BILL NUMBER: SB 1247 AMENDED
BILL TEXT
AMENDED IN SENATE MAY 11, 2004
AMENDED IN SENATE APRIL 27, 2004
AMENDED IN SENATE APRIL 16, 2004
AMENDED IN SENATE APRIL 12, 2004
INTRODUCED BY Senator Soto
FEBRUARY 12, 2004
An act to add and repeal Part 4.5 (commencing with Section 42950)
of Division 26 of the Health and Safety Code, relating to air
pollution.
LEGISLATIVE COUNSEL'S DIGEST
SB 1247, as amended, Soto. Air pollution:
Incentive-Based Large Emission Reduction Program
for Internal Combustion Engines .
Existing law designates the State Air Resources Board as the state
agency charged with coordinating efforts to attain and maintain
ambient air quality standards. Existing law designates air pollution
control districts and air quality management districts as having the
primary responsibility for the control of air pollution from all
sources other than vehicular sources, and, subject to the powers and
duties of the state board, requires that districts adopt and enforce
rules and regulations to achieve and maintain the state and federal
ambient air quality standards in all areas affected by emission
sources under their jurisdiction.
Existing law establishes the Carl Moyer Memorial Air Quality
Standards Attainment Program to provide grants to offset the
incremental cost of projects that reduce emissions of oxides of
nitrogen from heavy-duty onroad vehicles, off-road nonrecreation
equipment and vehicles, locomotives, diesel marine vessels,
stationary agricultural engines, and other high-emitting diesel
engines in the state. Existing regulations adopted by the state
board establish the Lower-Emission Schoolbus
School Bus Program to reduce school children's exposure to air
pollution emitted by older schoolbuses through a schoolbus
replacement and infrastructure component and a particulate matter
retrofit component for diesel schoolbuses, and establish various
light-duty vehicle retirement programs to encourage voluntary
retirement of older, high-emitting vehicles.
This bill would establish the Incentive-Based
Large Emission Reduction Program for Internal
Combustion Engines to reduce unhealthful air emissions from
internal combustion engines through the application of financial
incentives-based incentive-based
programs. The program would be administered by the state board and
implemented by the state board and the districts. The
bill would establish the Incentive-Based Large
Emission Reduction Program for Internal Combustion
Engines Trust Fund in the State Treasury, and would make
moneys in the trust fund available, upon appropriation by the
Legislature, to carry out the purposes of the program. The bill
would authorize moneys from the fund to be expended on
incentive programs including, but not limited to, the Carl Moyer
Program, to provide grants to offset the incremental
cost of projects that reduce oxides of nitrogen, reactive organic
gases, and particulate matter from onroad vehicles, off-road
equipment and vehicles, locomotives, diesel marine vehicles,
stationary agricultural engines, and other high-emitting engine
sources, through funding projects for specified heavy-duty sources,
the Lower-Emission School Bus Program, light-duty vehicle
programs, lawnmower electrification programs, and projects to
retrofit or replace agricultural engines and pumps.
The bill would require the entity implementing the program in
each district to adopt and annually update a plan to prioritize
reductions of air pollutants based on the needs of the district,
estimate the cost-effectiveness of programs, prioritize activities
and projects to be funded, specify criteria or measures to determine
grant eligibility, project allocations of funding, and identify how
emission reductions will be applied to applicable state
implementation plans. The bill would also require each
district that elects to participate in the program to establish
funding priorities for pollution source reduction projects after
considering specified requirements, coordinate with any local, state,
or federal agency, or with any private organization, concerned with
reducing emissions from internal combustion engines that it
determines appropriate, and identify potential sources of shared
funding responsibilities. The bill would require that 50% of the
moneys allocated to each district be expended in a manner that
directly addresses air pollution or health impacts resulting
from the refining and combustion of gasoline and diesel fuel
reduces air contaminants or the public health risks
associated with air contaminants in communities with the most
significant exposure to air pollution
contaminants .
The bill would require the state board and the participating
districts, commencing March 1, 2007, and every 3 years
thereafter, until March 1, 2022 2017
, inclusive, to provide an annual report to the Legislature on
the program.
The bill would repeal these provisions on December
March 31, 2022 2017
.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. (a) The Legislature finds and declares all of the
following:
(1) Internal combustion engines are the single largest source of
air pollution threatening the public health and environment of all
Californians.
(2) Air pollution control districts and air quality management
districts are primarily responsible for reducing the local health
effects associated with air pollution in their respective air basins.
(3) A number of regulatory and financial incentive programs have
been established to reduce emissions from internal combustion engines
on a cost-effective basis. Emission reduction benefits of
regulatory programs to reduce emissions from internal combustion
engines affect future engines and are slow in being realized because
of the rate at which older, dirtier engines are retired or replaced.
Emission reduction benefits can be accelerated through financial
incentive programs that target the retrofit or replacement of older
engines. There is, however, no comprehensive program of financial
incentives for reducing emissions from internal combustion engines.
(4) It is, therefore, necessary that legislation be enacted to
establish a comprehensive financial incentives program to reduce
emissions from internal combustion engines based on a fair and
balanced mix of funding sources demonstrating a nexus with the
sources of emissions.
