BILL NUMBER: SB 225	INTRODUCED
	BILL TEXT


INTRODUCED BY   Senator Florez

                        FEBRUARY 23, 2009

   An act to amend Sections 41081, 41606, 44229, and 44281 of, and to
add Section 40708.5 to, the Health and Safety Code, relating to air
pollution.



	LEGISLATIVE COUNSEL'S DIGEST


   SB 225, as introduced, Florez. Emission reduction credits.
   Existing law prohibits the creation of an emission reduction
credit from air pollution reductions funded by certain public
programs. Existing law creates air quality management districts and
air pollution control districts and requires these districts, except
as otherwise provided, to establish a system by which all reductions
in the emission of air contaminants that are to be used to offset
certain future increases in the emission of air contaminants are to
be banked prior to use to offset future increases in emissions.
   This bill would authorize a district to create an emission
reduction credit from the emission reductions resulting from a
project that is funded from both public and private moneys if
specified requirements are met.
   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.  Section 40708.5 is added to the Health and Safety Code,
to read:
   40708.5.  (a) A district may authorize the creation of an emission
reduction credit from the emission reductions resulting from a
project that is funded from both public and private moneys.
   (b) For emission reduction credits authorized pursuant to
subdivision (a), the total amount of credits may not exceed 90
percent of the amount of the total emission reductions achieved by
the project. Any emission reductions credits resulting from the
project in excess of 90 percent shall be retired by the district.
   (c) If an emission reduction credit authorized pursuant to this
section is sold or otherwise transferred, the credit shall be
discounted by 10 percent.
   (d) This section shall be implemented in a manner consistent with
the federal Clean Air Act (42 U.S.C. Sec. 4901 et seq.).
  SEC. 2.  Section 41081 of the Health and Safety Code, as amended by
Section 2 of Chapter 707 of the Statutes of 2004, is amended to
read:
   41081.  (a) Subject to Article 3.7 (commencing with Section 53720)
of Chapter 4 of Part 1 of Division 2 of Title 5 of the Government
Code, or with the approval of the board of supervisors of each county
included, in whole or in part, within the Sacramento district, the
Sacramento district board may adopt a surcharge on the motor vehicle
registration fees applicable to all motor vehicles registered in
those counties within the Sacramento district whose boards of
supervisors have adopted a resolution approving the surcharge. The
surcharge shall be collected by the Department of Motor Vehicles and,
after deducting the department's administrative costs, the remaining
funds shall be transferred to the Sacramento district. Prior to the
adoption of any surcharge pursuant to this subdivision, the district
board shall make a finding that any funds allocated to the district
as a result of the adoption of a county transportation sales and use
tax are insufficient to carry out the purposes of this chapter.
   (b) The surcharge shall not exceed six dollars ($6).
   (c) After consulting with the Department of Motor Vehicles on the
feasibility thereof, the Sacramento district board may provide, in
the surcharge adopted pursuant to subdivision (a), to exempt from all
or part of the surcharge any category of low-emission motor vehicle.

   (d) Funds received by the Sacramento district pursuant to this
section shall be used by that district as follows:
   (1) The revenues resulting from the first four dollars ($4) of
each surcharge shall be used to implement reductions in emissions
from vehicular sources, including, but not limited to, a clean fuels
program and motor vehicle use reduction measures.
   (2) The revenues resulting from the next two dollars ($2) of each
surcharge shall be used to implement the following programs that
achieve emission reductions from vehicular sources and off-road
engines, to the extent that the district determines the program
remediates air pollution harms created by motor vehicles on which the
surcharge is imposed:
   (i) Projects eligible for grants under the Carl Moyer Memorial Air
Quality Standards Attainment Program (Chapter 9 (commencing with
Section 44275) of Part 5).
   (ii) The new purchase, retrofit, repower, or add-on of equipment
for previously unregulated agricultural sources of air pollution, as
defined in Section 39011.5, within the Sacramento district, for a
minimum of three years from the date of adoption of an applicable
rule or standard, or until the compliance date of that rule or
standard, whichever is later, if the state board has determined that
the rule or standard complies with Sections 40913, 40914, and
41503.1, after which period of time, a new purchase, retrofit,
repower, or add-on of equipment shall not be funded pursuant to this
chapter. The district shall follow any guidelines developed under
subdivision (a) of Section 44287 for awarding grants under this
program.
