GAVIN NEWSOM, GOVERNOR OFFICE OF ADMINISTRATIVE LAW REGISTER 2020, NUMBER 26−Z PUBLISHED WEEKLY BY THE OFFICE OF ADMINISTRATIVE LAW JUNE 26, 2020 PROPOSED ACTION ON REGULATIONS TITLE 2. FAIR POLITICAL PRACTICES COMMISSION Conflict−of−Interest Code — Notice File Number Z2020−0616−05 ....................................... 915 Amendment State Agency: California Earthquake Authority California Labor and Workforce Development Agency Multi−County: Marin Clean Energy Adoption Multi−County: Opportunities for Learning — California, Inc. TITLE 2.

STATE ALLOCATION BOARD Full−Day Kindergarten Facilities Grant Program — Notice File Number Z2020−0616−04 .................... 916 TITLE 2. STATE PERSONNEL BOARD Written Notification of Personal Service Contracts — Notice File Number Z2020−0612−01 ................... 924 TITLE 10. DEPARTMENT OF BUSINESS OVERSIGHT Credit Union Regulations Under the California Credit Union Law — Notice File Number Z2020−0612−02 ............................................. 927 TITLE 13 and 17. AIR RESOURCES BOARD Heavy−Duty Omnibus Low NOx Regulation — Notice File Number Z2020−0609−07 ........................ 930 TITLE 14.

BOARD OF FORESTRY AND FIRE PROTECTION Camping Fee Amendments, 2020 — Notice File Number Z2020−0616−03 ................................. 949 (Continued on next page) Time- Dated Material

TITLE 14. BOARD OF FORESTRY AND FIRE PROTECTION Tethered Operation Amendments, 2020 — Notice File Number Z2020−0616−02 ............................ 953 TITLE 15. DEPARTMENT OF CORRECTIONS AND REHABILITATION Registration Notification — Notice File Number Z2020−0610−01 ........................................ 957 TITLE 16. PHYSICAL THERAPY BOARD OF CALIFORNIA Substantial Relationship Criteria — Notice File Number Z2020−0616−01 ................................. 960 TITLE 28. DEPARTMENT OF MANAGED HEALTH CARE Conflict−of−Interest Code — Notice File Number Z2020−0611−01 ....................................... 963

SUMMARY OF REGULATORY ACTIONS Regulations filed with Secretary of State ........................................................... 964 The California Regulatory Notice Register is an official state publication of the Office of Administrative Law containing notices of proposed regulatory actions by state regulatory agencies to adopt, amend or repeal regulations contained in the California Code of Regulations. The effective period of a notice of proposed regulatory action by a state agency in the California Regulatory Notice Register shall not exceed one year [Government Code § 11346.4(b)].

It is suggested, therefore, that issues of the California Regulatory Notice Register be retained for a minimum of 18 months. CALIFORNIA REGULA TORY NOTICE REGISTER is published weekly by the Office of Administrative Law, 300 Capitol Mall, Suite 1250, Sacramento, CA 95814-4339. The Register is printed by Barclays, a subsidiary of West, a Thomson Reuters Business, and is offered by subscription for $205.00 (annual price). To order or make changes to current subscriptions, please call (800) 328−4880. The Register can also be accessed at http://www.oal.ca.gov.

CALIFORNIA REGULATORY NOTICE REGISTER 2020, VOLUME NUMBER 26-Z PROPOSED ACTION ON REGULATIONS Information contained in this document is published as received from agencies and is not edited by Thomson Reuters. TITLE 2.

FAIR POLITICAL PRACTICES COMMISSION NOTICE IS HEREBY GIVEN that the Fair Political Practices Commission, pursuant to the authority vested in it by Sections 82011, 87303, and 87304 of the Gov- ernment Code to review proposed conflict−of−interest codes, will review the proposed/amended conflict−of− interest codes of the following: CONFLICT−OF−INTEREST CODES Amendment STATE AGENCY: California Earthquake Authority California Labor and Workforce Development Agency MULTI−COUNTY: Marin Clean Energy Adoption MULTI−COUNTY: Opportunities for Learning — California, Inc.