(5) The state's air quality program has achieved significant
reductions in pollutant emissions from stationary sources, to the
point that mobile source emissions are the overwhelming cause of air
quality problems in many areas of the state. Despite very
significant improvements in both fuel performance and emission
standards of new gasoline and diesel powered vehicles, mobile sources
have become the dominant source of ozone producing air emissions,
accounting for nearly 70 percent of the state inventory. Most of
these emissions are from older or poorly-maintained vehicles,
particularly gross polluters, and exhaust from other internal
combustion engines.
(b) It is the intent of the Legislature in enacting the act adding
this section that the state board and districts in the state place
greater focus on obtaining emissions reductions from mobile sources,
especially from gross polluting mobile sources, and that those mobile
sources achieve their share of emission reductions in order to
improve air quality and achieve and maintain state and federal air
standards.
SEC. 2. Part 4.5 (commencing with Section 42950) is added to
Division 26 of the Health and Safety Code, to read:
Part 4.5. Incentive-Based Emission Reduction Program for
Internal Combustion Engines
Part 4.5. Large Emission Reduction Program
42950. (a) This part shall be known, and may be cited, as the
Incentive-Based Emission Reduction Program for Internal
Combustion Engines. Large Emission Reduction Program.
(b) The purpose of the program established by this part is to
reduce unhealthful air emissions from internal combustion engines
through the application of financial incentives-based programs,
relying to the greatest extent possible on existing programs with
proven cost-effective results. The program shall be administered by
the state board and the districts in accordance with this part. The
state board and the districts may request the assistance of other
state agencies with relevant expertise and authority to achieve the
goals and purposes of this part.
42951. For the purposes of this part, the following terms have
the following meanings:
(a) "Accelerated light-duty vehicle retirement program" means
a program to identify and encourage voluntary retirement of older,
high-emitting vehicles and to assist in the repair and replacement of
defective emission control system parts that is established by the
state board or a district pursuant to Article 10 (commencing with
Section 44100) of Chapter 5 of Part 5.
(b) "Btu" means British thermal unit.
(c) "Carl Moyer Program" means the Carl Moyer Memorial Air
Quality Standards Attainment Program established pursuant to Chapter
9 (commencing with Section 44275) of Part 5.
(b)
(d) "Cost-effectiveness" means dollars provided to a project
pursuant to this part for each ton of covered emissions reductions
attributed to a project or to the program as a whole. In calculating
cost-effectiveness, one-time grants of funds made at the beginning
of a project shall be annualized using a time value of public funds
or discount rate determined for each project by the state board,
taking into account the interest rate on bonds, interest earned by
state funds, and other factors as determined appropriate by the state
board. Cost-effectiveness shall be calculated by dividing
annualized costs by average annual emissions reductions in this
state. Emissions reductions shall include all covered emission
reductions in accordance with procedures determined by the state
board.
(e) "Covered emissions" include oxides of nitrogen (NOx), reactive
organic gases (ROG), and particulate matter (PM) that is emitted
from covered engines.
(f) "Covered engine" includes any internal combustion engine or
electric motor and drive powering a covered source.
(g) "Covered source" includes onroad vehicles, off-road
recreational and nonrecreational equipment and vehicles, locomotives,
diesel marine vessels, stationary agricultural engines, and, as
determined by the state board, other high-emitting diesel or gasoline
engine categories.
(h) "Covered vehicle" includes any vehicle or piece of equipment
powered by a covered engine.
(i) "Diesel fuel" means a liquid that is commonly or
commercially known or sold as fuel that is suitable for use in a
diesel-powered engine. A liquid meets this requirement if, without
further processing or blending, the liquid has practical and
commercial fitness for use in a diesel-powered engine.
(c)
(j) "District" means an air pollution control district, a unified
air pollution control district, or an air quality management
district.
(k) "Fuel emulsification" means a fuel mixture approved by
the state board that includes, but is not limited to, water and
certain additives, with or without surfactants, to reduce emissions
from compression-ignition engines.
(d) "Fund" means the Incentive-Based Emission Reduction Program
for Internal Combustion Engines Trust Fund established
(l) "Fund" means the Large Emission Reduction Trust Fund
established pursuant to Section 42953
42954 .
(e)
(m) "Gasoline" means a volatile mixture of hydrocarbons,
generally containing small amounts of additives, suitable for use as
a fuel in spark-ignition internal combustion engines.
(f)
(n) "Incremental cost" means the cost of the project less a
baseline cost that would otherwise be incurred by the applicant in
the normal course of business. Incremental costs may include added
lease or fuel costs as well as incremental capital costs.
(o) "Lawnmower electrification program" means a program
established by a district designed to replace high-emitting lawn and
garden equipment with zero-emission models.
(g)
(p) "Light-duty parts replacement" means replacing selected
emission control equipment on light-duty vehicles.
(q) "Local agency" includes a city, county, city and county,
special district, regional governmental organization, and any other
form of local government.
(r) "Lower-Emission School Bus Program" means the program by
that name adopted by regulation by the state board on December 7,
2000, and issued in April 2001, as that program may be
amended from time to time.
(h) "Light-duty vehicle retirement program" means a program to
identify and encourage voluntary retirement of older, high-emitting
vehicles and to assist in the repair and replacement of defective
emission control system parts that is established by the state board
pursuant to Article 10 (commencing with Section 44100) of Chapter 5
of Part 5. and as that program is authorized by this
part.
