responsibility for the
34reporting aspects of the program.

35(b) The responsibilities of a district include local administration
36of project funds, monitoring funded projects, and reporting results
37to the state board, in accordance with this chapter. Any project
38funds awarded to a successful applicant shall be disbursed by the
39district.

P19   1(c) Relative to the allocation of funds in the south coast district,
2for purposes of this program, Mobile Source Air Pollution
3Reduction Review Committee funds shall only be used as matching
4funds upon approval, by minute action, of the Mobile Source Air
5Pollution Reduction Review Committee.

6(d) The state board may reserve up to 10 percent of the program
7funds available each year to directly fund any projectbegin delete described in
8paragraph (7) of subdivision (a) of Section 44275end delete
begin insert that is a covered
9sourceend insert
andbegin insert is described inend insert Section 44281. A project that is
10multidistrict in nature shall be funded by the state board in
11coordination with the appropriate districts. The state board shall
12coordinate outreach efforts with a participating district to ensure
13that any parallel availability of a district grant and a grant from
14the state board is clear to an eligible applicant. Reserved funds not
15committed to a project funded directly by the state board by the
16end of the fiscal year shall be made available to the districts in the
17following year.

18(e) The commission, in consultation with the state board, shall
19manage the Advanced Technology Account and the Infrastructure
20Demonstration Program in accordance with this chapter.

21(f) The state board shall work closely with the commission and
22the districts for the duration of this program to maximize the ability
23of the program to achieve its goals.

24(g) The state board and the districts shall take all appropriate
25and necessary actions to ensure that emissions reductions achieved
26through the program are credited by the United States
27Environmental Protection Agency to the appropriate emission
28reduction objectives in the state implementation plan.

29

SEC. 12.  

Section 44287 of the Health and Safety Code, as
30amended by Section 25 of Chapter 401 of the Statutes of 2013, is
31amended to read:

32

44287.  

(a) The state board shall establish or update grant
33criteria and guidelines consistent with this chapter for covered
34vehicle and infrastructure projects as soon as practicable, but not
35later than July 1, 2017. The adoption of guidelines is exempt from
36the rulemaking provisions of the Administrative Procedure Act
37(Chapter 3.5 (commencing with Section 11340) of Part 1 of
38Division 3 of Title 2 of the Government Code). The state board
39shall solicit input and comment from the districts during the
40development of the criteria and guidelines and shall make every
P20   1effort to develop criteria and guidelines that are compatible with
2existing district programs that are also consistent with this chapter.
3Guidelines shall include protocols to calculate project
4cost-effectiveness. The grant criteria and guidelines shall include
5safeguards to ensure that the project generates surplus emissions
6reductions. Guidelines shall enable and encourage districts to
7cofund projects that provide emissions reductions in more than
8one district. The state board shall make draft criteria and guidelines
9available to the public 45 days before final adoption, and shall
10hold at least one public meeting to consider public comments
11before final adoption. The state board may develop separate
12guidelines and criteria for the different types of eligible projects
13described in subdivision (a) of Section 44281.

14(b) The state board, in consultation with the participating
15districts, may propose revisions to the criteria and guidelines
16established pursuant to subdivision (a) as necessary to improve
17the ability of the program to achieve its goals. A proposed revision
18shall be made available to the public 45 days before final adoption
19of the revision and the state board shall hold at least one public
20meeting to consider public comments before final adoption of the
21revision.

22(c) The state board shall reserve funds for, and disburse funds
23to, districts from the fund for administration pursuant to this section
24and Section 44299.1.

25(d) The state board shall develop guidelines for a district to
26follow in applying for the reservation of funds, in accordance with
27this chapter. It is the intent of the Legislature that district
28administration of any reserved funds be in accordance with the
29project selection criteria specified in Sections 44281, 44282, and
3044283 and all other provisions of this chapter. The guidelines shall
31be established and published by the state board as soon as
32practicable, but not later than January 1, 2006.

