Article 3 - The Air Quality Improvement Program

California Health and Safety Code — §§ 44274-44274.7

Sections (10)

Amended by Stats. 2023, Ch. 319, Sec. 10. (AB 126) Effective October 7, 2023.

(a)The Air Quality Improvement Program is hereby created. The program shall be administered by the state board, in consultation with the districts. The state board shall develop guidelines to implement the program. Prior to the adoption of the guidelines, the state board shall hold at least one public hearing. In addition, the state board shall hold at least three public workshops with at least one workshop in northern California, one in the central valley, and one in southern California. The purpose of the program shall be to fund, upon appropriation by the Legislature, air quality improvement projects relating to zero-emission fuel and vehicle technologies. The primary purpose of the program shall be to fund projects to reduce criteria air

pollutants in the logistics, goods movement, off-road, warehouse, and port sectors, improve air quality in nonattainment basins, with a priority for projects located in the areas of extreme nonattainment, and improve the air quality impacts of zero-emission transportation fuels and vehicles, vessels, and equipment technologies.

(b)The state board shall provide preference in awarding funding to projects with higher benefit-cost scores that maximize the purposes and goals of the Air Quality Improvement Program. The state board may give additional preference based on the following criteria, as applicable, in funding awards to projects:

(1)Proposed or potential reduction of criteria or toxic air pollutants.

(2)Contribution to regional air quality improvement.

(3)Ability to promote the use of clean alternative fuels and vehicle technologies as determined by the state board, in coordination with the commission.

(4)Ability to achieve climate change benefits in addition to criteria pollutant or air toxic emissions reductions.

(5)Ability to support market transformation of California’s vehicle or equipment fleet to utilize zero-emission technologies.

(6)Ability to leverage private capital investments.

(c)The program shall be limited to competitive grants, revolving loans, loan guarantees,

loans, and other appropriate funding measures that further the purposes of the program. Projects to be funded shall include only the following:

(1)On-road and off-road equipment projects that are cost effective.

(2)Projects that provide mitigation for off-road gasoline exhaust and evaporative emissions.

(3)Incentives for small off-road equipment replacement to encourage consumers to replace internal combustion engine lawn and garden equipment.

(4)Incentives for medium- and heavy-duty vehicles and equipment mitigation, including all of the following:

(A)Lower emission schoolbus

programs.

(B)Electric, hybrid, and plug-in hybrid on-road and off-road medium- and heavy-duty equipment.

(C)Regional air quality improvement and attainment programs implemented by the state or districts in the most impacted regions of the state.

(D)Precommercial demonstrations of advanced vehicles, engines, equipment, and transportation systems.

(5)Workforce training initiatives related to advanced energy technology designed to reduce air pollution, including state-of-the-art equipment and goods, and new processes and systems. Workforce training initiatives funded shall be broad-based partnerships that leverage other public and private job training programs

and resources. These partnerships may include, though are not limited to, employers, labor unions, labor-management partnerships, community organizations, workforce investment boards, postsecondary education providers including community colleges, and economic development agencies.

(6)Incentives to identify and reduce emissions from high-emitting light-duty vehicles.

(d)(1) Beginning January 1, 2011, the state board shall submit to the Legislature a biennial report to evaluate the implementation of the Air Quality Improvement Program established pursuant to this chapter.

(2)The report shall include all of the following:

(A)A list of

projects funded by the Air Quality Improvement Account.

(B)The expected benefits of the projects in promoting clean, alternative fuels and vehicle technologies.

(C)Improvement in air quality and public health, greenhouse gas emissions reductions, and the progress made toward achieving these benefits.

(D)The impact of the projects in making progress toward attainment of state and federal air quality standards.

(E)Recommendations for future actions.

(3)The state board may include the information required to be reported pursuant to paragraph (1) in an existing report to the Legislature as the

state board deems appropriate. The state board may also include in an existing report the description of how grant, loan, voucher, or other incentive projects that receive moneys from the Air Quality Improvement Fund are implementing the labor standards required by Chapter 3.6 (commencing with Section 39680) of Part 2, as applicable.