(s) "Mobile Source Air Pollution Reduction Review Committee" means
the committee created by Section 44244.
(t) "NOx" means oxides of nitrogen.
(u) "PM" means particulate matter.
(v) "Program" means the Large Emission Reduction Program created
by subdivision (a) of Section 42952.
(w) "Repower" means replacing an engine with a different engine.
The term repower, as used in this part, generally refers to replacing
an older, uncontrolled engine with a new, emissions-certified
engine, although replacing an older emissions-certified engine with a
newer engine certified to lower emissions standards may be eligible
for funding under this program.
(x) "Retrofit" means making modifications to the engine and fuel
system that results in the retrofitted engine not having the same
specifications as the original engine.
(y) "ROG" means reactive organic gases.
42952. (a) There is hereby created the Large Emissions
Reduction Program. The overall general administration of the
comprehensive program shall be performed by the state board. The
state board may delegate implementation of the light-duty vehicle
program element to the districts. The state board shall delegate
implementation of all other elements of the comprehensive program to
the districts. Notwithstanding this delegation of administration,
each district may opt out of the administration of the program, and
the state board shall administer the program within that district.
(b) The program shall provide grants to offset the incremental
cost of projects that reduce covered emissions from covered sources
in California, for all of the following:
(1) To fund projects that offset the incremental cost of
heavy-duty projects that reduce emissions of covered emissions from
heavy-duty covered sources in California.
(2) The Lower-Emission School Bus Program.
(3) Accelerated light-duty vehicle retirement programs.
(4) Lawnmower electrification programs.
(5) Projects to retrofit, repair, or replace agricultural engines
and pumps.
(c) Regulations and guidelines for grant awards shall be
determined by the state board, in consultation with the districts, in
accordance with this part.
(d) The entity implementing the program in each district shall
adopt, and annually update, a plan at a duly noticed public hearing
that provides for all the following:
(1) Prioritizes the desired reductions in the individual air
pollutants comprising the covered emissions, based on the air quality
needs of the district.
(2) Estimates the relative cost-effectiveness of the programs
listed in subdivision (b). The administering entity may breakdown
each program into further categories at its discretion.
(3) Prioritizes the activities and projects to be funded for each
covered emission that is prioritized pursuant to paragraph (1), to
ensure that 80 percent of all expenditures would be prioritized based
on cost-effectiveness within the cost-effectiveness criteria.
(4) Specifies criteria or measures that will be applied to
determine eligibility for grant funding to ensure that the most
cost-effective projects will be funded. These criteria or measures
may include, but are not limited to, all of the following:
(A) Restricting grants to certain engine, motor, or vehicle
model-years.
(B) Sequencing of programmatic measures to ensure that the most
cost-effective programs are carried out earlier in the year.
(C) Expedited processing of grants for projects that the
administering entity determines are very cost-effective.
(D) Applying a more restrictive cost-effectiveness standard than
otherwise permitted by Section 42962 during the first two years the
program is operative.
(5) Projects the allocation of funding among the various programs.
(6) Identifies how emission reductions will be credited to the
applicable state implementation plans.
(7) Grants an allocation of up to 20 percent of the total project
awards, at the discretion of the implementing entity, to a project if
the award meets the cost-effectiveness criteria specified in Section
42962.
42953. Any new program undertaken by the state board or a
district pursuant to this part is subject to all of the following
requirements:
(a) The program shall reduce and mitigate emissions, and the
impacts of those emissions, from internal combustion engines.
(b) Any new mobile source program or any existing mobile source
program that is considered for funding shall demonstrate
cost-effectiveness expressed in dollars expended per ton of emissions
removed through use of a consistent transparent methodology with
statewide applicability for on- and off-road diesel engines, light
and medium-duty vehicles, or other internal ombustion
combustion engines, as determined by the state
board pursuant to Section 42958. All projects shall meet applicable
specific cost-effectiveness criteria and 80 percent of all
expenditures shall be prioritized based on cost-effectiveness within
the cost-effectiveness criteria.
(c) Any new program shall demonstrate actual emission
reductions, including, but not limited to, being both measurable and
surplus, through application of realistic program assumptions
reductions through the application of realistic
program assumptions .
(d) Any new program shall be adopted by regulation by the state
board pursuant to Chapter 3.5 (commencing with Section 11340) of Part
1 of Division 3 of Title 2 of the Government Code, shall be
consistent with the authority granted the state board consistent with
this division, and shall be implemented by districts pursuant to the
regulations adopted by the state board.
(e) Any new program shall be measured by its impact on ozone and
PM compliance with state and federal standards, rather than by the
type of fuel used by the motor or engine.
(f) The implementation of any program shall provide environmental
justice in accordance with subdivision (a) of Section 43023.5 to
directly reduce ozone and PM concentrations in communities with the
most significant exposure to ozone and PM concentrations, including,
but not limited to, communities of minority or low-income population.
(g)
(f) In addition to achieving the air quality objectives
pursuant to this part, any program affecting the general public
or small business shall have convenience for the general public
or the small business community as an underlying
principle.
(h)
(g) Any new program shall have explicit quantifiable
objectives, and shall be accompanied by independent and external
periodic reviews of program performance and achievement of targeted
emissions reductions at expected costs.
