CHAPTER 3.2. Goods Movement Emission Reduction Program [39625. - 39627.5.]

Cal. Health and Safety Code - HSC 3.2.
in effect

Cal. Health and Safety Code - HSC § 39625. Section 39625.

The Legislature finds and declares as follows: (a) In November 2006, the voters approved the Highway Safety, Traffic Reduction, Air Quality and Port Security Bond Act of 2006, also known as Proposition 1B, that, among other things, provided one billion dollars ($1,000,000,000) to reduce emissions associated with the movement of freight along California’s trade corridors. (b) Proposition 1B requires these funds to be made available, upon appropriation by the Legislature and subject to the conditions and criteria provided by the Legislature, to the State Air Resources Board in order to reduce the emissions associated with goods movement. (c) Proposition 1B further required these funds to be made available for emission reductions not otherwise required by law or regulation. These funds are intended to supplement existing funds used to finance strategies that reduce emissions and public health risk associated with the movement of freight commencing at the state’s seaports and land ports of entry and transported through California’s trade corridors. (d) Tremendous growth in goods movement activity has created a public health crisis in communities located adjacent to ports and along trade corridors. It is the intent of the Legislature that these funds be expended in a manner that reduces the health risk associated with the movement of freight along California’s trade corridors. (e) It is the intent of the Legislature that the state board maximize the emission reduction benefits, achieve the earliest possible health risk reduction in heavily impacted communities, and provide incentives for the control of emission sources that contribute to increased health risk in the future. (f) It is the intent of the Legislature that the state board develop partnerships between federal, state, and private entities involved in goods movement to reduce emissions. (g) The purpose of this chapter is to establish standards and procedures for the expenditure of these funds.

Cal. Health and Safety Code - HSC § 39625.1. Section 39625.1.

As used in this chapter, the following terms have the following meanings: (a) “Applicant” means any local public entity involved in the movement of freight through trade corridors of the state or involved in air quality improvements associated with goods movement. For the purposes of administering a loan or loan guarantee program only, an applicant may include any state agency. (b) “Emission” or “emissions” means emissions including, but not limited to, diesel particulate matter, oxides of nitrogen, oxides of sulfur, and reactive organic gases. (c) “Emission sources” means one of the following categories of sources of air pollution associated with the movement of freight through California’s trade corridors: heavy-duty trucks, locomotives, commercial harbor craft, ocean-going vessels related to freight, and cargo-handling equipment. (d) “Goods movement facility” means airports, seaports, land ports of entry, freight distribution warehouses and logistic centers, freight rail systems, and highways that have a high volume of truck traffic related to the movement of goods, as determined by the state board. (e) “Trade corridors” means any of the following areas: the Los Angeles/Inland Empire region, the Central Valley region, the Bay Area region, and the San Diego/border region.

Cal. Health and Safety Code - HSC § 39625.02. Section 39625.02.

(a) As used in this chapter and in Chapter 12.49 (commencing with Section 8879.20) of Division 1 of Title 2 of the Government Code, the following terms have the following meanings: (1) “Administrative agency” means the state agency responsible for programming bond funds made available by Chapter 12.49 (commencing with Section 8879.20) of Division 1 of Title 2 of the Government Code, as specified in subdivision (c). (2) Unless otherwise specified in this chapter, “project” includes equipment purchase, right-of-way acquisition, and project delivery costs. (3) “Recipient agency” means the recipient of bond funds made available by Chapter 12.49 (commencing with Section 8879.20) of Division 1 of Title 2 of the Government Code that is responsible for implementation of an approved project. (4) “Fund” shall have the meaning as defined in subdivision (c) of Section 8879.22 of the Government Code. (b) Administrative costs, including audit and program oversight costs for the agency administering the program funded pursuant to this chapter, recoverable by bond funds shall not exceed 5 percent of the program’s costs. (c) The State Air Resources Board is the administrative agency for the goods movement emission reduction program pursuant to paragraph (2) of subdivision (c) of Section 8879.23 of the Government Code. (d) The administrative agency shall not approve project fund allocations for a project until the recipient agency provides a project funding plan that demonstrates that the funds are expected to be reasonably available and sufficient to complete the project. The administrative agency may approve funding for usable project segments only if the benefits associated with each individual segment are sufficient to meet the objectives of the program from which the individual segment is funded. (e) Guidelines adopted by the administrative agency pursuant to this chapter and Chapter 12.49 (commencing with Section 8879.20) of Division 1 of Title 2 of the Government Code are intended to provide internal guidance for the agency and shall be exempt from the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code), and shall do all of the following: (1) Provide for audit of project expenditures and outcomes. (2) Require that the useful life of the project be identified as part of the project nomination process. (3) Require that project nominations have project delivery milestones, including, but not limited to, start and completion dates for environmental clearance, land acquisition, design, construction bid award, construction completion, and project closeout, as applicable. (f) (1) As a condition for allocation of funds to a specific project under Chapter 12.49 (commencing with Section 8879.20) of Division 1 of Title 2 of the Government Code, the administrative agency shall require the recipient agency to report, on a semiannual basis, on the activities and progress made toward implementation of the project. The administrative agency shall forward the report to the Department of Finance by means approved by the Department of Finance. The purpose of the report is to ensure that the project is being executed in a timely fashion, and is within the scope and budget identified when the decision was made to fund the project. If it is anticipated that project costs will exceed the approved project budget, the recipient agency shall provide a plan to the administrative agency for achieving the benefits of the project by either downscoping the project to remain within budget or by identifying an alternative funding source to meet the cost increase. The administrative agency may either approve the corrective plan or direct the recipient agency to modify its plan. (2) Within six months of the project becoming operable, the recipient agency shall provide a report to the administrative agency on the final costs of the project as compared to the approved project budget, the project duration as compared to the original project schedule as of the date of allocation, and performance outcomes derived from the project compared to those described in the original application for funding. The administrative agency shall forward the report to the Department of Finance by means approved by the Department of Finance.