A written comment period has been established com- mencing on June 26, 2020 and closing on August 10, 2020. Written comments should be directed to the Fair Political Practices Commission, Attention Amanda Apostol, 1102 Q Street, Suite 3000, Sacramento, Cali- fornia 95811. At the end of the 45−day comment period, the pro- posed conflict−of−interest code(

s) will be submitted to the Commission’s Executive Director for his review, unless any interested person or his or her duly autho- rized representative requests, no later than 15 days prior to the close of the written comment period, a public hearing before the full Commission. If a public hearing is requested, the proposed code(

s) will be submitted to the Commission for review. The Executive Director of the Commission will re- view the above−referenced conflict−of−interest code(s), proposed pursuant to Government Code Sec- tion 87300, which designate, pursuant to Government Code

Section 87302, employees who must disclose cer- tain investments, interests in real property and income. The Executive Director of the Commission, upon his or its own motion or at the request of any interested per- son, will approve, or revise and approve, or return the proposed code(

s) to the agency for revision and re− submission within 60 days without further notice. Any interested person may present statements, argu- ments or comments, in writing to the Executive Direc- tor of the Commission, relative to review of the pro- posed conflict−of−interest code(s). Any written com- ments must be received no later than August 10, 2020. If a public hearing is to be held, oral comments may be presented to the Commission at the hearing.

COST TO LOCAL AGENCIES There shall be no reimbursement for any new or in- creased costs to local government which may result from compliance with these codes because these are not new programs mandated on local agencies by the codes since the requirements described herein were mandated by the Political Reform Act of 1974. Therefore, they are not “costs mandated by the state” as defined in Govern- ment Code

Section 17514. EFFECT ON HOUSING COSTS AND BUSINESSES Compliance with the codes has no potential effect on housing costs or on private persons, businesses or small businesses. AUTHORITY Government Code Sections 82011, 87303 and 87304 provide that the Fair Political Practices Commission as the code reviewing body for the above conflict−of− interest codes shall approve codes as submitted, revise the proposed code and approve it as revised, or return the proposed code for revision and re−submission.

REFERENCE Government Code Sections 87300 and 87306 pro- vide that agencies shall adopt and promulgate conflict− of−interest codes pursuant to the Political Reform Act and amend their codes when change is necessitated by changed circumstances. CONTACT Any inquiries concerning the proposed conflict−of− interest code(

s) should be made to Amanda Apostol, Fair Political Practices Commission, 1102 Q Street, Suite 3000, Sacramento, California 95811, telephone (916) 324−5854. 915

CALIFORNIA REGULATORY NOTICE REGISTER 2020, VOLUME NUMBER 26-Z A V AILABILITY OF PROPOSED CONFLICT−OF−INTEREST CODES Copies of the proposed conflict−of−interest codes may be obtained from the Commission offices or the re- spective agency. Requests for copies from the Commis- sion should be made to Amanda Apostol, Fair Political Practices Commission, 1102 Q Street, Suite 3000, Sacramento, California 95811, telephone (916) 322−5660. TITLE 2.

STATE ALLOCATION BOARD THE STATE ALLOCATION BOARD PROPOSES TO AMEND REGULATION SECTIONS 1860 THROUGH 1860.21, INCLUDING ASSOCIATED FORMS AND GRANT AGREEMENT, TITLE 2, CALIFORNIA CODE OF REGULATIONS, RELATING TO THE FULL−DAY KINDERGARTEN FACILITIES GRANT PROGRAM PROPOSED AMENDMENTS TO THE FOLLOWING REGULATION SECTIONS:  1860, 1860.2, 1860.3, 1860.4, 1860.5, 1860.6, 1860.10, 1860.11, 1860.13, 1860.15, 1860.18, AND 1860.19 PROPOSED AMENDMENTS TO THE FOLLOWING FORMS  Application for Funding, Form SAB 70−01 (Rev. 10/19), which is incorporated by reference and referenced in Regulation

Section 1860.2  Fund Release Authorization, Form SAB 70−02 (Rev. 10/19), which is incorporated by reference and referenced in Regulation

Section 1860.2  Expenditure Report, Form SAB 70−03 (Rev. 10/19), which is incorporated by reference and referenced in Regulation

Section 1860.2  Grant Agreement, (Rev. 10/19), which is incorporated by reference and referenced in Regulation

Section 1860.2 NOTICE IS HEREBY GIVEN that the State Alloca- tion Board (SAB) proposes to amend the above− referenced regulation sections, including associated forms and grant agreement, contained in Title 2, Cali- fornia Code of Regulations (CCR). A public hearing is not scheduled. A public hearing will be held if any inter- ested person, or his or her duly authorized representa- tive, submits a written request for a public hearing to the Office of Public School Construction (OPSC) no later than 15 days prior to the close of the written comment period.