(i)
(h) Any new program shall consider issues of startup and
scalability, and the potential for the program to cause unintended
negative consequences.
(j)
(i) Any new program that addresses emissions in a manner
similar to those reductions addressed in existing programs in the
same jurisdiction shall incorporate program reforms considered
necessary to improve the operational equity of the current program
and to meet the other principles described in this section.
(k) Emission reductions from any funded and fully implemented
projects or programs pursuant to this part shall be included in the
state implementation plan, or any revision to that plan, that is
submitted to the United States Environmental Protection Agency
pursuant to the federal Clean Air Act (42 U.S.C. Sec. 7401 et seq.).
42953. (a) The Incentive-Based Emission Reduction Program for
Internal Combustion Engines Trust Fund is hereby
42954. (a) The Large Emission Reduction Program Trust Fund is
hereby created in the State Treasury. Moneys in the trust fund
shall be available, upon appropriation by the Legislature, to carry
out the purposes of this part. In addition to moneys appropriated by
the Legislature, the fund may accept moneys from other sources,
including, but not limited to, federal and local agencies,
and private sector sources.
(b) Notwithstanding Sections 16475, 16475.1, and 16480.6 of the
Government Code, all of the interest earned on money in the trust
fund shall be deposited in the trust fund.
(c) Not more than 2.5 5 percent of
the moneys deposited in the fund may be used by districts for the
cost of administering this program.
(d) Moneys in the fund shall be encumbered prior to December 31,
2022. Grants may not be made by the state board or a district from
the fund after that date.
42954. Incentive programs eligible for funding from the fund
include, but are not limited to, the following:
(a) The Carl Moyer Program, including, but not limited to, fuel
emulsification projects to the extent permissible under the program.
(b) The Lower-Emission School Bus Program.
(c) Light-duty vehicle retirement programs.
(d) Lawnmower electrification programs.
(e) Projects to retrofit or replace agricultural engines and
pumps.
(d) Grants may not be made by the state board or a district from
the fund after December 31, 2014. Grant funds awarded prior to
December 31, 2014, that are not encumbered by December 31, 2016,
shall revert to the General Fund.
(e) All program funds shall be encumbered two years from the date
of appropriation or date of contribution to the fund. No grants may
be made by districts using money reserved within the fund after the
date of appropriation.
(f) Funds reserved for a district that have not been encumbered
within two years of the date of appropriation shall revert back to
the state board, and thereafter shall be permanently allocated by the
state board to districts in proportion to the aggregate net
disbursements that the participating districts received during the
life of the grant program, to be used in accordance with the goals
and objectives of the grant program and to be granted by the
districts in accordance with the procedures and criteria in place at
the termination of the grant program or as subsequently modified by
the districts as needed to better meet the grant program objectives
and protect human health and welfare.
(g) To ensure that emission reductions are obtained as needed from
pollution sources, any moneys deposited in or appropriated to the
fund shall be segregated and administered as follows:
(1) ____ percent shall be allocated to the Lower-Emission School
Bus Program.
(2) The remainder of the funds shall be allocated by the state
board to heavy-duty projects, light-duty vehicle projects, and
nonheavy-duty off-road projects.
(3) Not more than 3 percent of the moneys in the fund shall be
allocated to program support and outreach costs incurred by the state
board directly associated with implementing the program pursuant to
this part. These funds shall be allocated to the state board in
proportion to total program funds administered by the state board.
(4) Not more than 2 percent of the moneys in the fund shall be
allocated to direct program outreach activities. The state board may
use these funds for program outreach contracts or may allocate
outreach funds to participating air districts in proportion to each
district's allocation from the fund. The state board shall report on
the use of outreach funds in their reports to the Legislature
pursuant to Section 42959.
(5) The balance shall be deposited in the fund to be expended to
offset added costs of new very low- or zero-emission vehicle
technologies, and emission reducing repowers, retrofits, and add-on
equipment for covered vehicles and engines.
(i) Moneys in the fund shall be allocated to a district that
submits an eligible application to the state board pursuant to
Sections 42965, 42966, and 42967. The state board shall determine
the maximum amount of annual funding from the fund that each district
may receive. This determination shall be made based on a formula
developed and approved jointly by the state board and the California
Air Pollution Control Officers Association.
42955. Each district that participates in a program described in
Section 42954 42952 shall do all of the
following:
(a) Establish funding priorities for pollution source reduction
projects after considering all of the requirements described in
Section 42952 42953 to help comply with
federal and state ambient air quality standards .
(b) Coordinate with any local, state, or federal agency, or with
any private organization, concerned with reducing emissions from
internal combustion engines that it determines to be appropriate.
(c) Identify potential sources of shared funding responsibilities,
including, but not limited to, any of the following sources:
(1) State.
(2) Federal.
(3) Private.
42956. Each district shall expend 50 percent of the moneys it
receives from the fund in a manner that directly addresses air
pollution or health impacts resulting from the refining and
combustion of gasoline and diesel fuel in communities with the most
significant exposure to air pollution, consistent with subdivisions
(a) and (b) of Section 43023.5.
42956. The administering entity in each district shall ensure
that not less than 50 percent of the funds are expended in a manner
that directly reduces air contaminants or reduces the public health
risks associated with air contaminants, including, but not limited
to, airborne toxics and particulate matter, in communities with the
most significant exposure to air contaminants or localized air
contaminants, or both, including, but not limited to, communities of
minority populations or low-income populations.