Cal. Health and Safety Code - HSC § 39625.5. Section 39625.5.

(a) (1) Upon appropriation by the Legislature from the funds made available by paragraph (2) of subdivision (c) of Section 8879.23 of the Government Code, the state board shall allocate funds on a competitive basis for projects that are shown to achieve the greatest emission reductions from each emission source identified in subdivision (c) of Section 39625.1, not otherwise required by law or regulation, from activities related to the movement of freight along California’s trade corridors, commencing at the state’s airports, seaports, and land ports of entry. (2) Projects eligible for funding pursuant to paragraph (1) shall include, but are not limited to, the following: (A) The replacement, repower, or retrofit of heavy-duty diesel trucks. (B) The replacement, repower, or retrofit of diesel locomotive engines, with priority given to switching locomotive engines, provided that before any project is authorized for a locomotive engine operated and controlled by a railroad company that has entered into a memorandum of understanding or any other agreement with a state or federal agency, a local air quality management district, or a local air pollution control district, including, but not limited to, the ARB/Railroad Statewide Agreement Particulate Emissions Reductions Program at California Rail Yards, dated June 2005, the state board shall determine that the emission reductions that would be achieved by the locomotive engine are not necessary to satisfy any mandated emission reduction requirement under any such agreement. (C) The replacement, repower, or retrofit of harbor craft that operates at the state’s seaports. (D) The provision of on-shore electrical power for ocean freight carriers calling at the state’s seaports to reduce the use of auxiliary and main engine ship power. (E) Mobile or portable shoreside distributed power generation projects that eliminate the need to use the electricity grid. (F) The replacement, repower, or retrofit of cargo handling equipment that operates at the state’s seaports and rail yards. (G) Electrification infrastructure to reduce engine idling and use of internal combustion auxiliary power systems at truck stops, intermodal facilities, distribution centers, and other places where trucks congregate. (b) (1) The state board shall allocate funds in a manner that gives priority to emission reduction projects that achieve the earliest possible reduction of health risk in communities with the highest health risks from goods movement facilities. (2) In evaluating which projects to fund, the state board shall at a minimum consider all of the following criteria: (A) The magnitude of the emission reduction. (B) The public health benefits of the emission reduction. (C) The cost-effectiveness and sustainability of the emissions reductions. (D) The severity and magnitude of the emission source’s contributions to emissions. (E) Regulatory and State Implementation Plan requirements, and the degree of surplus emissions to be reduced. (F) The reduction in greenhouse gases, consistent with and supportive of emission reduction goals, consistent with existing law. (G) The extent to which advanced emission reduction technologies are to be used. (H) The degree to which funds are leveraged from other sources. (I) The degree to which the project reduces air pollutants or air contaminants in furtherance of achieving state and federal ambient air quality standards and reducing toxic air contaminants. (J) The total emission reductions a project would achieve over its lifetime per state dollar invested. (K) Whether an emissions reduction is likely to occur in a location where emissions sources in the area expose individuals and population groups to elevated emissions that result in adverse health effects and contribute to cumulative human exposures to pollution. (c) The state board shall ensure that state bond funds are supplemented and matched with funds from federal, local, and private sources to the maximum extent feasible.

Cal. Health and Safety Code - HSC § 39626. Section 39626.