(e)Projects using grants, loans, vouchers, or other incentives funded in part or whole by the Air Quality Improvement Fund shall be conditioned on the requirements of Chapter 3.6 (commencing with Section 39680) of Part 2, as applicable.

§ 44274.4

Added by Stats. 2018, Ch. 369, Sec. 2. (SB 1014) Effective January 1, 2019.

(a)For purposes of this section, the following terms have the following meanings:

(1)“California Clean Miles Standard and Incentive Program” means the program established pursuant to Section 5450 of the Public Utilities Code.

(2)“Clean Vehicle Rebate Project” means the program established by the board as part of the Air Quality Improvement Program pursuant to this article.

(3)“Transportation network company” has the same meaning as defined in Section 5431 of the Public Utilities Code.

(4)“Zero-emission vehicle” has the same meaning as defined in

Section 44258.

(b)The state board shall work with transportation network companies, including their affiliates; fleet owners that provide vehicles by contract to participating drivers for use on transportation network company platforms; entities contracting with participating drivers to provide zero-emission vehicles for use on transportation network company platforms; and stakeholders to evaluate the role of rental fleet, car share fleet, and business Clean Vehicle Rebate Project incentives with the California Clean Miles Standard and Incentive Program.

§ 44274.5

Added by Stats. 2007, Ch. 750, Sec. 5. Effective January 1, 2008.

The Air Quality Improvement Fund is hereby created in the State Treasury, to be administered by the state board. The moneys in the Air Quality Improvement Fund, upon appropriation by the Legislature, shall be expended by the state board in accordance with this chapter to implement the Air Quality Improvement Program. The Legislature may transfer moneys from the fund to the Carl Moyer Memorial Air Quality Standards Attainment Trust Fund.

§ 44274.6

Repealed and added by Stats. 2018, Ch. 366, Sec. 2. (AB 2885) Effective January 1, 2019. Section operative January 1, 2022, by its own provisions.

(a)For purposes of this section, the following definitions apply:

(1)“Low income” means a resident of the state whose household income is less than or equal to 300 percent of the federal poverty level.

(2)“Low-income communities” has the same meaning as defined in Section 39713.

(b)Under the Clean Vehicle Rebate Project established as a part of the Air Quality Improvement Program, the state board shall provide outreach to low-income households and low-income communities to increase consumer awareness of the Clean Vehicle Rebate Project.

(c)This section shall become operative on January 1, 2022.

§ 44274.7

Added by Stats. 2008, Ch. 760, Sec. 13. Effective September 30, 2008.

(a)Notwithstanding any other provision of this chapter, funds appropriated by the Legislature to the state board from the Air Quality Improvement Fund in the Budget Act of 2008, not used to implement the Air Quality Improvement Program, shall be expended by the state board to provide financial assistance to owners and operators of on-road heavy-duty diesel-fueled motor vehicles for costs associated with early compliance with both of the following regulations:

(1)Regulations to reduce emissions of diesel particulate matter, oxides of nitrogen, and other criteria pollutants, and greenhouse gases from in-use heavy-duty diesel-fueled vehicles.

(2)Regulations to reduce greenhouse gas emissions from heavy-duty tractors and 53-foot box-type trailers that transport freight on state highways.

(b)Funds shall be expended for low- or zero-interest loans or grants.

(c)Priority for funding shall be provided to both of the following:

(1)Owners of less than three on-road heavy-duty diesel-fueled motor vehicles and to those owners and operators most heavily impacted by the regulations described in subdivision (a) who demonstrate financial hardship as determined by the state board.

(2)On-road heavy-duty diesel-fueled motor vehicles that are used for short-haul trucking, including short-haul trucking that crosses state or federal borders where there are significant air pollution impacts in the state.

(d)The state board may contract with the Treasurer for assistance in expending funds through programs implemented by the Treasurer.

(e)The state board shall maximize use of the funds described in this section with other funds that may be available for on-road heavy-duty diesel-fueled motor vehicle pollution reduction, including, but not limited to, the Goods Movement Emission Reduction Program (Chapter 3.2 (commencing with Section 39625) of Part 2) and the Carl Moyer Memorial Air Quality Standards Attainment Program (Chapter 9 (commencing with Section 44275)).