   (iii) The new purchase of schoolbuses pursuant to the
Lower-Emission School Bus Program adopted by the state board.
   (iv) An accelerated vehicle retirement or repair program that is
adopted by the state board pursuant to authority granted hereafter by
the Legislature by statute.
   (e) Not more than 5 percent of the funds collected pursuant to
this section shall be used by the district for administrative
expenses.
   (f)  No   Except as provided in Section
40708.5, no  project funded by the program shall be used for
credit under any state or federal emissions averaging, banking, or
trading program.  No   Except as provided in
Section 40708.5, no  emission reduction generated by the program
shall be used as marketable emission reduction credits or to offset
any emission reduction obligation of any person or entity. 
Projects   Except as provided in Section 40708.5,
projects  involving new engines that would otherwise generate
marketable credits under state or federal averaging, banking, and
trading programs shall include transfer of credits to the engine end
user and 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.
   (g) This section shall remain in effect only until January 1,
2015, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2015, deletes or extends
that date.
  SEC. 3.  Section 41606 of the Health and Safety Code is amended to
read:
   41606.  (a) (1) It is the intent of the Legislature to reduce air
pollution from open field burning in the state and to improve air
quality and protect the public health through new incentives for
biomass facilities to increase their use of agricultural waste that
would otherwise be burned in open fields in the state.
   (2) It is the further intent of the Legislature that the initial
incentives paid pursuant to this section provide an effective
incentive for the use of qualified agricultural biomass purchased
from July 1, 2003, through December 31, 2003, inclusive, in order to
maximize air quality benefits during the 2003-04 fiscal year.
   (b) For purposes of this section:
   (1) "Qualified agricultural biomass" means agricultural residues
that are purchased after July 1, 2003, that historically have been
open-field burned in the jurisdiction of the air district from which
the agricultural residues are derived, as determined by the air
district, excluding urban and forest wood products, that include
either of the following:
   (A) Field and seed crop residues, including, but not limited to,
straws from rice and wheat.
   (B) Fruit and nut crop residues, including, but not limited to,
orchard and vineyard pruning and removals.
   (2) "Facility" means any facility located in California that meets
all of the following criteria:
   (A) As of July 1, 2003, converted and continues to convert
qualified agricultural biomass to energy.
   (B) Is permitted with best available control technology to reduce
emissions, has emissions control equipment in good working order, and
is in compliance with its operating permit, as determined by the air
pollution control district or air quality management district in
which the facility operates.
   (C) Demonstrates a significant net increase in utilization of
qualified agricultural biomass as compared to usage without grant
moneys pursuant to this section. A "significant net increase" means
an increase of at least 10 percent in purchases of qualified
agricultural biomass above the average annual tonnage purchased by
the facility in the previous five years of operation prior to the
implementation of the Agricultural Biomass-to-Energy Incentive Grant
Program pursuant to former Part 3 (commencing with Section 1101) of
Division 1 of the Food and Agricultural Code, as repealed by the act
adding this section.
   (c) (1) The State Energy Resources Conservation and Development
Commission shall, upon determining that a facility is eligible for
funding, provide incentives to the facility, consistent with this
section.
   (2) The State Energy Resources Conservation and Development
Commission shall complete the issuance of incentive payments for
qualified agricultural biomass purchased from July 1, 2003, through
December 31, 2003, inclusive, within 90 days of the effective date of
this section.
   (3) In providing incentives pursuant to this section, the State
Energy Resources Conservation and Development Commission shall
provide incentive payments in the amount of ten dollars ($10) for
each ton of qualified agricultural biomass received by a facility and
converted into energy. The State Energy Resources Conservation and
Development Commission may increase the incentive payment for types
or sources of qualified agricultural biomass that require greater
incentives to achieve meaningful increases in usage by facilities, as
determined by the State Energy Resources Conservation and
Development Commission.
   (4) Notwithstanding any other provision of law, the receipt of
incentives pursuant to this section does not make a facility
ineligible for any other production subsidy, rebate, buydown, or
other incentive funded through electricity surcharges, except that
receipt of incentives funded through electricity surcharges shall
preclude receipt of biomass-to-energy incentives financed by the
General Fund.