Following the public hearing, if one is request- ed, or following the written comment period if no public hearing is requested, OPSC, at its own motion or at the instance of any interested person, may adopt the pro- posals substantially as set forth above without further notice. AUTHORITY AND REFERENCE CITATIONS The SAB is proposing to amend the above−refer- enced regulation sections under the authority provided by Sections 17280, 17375, 17375(a), 17375(b), 17375(b)(2), 17375(b)(2)(A), 17375(b)(3), 17375(b)(4), 17375(c), 17375(e), 17375(f), 17375(g), 17375(

h) of the Education Code; 16304 and 16304.1 of the Government Code. The proposals interpret and make specific reference Sections 8973, 17070.15, 17072.10(b), 17072.10(d), 17072.10(e), 17074.10, 17075.10, 17075.15, 17280, 17375, 17375(a), 17375(b), 17375(b)(2), 17375(b)(2)(A), 17375(b)(2)(B), 17375(b)(3), 17375(b)(4), 17375(c), 17375(d), 17375(e), 17375(f), 17375(g), 17375(h), 41024, and 42238.01 of the Education Code; 14608 and 15490(c), Government Code; 1771.3 and 1771.5, La- bor Code. INFORMATIVE DIGEST/POLICY OVERVIEW STATEMENT Assembly Bill (AB) 1808,

Chapter 32, Statutes of 2018 (Committee on Budget, Education Finance: Edu- cation Omnibus Trailer Bill), established the Full−Day Kindergarten Facilities Grant Program (FDKFGP). The FDKFGP allows school districts that lack the facil- ities to provide full−day kindergarten to apply for one− time grants to construct new school facilities or retrofit existing school facilities for the sole purpose of provid- ing full−day kindergarten classrooms. On July 1, 2019, the Governor signed Senate Bill (SB) 75,

Chapter 51, Statutes of 2019, The Education Finance: Education Omnibus Trailer Bill. This bill appropriated an addi- tional $300,000,000 from the General Fund for the 2019/2020 fiscal year to the SAB to continue funding the program. In addition, the statute limits a portion of the program’s funding to school districts that will use the funding to convert part−day kindergarten facilities to full−day kindergarten facilities. At its meeting on Oc- tober 23, 2019, the SAB adopted proposed regulatory amendments on an emergency basis. The emergency regulations were approved by the Office of Administra- tive Law, filed with the Secretary of State and became effective on February 18, 2020. 916

CALIFORNIA REGULATORY NOTICE REGISTER 2020, VOLUME NUMBER 26-Z Funds Impacted  General Fund appropriation in the amount of $300,000,000 Attached to this Notice is the specific regulatory lan- guage of the proposed regulations, including three asso- ciated forms. The Grant Agreement, will not be includ- ed because the document is very large.

However, the proposed regulations, forms and the Grant Agreement will be accessible and can be reviewed on OPSC’s web- site at: https://www.dgs.ca.gov/OPSC/Resources/ Page−Content/Office−of−Public−School− Construction−Resources−List−Folder/Laws−and− Regulations, scroll down to “Full−Day Kindergarten Facilities Grant Program, FDK Pending Regulatory Changes.” Copies of the proposed regulations, associ- ated forms and Grant Agreement will be mailed to any person requesting this information by using OPSC’s contact information set forth below in this Notice.

The proposed regulations implement the FDKFGP Regula- tions under the California Code of Regulations, Title 2,

Chapter 3, Subchapter 4, Group 1, State Allocation Board, Subgroup 5.8, Regulations relating to the Full− Day Kindergarten Facilities Grant Program. Background and Problem Being Resolved As mentioned above, The Education Finance: Educa- tion Omnibus Trailer Bill, SB 75,

Chapter 51, Statutes of 2019, was signed by the Governor on July 1, 2019. This bill appropriated to the SAB an additional $300 million from the General Fund for the 2019/2020 fiscal year to provide one−time grants to school districts to construct new school facilities or retrofit existing school facilities for the purpose of providing full−day kindergarten facilities. The statute limits a portion of the program’s funding to school districts that will use the funding to convert part−day kindergarten facilities to full−day kinder- garten facilities.

In addition, the statute changes the lo- cal matching share for these conversion projects from 50 percent for new construction projects and 40 percent for retrofit projects to 25 percent for both types of project scopes. For those districts that will not be con- verting, the local matching share remains at 50 percent and 40 percent, respectively. The OPSC, on behalf of the SAB, conducted two stakeholder meetings to discuss the proposed regulato- ry amendments to address statutory changes to the FDKFGP.

As a reminder, the projects must provide classrooms to house existing kindergarten students and not add capacity to bring new students to the school site. This remains a self−certification program. OPSC performed a search on whether the proposed regulations were consistent and compatible with exist- ing State laws and regulations. After performing the search, OPSC, on behalf of the SAB, determined that SB 75,

Chapter 51, Statutes of 2019, the Education Fi- nance: Education Omnibus Trailer Bill, was created to clarify and make modifications to the existing FDKFGP. There are no other programs or regulations in existence that address the lack of kindergarten facilities or the conversion of part−day kindergarten facilities to full−day kindergarten facilities. Therefore, the pro- posed regulations are determined to be consistent and compatible with existing State laws and regulations.