33(e) Funds shall be reserved by the state board for administration
34by a district that adopts an eligible program pursuant to this chapter
35and offers matching funds at a ratio of one dollar ($1) of matching
36funds committed by the district or the Mobile Source Air Pollution
37Reduction Review Committee for every two dollars ($2) committed
38from the fund. Funds available to the Mobile Source Air Pollution
39Reduction Review Committee may be counted as matching funds
40for projects in the South Coast Air Basin only if the committee
P21   1approves the use of these funds for matching purposes. Matching
2funds may be any funds under the district’s budget authority that
3are committed to be expended in accordance with the program.
4Funds committed by a port authority or a local government, in
5cooperation with a district, to be expended in accordance with the
6program may also be counted as district matching funds. Matching
7funds provided by a port authority or a local government shall not
8exceed 30 percent of the total required matching funds in any
9district that applies for more than three hundred thousand dollars
10($300,000) of the state board funds. Only a district, or a port
11authority or a local government teamed with a district, may provide
12matching funds.

13(f) The state board may adjust the ratio of matching funds
14described in subdivision (e), if it determines that an adjustment is
15necessary in order to maximize the use of, or the air quality benefits
16provided by, the program, based on a consideration of the financial
17resources of the district.

18(g) Notwithstanding subdivision (e), a district need not provide
19matching funds for state board funds allocated to the district for
20program outreach activities pursuant to paragraph (4) of subdivision
21(a) of Section 44299.1.

22(h) A district may include within its matching funds a reasonable
23estimate of direct or in-kind costs for assistance in providing
24program outreach and application evaluation. In-kind and direct
25matching funds shall not exceed 15 percent of the total matching
26funds offered by a district. A district may also include within its
27matching funds any money spent on or after February 25, 1999,
28that would have qualified as matching funds but were not
29previously claimed as matching funds.

30(i) A district desiring a reservation of funds shall apply to the
31state board following the application guidelines established
32pursuant to this section. The state board shall approve or disapprove
33a district application not later than 60 days after receipt. Upon
34approval of any district application, the state board shall
35simultaneously approve a reservation of funding for that district
36to administer. Reserved funds shall be disbursed to the district so
37that funding of a district-approved project is not impeded.

38(j) Any funds reserved for a district by the state board pursuant
39 to this section are available for disbursement to the district for a
40period of not more than two years from the time of reservation.
P22   1Funds not liquidated by a district by June 30 of the fourth calendar
2year following the date of the reservation shall be returned to the
3state board within 90 days for future allocation pursuant to this
4chapter. Each reservation of funds shall be accounted for separately,
5and unused funds from each application shall revert back to the
6state board for use pursuant to this chapter as specified in this
7subdivision.

8(k) The state board shall specify a date each year when district
9applications are due. If the eligible applications received in any
10year oversubscribe the available funds, the state board shall reserve
11funds on an allocation basis, pursuant to Section 44299.2. The
12state board may accept a district application after the due date for
13a period of months specified by the state board. Funds may be
14reserved in response to those applications, in accordance with this
15chapter, out of funds remaining after the original reservation of
16funds for the year.

17(l) Guidelines for a district application shall require information
18from an applicant district to the extent necessary to meet the
19requirements of this chapter, but shall otherwise minimize the
20information required of a district.

21(m) A district application shall be reviewed by the state board
22immediately upon receipt. If the state board determines that an
23application is incomplete, the applicant shall be notified within 10
24working days with an explanation of what is missing from the
25application. A completed application fulfilling the criteria shall be
26approved as soon as practicable, but not later than 60 working days
27after receipt.

28(n) The commission, in consultation with the districts, shall
29establish project approval criteria and guidelines for infrastructure
30projects consistent with Section 44284 as soon as practicable, but
31not later than February 15, 2000. The commission shall make draft
32criteria and guidelines available to the public 45 days before final
33adoption, and shall hold at least one public meeting to consider
34public comments before final adoption.

35(o) The commission, in consultation with the participating
36districts, may propose revisions to the criteria and guidelines
37established pursuant to subdivision (n) as necessary to improve
38the ability of the program to achieve its goals. A revision may be
39proposed at any time, or may be proposed in response to a finding
40made in the annual report on the program published by the state
P23   1board pursuant to Section 44295. A proposed revision shall be
2made available to the public 45 days before final adoption of the
3revision and the commission shall hold at least one public meeting
4to consider public comments before final adoption of the revision.