42957. (a) The responsibilities of the state board or the
participating district, as applicable, with respect to programs
implemented pursuant to this part shall include management of program
funds and program oversight.
(b) The state board shall have primary responsibility for any
federal reporting aspects of each program.
(c) The responsibilities of a district shall include, but are not
limited to, local administration of project funds, monitoring funded
projects, and reporting results to the state board. Any project
funds awarded to a successful applicant shall be disbursed by the
district.
(d) The state board and the districts shall ensure that emissions
reductions achieved through the program are, to the extent
permissible under state and federal law, credited by the United
States Environmental Protection Agency to the appropriate emission
reduction objectives in the State Implementation Plan. The
state board and the implementing districts shall cooperate to update
the applicable state implementation plans to take into consideration
the emission reductions resulting from the implementation of the
program as soon as practicable, but not later than December 31, ____.
42958. (a) The state board shall assist the districts with
developing procedures to monitor whether the emission reductions
projected in successful grant applications are achieved. Monitoring
procedures may include, but are not limited to, project audits and
the requirement that each grant recipient provide information about
the project on an annual basis as part of the grant agreement between
the state board or districts and the grant recipient. The state
board and the district shall minimize, to the extent feasible, the
information that is required from grant recipients, and shall develop
a simple and convenient format for reporting the required
information.
(b) The monitoring procedures developed pursuant to subdivision
(a) shall allow emission reductions generated to be fully credited to
air quality plans.
(c) The state board shall monitor district programs to ensure that
participating districts conduct their programs consistent with the
requirements described in Section 42952 42953
.
42959. Not later than March 1, 2007, and each March 1
on March 1 every three years thereafter until
March 1, 2022 2017, inclusive, the
state board, in cooperation with participating districts, shall
provide the Legislature with a program report. The report shall
include, but shall not be limited to, all of the following:
(a) A detailed review of the moneys received, moneys granted,
moneys reserved for grants based on project approvals, and shared
funding responsibilities, and the sources of those moneys.
(b) An estimate of future demand for grant moneys.
(c) A description of the overall effectiveness of the program in
delivering the emission reductions required by air quality plans,
including, but not limited to, the rate of progress plans and
milestone and conformity tests, as
well as attainment and maintenance plans.
42960.
(d) A list of any of the projects funded through the program that
were not implemented in accordance with the requirements of the
program and the final disposition of funds appropriated for those
projects.
(e) An external independent audit of the program measured against
program requirements as implemented by the state board and the five
largest districts based on district population.
(f) The report shall evaluate the effectiveness of the program in
soliciting and evaluating project applications, providing awards in a
timely manner, and monitoring project implementation. The report
shall describe any adjustments made to the project selection criteria
and recommend any further needed changes or adjustments to the grant
program, including changes in grant award criteria, administrative
procedures, or statutory provisions that would enhance the
effectiveness and efficiency of the grant program.
(g) The state board shall request comments and hold public
meetings on each draft periodic report to obtain public comments.
The state board shall consider and respond to all significant
comments received in producing a final annual report.
(h) A final periodic report shall be published within 90 days from
the date of publication of each draft annual report.
(i) For the accelerated light-duty vehicle retirement program,
this reporting requirement supercedes the reporting requirement
described in subdivision (c) of Section 44104.5.
42960. (a) Eligible projects are any of the following:
(1) The purchase of new vehicles or covered engines.
(2) The emission-reducing retrofit of covered engines, or the
replacement of old engines powering covered sources with newer
engines certified to more stringent emissions standards than the
engine being replaced, or with electric motors or drives.
(3) The purchase and use of emission-reducing add-on equipment or
fuel emulsion that has been verified by the state board for covered
vehicles or engines.
(4) The development and demonstration of practical, low-emission
retrofit technologies, repower options, and advanced technologies for
covered engines and vehicles to the extent that those projects
contribute to emission reductions that are creditable to federal and
state implementation plans.
(5) Accelerated light-duty vehicle retirement, including, but not
limited to, detection of high-emitting vehicles.
(6) Light-duty parts replacement.
(7) The purchase of low-emission schoolbuses.
(8) Agricultural engines and pumps retrofit, repair or replacement
projects.
(b) No new purchase, retrofit, repower, add-on equipment or fuel
emulsion project may be funded under this part by federal, state, or
local funding if it is required by any local, state, or federal
statute, rule, regulation, memorandum of agreement or understanding,
or any other legally binding document, except that an otherwise
qualified project may be funded even if the State Implementation Plan
assumes that the change in equipment, vehicles, or operations will
occur, if the change is not required by a statute, regulation, or
other legally binding document in effect as of the date the grant is
awarded. The cost-effectiveness shall be calculated based on that
time period that the project is not required. No project funded by
program funds from federal, state, or local funding may be used for
credit under any state or federal emissions averaging, banking, or
trading program. No emission reduction generated by the program that
is funded from federal, state, or local funding may be used as
marketable emission reduction credits or to offset any emission
reduction obligation of any entity. Projects involving new engines
that would otherwise generate marketable credits under state or
federal averaging, banking, and trading programs shall include the
transfer of credits to the engine end user and the retirement of
those credits toward reducing air emissions in order to qualify for
funding under the program. A purchase of a low-emission vehicle or
of equipment pursuant to a corporate or a controlling board's policy,
but not otherwise required by law, shall generate surplus emissions
reductions and may be funded by the program.