(a) (1) The state board shall develop guidelines by December 31, 2007, consistent with the requirements of this chapter, to implement Section 39625.5, in consultation with stakeholders, including, but not limited to, local air quality management and air pollution control districts, metropolitan planning organizations, port authorities, shipping lines, railroad companies, trucking companies, harbor craft owners, freight distributers, terminal operators, local port community advisory groups, community interest groups, and airports. The guidelines shall, at a minimum, include all of the following: (A) An application process for the funds, and any limits on administrative costs for the recipient agency, including an administrative cost limit of up to 5 percent. (B) A requirement for a contribution of a specified percentage of funds leveraged from other sources or in-kind contributions toward the project. (C) Project selection criteria. (D) The method by which the state board will consider the air basin’s status in maintaining and achieving state and federal ambient air quality standards and the public health risk associated with goods movement-related emissions and toxic air contaminants. (E) Accountability and auditing requirements to ensure that expenditure of bond proceeds, less administrative costs, meets quantifiable emission reduction objectives in a timely manner, and to ensure that the emission reductions will continue in California for the project lifetime. (F) Requirements for agreements between applicants and recipients of funds executed by the state board related to the identification of project implementation milestones and project completion that ensure that if a recipient fails to accomplish project milestones within a specified time period, the state board may modify or terminate the agreement and seek other remedies as it deems necessary. (2) Prior to the adoption of the guidelines, the state board shall hold no less than one public workshop in northern California, one public workshop in the Central Valley, and one public workshop in southern California. (b) For each fiscal year in which funds are appropriated for the purposes of this chapter, the state board shall issue a notice of funding availability no later than November 30. For the 2007–08 fiscal year, if funds are appropriated for the purposes of this chapter, the state board shall issue a notice of funding upon adoption of the guidelines described in subdivision (a). (c) (1) After applications have been submitted and reviewed for consistency with the requirements of this chapter and the Highway Safety, Traffic Reduction, Air Quality, and Port Security Bond Act of 2006, the state board shall compile and release to the public a preliminary list of all projects that the state board is considering for funding and provide adequate opportunity for public input and comment. (2) The state board shall hold no less than one public workshop in northern California, one public workshop in the Central Valley, and one public workshop in southern California to discuss the preliminary list. This requirement shall not apply to the funds appropriated in the 2007–08 fiscal year. (3) After the requirements of paragraphs (1) and (2) are met, the state board shall adopt a final list of projects that will receive funding at a regularly scheduled public hearing. (d) Nothing in this chapter authorizes the state board to program funds not appropriated by the Legislature.

Cal. Health and Safety Code - HSC § 39626.5. Section 39626.5.

(a) A project shall not be funded pursuant to this chapter unless both of the following requirements are met: (1) The project is sponsored by an applicant. (2) The project is consistent with any comprehensive local or regional plans or strategies to reduce emissions from goods movement activities in its jurisdiction. (b) Notwithstanding Section 16304.1 of the Government Code, an applicant receiving funds pursuant to this chapter shall have up to two years from the date that the funds are allocated to the applicant pursuant to a grant agreement to award the contract for implementation of a project, or the funds shall revert to the California Ports Infrastructure, Security, and Air Quality Improvement Account for allocation as provided in paragraph (2) of subdivision (c) of Section 8879.23 of the Government Code upon appropriation by the Legislature. Funds not liquidated within four years of the date of the award of the contract between the applicant and the contractor shall revert to the California Ports Infrastructure, Security, and Air Quality Improvement Account for allocation as provided in paragraph (2) of subdivision (c) of Section 8879.23 of the Government Code upon appropriation by the Legislature. Returned funds or unspent funds from obligated contracts received by the applicant prior to the end of the four-year liquidation period may be awarded by the applicant to fund other equipment projects included on the same competitively ranked list approved by the state board pursuant to the grant agreement, or, if there are no other eligible projects included on that list, shall be returned to the state board for reallocation to an applicant by the state board pursuant to guidelines developed and adopted by the state board through a public process. These guidelines shall give first priority to projects that are both in the same emission source category and in the same trade corridor as the original project, and second priority to projects that are only in the same trade corridor as the original project. All funds awarded by the applicant shall be liquidated within four years of the date of the award of the original contract or shall revert to the California Ports Infrastructure, Security, and Air Quality Improvement Account for allocation provided in paragraph (2) of subdivision (c) of Section 8879.23 of the Government Code upon appropriation by the Legislature. (c) Of the amount appropriated in Item 3900–001–6054 of the Budget Act of 2007, not more than twenty-five million dollars ($25,000,000) shall be available to the state board for the purpose of executing grant agreements directly with ports, railroads, or local air districts for eligible projects to achieve the earliest possible health risk reduction from the emission sources identified in subdivision (c) of Section 39625.1. It is the intent of the Legislature that funds allocated pursuant to this subdivision be distributed pursuant to the guidelines adopted by the state board under Section 39626, and that the state board provide sufficient opportunity for the public to review and comment on any projects proposed to be funded pursuant to this subdivision.

Cal. Health and Safety Code - HSC § 39627. Section 39627.

The state board may seek reimbursement for program administration costs annually through an appropriation in the Budget Act from funds available pursuant to paragraph (2) of subdivision (c) of Section 8879.23 of the Government Code.

Cal. Health and Safety Code - HSC § 39627.5. Section 39627.5.

The state board shall submit an annual report to the Legislature summarizing its activities related to the administration of this chapter with the Governor’s proposed budget, on January 10, for the ensuing fiscal year. The summary shall, at a minimum, include a description of projects funded pursuant to this chapter, the amount of funds allocated for each project, the location of each project, the status of each project, and a quantitative description of the emissions reductions achieved through the project or program. The state board shall include in this report a description of any changes to the scope of grant agreements entered into to allocate funds to an applicant or changes to the award amounts described in a grant agreement.
Source: CA Legislative Counsel Bulk DataURL: https://downloads.leginfo.legislature.ca.gov/pubinfo_2025.zipFetched: 6/27/2026

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