5(p) Unclaimed funds will be allocated by the state board in
6accordance with Section 44299.2.

7(q) 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

SEC. 13.  

Section 44287.1 of the Health and Safety Code is
11amended to read:

12

44287.1.  

(a) The state board shall, at its first opportunity,
13revise the grant criteria and guidelines adopted pursuant to Section
1444287 to incorporate projects in which an applicant turns in
15nonroad internal combustion technology and equipment that the
16applicant owns and that still has some useful life, coupled with the
17purchase of new nonroad zero-emission technology and equipment
18that is in a similar category or that can perform the same work.

19(b) When it evaluates the benefits of a project described in
20subdivision (a), the state board shall count both of the following
21emission reduction streams, provided that they are real, enforceable,
22quantifiable, and surplus emission reductions:

23(1) The displacement of the emissions from the older nonroad
24internal combustion technology and equipment for its remaining
25life with the new nonroad zero-emission technology and equipment.

26(2) After the time period specified in paragraph (1), the
27displacement of emissions from new nonroad internal combustion
28technology and equipment meeting the emission standards in place
29at time of purchase, with the new nonroad zero-emission
30technology and equipment over its remaining life.

31(c) A project described in subdivision (a) shall meet the
32cost-effectiveness criteria in Section 44283 and all other criteria
33of the program, including the requirement that the emission
34reductions be real, enforceable, quantifiable, and surplus.

35(d) The incremental cost of a project described in subdivision
36(a) may include, at the discretion of the applicant, some or all of
37the reasonable salvage value of the nonroad internal combustion
38technology and equipment turned in, as determined by the state
39board. However, an applicant that elects to include these costs
P24   1shall be required to meet the cost-effectiveness criteria in Section
244283.

3

SEC. 14.  

Section 44287.2 of the Health and Safety Code is
4amended to read:

5

44287.2.  

(a) By July 1, 2017, the state board shall revise
6project grant criteria and guidelines pursuant to Section 44287 to
7allow funds from federal, state, and local programs or other public
8funding sources to be used for a project also funded under this
9chapter without those additional public funds being factored into
10the criteria emission reduction cost-effectiveness calculations, if
11the projects are eligible under those programs and meet all criteria
12associated with those funding sources. Those other projects include,
13but are not limited to, any of the following:

14(1) Federal funding from programs designed to reduce
15greenhouse gas emissions.

16(2) State and local funding from programs designed to reduce
17 greenhouse gas emissions, including the Greenhouse Gas Reduction
18Fund, created pursuant to Section 16428.8 of the Government
19Code, and the Alternative and Renewable Fuel and Vehicle
20Technology Program (Article 2 (commencing with Section 44272)
21of Chapter 8.9).

22(3) Funding from programs designed to support energy diversity.

23(4) Funding from programs that are intended to provide covered
24emissions reductions but do not require those reductions to be able
25to be credited to the state implementation plan.

26(b) Nothing in this section authorizes the expenditure of funds
27for a project that does not meet all of the requirements of this
28chapter, including requirements that require cost sharing or the
29matching of funds. The sum of the total grants shall not exceed
30the project cost. The covered emissions reductions paid for pursuant
31to this chapter shall not be claimed by the other funding sources.

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

35

SEC. 15.  

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
P25   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

SEC. 16.  

Section 44291 of the Health and Safety Code is
37amended to read:

38

44291.  

(a) The state board shall assist districts with developing
39procedures to monitor whether the emission reductions projected
40in successful grant applications are actually achieved. Monitoring
P26   1procedures may include project audits, and may also include
2requirements, as part of the contract between the state board or
3districts and the grant recipients, that each grant recipient provide
4information about the project on an annual basis. Information
5required from grant recipients should be minimized and the format
6for reporting the information should be made simple and
7convenient.