(c) Eligible applicants may be any individual, company, or public
agency that owns one or more covered vehicles or engines that operate
primarily within California or otherwise contribute to the ozone or
particulate levels in California.
42961. The following criteria apply to all projects to be funded
through the program:
(a) Except for projects involving marine vessels, or light-duty
vehicles, 75 percent or more of vehicle miles traveled or hours of
operation shall be projected to be in California for at least five
years following the grant award. Projects involving marine vessels
and engines shall be limited to those that spend enough time
operating in California air basins over the lifetime of the project
to meet the cost-effectiveness criteria based on covered emissions
reductions in California, as provided in Section 42962. Projects
involving light-duty vehicles shall ensure that the vehicles operated
for a minimum of three years within California prior to program
participation.
(b) To be eligible, projects, except for school buses, shall meet
the cost-effectiveness per ton of covered emissions reduced
requirements of Section 42962.
(c) To be eligible, schoolbuses must meet the criteria established
pursuant to this part. Schoolbuses shall meet a cost-effectiveness
of either $ ____ per ton of NOx plus PM or $ ____ per ton of PM,
consistent with the methodology determined by the state board under
the Lower-Emission School Bus Program. The statewide funding
allocation between natural gas and conventionally fueled schoolbuses
shall be proportioned on a __:__ ratio, respectively.
(d) To be eligible, retrofits, repowers, installation of add-on
equipment, fuel emulsion, accelerated light-duty vehicle retirement,
and light-duty parts replacement for covered vehicles shall be
performed, or new covered vehicles delivered to the end user, on or
after the date the program is implemented.
(e) Retrofit technologies, new engines, and new vehicles shall be
certified for sale or under experimental permit for operation in
California. The state board shall adopt guidelines for determining
the base cost of any new engine, vehicle or control technology. Base
costs shall, at a minimum, include all features otherwise required
by local, state, or federal law.
(f) Repower projects that replace older, uncontrolled engines with
new, emissions-certified engines or that replace emissions-certified
engines with new engines certified to a more stringent emissions
standard are approvable subject to the other applicable selection
criteria. The state board shall determine appropriate baseline
emission levels for the uncontrolled engines being replaced.
(g) Projects, retrofit, and add-on equipment projects that
document a reduction in covered emissions shall not increase any
other covered emissions compared to the applicable baseline emissions
accepted by the state board for that engine year and application.
The state board shall determine appropriate baseline emission levels.
Acceptable documentation shall be defined by the state board.
After study of available emission reduction technologies and after
public notice and comment, the state board may revise the prohibition
of allowing any increase of any other pollutant provided for in this
section to improve the ability of the program to achieve its goals.
(h) (1) For heavy-duty projects, except for schoolbuses, involving
the purchase of new very low- or zero-emission vehicles to an
existing fleet, engines shall be certified to an optional low-NOx
emissions standard established by the state board, except as provided
for in paragraph (2). For projects involving the replacement of an
existing vehicle through a vehicle retirement program or other
similar program, the state board shall develop guidelines as to how
their cost-effectiveness shall be calculated.
(2) For projects involving the purchase of new very low- or
zero-emission covered vehicles for an existing fleet for which no
optional low-NOx emission standards are available, documentation
shall be provided showing that the very-low or zero-emission engine
emits not more than 70 percent of the NOx or NOx plus hydrocarbon
emissions of a new engine certified to the applicable baseline NOx or
NOx plus hydrocarbon emission standard for that engine and meets
applicable particulate standards. The state board shall specify the
documentation required. If no baseline emission standard exists for
new vehicles in a particular category, the state board shall
determine an appropriate baseline emission level for comparison.
(i) For light-duty parts replacement, the state board shall
determine appropriate criteria based on the efficiency and
effectiveness of replacement equipment, the cost, the
cost-effectiveness, and other criteria.
42962. The following requirements apply to all projects funded by
the program, except those projects involving the purchase of
schoolbuses:
(a) Grants may not be made for projects with a cost-effectiveness,
calculated in accordance with this section, of less than $____ per
ton of NOx or $____ per ton of PM reduced in California. For
projects obtaining emission reductions for more than one covered
pollutant, the state board shall determine appropriate
cost-effectiveness methodologies.
(b) Only covered emission reductions that are deemed attributable
to an applicable implementation plan and that occur in California
shall be included in the cost-effectiveness determination. The
extent to which covered emissions generated at sea contribute to air
quality in California nonattainment areas shall be incorporated into
these methodologies based on a reasonable assessment of currently
available information and modeling assumptions.
(c) The state board shall develop protocols for calculating the
surplus reductions in covered emissions in California from
representative project types over the life of the project.
(d) The cost of the reductions in covered emissions is the amount
of the grant from the program, plus any other state funds, or funds
under the district's budget authority or fiduciary control, provided
toward the project. The state board shall establish reasonable
methodologies for evaluating project cost-effectiveness, taking into
account a fair and reasonable discount rate or time value of public
funds.
(e) A grant may not be made that, net of taxes, provides the
applicant with funds in excess of the incremental cost of the
project. Incremental lease costs may be capitalized according to
guidelines adopted by the state board so that these incremental costs
may be offset by a one-time grant award.
