Amended in Assembly August 31, 2015

Amended in Assembly August 17, 2015

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 June 30 of the fourth year 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).

P4    1(c) After consulting with the Department of Motor Vehicles on
2the feasibility thereof, the Sacramento district board may provide,
3in the surcharge adopted pursuant to subdivision (a), to exempt
4from all or part of the surcharge any category of low-emission
5motor vehicle.

6(d) Funds received by the Sacramento district pursuant to this
7section shall be used by that district as follows:

8(1) The revenues resulting from the first four dollars ($4) of
9each surcharge shall be used to implement reductions in emissions
10from vehicular sources, including, but not limited to, a clean fuels
11program and motor vehicle use reduction measures.

12(2) The revenues resulting from the next two dollars ($2) of
13each surcharge shall be used to implement the following programs
14that achieve emission reductions from vehicular sources and
15off-road engines, to the extent that the district determines the
16program remediates air pollution harms created by motor vehicles
17on which the surcharge is imposed:

18(A) Projects eligible for grants under the Carl Moyer Memorial
19Air Quality Standards Attainment Program (Chapter 9
20(commencing with Section 44275) of Part 5).

21(B) The new purchase, retrofit, repower, or add-on of equipment
22for previously unregulated agricultural sources of air pollution, as
23defined in Section 39011.5, within the Sacramento district, for a
24minimum of three years from the date of adoption of an applicable
25rule or standard, or until the compliance date of that rule or
26standard, whichever is later, if the state board has determined that
27the rule or standard complies with Sections 40913, 40914, and
2841503.1, after which period of time, a new purchase, retrofit,
29repower, or add-on of equipment shall not be funded pursuant to
30this chapter. The district shall follow any guidelines developed
31under subdivision (a) of Section 44287 for awarding grants under
32this program.

33(C) The purchase of new schoolbuses orbegin delete the purchase forend delete the
34repower or retrofit of emissions control equipment for existing
35schoolbuses pursuant to the Lower-Emission School Bus Program
36adopted by the state board.

37(D) An accelerated vehicle retirement or repair program that is
38adopted by the state board pursuant to authority granted hereafter
39by the Legislature by statute.

P5    1(E) The replacement of onboard natural gas fuel tanks on
2schoolbuses that are 14 years or older or the enhancement of
3deteriorating natural gas fueling dispensers of fueling infrastructure,
4pursuant to the Lower-Emission School Bus Program adopted by
5the state board.

6(F) The funding of alternative fuel and electric infrastructure
7projects solicited and selected through a competitive bid process.

8(e) Not more than 6.25 percent of the funds collected pursuant
9to this section shall be used by the district for administrative
10expenses.

11(f) A project funded by the program shall not be used for credit
12under any state or federal emissions averaging, banking, or trading
13program. An emission reduction generated by the program shall
14not be used as marketable emission reduction credits or to offset
15any emission reduction obligation of any person or entity. Projects
16involving new engines that would otherwise generate marketable
17credits under state or federal averaging, banking, and trading
18programs shall include transfer of credits to the engine end user
19and retirement of those credits toward reducing air emissions in
20order to qualify for funding under the program. A purchase of a
21low-emission vehicle or of equipment pursuant to a corporate or
22a controlling board’s policy, but not otherwise required by law,
23shall generate surplus emissions reductions and may be funded by
24the program.

25(g) This section shall remain in effect only until January 1, 2024,
26and as of that date is repealed, unless a later enacted statute, that
27is enacted before January 1, 2024, deletes or extends that date.

28

SEC. 2.  

Section 44223 of the Health and Safety Code is
29amended to read:

30

44223.  

(a) In addition to any other fees specified in this code,
31the Vehicle Code, and the Revenue and Taxation Code, a district,
32except the Sacramento district, may levy a fee of up to two dollars
33($2) on motor vehicles registered within the district. A district may
34impose the fee only if the district board adopts a resolution
35providing for both the fee and a corresponding program for the
36reduction of air pollution from motor vehicles pursuant to, and for
37related planning, monitoring, enforcement, and technical studies
38necessary for the implementation of, the California Clean Air Act
39of 1988 (Chapter 1568 of the Statutes of 1988), or for the
40attainment or maintenance of state or federal ambient air quality
P6    1standards or the reduction of toxic air contaminant emissions from
2motor vehicles.

3(b) In districts with nonelected officials on their boards, a
4resolution adopted pursuant to subdivision (a) shall be approved
5by both a majority of the board and a majority of the board
6members who are elected officials.

7(c) A fee imposed pursuant to this section shall become effective
8on either April 1 or October 1, as provided in the resolution adopted
9by the board pursuant to subdivision (a).

10

SEC. 3.  

Section 44225 of the Health and Safety Code, as
11amended by Section 6 of Chapter 401 of the Statutes of 2013, is
12amended to read:

13

44225.  

A district may increase the fee established under Section
1444223 to up to six dollars ($6). A district may increase the fee only
15if the following conditions are met:

16(a) A resolution providing for both the fee increase and a
17corresponding program for expenditure of the increased fees for
18the reduction of air pollution from motor vehicles pursuant to, and
19for related planning, monitoring, enforcement, and technical studies
20necessary for the implementation of, the California Clean Air Act
21of 1988 (Chapter 1568 of the Statutes of 1988), or for the
22attainment or maintenance of state or federal ambient air quality
23standards or the reduction of toxic air contaminant emissions from
24motor vehicles, is adopted and approved by the governing board
25of the district.

26(b) In districts with nonelected officials on their governing
27boards, the resolution shall be adopted and approved by both a
28majority of the governing board and a majority of the board
29members who are elected officials.

30(c) An increase in fees established pursuant to this section shall
31become effective on either April 1 or October 1, as provided in
32the resolution adopted by the board pursuant to subdivision (a).

33(d) This section shall remain in effect only until January 1, 2024,
34and as of that date is repealed, unless a later enacted statute, that
35is enacted before January 1, 2024, deletes or extends that date.

36

SEC. 4.  

Section 44229 of the Health and Safety Code, as
37amended by Section 8 of Chapter 401 of the Statutes of 2013, is
38amended to read:

39

44229.  