   (5) The State Energy Resources Conservation and Development
Commission, in consultation with the California Environmental
Protection Agency, may adopt guidelines governing the incentives
authorized under this section at a publicly noticed meeting offering
all interested parties an opportunity to comment. Substantive changes
to the guidelines may not be adopted without at least 10 days'
written notice to the public. The public notice of meetings required
by this paragraph may not be less than 30 days. Notwithstanding any
other provision of law, any guidelines adopted pursuant to this
section shall be exempt from the requirements of Chapter 3.5
(commencing with Section 11340) of Division 3 of Title 2 of the
Government Code. Adoption of guidelines shall not delay the timing of
the payment of incentives that are required by paragraph (2).
   (6) Awards made pursuant to this section are grants, subject to
appeal to the State Energy Resources Conservation and Development
Commission upon a showing that factors other than those contained in
this section, and any guidelines adopted pursuant to this section,
were a substantial factor in making the award. Any actions taken by
an applicant to apply for, become, or remain eligible for an award,
shall not be the rendering of goods, services, or a direct benefit to
the State Energy Resources Conservation and Development Commission.
   (d)  Facilities   Except as provided in
Section 40708.5, facilities  receiving incentive payments
pursuant to this section are not eligible to receive emission
reduction credits for any qualified agricultural biomass for which a
facility has received an incentive payment.  Generators
  Except as provided in Section 40708.5, generators
 or suppliers of qualified agricultural biomass may not receive
emission reduction credits for any qualified agricultural biomass for
which a facility has received an incentive payment. For purposes of
this section, "emission reduction credits" means a credit for a
reduction in the emission of an air contaminant that is banked and is
available to offset increases in emissions pursuant to Section
40709, and the regulations adopted pursuant to that section.
  SEC. 4.  Section 44229 of the Health and Safety Code, as amended by
Section 4 of Chapter 707 of the Statutes of 2004, is amended to
read:
   44229.  (a) After deducting all administrative costs it incurs
through collection of fees pursuant to Section 44227, the Department
of Motor Vehicles shall distribute the revenues to districts, which
shall use the revenues resulting from the first four dollars ($4) of
each fee imposed to reduce air pollution from motor vehicles and to
carry out related planning, monitoring, enforcement, and technical
studies necessary for implementation of the California Clean Air Act
of 1988. Fees collected by the Department of Motor Vehicles pursuant
to this chapter shall be distributed to districts based upon the
amount of fees collected from motor vehicles registered within each
district.
   (b) Notwithstanding the provisions of Section 44241 and Section
44243, a district shall use the revenues resulting from the next two
dollars ($2) of each fee imposed pursuant to Section 44227 to
implement the following programs that the district determines
remediate air pollution harms created by motor vehicles on which the
surcharge is imposed:
   (1) Projects eligible for grants under the Carl Moyer Memorial Air
Quality Standards Attainment Program (Chapter 9 (commencing with
Section 44275) of Part 5).
   (2) The new purchase, retrofit, repower, or add-on equipment for
previously unregulated agricultural sources of air pollution, as
defined in Section 39011.5, for a minimum of three years from the
date of adoption of an applicable rule or standard, or until the
compliance date of that rule or standard, whichever is later, if the
state board has determined that the rule or standard complies with
Sections 40913, 40914, and 41503.1, after which period of time, a new
purchase, retrofit, repower, or add-on of equipment shall not be
funded pursuant to this chapter. The districts shall follow any
guidelines developed under subdivision (a) of Section 44287 for
awarding grants under this program.
   (3) The new purchase of schoolbuses pursuant to the Lower-Emission
School Bus Program adopted by the state board.
   (4) An accelerated vehicle retirement or repair program that is
adopted by the state board pursuant to authority granted hereafter by
the Legislature by statute.
   (c) The Department of Motor Vehicles may annually expend not more
than the following percentages of the fees collected pursuant to
Section 44227 on administrative costs:
   (1) During the first year after the operative date of this
chapter, not more than 5 percent of the fees collected may be used
for administrative costs.
   (2) During the second year after the operative date of this
chapter, not more than 3 percent of the fees collected may be used
for administrative costs.
   (3) During any year subsequent to the second year after the
operative date of this chapter, not more than 1 percent of the fees
collected may be used for administrative costs.
   (d)  No   Except as provided in Section
40708.5, no  project funded by the program shall be used for
credit under any state or federal emissions averaging, banking, or
trading program.  No   Except as provided in
Section 40708.5, no  emission reduction generated by the program
shall be used as marketable emission reduction credits or to offset
any emission reduction obligation of any person or entity. 