(f) Funds under an implementing agency's budget authority or
fiduciary control may be used to pay for the incremental cost of
liquid or gaseous fuel, other than standard gasoline or diesel, that
is integral to a covered emission reducing technology that is part of
a project receiving grant funding under the program. The fuel shall
be approved for sale by the state board and the Department of
Measurement Standards. The incremental fuel cost over the expected
lifetime of the vehicle may be offset by the district if the project
as a whole, including the incremental fuel cost, meets all of the
requirements of this part, including the maximum allowed
cost-effectiveness. The state board shall develop an appropriate
methodology for converting incremental fuel costs over the vehicle
lifetime into an initial cost for the purposes of determining project
cost-effectiveness. Incremental fuel costs may not be included in
project costs for fuels dispensed from any facility that was funded,
in whole or in part, from the fund.
(g) For purposes of determining any grant amount pursuant to this
part, the incremental cost of any new purchase, retrofit, repower, or
add-on equipment project shall be reduced by the value of any
current financial incentive that directly reduces the project price,
including any tax credits or deductions, grants, or other public or
private financial assistance or buy-down. Project proponents
applying for funding shall be required to state in their application
any other public or private financial assistance provided to the
project.
(h) For each year the program is in effect, the state board shall
adjust the maximum cost-effectiveness amount established in
subdivision (a) and any per-project maximum set by the state board to
account for inflation.
42963. The following requirements are applicable to projects
involving light-duty vehicles or nonheavy-duty off-road sources:
(a) The state board shall develop protocols for calculating the
surplus covered emission reductions in California to help ensure that
they can be attributable to the applicable state implementation
plan.
(b) The state board shall establish reasonable methodologies for
evaluating cost-effectiveness consistent with the definition
contained in subdivision (d) of Section 42951 and with Section 42962,
and with accepted methods, taking into account a fair and reasonable
discount rate or time value of public funds.
(c) For accelerated light-duty vehicle retirement projects, the
state board shall comply with the provisions of Article 10
(commencing with Section 44100) of Chapter 5 of Part 5.
42964. (a) The state board shall manage program funds and shall
provide program oversight. The state board shall produce guidelines,
protocols, and criteria for covered vehicle projects and develop
methodologies for evaluating project cost-effectiveness in accordance
with this part. The state board shall have primary responsibility
for the reporting aspects of the program.
(b) The responsibilities of a district may include any or all of
the following:
(1) Submission of an annual plan for projects or to be funded by
the program to the state board to address the district's priority
mobile source emission reduction goals and in compliance with adopted
air quality plans.
(2) Local administration of project funds.
(3) Monitoring funded projects.
(4) Reporting results to the state board in accordance with this
part.
(5) Disbursing project funds awarded to a successful applicant.
(c) Funds allocated to the South Coast Air Quality Management
District for purposes of this program by the Mobile Source Air
Pollution Reduction Review Committee may only be used as matching
funds upon approval, by minute action, of the committee.
(d) The state board shall work closely with the districts for the
duration of this program to maximize the ability of the program to
achieve its goals.
42965. The following grant criteria and guidelines are applicable
to heavy-duty projects, except those involving schoolbuses.
(a) The state board shall establish grant criteria and guidelines
consistent with this part for covered vehicle projects as soon as
practicable, but not later than July 1, 2005. The adoption of
guidelines pursuant to this subdivision is exempt from the rulemaking
provisions of the Administrative Procedure Act, Chapter 3.5
(commencing with Section 11340) of Part 1 of Division 3 of Title 2 of
the Government Code. The state board shall solicit input and
comment from the districts during the development of the criteria and
guidelines and shall make every effort to develop criteria and
guidelines that are compatible with existing district programs and
are also consistent with this part. Guidelines shall include
protocols to calculate project cost-effectiveness. The grant
criteria and guidelines shall include safeguards to ensure that the
project generates surplus emissions reductions. Guidelines shall
enable and encourage districts to jointly fund projects that provide
emissions reductions in more than one district. The state board
shall make draft criteria and guidelines available to the public 45
days before final adoption, and shall hold at least one public
meeting to consider public comments before final adoption.
(b) The state board, in consultation with the participating
districts, may propose revisions to the criteria and guidelines
established pursuant to subdivision (a) as necessary to improve the
ability of the program to achieve its goals. A proposed revision
shall be made available to the public 45 days before final adoption
of the revision and the state board shall hold at least one public
meeting to consider public comments before final adoption of the
revision.
(c) The state board shall develop guidelines for a district to
follow in applying for the reservation of funds, in accordance with
this part. It is the intent of the Legislature that district
administration of any reserved funds be in accordance with the
project selection criteria specified in Sections 42960, 42961, and
42962, and all other provisions of this part. The guidelines shall
be established and published by the state board as soon as
practicable, but not later than July 1, 2005.
(d) A district desiring a reservation of funds shall apply to the
state board following the application guidelines established pursuant
to this section. The state board shall approve or disapprove a
district application not later than 60 days after receipt. Upon
approval of any district application, the state board shall
simultaneously approve a reservation of funding for that district to
administer. Reserved funds shall be disbursed to the district so
that funding of a district-approved project is not impeded.