(a) After deducting all administrative costs it incurs
40through collection of fees pursuant to Section 44227, the
P7    1Department of Motor Vehicles shall distribute the revenues to
2districts, which shall use the revenues resulting from the first four
3dollars ($4) of each fee imposed to reduce air pollution from motor
4vehicles and to carry out related planning, monitoring, enforcement,
5and technical studies necessary for implementation of the California
6Clean Air Act of 1988 (Chapter 1568 of the Statutes of 1988). Fees
7collected by the Department of Motor Vehicles pursuant to this
8chapter shall be distributed to districts based upon the amount of
9fees collected from motor vehicles registered within each district.

10(b) Notwithstanding Sections 44241 and 44243, a district shall
11use the revenues resulting from the next two dollars ($2) of each
12fee imposed pursuant to Section 44227 to implement the following
13programs that the district determines remediate air pollution harms
14created by motor vehicles on which the surcharge is imposed:

15(1) 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(2) The new purchase, retrofit, repower, or add-on equipment
19for previously unregulated agricultural sources of air pollution, as
20defined in Section 39011.5, for a minimum of three years from
21the date of adoption of an applicable rule or standard, or until the
22compliance date of that rule or standard, whichever is later, if the
23state board has determined that the rule or standard complies with
24Sections 40913, 40914, and 41503.1, after which period of time,
25a new purchase, retrofit, repower, or add-on of equipment shall
26not be funded pursuant to this chapter. The districts shall follow
27any guidelines developed under subdivision (a) of Section 44287
28for awarding grants under this program.

29(3) The purchase of new schoolbuses orbegin delete the purchase forend delete the
30repower or retrofit of emissions control equipment for existing
31schoolbuses pursuant to the Lower-Emission School Bus Program
32adopted by the state board.

33(4) An accelerated vehicle retirement or repair program that is
34adopted by the state board pursuant to authority granted hereafter
35by the Legislature by statute.

36(5) The replacement of onboard natural gas fuel tanks on
37schoolbuses that are 14 years or older or the enhancement of
38deteriorating natural gas fueling dispensers of fueling infrastructure,
39pursuant to the Lower-Emission School Bus Program adopted by
40the 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:

34(1) [Reserved]

35(2) “Btu” means British thermal unit.

36(3) “Commission” means the State Energy Resources
37Conservation and Development Commission.

38(4) “Cost-effectiveness” means dollars provided to a project
39pursuant to subdivision (d) of Section 44283 for each ton of
40covered emission reduction attributed to a project or to the program
P9    1as a whole. In calculating cost-effectiveness, one-time grants of
2funds made at the beginning of a project shall be annualized using
3a time value of public funds or discount rate determined for each
4project by the state board, taking into account the interest rate on
5bonds, interest earned by state funds, and other factors as
6determined appropriate by the state board. Cost-effectiveness shall
7be calculated by dividing annualized costs by average annual
8emissions reduction. The state board, in consultation with the
9districts and concerned members of the public, shall establish
10appropriate cost-effective limits for oxides of nitrogen, particulate
11matter, and reactive organic gases and a reasonable system for
12comparing the cost-effectiveness of proposed projects as described
13in subdivision (a) of Section 44283.

14(5) “Covered emissions” include emissions of oxides of nitrogen,
15particulate matter, and reactive organic gases from any covered
16source.

17(6) “Covered engine” includes any internal combustion engine
18or electric motor and drive powering a covered source.

19(7) “Covered source” includes onroad vehicles, off-road
20nonrecreational equipment and vehicles, locomotives, marine
21vessels, agricultural sources of air pollution, as defined in Section
2239011.5, and, as determined by the state board, other categories
23necessary for the state and districts to meet air quality goals.

24(8) “Covered vehicle” includes any vehicle or piece of
25equipment powered by a covered engine.

26(9) “District” means a county air pollution control district or an
27air quality management district.

28(10) “Fund” means the Air Pollution Control Fund established
29pursuant to Section 43015.

30(11) “Incremental cost” means the cost of the project less a
31baseline cost that would otherwise be incurred by the applicant in
32the normal course of business. Incremental costs may include
33added lease, energy, or fuel costs pursuant to Section 44283 as
34well as incremental capital costs.

35(12) “Liquidated” means that all moneys for a specified fiscal
36year have been spent by a district to reimburse grantees for valid
37and eligible project invoices and district administrative costs.
38Payments withheld from the grantee by a district until all
39contractual reporting requirements are met may be excluded from
40these amounts for the purposes of liquidation.

P10   1(13) “Mobile Source Air Pollution Reduction Review
2Committee” means the Mobile Source Air Pollution Reduction
3Review Committee created by Section 44244.

4(14) “New very low emission vehicle” means a heavy-duty
5vehicle that qualifies as a very low emission vehicle when it is a
6new vehicle, where new vehicle has the same meaning as defined
7in Section 430 of the Vehicle Code, or that is modified with the
8approval and warranty of the original equipment manufacturer to
9qualify as a very low emission vehicle within 12 months of delivery
10to an owner for private or commercial use.

11(15) “NOx” means oxides of nitrogen.

12(16) “Program” means the Carl Moyer Memorial Air Quality
13Standards Attainment Program created by subdivision (a) of
14Section 44280.

15(17) “Recaptured” means those moneys that are returned to a
16district or the state board by a grantee because that grantee did not
17meet contractual obligations.

18(18) “Repower” means replacing an engine with a different
19engine. The term repower, as used in this chapter, generally refers
20to replacing an older, uncontrolled engine with a new,
21emissions-certified engine, although replacing an older
22emissions-certified engine with a newer engine certified to lower
23emissions standards may be eligible for funding under this program.

24(19) “Retrofit” means making modifications to the engine and
25fuel system so that the retrofitted engine does not have the same
26specifications as the original engine.

27(20) “Returned” means those moneys sent by a district to the
28state board for reallocation because those moneys are not liquidated
29by a liquidation deadline.

begin insert

30(21) “Schoolbus project” means the purchase of new
31schoolbuses or the repower or retrofit of emissions control
32equipment for existing schoolbuses.

end insert
begin delete

33(21)

end delete

34begin insert(22)end insert “Very low emission vehicle” means a heavy-duty vehicle
35with emissions significantly lower than otherwise applicable
36baseline emission standards or uncontrolled emission levels
37pursuant to Section 44282.