Proceeding with the implementation of the proposed regulatory amendments, the three forms and the grant agreement templates will enhance applicants’ aware- ness when partnering with the State while defining the responsibilities of funding applicant projects. This will ensure program oversight and expenditure accountability. Anticipated Benefits of the Proposed Regulations There are non−monetary benefits associated with these proposed regulatory amendments.

The proposed regulations promote fairness to all school districts, es- pecially those school districts that may not otherwise qualify for State funding under the School Facility Pro- gram.

The proposed regulations also promote social eq- uity by providing one−time general fund funding to those school districts that wish to convert part−day kindergarten facilities to full−day kindergarten facili- ties, and for those school districts lacking the facilities to provide full−day kindergarten instruction to con- struct new school facilities or retrofit existing school fa- cilities in an effort to provide kindergarten facilities.

Additionally, there are benefits to health, safety, and welfare of California residents (school children and school faculty) because kindergarten facilities will be built stronger and safer. School districts utilize con- struction and trades employees to work on school con- struction projects and although the proposed regula- tions do not directly impact worker’s safety, existing law provides for the availability of a skilled labor force.

Further, public health and safety is enhanced because a properly paid and trained workforce will build school construction projects that are higher quality, structural- ly code−compliant and safer for use by pupils, staff, and other occupants on the site. Lastly, the State will benefit because kindergarten facilities will be constructed, thereby increasing the State’s inventory of school facilities. The proposed regulations are therefore determined to be consistent and compatible with existing State laws and regulations.

As stated above, OPSC performed a search on whether the proposed regulations were con- sistent and compatible with existing State laws and reg- ulations. After performing the search, OPSC, on behalf of the SAB, has determined that SB 75,

Chapter 51, Ed- ucation Finance: Education Omnibus Trailer Bill, was 917

CALIFORNIA REGULATORY NOTICE REGISTER 2020, VOLUME NUMBER 26-Z created to clarify and make modifications to the exist- ing FDKFGP. There are no other programs or regula- tions in existence that address the lack of kindergarten facilities or the conversion of part−day kindergarten fa- cilities to full−day kindergarten facilities. Therefore, the proposed regulations are determined to be consis- tent and compatible with existing State laws and regula- tions.

Proceeding with the implementation of the pro- posed regulatory amendments, the three forms and the grant agreement templates will enhance applicants’ awareness when partnering with the State while defin- ing the responsibilities of funding applicant projects. This will ensure program oversight and expenditure accountability. These proposed regulations may have a positive im- pact to various business, manufacturing, and construction−related industries such as architecture, engineering, trades and municipalities, along with the creation of an unknown amount of jobs.

The proposed regulations may also provide a positive impact to the creation of jobs, the creation of new businesses, and the expansion of businesses in California. It is not anticipat- ed that the proposed regulations will result in the elimi- nation of existing businesses or jobs within California.

Summary of the Proposed Regulatory Amendments A

summary of the proposed regulations is as follows: Existing Regulation

Section 1860 states the purpose of the regulations, which is to implement the FDKFGP. The proposed regulatory amendments delete language that refers to grant funding in the amount of $100 mil- lion dollars since there is an additional appropriation and adds the word “funding” to represent all of the fund- ing appropriated to the FDKFGP. Existing Regulation

Section 1860.2 represents a set of defined words and terms used exclusively for these regulations. These

definitions provide clarity to OPSC and school districts on program concepts and require- ments. The proposed regulatory amendments add addi- tional defined words and terms for purposes of clarify- ing the differences between Full−Day Kindergarten Program and Part−Day Kindergarten Program. Existing Regulation

Section 1860.3 sets forth general requirements that all school districts seeking program funding must meet. This regulation also specifies that school districts may only apply for program funding for a project that entered into a construction contract on or after the program start date of June 27, 2018. The pro- posed regulatory amendments make structure changes to this

Section since the funding is separated between the $100 million provided in the 2018/2019 budget and the $300 million provided in the 2019/2020 budget; each funding source has specific requirements and timelines. In addition, the FDKFGP was revised through Senate Bill 75 which was signed by the Gover- nor effective July 1, 2019, not June 27, 2019. Existing Regulation

Section 1860.4 provides general funding guidelines for the program that apply to all school districts that participate in the program. This

Section clarifies that any funds returned prior to June 20, 2021 will be returned to the program account, while funds returned after June 30, 2021 will be returned to the General Fund. The proposed regulatory amend- ments delete language and restructure the

Section by delineating the funding from the 2018/2019 budget which must be encumbered by a certain date and pro- vides specificity regarding funds from the 2019/2020 budget that must be encumbered by June 30, 2022 or the funding shall be returned to the General Fund. In order to encourage participation in the FDKFGP, consistent with the statutory change, the regulations now clarify that new facilities built with full−day kindergarten pro- gram funds will not impact a school district’s School Facility Program (SFP) eligibility. Existing Regulation