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

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

24(d) The state board shall monitor district programs to ensure
25that participating districts conduct their programs consistent with
26the criteria and guidelines established by the state board and the
27commission pursuant to this chapter. The monitoring procedures
28shall contain provisions for return of funds not yet awarded to
29approved projects if a district fails to show that they are
30implementing a program consistent with the approved program.
31If the state board determines, pursuant to this subdivision, that
32moneys from the fund allocated to a district should be returned,
33the state board shall hold at least one public meeting to consider
34public comments prior to requiring the return of the allocated
35funds. The state board shall make every effort to assist districts to
36implement programs in an approved manner and shall only require
37the return of allocated funds if these efforts fail to address problems
38adequately. Returned funds shall be deposited in the fund. The
39state board shall not require the return of funds already awarded
40to approved projects.

P27   1(e) Program funds recaptured as a result of a settlement
2agreement executed by the state board shall be returned to the
3district that provided the funds to the grant recipient. A penalty
4resulting from a settlement agreement executed by the state board
5with a grant recipient or from a civil action brought by the Attorney
6General shall be deposited in the fund.

7

SEC. 17.  

Section 44299.1 of the Health and Safety Code, as
8amended by Section 28 of Chapter 401 of the Statutes of 2013, is
9amended to read:

10

44299.1.  

(a) To ensure that emission reductions are obtained
11as needed from pollution sources, any moneys deposited in the
12fund for use by the program or appropriated to the program shall
13be segregated and administered as follows:

14(1) Not more than 2.5 percent of the moneys in the fund for use
15by the program shall be allocated to program support and outreach
16costs incurred by the state board and the commission directly
17associated with implementing the program pursuant to this chapter.
18These funds shall be allocated to the state board and the
19commission in proportion to total program funds administered by
20the state board and the commission.

21(2) Not more than 2.5 percent of the moneys in the fund for use
22by the program shall be allocated to direct program outreach
23activities. The state board may use these funds for program
24outreach contracts or may allocate outreach funds to participating
25districts in proportion to each district’s allocation from the program
26moneys in the fund. The state board shall report on the use of
27outreach funds in their reports to the Legislature pursuant to Section
2844295.

29(3) The balance shall be deposited in the fund to be expended
30to offset added costs of new very low or zero-emission vehicle
31technologies, and emission reducing repowers, retrofits, and add-on
32equipment for covered vehicles and engines, and other projects
33specified in Section 44281.

34(b) Moneys in the fund shall be allocated to a district that
35submits an eligible application to the state board pursuant to
36Section 44287. The state board shall determine the maximum
37amount of annual funding from the fund for use by the program
38that each district may receive. This determination shall be based
39on the population in each district as well as the relative importance
P28   1of obtaining covered emission reductions in each district,
2specifically through the program.

3(c) Not more than 6.25 percent of the moneys allocated pursuant
4to this chapter to a district with a population of one million or more
5may be used by the district for indirect costs of implementation of
6the program, including outreach costs that are subject to the
7limitation in paragraph (2) of subdivision (a).

8(d) Not more than 12.5 percent of the moneys allocated pursuant
9to this chapter to a district with a population of less than one
10million may be used by the district for indirect costs of
11implementation of the program, including outreach costs that are
12subject to the limitation in paragraph (2) of subdivision (a).

13

SEC. 18.  

Section 44299.1 of the Health and Safety Code, as
14amended by Section 29 of Chapter 401 of the Statutes of 2013, is
15repealed.

16

SEC. 19.  

Section 44299.2 of the Health and Safety Code is
17amended to read:

18

44299.2.  

Funds shall be allocated to districts, and shall be
19subject to administrative terms and conditions as follows:

20(a) Available funds shall be distributed to districts taking into
21consideration the population of the area, the severity of the air
22quality problems experienced by the population, and the historical
23allocation of the program funds, except that the south coast district
24shall be allocated a percentage of the total funds available to
25districts that is proportional to the percentage of the total state
26population residing within the jurisdictional boundaries of that
27district. For the purposes of this subdivision, population shall be
28determined by the state board based on the most recent data
29provided by the Department of Finance. The allocation to the south
30coast district shall be subtracted from the total funds available to
31districts. Each district, except the south coast district, shall be
32awarded a minimum allocation of two hundred thousand dollars
33($200,000), and the remainder, which shall be known as the
34“allocation amount,” shall be allocated to all districts as follows:

35(1) The state board shall distribute 35 percent of the allocation
36amount to the districts in proportion to the percentage of the total
37residual state population that resides within each district’s
38boundaries. For purposes of this paragraph, “total residual state
39population” means the total state population, less the total
40population that resides within the south coast district.