38(b) This section shall remain in effect only until January 1, 2024,
39and as of that date is repealed, unless a later enacted statute, that
40is enacted before January 1, 2024, deletes or extends that date.

P11   1

SEC. 7.  

Section 44275 of the Health and Safety Code, as
2amended by Section 16 of Chapter 401 of the Statutes of 2013, is
3amended to read:

4

44275.  

(a) As used in this chapter, the following terms have
5the following meanings:

6(1) [Reserved]

7(2) “Btu” means British thermal unit.

8(3) “Commission” means the State Energy Resources
9Conservation and Development Commission.

10(4) “Cost-effectiveness” means dollars provided to a project
11pursuant to subdivision (d) of Section 44283 for each ton of NOx
12 reduction attributed to a project or to the program as a whole. In
13calculating cost-effectiveness, one-time grants of funds made at
14the beginning of a project shall be annualized using a time value
15of public funds or discount rate determined for each project by the
16state board, taking into account the interest rate on bonds, interest
17earned by state funds, and other factors as determined appropriate
18by the state board. Cost-effectiveness shall be calculated by
19dividing annualized costs by average annual emissions reduction
20of NOx in this state.

21(5) “Covered engine” includes any internal combustion engine
22or electric motor and drive powering a covered source.

23(6) “Covered source” includes onroad vehicles of 14,000 pounds
24gross vehicle weight rating (GVWR) or greater, off-road
25nonrecreational equipment and vehicles, locomotives, diesel marine
26vessels, stationary agricultural engines, and, as determined by the
27state board, other high-emitting diesel engine categories.

28(7) “Covered vehicle” includes any vehicle or piece of
29equipment powered by a covered engine.

30(8) “District” means a county air pollution control district or an
31air quality management district.

32(9) “Fund” means the Air Pollution Control Fund established
33pursuant to Section 43015.

34(10) “Incremental cost” means the cost of the project less a
35baseline cost that would otherwise be incurred by the applicant in
36the normal course of business. Incremental costs may include
37added lease or fuel costs pursuant to Section 44283 as well as
38incremental capital costs.

39(11) “Liquidated” means that all moneys for a specified fiscal
40year have been spent by a district to reimburse grantees for valid
P12   1and eligible project invoices and district administrative costs.
2Payments withheld from the grantee by a district until all
3contractual reporting requirements are met may be excluded from
4these amounts for the purposes of liquidation.

5(12) “Mobile Source Air Pollution Reduction Review
6Committee” means the Mobile Source Air Pollution Reduction
7Review Committee created by Section 44244.

8(13) “New very low emission vehicle” means a vehicle that
9qualifies as a very low emission vehicle when it is a new vehicle,
10where new vehicle has the same meaning as defined in Section
11430 of the Vehicle Code, or that is modified with the approval and
12warranty of the original equipment manufacturer to qualify as a
13very low emission vehicle within 12 months of delivery to an
14owner for private or commercial use.

15(14) “NOx” means oxides of nitrogen.

16(15) “Program” means the Carl Moyer Memorial Air Quality
17Standards Attainment Program created by subdivision (a) of
18Section 44280.

19(16) “Recaptured” means those moneys that are returned to a
20district or the state board by a grantee because that grantee did not
21meet contractual obligations.

22(17) “Repower” means replacing an engine with a different
23engine. The term repower, as used in this chapter, generally refers
24to replacing an older, uncontrolled engine with a new,
25emissions-certified engine, although replacing an older
26emissions-certified engine with a newer engine certified to lower
27emissions standards may be eligible for funding under this program.

28(18) “Retrofit” means making modifications to the engine and
29fuel system such that the retrofitted engine does not have the same
30specifications as the original engine.

31(19) “Returned” means those moneys sent by a district to the
32state board for reallocation because those moneys are not liquidated
33by a liquidation deadline.

begin insert

34(20) “Schoolbus project” means the purchase of new
35schoolbuses or the repower or retrofit of emissions control
36equipment for existing schoolbuses.

end insert
begin delete

37(20)

end delete

38begin insert(21)end insert “Very low emission vehicle” means a vehicle with
39emissions significantly lower than otherwise applicable baseline
P13   1emission standards or uncontrolled emission levels pursuant to
2Section 44282.

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

4

SEC. 8.  

Section 44281 of the Health and Safety Code, as
5amended by Section 19 of Chapter 401 of the Statutes of 2013, is
6amended to read:

7

44281.  

(a) Eligible projects include, but are not limited to, any
8of the following:

9(1) Purchase of new very low or zero-emission covered vehicles
10or covered heavy-duty engines.

11(2) Emission-reducing retrofit of covered engines, or
12replacement of old engines powering covered sources with newer
13engines certified to more stringent emissions standards than the
14engine being replaced, or with electric motors or drives.

15(3) Purchase and use of emission-reducing add-on equipment
16that has been verified by the state board for covered vehicles.

17(4) Development and demonstration of practical, low-emission
18retrofit technologies, repower options, and advanced technologies
19for covered engines and vehicles with very low emissions of NOx.

20(5) Light- and medium-duty vehicle projects in compliance with
21guidelines adopted by the state board pursuant to Title 13 of the
22California Code of Regulations.

23(b) No project shall be funded under this chapter after the
24compliance date required by any local, state, or federal statute,
25rule, regulation, memoranda of agreement or understanding, or
26other legally binding document, except that an otherwise qualified
27project may be funded even if the state implementation plan
28assumes that the change in equipment, vehicles, or operations will
29occur, if the change is not required by the compliance date of a
30statute, regulation, or other legally binding document in effect as
31of the date the grant is awarded. No project funded by the program
32shall be used for credit under any state or federal emissions
33averaging, banking, or trading program. No covered emission
34reduction generated by the program shall be used as marketable
35emission reduction credits or to offset any emission reduction
36obligation of any person or entity. Projects involving new engines
37that would otherwise generate marketable credits under state or
38federal averaging, banking, and trading programs shall include
39transfer of credits to the engine end user and retirement of those
40credits toward reducing air emissions in order to qualify for funding
P14   1under the program. A purchase of a low-emission vehicle or of
2equipment pursuant to a corporate or a controlling board’s policy,
3but not otherwise required by law, shall generate surplus emissions
4reductions and may be funded by the program.