Projects   Except as provided in Section 40708.5,
projects  involving new engines that would otherwise generate
marketable credits under state or federal averaging, banking, and
trading programs shall include transfer of credits to the engine end
user and retirement of those credits toward reducing air emissions in
order to quality for funding under the program. A purchase of a
 low-emision   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.
   (e) This section shall remain in effect only until January 1,
2015, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2015, deletes or extends
that date.
  SEC. 5.  Section 44281 of the Health and Safety Code, as amended by
Section 7 of Chapter 707 of the Statutes of 2004, is amended to
read:
   44281.  (a) Eligible projects include, but are not limited to, any
of the following:
   (1) Purchase of new very low or zero-emission covered vehicles or
covered heavy-duty engines.
   (2) Emission-reducing retrofit of covered engines, or 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) Purchase and use of emission-reducing add-on equipment that
has been verified by the state board for covered vehicles.
   (4) Development and demonstration of practical, low-emission
retrofit technologies, repower options, and advanced technologies for
covered engines and vehicles with very low emissions of oxides of
nitrogen.
   (5) Light- and medium-duty vehicle projects in compliance with
guidelines adopted by the state board pursuant to Title 13 of the
California Code of Regulations.
   (b) No project shall be funded under this chapter after the
compliance date required by any local, state, or federal statute,
rule, regulation, memoranda of agreement or understanding, or 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 the compliance date of a statute,
regulation, or other legally binding document in effect as of the
date the grant is awarded.  No   Except as
provided in Section 40708.5, no  project funded by the program
shall be used for credit under any state or federal emissions
averaging, banking, or trading program.  No  
Except as provided in Section 40708.5, no  emission reduction
generated by the program shall be used as marketable emission
reduction credits or to offset any emission reduction obligation of
any person or entity.  Projects   Except as
provided in Section   40708.5, projects  involving new
engines that would otherwise generate marketable credits under state
or federal averaging, banking, and trading programs shall include
transfer of credits to the engine end user and 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) The program may also provide funding toward installation of
fueling or electrification infrastructure as provided in Section
44284.
   (d) Eligible applicants may be any individual, company, or public
agency that owns one or more covered vehicles that operate primarily
within California or otherwise contribute substantially to the NOx,
PM  ,  or ROG emissions inventory in California.
   (e) It is the intent of the Legislature that all emission
reductions generated by this chapter shall contribute to public
health by reducing, for the life of the vehicle being funded, the
total amount of emissions in California.
   (f) This section shall remain in effect only until January 1,
2015, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2015, deletes or extends
that date.
  SEC. 6.  Section 44281 of the Health and Safety Code, as added by
Chapter 707 of the Statutes of 2004, is amended to read:
   44281.  (a) Eligible projects are any of the following:
   (1) Purchase of new very low or zero-emission covered vehicles or
covered engines.
   (2) Emission-reducing retrofit of covered engines, or 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) Purchase and use of emission-reducing add-on equipment for
covered vehicles.
   (4) Development and demonstration of practical, low-emission
retrofit technologies, repower options, and advanced technologies for
covered engines and vehicles with very low emissions of oxides of
nitrogen.
   (b) No new purchase, retrofit, repower, or add-on equipment shall
be funded under this chapter if it is required by any local, state,
or federal statute, rule, regulation, memoranda of agreement or
understanding, or 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.  No   Except as
provided in Section 40708.5, no  project funded by the program
shall be used for credit under any state or federal emissions
averaging, banking, or trading program.  No  
Except as provided in Section 40708.5, no  emission reduction
generated by the program shall be used as marketable emission
reduction credits or to offset any emission reduction obligation of
any entity.  Projects   Except as provided in
Section 40708.5, projects  involving new engines that would
otherwise generate marketable credits under state or federal
averaging, banking, and trading programs shall include transfer of
credits to the engine end user and 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) The program may also provide funding toward installation of
fueling or electrification infrastructure as provided in Section
44284.
   (d) Eligible applicants may be any individual, company, or public
agency that owns one or more covered vehicles that operate primarily
within California or otherwise contribute substantially to the NOx
emissions inventory in California.
   (e) It is the intent of the Legislature that all emission
reductions generated by this chapter shall contribute to public
health by reducing, for the life of the vehicle being funded, the
total amount of emissions in California.
   (f) This section shall become operative on January 1, 2015.