Section 1860.5 sets forth several criteria that all school districts must meet in order to ap- ply for program funding. School districts are required to provide a school board resolution providing approval to provide full−day kindergarten instruction at the project school site at completion of the project, pursuant to Ed- ucation Code

Section 8973. Additionally, school dis- tricts will be required to prove that they currently lack full−day kindergarten facilities. This

Section also re- quires school districts to provide a description of the proposed project that contains certain criteria. The pro- posed regulatory amendments delete language and re- structure the

Section for improved readability due to program modifications. School districts participating in the FDKFGP must convert from a part−day to a full− day kindergarten program for the 2019/2020 and 2020/2021 fiscal years; and for the 2021/2022 fiscal year, funding will not be to limited to conversion projects. School districts requesting funding from the 2019/2020 Budget Act are required to submit four years of enrollment data to determine a project’s overall need for funding based on enrollment patterns.

OPSC will collaborate with the California Department of Educa- tion (CDE) to determine if a project’s need for funding will be limited to retrofit. This is to ensure funds are ap- propriately spent. In addition, Subsection (d)(1)(C), the word “Section” was added, which is considered a non− substantive change. Existing Regulation

Section 1860.6 sets forth the ap- plication submittal process, which authorizes the SAB to establish two 30−calendar day funding rounds for school districts to request apportionments of available program funds. The proposed regulatory amendments 918

CALIFORNIA REGULATORY NOTICE REGISTER 2020, VOLUME NUMBER 26-Z delete the words “Full−Day Kindergarten Facilities Grant” as these are the regulations for the Program and do not require reiteration. The funding was made avail- able in the third and fourth funding rounds to give prior- ity to school districts converting from a part−day kindergarten program to a full−day kindergarten pro- gram. These additional funding rounds will allow the SAB to promptly expend the funds by the statute driven deadline of June 30, 2022. Any applications that do not receive an apportionment during each funding round will be returned to the school district. Existing Regulation

Section 1860.10 sets forth the process by which the amount for an additional grant for site acquisition will be determined. Education Code

Section 17375(

f) authorizes the SAB to allocate fund- ing necessary to acquire property adjacent to the exist- ing school site. The Site acquisition funding determina- tion for FDKFGP projects is similar to what is used in the SFP Regulations. The proposed regulatory amend- ment deletes wording that is no longer applicable be- cause it is more appropriate to provide an accurate ap- praisal within six months of purchasing a site for reim- bursement projects. Existing Regulation

Section 1860.11 specifies the matching share requirement for school districts apply- ing for a new construction grant. With the exception of school districts that receive financial hardship funding, school districts that apply for a new construction grant must provide 50 percent and the state will provide 50 percent, pursuant to Education Code 17375(b)(3). The proposed regulatory amendments delete language and restructure the

Section to include new funding ratios for state/district shares based on whether a school district is converting from a part−day kindergarten program to a full−day kindergarten program. If a school district is converting, then the district share is 25 percent and the state share is 75 percent. If a school district is not con- verting, then the funding ratio for state/district shares remains at 50/50. Existing Regulation

Section 1860.13 specifies the matching share requirement for school districts apply- ing for a retrofit grant. With the exception of school dis- tricts that receive financial hardship funding, school districts that apply for a retrofit grant must provide 40 percent and the state will provide 60 percent, pursuant to Education Code 17375(b)(3). The proposed regula- tory amendments delete language and restructure the

Section to include new funding ratios for state/district shares based on whether a school district is converting from a part−day kindergarten program to a full−day kindergarten program. If a school district is converting, then the district share is 25 percent and the state share is 75 percent. If a school district is not converting, then the funding ratio for state/district shares remains at 60/40. Existing Regulation

Section 1860.15 specifies the funding priority based on a school district’s preference points. Education Code

Section 17375(b)(2) states that priority for FDKFGP grants will be given to school dis- tricts that qualify for financial hardship and/or that have a high population of pupils who are eligible for Free and Reduced−Price School Meals (FRPM). This

Section creates a system of preference points in order to deter- mine project funding order. A maximum of 80 prefer- ence points may be earned in each funding round for each school district. A school district’s preference points will be calculated into two categories. Based on a sliding scale currently used in the SFP for the Charter School Facilities Program, a sliding scale was created to determine the percentage of students a school district has eligible for FRPM.

Points begin at four points for 60−65 percent of students eligible for FRPM, while 40 points will be earned if 100 percent of students within the school district qualify for FRPM. If a school district has been qualified for financial hardship by OPSC and is unable to contribute a portion or all of its matching share, the school district earns 40 points. Once OPSC has determined school districts’ approved applications, school districts will be placed in a preference order based on the preference points earned. School districts will be ordered from highest to lowest points (80 points to zero points).