5(c) The program may also provide funding toward the
6installation of fueling or energy infrastructure to fuel or power
7covered sources.

8(d) Eligible applicants may be any individual, company, or
9public agency that owns one or more covered vehicles that operate
10primarily within California or otherwise contribute substantially
11to the NOx, particulate matter (PM), or reactive organic gas (ROG)
12emissions inventory in California.

13(e) It is the intent of the Legislature that all emission reductions
14generated by this chapter shall contribute to public health by
15reducing, for the life of the vehicle being funded, the total amount
16of emissions in California.

17(f) 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.

20

SEC. 9.  

Section 44282 of the Health and Safety Code, as
21amended by Section 21 of Chapter 401 of the Statutes of 2013, is
22amended to read:

23

44282.  

The following criteria apply to all projects to be funded
24through the program except for projects funded through the
25infrastructure demonstration program and infrastructure projects,
26pursuant to subdivision (c) of Section 44281 and Section 44284:

27(a) The state board may establish project criteria, including
28minimum project life for source categories, in the guidelines
29described in Section 44287. For previously unregulated source
30categories, project criteria shall consider the timing of newly
31established regulatory requirements.

32(b) To be eligible, projects shall meet the cost-effectiveness per
33ton of covered emissions reduced requirements of Section 44283.

34(c) To be eligible, retrofits, repowers, and installation of add-on
35equipment for covered vehicles shall be performed, or new covered
36vehicles delivered to the end user, or covered vehicles scrapped
37on or after the date the program is implemented.

38(d) Retrofit technologies, new engines, and new vehicles shall
39be certified for sale or under experimental permit for operation in
40California.

P15   1(e) Repower projects that replace older, uncontrolled engines
2with new, emissions-certified engines or that replace
3emissions-certified engines with new engines certified to a more
4stringent NOx emissions standard are approvable subject to the
5other applicable selection criteria. The state board shall determine
6appropriate baseline emission levels for the uncontrolled engines
7being replaced.

8(f) For heavy-duty-vehicle projects, retrofit and add-on
9equipment projects shall document a NOx or PM emission
10reduction of at least 25 percent and no increase in other covered
11emissions compared to the applicable baseline emissions accepted
12by the state board for that engine year and application. The state
13board shall determine appropriate baseline emission levels.
14Acceptable documentation shall be defined by the state board.
15After study of available emission reduction technologies and after
16public notice and comment, the state board may revise the
17minimum percentage emission reduction criterion for retrofits and
18add-on equipment provided for in this section to improve the ability
19of the program to achieve its goals.

20(g) (1) For heavy-duty-vehicle projects involving the purchase
21of new very low or zero-emission vehicles, engines shall be
22certified to an optional low NOx emissions standard established
23by the state board, except as provided for in paragraph (2).

24(2) For heavy-duty-vehicle projects involving the purchase of
25new very low or zero-emission covered vehicles for which no
26optional low NOx emission standards are available, documentation
27shall be provided showing that the low or zero-emission engine
28emits not more than 70 percent of the NOx or NOx plus
29hydrocarbon emissions of a new engine certified to the applicable
30baseline NOx or NOx plus hydrocarbon emission standard for that
31engine and meets applicable particulate standards. The state board
32shall specify the documentation required. If no baseline emission
33standard exists for new vehicles in a particular category, the state
34board shall determine an appropriate baseline emission level for
35comparison.

36(h) For projects other than heavy-duty-vehicle projects, the state
37 board shall determine appropriate criteria under the provisions of
38Section 44287.

P16   1(i) This section shall remain in effect only until January 1, 2024,
2and as of that date is repealed, unless a later enacted statute, that
3is enacted before January 1, 2024, deletes or extends that date.

4

SEC. 10.  

Section 44283 of the Health and Safety Code, as
5amended by Section 23 of Chapter 401 of the Statutes of 2013, is
6amended to read:

7

44283.  

(a) (1) For all projects funded pursuant to this chapter,
8except for an infrastructure project described in subdivision (c) of
9Section 44281, the following cost-effectiveness criteria shall apply:

10(A) (i) Project grants shall not be made that exceed
11cost-effectiveness values calculated in accordance with this section.

12(ii) The state board, in collaboration with the districts, shall
13establish cost-effectiveness values in the guidelines issued pursuant
14to Section 44287, taking into consideration factors, including, but
15not limited to, the following:

16(I) The cost of emission control technologies identified in
17Section 44281.

18(II) The cost-effectiveness values for NOx, particulate matter,
19or reactive organic gases for any adopted rule or control measure
20in any district’s approved state implementation plan, or rule
21adopted by the state board.

begin insert

22(iii) A grant for a schoolbus project shall not exceed the cost
23caps established in the Lower-Emission School Bus Program and
24consistent with Section 44299.901. The cost-effectiveness value
25for these projects shall be set forth in the guidelines issued
26pursuant to Section 44287.

end insert

27(B) For projects obtaining reactive organic gas and particulate
28matter reductions, the state board shall determine appropriate
29adjustment factors to calculate a weighted cost-effectiveness value.

30(2) When a district board approves funding for a project or
31project category, the district board shall include, in its agenda or
32supporting materials for the meeting approving funding for the
33project or project category, a brief statement of the rationale for
34funding that source category, including the basis for selection and
35the importance of that project type.

36(b) Only covered emission reductions occurring in this state
37shall be included in the cost-effectiveness determination. The
38extent to which emissions generated at sea contribute to air quality
39in California nonattainment areas shall be incorporated into these
P17   1methodologies based on a reasonable assessment of currently
2available information and modeling assumptions.

3(c) The state board shall develop protocols for calculating the
4surplus covered emission reductions in California from
5representative project types over the life of the project.

