1. (a) Local, State, and Federal Laws

   Projects must be in compliance with all local, state, and federal laws, ordinances, and regulations in order to be eligible for funding.

2. (b) Full Fuel Cycle Analysis

   1. (1) Emissions Determination -- Full fuel cycle emissions for both the project fuel and baseline fuel must be determined using scenario year 2012 for GHG's, criteria pollutants, and total weighted toxic air contaminants.

      1. (A) The funding agency must use the fuel pathway specific to the project if a single fuel pathway is applicable.
      2. (B) The funding agency must use the average of the fuel pathways available for the project if multiple fuel pathways are applicable.

      3. (C) The baseline fuel pathways must be determined using the appropriate fuel and vehicle/equipment combination set forth in Table 1. Fuel projects must use the baseline fuel pathway for the baseline fuel and vehicle/equipment combination that the project fuel would be displacing.

         Table 1. Baseline Fuel Pathways

         Baseline Fuel and Vehicle/Equipment

         Baseline Fuel Pathway

         Gasoline model year 2009 or older vehicle/equipment.

         Appendix A, page A-3, Reformulated Gasoline (RFG) Marginal, internal combustion engine vehicle (ICEV)

         Gasoline model year 2010 or newer vehicle/equipment.

         Appendix A, page A-7, RFG Marginal, ICEV,

         Diesel model year 2009 or older vehicle/equipment.

         Appendix A, page A-31, Diesel, California ultra low sulfur diesel (CA ULSD), ICEV

         Diesel model year 2010 or newer vehicle/equipment.

         Appendix A, page A-35, Diesel, CA ULSD, ICEV

   2. (2) Emissions Evaluation-- The following criteria must be used for evaluating project emissions using the full fuel cycle analysis:

      1. (A) Comparison of GHG emissions--

         The total full fuel cycle GHG emissions of the project fuel pathway must be less than or equal to those of the baseline fuel pathway to be eligible for funding.

      2. (B) Comparison of criteria pollutants and air toxic emissions--

         1. 1. The funding agency may choose to not fund the project, or

         2. 2. The funding agency may choose to conduct a supplemental evaluation to weigh the potential merits of the project. The supplemental evaluation must include all of the following:

            1. a. The emission disbenefits of the criteria pollutant(s) or toxic air contaminants must be fully mitigated by emission benefits of the identical criteria pollutant(s) or toxic air contaminants from other concurrently funded projects in the same air basin within the same funding cycle to be eligible for funding.
            2. b. The total criteria pollutant emissions and total weighted toxic air contaminant emissions occurring in California from the project fuel pathway must be less than or equal to the baseline fuel pathway to be eligible for funding.
            3. c. The supplemental evaluation must be published for review and comment by the public at least 30 calendar days prior to being presented in a publicly noticed meeting. The supplemental evaluation must be made available, at a minimum, through the funding agency's website. The meeting must include a discussion of the pollutant trade offs of the proposed project including any potential health impacts, a description of the proposed fuel/technology, an analysis demonstrating that the emission increases are fully mitigated in accordance with section 2343(b)(2)(B)2.a., the project's role in furthering the objectives of HSC sections 44270 through 44274, and how the proposed project supports the State of California's climate change goals.
            4. d. The Energy Commission will consult with ARB in conducting any supplemental evaluations.

         If emissions of one or more criteria pollutants or total weighted toxic air contaminants occurring in California from the project fuel pathway are greater than the baseline fuel pathway, then the funding agency must choose one of the two following options:

   Projects must be evaluated using Appendix A of the August 2007 Full Fuel Cycle Assessment: Well-to-Wheels Energy Inputs, Emissions, and Water Impacts, CEC- 600-2007-004-REV, which is hereby incorporated by reference, that was prepared to support the December 2007 State Alternative Fuels Plan, CEC-600-2007-011-CMF, adopted by the ARB on November 15, 2007, Resolution 07 51. Vehicle and equipment projects where the replacement vehicle/equipment uses the same fuel as the baseline vehicle/equipment are not subject to this requirement. Eligibility of a project must be determined using the following process:

3. (c) Permitting, licensing, and environmental review

   1. (1) Projects must comply with all applicable licensing, permitting, conditional use, environmental review, emission offsets, and mitigation strategy requirements that may be required under local, state, or federal law including, but not limited to, the federal Clean Air Act (42 United States Code section 7401 et seq.), National Environmental Policy Act of 1969 (42 United States Code section 4321 et seq.), California Clean Air Act of 1988 (Statutes of 1988, Chapter 1568, HSC section 39000 et seq.), Air Toxics “Hot Spots” Information and Assessment Act of 1987 (Statutes of 1987, Chapter 1252, HSC section 44300 et seq.), California Environmental Quality Act (CEQA)(Statutes of 1970, Chapter 1433, Public Resources Code sections 21000-21178) and CEQA Guidelines (Title 14 California Code of Regulations section 15000 et seq.), CEC Regulations (Title 20 California Code of Regulations, Division 2, Chapter 5, section 1701 et seq.), and local rules or ordinances.
   2. (2) For each project, all identified air quality impacts and mitigation strategies must be determined at the project level with the governmental entities that have regulatory or other jurisdiction over the project pursuant to local, state, and federal laws, ordinances, and regulations.
   3. (3) The grantee must commit in the funding agreement with the funding agency to implementing all air pollution mitigation strategies, if any, recommended or required by the applicable jurisdictional and regulatory entities.
   4. (4) All mitigation commitments must be set forth in writing prior to the grantee receiving the first funding allocation.
   5. (5) Documentation of required mitigation must be maintained by the funding agency for any project selected for funding. The funding agency must monitor the status of all required mitigation through completion of the project and maintain records according to the provisions set forth in section 2344.

   6. (6) Localized health impacts must be considered when selecting projects for funding. The funding agency must consider environmental justice consistent with state law and complete the following:

      1. (A) For each fiscal year, the funding agency must publish a staff report for review and comment by the public at least 30 calendar days prior to approval of projects. The report must analyze the aggregate locations of the funded projects, analyze the impacts 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, and identify agency outreach to community groups and other affected stakeholders.
      2. (B) Projects must be selected and approved for funding in a publicly noticed meeting.

   Projects that require licensing, permitting, environmental review, or other entitlement or precondition of use from local, state, or federal entities are subject to the requirements set forth herein:

4. (d) Specific Requirements for Vehicle and Equipment Projects

   1. (1) Emissions Evaluation

      The replacement vehicle/equipment tailpipe emissions must be equal to or less than those of the baseline vehicle/equipment for each pollutant for which the technology has an emission or verification standard in order to be eligible for funding.

   2. (2) Determination of Vehicle/Equipment Emissions

      1. (A) Emissions must be determined using the appropriate tailpipe emissions analysis inputs set forth in Table 2

         Table 2: Vehicle/Equipment Tailpipe Emissions Analysis Inputs

         Project Type

         Baseline Emissions

         Replacement Emissions

         New vehicle/equipment purchase

         Current vehicle/equipment model year emission factors

         Emission factors of vehicle/equipment to be purchased

         Vehicle/equipment replacement or Engine repower

         Emission factors of the vehicle/equipment or engine being replaced

         Emission factors of vehicle/equipment or engine to be purchased

         Vehicle retrofit

         Emission factors of the existing vehicle/equipment without retrofit

         Emissions of vehicle/equipment with retrofit installed, based on retrofit verification

      2. (B) Technologies that have not been certified or verified at the time of project evaluation may be considered for funding in accordance with the provisions set forth in (3) below.

   3. (3) Emerging technologies

      1. (A) The project applicant must document in writing to the funding agency that the technology has no emissions disbenefit when compared to the baseline vehicle/equipment.
      2. (B) The documentation may include, but is not limited to, test data, engineering specifications, or scientific studies relating to the technology being funded.
      3. (C) The funding agency must evaluate the documentation to ensure that it presents evidence that the technology results in no air quality disbenefit in emissions of criteria pollutants, toxic air contaminants, or greenhouse gases (GHG). The funding agency may consult with other entities in this evaluation.

      Emerging technologies shall be eligible for funding on a case-by-case basis. A case-by-case evaluation consists of the following steps and criteria:

   Tailpipe emissions for vehicle and equipment projects must be evaluated in accordance with the following requirements:

5. (e) Specific requirements for fuel projects

   All fuel projects must comply with applicable fuel specifications and future, new fuel specifications set forth in Title 13, California Code of Regulations, Division 3, Chapter 5, Article 1, Subarticle 2 and Article 3. Fuels with no fuel specification are exempt from this provision.

Except as provided in section 2341 (a) through (c) above, the following requirements are applicable to all projects:

Note: Authority cited: 39600, 39601 and 44271, Health and Safety Code. Reference: Sections 39600, 39601 and 44271, Health and Safety Code.

History

1. New section filed 6-4-2009; operative 6-4-2009 pursuant to Government Code section 11343.4 (Register 2009, No. 23).