(e) The state board shall specify a date each year when district
applications are due. If the eligible applications received in any
year oversubscribe the available funds, the state board shall reserve
funds on an allocation basis, pursuant to subdivision (b) of Section
42954. The state board may accept a district application after the
due date for a period of months specified by the state board. Funds
may be reserved in response to those applications, in accordance with
this part, out of funds remaining after the original reservation of
funds for the year.
(f) Guidelines for a district application shall require
information from an applicant district to the extent necessary to
meet the requirements of this part, but shall otherwise minimize the
information required of a district.
(g) A district application shall be reviewed by the state board
immediately upon receipt. If the state board determines that an
application is incomplete, the applicant shall be notified within 10
working days with an explanation of what is missing from the
application. A completed application fulfilling the criteria shall
be approved as soon as practicable, but not later than 60 working
days after receipt.
42966. The following grant criteria and guidelines are applicable
to light-duty vehicle and nonheavy-duty off-road projects:
(a) The state board shall establish grant criteria and guidelines
consistent with this part as soon as practicable, but not later than
March 1, 2006. The state board shall solicit input and comment from
districts and other stakeholders during the development of the
criteria and guidelines and shall make every effort to develop
criteria and guidelines that are compatible with existing district
programs and are also consistent with this part. The criteria and
guidelines shall include protocols to calculate project costs,
emission benefits, and cost-effectiveness. The criteria and
guidelines shall include safeguards to ensure that the project
generates surplus emission reductions.
(b) The state board may reserve funds for administration by a
district that adopts an eligible light-duty vehicle or nonheavy-duty
off-road program.
42967. The following grant application review process is
applicable to heavy-duty projects, except for those involving
schoolbuses.
(a) An application for a project grant shall be reviewed by the
administering district upon receipt. If the administering district
determines that an application is incomplete, the applicant shall be
notified within five working days with an explanation of what is
missing from the application. The date and time of receipt of each
application determined to be complete shall be recorded and the
completed application shall be evaluated with respect to the
appropriate project selection criteria. A district shall make every
effort to process an application and grant an award rapidly and to
coordinate project approval with any purchase or installation timing
constraint on an applicant. Notwithstanding any other provision of
this part, the administering district may determine that an
application is not in good faith, not credible, or not in compliance
with this part and its objectives.
(b) A participating district may request assistance from the state
board on an as-needed basis to clarify project evaluation protocols
or to obtain information necessary to properly evaluate an
application.
(c) Funds shall be awarded in conjunction with the execution of a
contract that obligates the state board or a participating district
to make the grant and obligates the grantee to take the actions
described in the grant application. A contract shall incorporate the
recapture provisions contained in subdivision (c) of Section 42969.
42968. The state board and participating districts shall
institute an outreach program to inform potential participants,
technology suppliers, vendors, engine and equipment dealers and
distributors, fleet owners, industry organizations and publications,
districts, and rail and port organizations of the availability of
grants, and of the requirements and objectives of the grant program.
The state board and participating districts shall vigorously recruit
grant applications and publish examples of successful projects.
Outreach efforts on the part of the state board shall be coordinated
with district outreach efforts.
42969. (a) The state board shall assist districts with developing
procedures to monitor whether the emission reductions projected in
successful grant applications are actually achieved. Monitoring
procedures may include project audits, and may also include
requirements, as part of the contract between the state board or
districts and the grant recipients, that each grant recipient provide
information about the project on an annual basis. Information
required from grant recipients should be minimized and the format for
reporting the information should be made simple and convenient.
(b) The monitoring and auditing procedures shall be sufficient to
allow emission reductions generated to be fully credited to air
quality plans. The monitoring procedures shall contain provisions
for recapturing grant awards in proportion to any loss of emission
reductions or underachievement in dispensing qualifying fuel compared
with the reductions and fuel dispensing projected in the grant
application. Funds recaptured shall be deposited in the accounts
from which the funds were originally expended. From time-to-time,
monitoring and auditing procedures shall be revised as appropriate to
enhance program effectiveness.
(c) The state
board shall monitor district programs to ensure that participating
districts conduct their programs consistent with the criteria and
guidelines established by the state board pursuant to this part. The
monitoring procedures shall contain provisions for recapture of
funds not yet awarded to approved projects if a district fails to
show that they are implementing a program consistent with the
approved program. If the state board determines, pursuant to this
subdivision, that moneys from the fund allocated to a district should
be recaptured, the state board shall hold at least one public
meeting to consider public comments prior to recapturing the
allocated funds. The state board shall make every effort to assist
districts in implementing programs in an approved manner and shall
only recapture allocated funds if these efforts fail to address
problems adequately. Recaptured funds shall be deposited in the fund.
The state board shall not recapture funds already awarded to
approved projects.
42970. If any provision of this part or the application
thereof to any person or circumstance is held invalid, it is the
intent of the Legislature that the invalidity not affect other
provisions or applications of the part that can be given effect
without the invalid provision or application, and to this end the
provisions of this part are severable.
42961. This part shall remain in effect only until December 31,
2022, and as of that date is repealed, unless a later enacted
statute, that is enacted before December 31, 2022, deletes or extends
that date.
42971. This part shall remain in effect only until March 31,
2017, and as of that date is repealed, unless a later enacted
statute, that is enacted before March 31, 2017, deletes or extends
that date.