P29   1(2) The state board shall distribute 35 percent of the allocation
2amount to the districts in proportion to the severity of the air quality
3problems to which each district’s population is exposed. The
4severity of the exposure shall be calculated as follows:

5(A) Each district shall be awarded severity points based on the
6district’s attainment designation and classification, as most recently
7promulgated by the federal Environmental Protection Agency for
8the National Ambient Air Quality Standard for ozone averaged
9over eight hours, as follows:

10(i) A district that is designated attainment for the federal
11eight-hour ozone standard shall be awarded one point.

12(ii) A district that is designated nonattainment for the federal
13eight-hour ozone standard shall be awarded severity points based
14on classification. Two points shall be awarded for transitional,
15basic, or marginal classifications, three points for moderate
16classification, four points for serious classification, five points for
17severe classification, six points for severe-17 classification, and
18seven points for extreme classification.

19(B) Each district shall be awarded severity points based on the
20annual diesel particulate emissions in the air basin, as determined
21by the state board. One point shall be awarded to the district, in
22increments, for each 1,000 tons of diesel particulate emissions. In
23making this determination, 0 to 999 tons shall be awarded no
24points, 1,000 to 1,999 tons shall be awarded one point, 2,000 to
252,999 tons shall be awarded two points, and so forth. If a district
26encompasses more than one air basin, the air basin with the greatest
27diesel particulate emissions shall be used to determine the points
28awarded to the district. The San Diego County Air Pollution
29Control District and the Imperial County Air Pollution Control
30District shall be awarded one additional point each to account for
31annual diesel particulate emissions transported from Mexico.

32(C) The points awarded under subparagraphs (A) and (B), shall
33be added together for each district, and the total shall be multiplied
34by the population residing within the district boundaries, to yield
35the local air quality exposure index.

36(D) The local air quality exposure index for each district shall
37be summed together to yield a total state exposure index. Funds
38shall be allocated under this paragraph to each district in proportion
39to its local air quality exposure index divided by the total state
40exposure index.

P30   1(3) The state board shall distribute 30 percent of the allocation
2amount to the districts in proportion to the allocation of funds from
3the program moneys in the fund, as follows:

4(A) Because each district is awarded a minimum allocation
5pursuant to subdivision (a), there shall be no additional minimum
6allocation from the program historical allocation funds. The total
7amount allocated in this way shall be subtracted from total funding
8previously awarded to the district under the program, and the
9remainder, which shall be known as directed funds, shall be
10allocated pursuant to subparagraph (B).

11(B) Each district with a population that is greater than or equal
12to 1 percent of the state’s population shall receive an additional
13allocation based on the population of the district and the district’s
14relative share of emission reduction commitments in the state
15implementation plan to attain the National Ambient Air Quality
16Standard for ozone averaged over one hour. This additional
17allocation shall be calculated as a percentage share of the directed
18funds for each district, derived using a ratio of each district’s share
19amount to the base amount, which shall be calculated as follows:

20(i) The base amount shall be the total program funds allocated
21by the state board to the districts in the 2002-03 fiscal year, less
22the total of the funds allocated through the minimum allocation to
23each district in the 2002-03 fiscal year.

24(ii) The share amount shall be the allocation that each district
25received in the 2002-03 fiscal year, not including the minimum
26allocation. There shall be one share amount for each district.

27(iii) The percentage share shall be calculated for each district
28by dividing the district’s share amount by the base amount, and
29multiplying the result by the total directed funds available under
30this subparagraph.

31(b) Funds shall be distributed as expeditiously as reasonably
32practicable, and a report of the distribution shall be made available
33to the public.

34(c) All funds allocated pursuant to this section shall be liquidated
35as provided for in the guidelines adopted pursuant to Section 44287
36by June 30 four years following the year of allocation. Funds not
37liquidated within the four years shall be returned to the state board
38within 90 days for future allocation pursuant to this chapter.



O

    96