(f)By January 1, 2010, and each January 1 thereafter until all funds are expended, the state board shall report to the Legislature on the implementation of this section, including, but not limited to, the types of financial assistance provided.

§ 44274.10

Amended by Stats. 2022, Ch. 574, Sec. 11. (AB 211) Effective September 27, 2022.

For purposes of this article, the following definitions apply:

(a)“Financing tools” includes, but is not limited to, any of the following:

(1)Capital instruments, which are financing instruments that increase access to capital or

other resources or reduce the cost of capital, or both, such as interest rate reductions, public-backed “soft” loans, grants, bonds, and investment aggregation, also known as warehousing.

(2)Risk reduction instruments, which are financing instruments that reduce exposure to risk or uncertainty, such as performance guarantees and asset residual value guarantees.

(3)Cost smoothing instruments, which are financing instruments that reduce and smooth up-front or recurrent costs, or both, such as operational leasing, all-inclusive leasing, also known as wet leasing, lease-purchase agreements, and on-bill financing.

(b)“Fleet” means one or more vehicles under common control or ownership.

(c)“Medium- and heavy-duty vehicle” includes, but is not limited to, trucks, buses, and vehicles used for construction and earth moving purposes.

(d)“Nonfinancial supports” means technical support, such as supports for technical management of

electric medium- and heavy-duty vehicles, technical assistance for financing approaches, battery health programs, and creation of residual markets, or policy action, such as policy measures to enable financing or encourage fleet transitions.

(e)“Program” means the Medium- and Heavy-Duty Zero-Emission Vehicle Fleet Purchasing Assistance Program established pursuant to Section 44274.11.

(f)“Underserved community” means any of the following communities:

(1)A low-income community as defined by paragraph (2) of subdivision (d) of Section 39713.

(2)A community identified as a disadvantaged community by the California Environmental Protection Agency pursuant to Section 39711.

(3)A community selected by the state board pursuant to Section 44391.2.

(4)A community located on lands belonging to a federally recognized California Native American tribe.

§ 44274.11

Amended by Stats. 2022, Ch. 574, Sec. 12. (AB 211) Effective September 27, 2022.

The Medium- and Heavy-Duty Zero-Emission Vehicle Fleet Purchasing Assistance Program is hereby established within the state board’s Air Quality Improvement Program established pursuant to Section 44274 to make financing tools and nonfinancial supports available to the operators of medium- and heavy-duty vehicle fleets to enable those operators to transition their fleets to zero-emission vehicles.

§ 44274.12

Amended by Stats. 2022, Ch. 574, Sec. 13. (AB 211) Effective September 27, 2022.

(a)The state board shall do all of the following when developing and implementing the program:

(1)Seek input from environmental justice organizations, medium- and heavy-duty vehicle fleets of diverse sizes and types, financiers, original truck equipment manufacturers, transportation, logistics, and fleet management companies, nongovernmental organizations, and other

relevant stakeholders on all of the following topics:

(A)Which medium- and heavy-duty fleets should be designated as high-priority fleets pursuant to paragraph (5), taking into consideration the implications for climate change, pollution and environmental justice, state policy regarding clean air and transportation, and post-COVID economic recovery.

(B)How to apply to the program the Governor’s Office of Business and Economic Development’s findings on the critical barriers that impede medium- and heavy-duty fleets in different sectors and of different fleet sizes from transitioning to zero-emission vehicles.

(C)The financing tools and nonfinancial supports that should be used to help overcome the critical barriers identified pursuant to subparagraph (B).

(D)How to determine whether the program is successful in meeting its goals.

(2)Develop and design, in consultation with other relevant state agencies and building on the input received pursuant to paragraph (1), financing tools and nonfinancial supports that are most appropriate for different sizes and sectors of medium- and heavy-duty vehicle fleets.

(3)Ensure the financing tools and nonfinancial supports identified pursuant to paragraph (2) have no redundancies or inefficiencies with other state programs.

(4)Ensure that a minimum of 75 percent of financing products offered under the program are directed towards operators of medium- and heavy-duty fleets whose fleets directly impact, or operate in, an underserved community.

(5)Designate which medium- and heavy-duty fleets are the high-priority fleets that will have access to the program first based on a consideration of state transportation policy and the input received pursuant to paragraph (1). The

state board shall designate port and drayage truck fleets as one of the high-priority fleets until a date determined by the state board.