If sufficient funds are available in that funding round, then all approved applications will be funded. If the amount of funding requested is more than the amount allocated for that round, then OPSC will be- gin with the highest preference point school district and fund their first priority project as stated on the Form SAB 70−01, Application for Funding. If two or more school districts have the same amount of preference points, then they will be placed into a lottery to deter- mine who will be funded first.

The proposed regulatory amendments add an additional tiebreaker for school districts with the same total preference points by using a school district’s exact Low Income percentage to one decimal place identified on the most recent FRPM data on file. This tiebreaking method should reduce the like- lihood of having to do a lottery and to remain in align- ment with the statute to prioritize funding to lower− income school districts. However, if there is still a tie then a lottery system will take place. Existing Regulation

Section 1860.18 sets forth re- porting requirements that school districts receiving pro- gram funding must meet. A school district that has re- ceived funds in accordance with the program must sub- mit an expenditure report at the completion of the project. School districts must submit a valid Form SAB 70−03, Expenditure Report. A project is considered complete when either of the following occurs: 1) When the notice of completion has been filed; all outstanding 919

CALIFORNIA REGULATORY NOTICE REGISTER 2020, VOLUME NUMBER 26-Z invoices, claims, and change orders have been satisfied and the facility is currently in use by the school district; or 2) One year from the final fund release. A final ex- penditure report shall be due one year after the first ex- penditure report. OPSC will use the information pro- vided on this form to ensure that expenditures made by the school districts for their FDKFGP projects comply with statute and other applicable State requirements pertaining to construction. The proposed regulatory amendment adds an additional reference citation that relates to the new funding ratio of 75/25, state/district shares. Existing Regulation

Section 1860.19 specifies how remaining funding may be used after project comple- tion. Project savings and unexpended funds are the dif- ferent types of remaining funds from FDKFGP projects. School districts that are not financial hardship are able to expend their project savings, including inter- est, that are not needed for the FDKFGP project on oth- er high priority capital facility needs of the school dis- trict. Any savings not expended within one year of project completion must be returned to the State.

School districts that are financial hardship that have any unex- pended funds from the FDKFGP project and that were not spent on eligible expenditures, must be returned to the State upon completion of the project. Any interest earned on State funds for financial hardship grant fund- ing that is not expended on eligible project expenditures must be returned to the State to help reduce the financial hardship contribution for that project. A school district is only required to return unexpended funds up to the amount of the financial hardship grant provided by the SAB.

The proposed regulatory amendments allow school districts receiving funding from the 2019/2020 Budget Act to expend project savings, regardless of Fi- nancial Hardship status. In addition, project savings may be expended on professional and instruction mate- rials to build capacity for the implementation of a full− day kindergarten program. Existing Form SAB 70−01, Application for Funding, (which is incorporated by reference) is used by school districts to apply for program funding.

The form also serves as a certification from the district regarding com- pliance with requirements of the law and FDKFGP Regulations. School districts must submit this form during the funding rounds described in Regulation Sec- tion 1860.6. OPSC will use this form in order to collect the information necessary to calculate the amount of grants applicable to the project and to determine project funding order.

The proposed regulatory amendments provide 1) the ability for a school district to apply for both new construction and retrofit as a dual scope type of application [pages 1 and 3]; 2) deletes language re- garding the labelling of current kindergarten class- rooms, including the submission of certain documenta- tion [pages 1 and 2]; and 3) adds new language instruct- ing school districts to label all facilities and identify their current uses as well as all classrooms constructed or previously retrofitted to house kindergarten pupils [pages 1 and 2].

All of the proposed amendments per- tain to the different types of applications listed under “Specific Instructions of this Form. In addition, there are two new Certifications being added on page 4 as well as two Certifications being amended and deleted. Existing Form SAB 70−02, Fund Release Authoriza- tion (which is incorporated by reference) is used by school districts to request the release of funds when projects have received an apportionment by the SAB.

The applicant will certify on this form that it has already submitted the signed grant agreement, or the signed grant agreement is accompanying the Form SAB 70−02. After an FDKFGP apportionment has been made by the Board, OPSC will release the apportioned funds once the school district completes and submits this form to OPSC. School districts who receive grants without an advance release of funds must submit this form with all required approvals within 180 days of ap- portionment.

School districts who receive grants with an advance release of funds must then submit this form with all required approvals within 12 months of appor- tionment. The proposed regulatory amendment re- minds school districts to submit an updated Form SAB 70−01 if funding was previously received for design and/or site approvals. Existing Form SAB 70−03, Expenditure Report, is used by school districts to report their project savings and unexpended funds. Expenditure reports must be submitted within one year of final fund release or at the completion of the FDKFGP project.