6(d) The cost of the covered emission reduction is the amount
7of the grant from the program, including matching funds provided
8pursuant to subdivision (e) of Section 44287, or funding provided
9pursuant to paragraph (2) of subdivision (d) of Section 41081 or
10subdivision (b) of Section 44229, not including funds described
11in subdivision (a) of Section 44287.2. The state board shall
12establish reasonable methodologies for evaluating project
13cost-effectiveness, consistent with the definition contained in
14paragraph (4) of subdivision (a) of Section 44275, and with
15accepted methods, taking into account a fair and reasonable
16discount rate or time value of public funds.

17(e) A grant shall not be made that, net of taxes, provides the
18applicant with funds in excess of the incremental cost of the project.
19Incremental lease costs may be capitalized according to guidelines
20adopted by the state board so that these incremental costs may be
21offset by a one-time grant award.

22(f) Funds under a district’s budget authority or fiduciary control
23may be used to pay for the incremental cost of energy or liquid or
24gaseous fuel, other than standard gasoline or diesel, which is
25integral to a covered emission reducing technology that is part of
26a project receiving grant funding under the program. The fuel shall
27be approved for sale in the state. The incremental energy or fuel
28cost over the expected lifetime of the vehicle may be offset by the
29district if the project as a whole, including the incremental energy
30or fuel cost, meets all of the requirements of this chapter, including
31the maximum allowed cost-effectiveness. The state board shall
32develop an appropriate methodology for converting incremental
33energy or fuel costs over the vehicle lifetime into an initial cost
34for the purposes of determining project cost-effectiveness.
35Incremental energy or fuel costs shall not be included in project
36costs for fuels dispensed from any facility that was funded, in
37whole or in part, from the fund.

38(g) For the purposes of determining any grant amount pursuant
39to this chapter, project proponents applying for funding shall be
P18   1required to state in their application any other public financial
2assistance to the project.

3(h) For projects that would repower off-road equipment by
4replacing uncontrolled diesel engines with new, certified diesel
5engines, the state board may establish maximum grant award
6amounts per repower. A repower project shall also be subject to
7the incremental cost maximum pursuant to subdivision (e).

8(i) After study of available emission reduction technologies and
9costs and after public notice and comment, the state board may
10adjust the values of the maximum grant award criteria stated in
11this section to improve the ability of the program to achieve its
12goals. Every year the state board shall adjust the maximum
13cost-effectiveness amount established in subdivision (a) and any
14per-project maximum set by the state board pursuant to subdivision
15(h) to account for inflation and other factors as authorized by this
16section.

17(j) 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.

20

SEC. 11.  

Section 44286 of the Health and Safety Code is
21amended to read:

22

44286.  

(a) The responsibilities of the state board include
23management of program funds and program oversight. The state
24board is responsible for producing guidelines, protocols, and
25criteria for covered vehicle projects and developing methodologies
26for evaluating project cost-effectiveness in accordance with this
27chapter. The state board shall have primary responsibility for the
28reporting aspects of the program.

29(b) The responsibilities of a district include local administration
30of project funds, monitoring funded projects, and reporting results
31to the state board, in accordance with this chapter. Any project
32funds awarded to a successful applicant shall be disbursed by the
33district.

34(c) Relative to the allocation of funds in the south coast district,
35for purposes of this program, Mobile Source Air Pollution
36Reduction Review Committee funds shall only be used as matching
37funds upon approval, by minute action, of the Mobile Source Air
38Pollution Reduction Review Committee.

39(d) The state board may reserve up to 10 percent of the program
40funds available each year to directly fund any project that is a
P19   1covered source and is described in Section 44281. A project that
2is multidistrict in nature shall be funded by the state board in
3coordination with the appropriate districts. The state board shall
4coordinate outreach efforts with a participating district to ensure
5that any parallel availability of a district grant and a grant from
6the state board is clear to an eligible applicant. Reserved funds not
7committed to a project funded directly by the state board by the
8end of the fiscal year shall be made available to the districts in the
9following year.

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

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

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

21

SEC. 12.  

Section 44287 of the Health and Safety Code, as
22amended by Section 25 of Chapter 401 of the Statutes of 2013, is
23amended to read:

24

44287.  

(a) The state board shall establish or update grant
25criteria and guidelines consistent with this chapter for covered
26vehicle and infrastructure projects as soon as practicable, but not
27later than July 1, 2017. The adoption of guidelines is exempt from
28the rulemaking provisions of the Administrative Procedure Act
29(Chapter 3.5 (commencing with Section 11340) of Part 1 of
30Division 3 of Title 2 of the Government Code). The state board
31shall solicit input and comment from the districts during the
32development of the criteria and guidelines and shall make every
33effort to develop criteria and guidelines that are compatible with
34existing district programs that are also consistent with this chapter.
35Guidelines shall include protocols to calculate project
36cost-effectiveness. The grant criteria and guidelines shall include
37safeguards to ensure that the project generates surplus emissions
38reductions. Guidelines shall enable and encourage districts to
39cofund projects that provide emissions reductions in more than
40one district. The state board shall make draft criteria and guidelines
P20   1available to the public 45 days before final adoption, and shall
2hold at least one public meeting to consider public comments
3before final adoption. The state board may develop separate
4guidelines and criteria for the different types of eligible projects
5described in subdivision (a) of Section 44281.

6(b) The state board, in consultation with the participating
7districts, may propose revisions to the criteria and guidelines
8established pursuant to subdivision (a) as necessary to improve
9the ability of the program to achieve its goals. A proposed revision
10shall be made available to the public 45 days before final adoption
11of the revision and the state board shall hold at least one public
12meeting to consider public comments before final adoption of the
13revision.

14(c) The state board shall reserve funds for, and disburse funds
15to, districts from the fund for administration pursuant to this section
16and Section 44299.1.

17(d) The state board shall develop guidelines for a district to
18follow in applying for the reservation of funds, in accordance with
19this chapter. It is the intent of the Legislature that district
20administration of any reserved funds be in accordance with the
21project selection criteria specified in Sections 44281, 44282, and
2244283 and all other provisions of this chapter. The guidelines shall
23be established and published by the state board as soon as
24practicable, but not later than January 1, 2006.