(6)Provide financing tools to operators of small and microfleets of medium- and heavy-duty vehicles that include, but are not limited to, direct assistance, such as incentives, grants, and vouchers, that increase access to capital and reduce exposure to market risks or uncertainties. The state board

shall determine how many vehicles constitute a small fleet and a microfleet for purposes of the program.

(7)Provide financing tools to operators of large fleets of medium- and heavy-duty vehicles to increase access to private capital in ways that make it easier, less expensive, or reduce uncertainties, or any combination of these things, for the operators to transition to zero-emission vehicles. The state board shall determine how many vehicles constitute a large fleet for purposes of the program.

(8)Enable the stacking or coordinated combination of financial tools and nonfinancial supports.

(9)Facilitate the decommissioning of high-polluting medium- and heavy-duty vehicles in

accordance with the state’s clean air targets and goals.

(10)Enable the development of replicable business models that allow private capital to fully engage, while meeting the goals of this article.

(11)Include optimal financing tools and appropriate nonfinancial supports that are designed and targeted to catalyze electrification at scale.

(12)Encourage emerging flexible business, operational, and ownership models that accomplish the goals of this article, such as lease-backs or electric vehicle managers and lessors.

(13)Ensure the financing tools and nonfinancial supports designed and developed pursuant to this section are available to operators of medium- and heavy-duty fleets by January 1, 2023.

(b)Upon appropriation by the Legislature, the state board may allocate moneys to the program from, but is not limited to funding the program from, all of the following funding sources:

(1)The Air Quality Improvement Fund created by Section 44274.5.

(2)The Greenhouse Gas Reduction Fund created by Section 16428.8 of the Government Code.

(3)The General Fund.

(c)(1) The state board shall ensure that the program aligns with milestones established in Executive Order No. N-79-20 and the goals set forth in Resolution 20-19 adopted by the state board on June 25, 2020, along with the Advanced Clean Trucks Regulation (Sections 1963 to 1963.5, inclusive, and Sections 2012 to 2012.2, inclusive, of Title 13 of the California Code of Regulations).

(2)The state board shall do both of the following:

(A)Establish penetration targets for deployment of financing tools and nonfinancial supports to operators, including, but not limited to, those whose fleets directly impact, or operate in, underserved communities for each milestone specified in paragraph (1).

(B)Compile data and information about the deployment of financing

tools and nonfinancial supports provided pursuant to the program to operators, including, but not limited to, those whose fleets directly impact, or operate in, underserved communities.

(d)The state board shall coordinate with the Public Utilities Commission and the State Energy Resources Conservation and Development

Commission to provide marketing, education, and outreach to underserved communities regarding the program.

§ 44274.13

Amended by Stats. 2022, Ch. 574, Sec. 14. (AB 211) Effective September 27, 2022.

(a)In implementing the program, the state board, shall develop a data collection and dissemination strategy for the program to facilitate informed decisionmaking by other state agencies and private sector financiers.

(b)The state board shall keep confidential all business trade secrets and proprietary information

about fleets that

it gathers or becomes aware of through the course of implementing and administering this article, including through applications for financial assistance. Business trade secrets and proprietary information obtained pursuant to this subdivision are not subject to the California Public Records Act

(Division 10 (commencing with Section 7920.000) of Title 1 of the Government Code).

(c)The strategy developed pursuant to subdivision (a) shall include data that is necessary to facilitate the financing of zero-emission vehicles in order to increase the scalability of financial tools and nonfinancial supports. These data include, but are not limited to, vehicle and battery performance, upfront and operational costs, residual values, operational revenues, and zero-emission vehicle miles traveled.

§ 44274.15

Added by Stats. 2021, Ch. 639, Sec. 2. (SB 372) Effective January 1, 2022.

The state board shall create, in coordination with other state agencies that administer programs similar to the program established in Section 44274.11, a “one-stop shop” that provides information on the state board’s internet website to operators of medium- and heavy-duty fleets about all of the potential financing and grant options and other technical assistance available to help obtain financing for zero-emission medium- and heavy-duty vehicles.