A final savings re- port must be submitted within one year of the comple- tion of the project. Financial hardship projects must submit their unexpended funds at the completion of their project. OPSC will use the information provided on this form to ensure that expenditures made by the school districts for FDKFGP projects comply with statute and other applicable State requirements pertain- ing to construction.

The proposed regulatory amend- ments include the addition of professional development or instruction materials to build capacity for the imple- mentation of the full−day kindergarten program, which is in alignmernt with Education Code

Section 17375(a)(4)(B)(i). Existing Grant Agreement template (which is incor- porated by reference) includes sections relevant to the FDKFGP for new construction and retrofit funding. It is the intent that the grant agreement will be entered into for every funding application that is processed; there- fore, each grant agreement will contain the relevant project information. The grant agreements serve as binding documents and key resources that define the re- 920

CALIFORNIA REGULATORY NOTICE REGISTER 2020, VOLUME NUMBER 26-Z sponsibilities of the state and school districts from the determination of the amount of eligible state funding to the reporting of all project funds, including any savings achieved. This will ensure greater transparency and ac- countability for the program grants being awarded un- der FDKFGP.

The proposed regulatory amendments in- corporate 1) the submittal of annual expenditure reports 12 months from the date of the full fund release, and 2) the ability for financial hardship districts to retain sav- ings and the retention of savings may be expended on professional development or instructional materials to build capacity for the implementation of a full−day kindergarten program.

There are minor changes incorporated on page 9, un- der F.2.: added the word “Section”; page 18, 3.f., under the heading Authority: struck out the extra “1” in 20114; page 28, 3.e. and f., under the heading Authori- ty: added “.” after Ed Code; pages 29 & 30, 5.a−j, under the heading Authority: added “.” after Ed Code.

These minor changes are considered non−substantive changes After conducting a review, the SAB has concluded that these are the only regulations on this subject area (construction of and/or retrofit of existing school facili- ties for the sole purpose of providing kindergarten classrooms), and therefore, the proposed regulations are neither inconsistent nor incompatible with existing State laws and regulations. The proposed regulations are within the SAB’s authority to enact regulations for the FDKFGP under Education Code

Section 17375(

g) and Government Code

Section 15503. Statutory Authority and Implementation Education Code

Section 17375(g). The State Alloca- tion Board may adopt regulations to implement this sec- tion. Any regulations adopted pursuant to this

section may be adopted as emergency regulations in accor- dance with the Administrative Procedure Act (Chapter 3.5 (commencing with

Section 11340) of

Part 1 of Divi- sion 3 of the Title 2 of the Government Code). The adoption of these regulations shall be deemed to be an emergency and necessary for the immediate preserva- tion of the public peace, health and safety, or general welfare. Government Code

Section 15503. Whenever the board is required to make allocations or apportionments under this part, it shall prescribe rules and regulations for the administration of, and not inconsistent with, the act making the appropriation of funds to be allocated or apportioned. The board shall require the procedure, forms, and the submission of any information it may deem necessary or appropriate. Unless otherwise pro- vided in the appropriation act, the board may require that applications for allocations or apportionments be submitted to it for approval. Determination of Inconsistency or Incompatibility with Existing State Regulations The Education Finance: Education Omnibus Trailer Bill, SB 75,

Chapter 51, Statutes of 2019, was signed by the Governor on July 1, 2019. This bill appropriated to the SAB an additional $300 million from the General Fund for the 2019/2020 fiscal year to provide one−time grants to school districts to construct new school facili- ties or retrofit existing school facilities for the purpose of providing full−day kindergarten facilities. The statute limits a portion of the program’s funding to school districts that will use the funding to convert part−day kindergarten facilities to full−day kinder- garten facilities.

In addition, the statute changes the lo- cal matching share for these conversion projects from 50 percent for new construction projects and 40 percent for retrofit projects to 25 percent for both types of project scopes. For those districts that will not be con- verting, the local matching share remains at 50 percent and 40 percent, respectively. OPSC performed a search on whether the proposed regulations were consistent and compatible with exist- ing State laws and regulations. After performing the search, OPSC, on behalf of the SAB, determined that SB 75,

Chapter 51, Statutes of 2019, the Education Fi- nance: Education Omnibus Trailer Bill, was created to clarify and make modifications to the existing FDKFGP. There are no other programs or regulations in existence that address the lack of kindergarten facilities or the conversion of part−day kindergarten facilities to full−day kindergarten facilities. Therefore, the pro- posed regulations are determined to be consistent and compatible with existing State laws and regulations.