25(e) Funds shall be reserved by the state board for administration
26by a district that adopts an eligible program pursuant to this chapter
27and offers matching funds at a ratio of one dollar ($1) of matching
28funds committed by the district or the Mobile Source Air Pollution
29Reduction Review Committee for every two dollars ($2) committed
30from the fund. Funds available to the Mobile Source Air Pollution
31Reduction Review Committee may be counted as matching funds
32for projects in the South Coast Air Basin only if the committee
33approves the use of these funds for matching purposes. Matching
34funds may be any funds under the district’s budget authority that
35are committed to be expended in accordance with the program.
36Funds committed by a port authority or a local government, in
37cooperation with a district, to be expended in accordance with the
38program may also be counted as district matching funds. Matching
39funds provided by a port authority or a local government shall not
40exceed 30 percent of the total required matching funds in any
P21   1district that applies for more than three hundred thousand dollars
2($300,000) of the state board funds. Only a district, or a port
3authority or a local government teamed with a district, may provide
4matching funds.

5(f) The state board may adjust the ratio of matching funds
6described in subdivision (e), if it determines that an adjustment is
7necessary in order to maximize the use of, or the air quality benefits
8provided by, the program, based on a consideration of the financial
9resources of the district.

10(g) Notwithstanding subdivision (e), a district need not provide
11matching funds for state board funds allocated to the district for
12program outreach activities pursuant to paragraph (4) of subdivision
13(a) of Section 44299.1.

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

22(i) A district desiring a reservation of funds shall apply to the
23state board following the application guidelines established
24pursuant to this section. The state board shall approve or disapprove
25a district application not later than 60 days after receipt. Upon
26approval of any district application, the state board shall
27simultaneously approve a reservation of funding for that district
28to administer. Reserved funds shall be disbursed to the district so
29that funding of a district-approved project is not impeded.

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

P22   1(k) The state board shall specify a date each year when district
2applications are due. If the eligible applications received in any
3year oversubscribe the available funds, the state board shall reserve
4funds on an allocation basis, pursuant to Section 44299.2. The
5state board may accept a district application after the due date for
6a period of months specified by the state board. Funds may be
7reserved in response to those applications, in accordance with this
8chapter, out of funds remaining after the original reservation of
9funds for the year.

10(l) Guidelines for a district application shall require information
11from an applicant district to the extent necessary to meet the
12requirements of this chapter, but shall otherwise minimize the
13information required of a district.

14(m) A district application shall be reviewed by the state board
15immediately upon receipt. If the state board determines that an
16application is incomplete, the applicant shall be notified within 10
17working days with an explanation of what is missing from the
18application. A completed application fulfilling the criteria shall be
19approved as soon as practicable, but not later than 60 working days
20after receipt.

21(n) The commission, in consultation with the districts, shall
22establish project approval criteria and guidelines for infrastructure
23projects consistent with Section 44284 as soon as practicable, but
24not later than February 15, 2000. The commission shall make draft
25criteria and guidelines available to the public 45 days before final
26adoption, and shall hold at least one public meeting to consider
27public comments before final adoption.

28(o) The commission, in consultation with the participating
29districts, may propose revisions to the criteria and guidelines
30established pursuant to subdivision (n) as necessary to improve
31the ability of the program to achieve its goals. A revision may be
32proposed at any time, or may be proposed in response to a finding
33made in the annual report on the program published by the state
34board pursuant to Section 44295. A proposed revision shall be
35made available to the public 45 days before final adoption of the
36revision and the commission shall hold at least one public meeting
37to consider public comments before final adoption of the revision.

38(p) Unclaimed funds will be allocated by the state board in
39accordance with Section 44299.2.

P23   1(q) This section shall remain in effect only until January 1, 2024,
2and as of that date is repealed, unless a later enacted statute, that
3is enacted before January 1, 2024, deletes or extends that date.

4

SEC. 13.  

Section 44287.1 of the Health and Safety Code is
5amended to read:

6

44287.1.  

(a) The state board shall, at its first opportunity,
7revise the grant criteria and guidelines adopted pursuant to Section
844287 to incorporate projects in which an applicant turns in
9nonroad internal combustion technology and equipment that the
10applicant owns and that still has some useful life, coupled with the
11purchase of new nonroad zero-emission technology and equipment
12that is in a similar category or that can perform the same work.

13(b) When it evaluates the benefits of a project described in
14subdivision (a), the state board shall count both of the following
15emission reduction streams, provided that they are real, enforceable,
16quantifiable, and surplus emission reductions:

17(1) The displacement of the emissions from the older nonroad
18internal combustion technology and equipment for its remaining
19life with the new nonroad zero-emission technology and equipment.

20(2) After the time period specified in paragraph (1), the
21displacement of emissions from new nonroad internal combustion
22technology and equipment meeting the emission standards in place
23at time of purchase, with the new nonroad zero-emission
24technology and equipment over its remaining life.

25(c) A project described in subdivision (a) shall meet the
26cost-effectiveness criteria in Section 44283 and all other criteria
27of the program, including the requirement that the emission
28reductions be real, enforceable, quantifiable, and surplus.

29(d) The incremental cost of a project described in subdivision
30(a) may include, at the discretion of the applicant, some or all of
31the reasonable salvage value of the nonroad internal combustion
32technology and equipment turned in, as determined by the state
33board. However, an applicant that elects to include these costs
34shall be required to meet the cost-effectiveness criteria in Section
3544283.

36

SEC. 14.  

Section 44287.2 of the Health and Safety Code is
37amended to read:

38

44287.2.  

(a) By July 1, 2017, the state board shall revise
39project grant criteria and guidelines pursuant to Section 44287 to
40allow funds from federal, state, and local programs or other public
P24   1funding sources to be used for a project also funded under this
2chapter without those additional public funds being factored into
3the criteria emission reduction cost-effectiveness calculations, if
4the projects are eligible under those programs and meet all criteria
5associated with those funding sources. Those other projects include,
6but are not limited to, any of the following:

7(1) Federal funding from programs designed to reduce
8greenhouse gas emissions.

9(2) State and local funding from programs designed to reduce
10 greenhouse gas emissions, including the Greenhouse Gas Reduction
11Fund, created pursuant to Section 16428.8 of the Government
12Code, and the Alternative and Renewable Fuel and Vehicle
13Technology Program (Article 2 (commencing with Section 44272)
14of Chapter 8.9).

15(3) Funding from programs designed to support energy diversity.

16(4) Funding from programs that are intended to provide covered
17emissions reductions but do not require those reductions to be able
18to be credited to the state implementation plan.

19(b) Nothing in this section authorizes the expenditure of funds
20for a project that does not meet all of the requirements of this
21chapter, including requirements that require cost sharing or the
22matching of funds. The sum of the total grants shall not exceed
23the project cost. The covered emissions reductions paid for pursuant
24to this chapter shall not be claimed by the other funding sources.

25(c) Subdivision (a) shall not apply to funds used pursuant to
26paragraph (2) of subdivision (d) of Section 41081 or subdivision
27(b) of Section 44229.

28

SEC. 15.  

Section 44288 of the Health and Safety Code is
29amended to read:

30

44288.  

(a) An application for a project grant shall be reviewed
31by the administering district immediately upon receipt. If the
32administering district determines that an application is incomplete,
33the applicant shall be notified within 30 working days with an
34explanation of what is missing from the application. The date and
35time of receipt of each application determined to be complete shall
36be recorded and the completed application shall be evaluated with
37respect to the appropriate project selection criteria. A district shall
38make every effort to process an application and grant an award
39rapidly and to coordinate project approval with any purchase or
40installation timing constraint on an applicant. Notwithstanding
P25   1any other provision of this chapter, the administering district may
2determine that an application is not in good faith, not credible, or
3not in compliance with this chapter and its objectives.

4(b) A participating district may request assistance from the state
5board on an as-needed basis to clarify project evaluation protocols
6or to obtain information necessary to properly evaluate an
7application.

8(c) An application for a grant for an infrastructure project shall
9be reviewed by the commission immediately upon receipt. If the
10commission determines that an application is incomplete, the
11applicant shall be notified within five working days with an
12explanation of what is missing from the application. The date and
13time of receipt of each application determined to be complete shall
14be recorded and the completed application shall be evaluated with
15respect to the appropriate project selection criteria. A complete
16grant application fulfilling the project selection criteria shall be
17approved as soon as practicable, but not later than 60 working days
18after receipt. Notwithstanding any other provision of this chapter,
19the commission may determine that an application is not in good
20faith, not credible, or not in compliance with this chapter and its
21objectives. The commission shall expedite the processing of an
22application and shall grant an award as rapidly as possible.

23(d) Funds shall be awarded in conjunction with the execution
24of a contract that obligates the state board or a participating district
25to make the grant and obligates the grantee to take the actions
26described in the grant application. A contract shall incorporate the
27recapturing provisions contained in subdivision (c) of Section
2844291.

29

SEC. 16.  

Section 44291 of the Health and Safety Code is
30amended to read:

31

44291.  

(a) The state board shall assist districts with developing
32procedures to monitor whether the emission reductions projected
33in successful grant applications are actually achieved. Monitoring
34procedures may include project audits, and may also include
35requirements, as part of the contract between the state board or
36districts and the grant recipients, that each grant recipient provide
37information about the project on an annual basis. Information
38required from grant recipients should be minimized and the format
39for reporting the information should be made simple and
40convenient.

P26   1(b) As soon as practicable, the state board, in consultation with
2the districts, shall publish procedures to monitor and audit
3infrastructure projects. These procedures shall ensure that the
4amount of qualifying fuel dispensed annually is greater than or
5equal to the amount upon which the grant award is based and that
6any project qualifying for funding on the basis of public
7accessibility or limited public accessibility is, in fact, providing
8that accessibility.

9(c) The monitoring and auditing procedures shall be sufficient
10to allow emission reductions generated to be fully credited to air
11quality plans. The monitoring procedures shall contain provisions
12for recapturing grant awards in proportion to any loss of emission
13reductions or underachievement in dispensing qualifying fuel
14compared with the reductions and fuel dispensing projected in the
15grant application. Monitoring and auditing procedures shall be
16 revised as appropriate to enhance program effectiveness.

17(d) The state board shall monitor district programs to ensure
18that participating districts conduct their programs consistent with
19the criteria and guidelines established by the state board and the
20commission pursuant to this chapter. The monitoring procedures
21shall contain provisions for return of funds not yet awarded to
22approved projects if a district fails to show that they are
23implementing a program consistent with the approved program.
24If the state board determines, pursuant to this subdivision, that
25moneys from the fund allocated to a district should be returned,
26the state board shall hold at least one public meeting to consider
27public comments prior to requiring the return of the allocated
28funds. The state board shall make every effort to assist districts to
29implement programs in an approved manner and shall only require
30the return of allocated funds if these efforts fail to address problems
31adequately. Returned funds shall be deposited in the fund. The
32state board shall not require the return of funds already awarded
33to approved projects.

34(e) Program funds recaptured as a result of a settlement
35agreement executed by the state board shall be returned to the
36district that provided the funds to the grant recipient. A penalty
37resulting from a settlement agreement executed by the state board
38with a grant recipient or from a civil action brought by the Attorney
39General shall be deposited in the fund.

P27   1

SEC. 17.  

Section 44299.1 of the Health and Safety Code, as
2amended by Section 28 of Chapter 401 of the Statutes of 2013, is
3amended to read:

4

44299.1.  

(a) To ensure that emission reductions are obtained
5as needed from pollution sources, any moneys deposited in the
6fund for use by the program or appropriated to the program shall
7be segregated and administered as follows:

8(1) Not more than 2.5 percent of the moneys in the fund for use
9by the program shall be allocated to program support and outreach
10costs incurred by the state board and the commission directly
11associated with implementing the program pursuant to this chapter.
12These funds shall be allocated to the state board and the
13commission in proportion to total program funds administered by
14the state board and the commission.

15(2) Not more than 2.5 percent of the moneys in the fund for use
16by the program shall be allocated to direct program outreach
17activities. The state board may use these funds for program
18outreach contracts or may allocate outreach funds to participating
19districts in proportion to each district’s allocation from the program
20moneys in the fund. The state board shall report on the use of
21outreach funds in their reports to the Legislature pursuant to Section
2244295.

23(3) The balance shall be deposited in the fund to be expended
24to offset added costs of new very low or zero-emission vehicle
25technologies, and emission reducing repowers, retrofits, and add-on
26equipment for covered vehicles and engines, and other projects
27specified in Section 44281.

28(b) Moneys in the fund shall be allocated to a district that
29submits an eligible application to the state board pursuant to
30Section 44287. The state board shall determine the maximum
31amount of annual funding from the fund for use by the program
32that each district may receive. This determination shall be based
33on the population in each district as well as the relative importance
34of obtaining covered emission reductions in each district,
35specifically through the program.

36(c) Not more than 6.25 percent of the moneys allocated pursuant
37to this chapter to a district with a population of one million or more
38may be used by the district for indirect costs of implementation of
39the program, including outreach costs that are subject to the
40limitation in paragraph (2) of subdivision (a).

P28   1(d) Not more than 12.5 percent of the moneys allocated pursuant
2to this chapter to a district with a population of less than one
3million may be used by the district for indirect costs of
4implementation of the program, including outreach costs that are
5subject to the limitation in paragraph (2) of subdivision (a).

6

SEC. 18.  

Section 44299.1 of the Health and Safety Code, as
7amended by Section 29 of Chapter 401 of the Statutes of 2013, is
8repealed.

9

SEC. 19.  

Section 44299.2 of the Health and Safety Code is
10amended to read:

11

44299.2.  

Funds shall be allocated to districts, and shall be
12subject to administrative terms and conditions as follows:

13(a) Available funds shall be distributed to districts taking into
14consideration the population of the area, the severity of the air
15quality problems experienced by the population, and the historical
16allocation of the program funds, except that the south coast district
17shall be allocated a percentage of the total funds available to
18districts that is proportional to the percentage of the total state
19population residing within the jurisdictional boundaries of that
20district. For the purposes of this subdivision, population shall be
21determined by the state board based on the most recent data
22provided by the Department of Finance. The allocation to the south
23coast district shall be subtracted from the total funds available to
24districts. Each district, except the south coast district, shall be
25awarded a minimum allocation of two hundred thousand dollars
26($200,000), and the remainder, which shall be known as the
27“allocation amount,” shall be allocated to all districts as follows:

28(1) The state board shall distribute 35 percent of the allocation
29amount to the districts in proportion to the percentage of the total
30residual state population that resides within each district’s
31boundaries. For purposes of this paragraph, “total residual state
32population” means the total state population, less the total
33population that resides within the south coast district.

34(2) The state board shall distribute 35 percent of the allocation
35amount to the districts in proportion to the severity of the air quality
36problems to which each district’s population is exposed. The
37severity of the exposure shall be calculated as follows:

38(A) Each district shall be awarded severity points based on the
39district’s attainment designation and classification, as most recently
40promulgated by the federal Environmental Protection Agency for
P29   1the National Ambient Air Quality Standard for ozone averaged
2over eight hours, as follows:

3(i) A district that is designated attainment for the federal
4eight-hour ozone standard shall be awarded one point.

5(ii) A district that is designated nonattainment for the federal
6eight-hour ozone standard shall be awarded severity points based
7on classification. Two points shall be awarded for transitional,
8basic, or marginal classifications, three points for moderate
9classification, four points for serious classification, five points for
10severe classification, six points for severe-17 classification, and
11seven points for extreme classification.

12(B) Each district shall be awarded severity points based on the
13annual diesel particulate emissions in the air basin, as determined
14by the state board. One point shall be awarded to the district, in
15increments, for each 1,000 tons of diesel particulate emissions. In
16making this determination, 0 to 999 tons shall be awarded no
17points, 1,000 to 1,999 tons shall be awarded one point, 2,000 to
182,999 tons shall be awarded two points, and so forth. If a district
19encompasses more than one air basin, the air basin with the greatest
20diesel particulate emissions shall be used to determine the points
21awarded to the district. The San Diego County Air Pollution
22Control District and the Imperial County Air Pollution Control
23District shall be awarded one additional point each to account for
24annual diesel particulate emissions transported from Mexico.

25(C) The points awarded under subparagraphs (A) and (B), shall
26be added together for each district, and the total shall be multiplied
27by the population residing within the district boundaries, to yield
28the local air quality exposure index.

29(D) The local air quality exposure index for each district shall
30be summed together to yield a total state exposure index. Funds
31shall be allocated under this paragraph to each district in proportion
32to its local air quality exposure index divided by the total state
33exposure index.

34(3) The state board shall distribute 30 percent of the allocation
35amount to the districts in proportion to the allocation of funds from
36the program moneys in the fund, as follows:

37(A) Because each district is awarded a minimum allocation
38pursuant to subdivision (a), there shall be no additional minimum
39allocation from the program historical allocation funds. The total
40amount allocated in this way shall be subtracted from total funding
P30   1previously awarded to the district under the program, and the
2remainder, which shall be known as directed funds, shall be
3allocated pursuant to subparagraph (B).

4(B) Each district with a population that is greater than or equal
5to 1 percent of the state’s population shall receive an additional
6allocation based on the population of the district and the district’s
7relative share of emission reduction commitments in the state
8implementation plan to attain the National Ambient Air Quality
9Standard for ozone averaged over one hour. This additional
10allocation shall be calculated as a percentage share of the directed
11funds for each district, derived using a ratio of each district’s share
12amount to the base amount, which shall be calculated as follows:

13(i) The base amount shall be the total program funds allocated
14by the state board to the districts in the 2002-03 fiscal year, less
15the total of the funds allocated through the minimum allocation to
16each district in the 2002-03 fiscal year.

17(ii) The share amount shall be the allocation that each district
18received in the 2002-03 fiscal year, not including the minimum
19allocation. There shall be one share amount for each district.

20(iii) The percentage share shall be calculated for each district
21by dividing the district’s share amount by the base amount, and
22multiplying the result by the total directed funds available under
23this subparagraph.

24(b) Funds shall be distributed as expeditiously as reasonably
25practicable, and a report of the distribution shall be made available
26to the public.

27(c) All funds allocated pursuant to this section shall be liquidated
28as provided for in the guidelines adopted pursuant to Section 44287
29by June 30 of the fourth year following the year of allocation.
30 Funds not liquidated within the four years shall be returned to the
31state board within 90 days for future allocation pursuant to this
32chapter.



O

    94