Proceeding with the implementation of the proposed regulatory amendments, the three forms and the grant agreement templates, will enhance applicants’ aware- ness when partnering with the State while defining the responsibilities of funding applicant projects. This will ensure program oversight and expenditure accountability. Forms Incorporated by Reference  Application for Funding, Form SAB 70−01, (Rev. 10/19), referenced in Regulation

Section 1859.2 and is incorporated by reference.  Fund Release Authorization, Form SAB 70−02 (Rev. 10/19), referenced in Regulation

Section 1860.2 and is incorporated by reference.  Expenditure Report, Form SAB 70−03 (Rev. 10/19), referenced in Regulation

Section 1860.2 and is incorporated by reference. 921

CALIFORNIA REGULATORY NOTICE REGISTER 2020, VOLUME NUMBER 26-Z  Grant Agreement, (Rev. 10/19), referenced in Regulation

Section 1860.2 and is incorporated by reference. IMPACT ON LOCAL AGENCIES OR SCHOOL DISTRICTS The Executive Officer of the SAB has determined that the proposed regulations do not impose a mandate or a mandate requiring reimbursement by the State pur- suant to

Part 7 (commencing with

Section 17500) of Di- vision 4 of the Government Code. It will not require lo- cal agencies or school districts to incur additional costs in order to comply with the proposed regulations.

DISCLOSURES REGARDING THE PROPOSED REGULATORY ACTION The Executive Officer of the SAB has made the fol- lowing initial determinations relative to the required statutory categories:  The SAB has made an initial determination that there will be no significant, statewide adverse economic impact directly affecting business, including the ability of California businesses to compete with businesses in other states.  The SAB is not aware of any cost impacts that a representative private person or business would necessarily incur in reasonable compliance with the proposed action.  There will be no non−discretionary costs or savings to local agencies.  The proposed regulations create no costs to any local agency or school district requiring reimbursement pursuant to Sections 17500 et seq., or beyond those required by law, except for the required district contribution toward each project as stipulated in statute.  There will be no costs or savings in federal funding to the State.  The proposed regulations create no costs or savings to any State agency beyond those required by law.  The SAB has made an initial determination that there will be no impact on housing costs.

RESULTS OF THE ECONOMIC IMPACT ANALYSIS Impact to Businesses and Jobs in California The proposed regulations clarify and make modifica- tions to the existing FDKFGP, which allows school dis- tricts that wish to convert part−day kindergarten facili- ties to full−day kindergarten facilities, and for those dis- tricts that lack the facilities to provide full−day kinder- garten facilities to apply for one−time grants to con- struct new school facilities or retrofit existing school fa- cilities for the sole purpose of providing full−day kindergarten classrooms.

Many aspects of the FDKFGP continue to be based on similarities in the Leroy F. Greene School Facilities Act of 1998 (School Facility Program), such as Finan- cial Hardship, site acquisition guidelines, etc. just to name a few. The School Facility Program is a $42 bil- lion voter−approved school facilities construction pro- gram. Although the FDKFGP is not the primary school facilities construction program, it does provide funding dedicated to construction of new facilities and/or retro- fit of existing facilities for kindergarten classrooms on- ly.

In making these statements, manufacturing and construction−related industries may be competing for construction jobs for both the FDKFGP and the School Facility Program because of funds apportioned to school districts from both programs. The funds will be released once the school districts submit the fund re- lease form and associated grant agreement. It is antici- pated that there will be a positive impact to the State’s economy and the potential for job creation because school districts are able to utilize these funds right away for their construction projects.

Therefore, the proposed regulations will most likely have a positive effect on the State’s economy, creation of jobs, creation of new businesses, and expansion of businesses, and will not eliminate jobs or eliminate ex- isting businesses within California.

Benefits to Public Health and Welfare, Worker Safety, and the State’ s Environment  The proposed regulations promote the State’s general welfare, including protection of public health and safety, by assisting in increasing the State’s infrastructure investment of school facilities.  The proposed regulations also promote fairness and/or social equity by providing one−time general fund dollars to those school districts that may be able to construct new facilities or retrofit existing facilities in an effort to provide kindergarten facilities.  There are benefits to health, safety, and welfare of California residents (school children and school faculty) because kindergarten facilities will be built stronger and safer.  There are continued benefits to the health and welfare of California residents and worker safety.

School districts utilize construction and trades employees to work on school construction 922

CALIFORNIA REGULATORY NOTICE REGISTER 2020, VOLUME NUMBER 26-Z projects, and although these proposed regulations do not directly impact worker safety, existing law provides for the availability of a skilled labor force and encourages improved health and safety of construction and trades employees through proper apprenticeship and training.

Further, public health and safety is enhanced because a properly paid and trained workforce will build school construction projects that are higher quality, structurally code−compliant and safer for use by pupils, staff, and other occupants on the site.  There is no impact to the State’s environment from the proposed regulations. The SAB finds the proposed regulations fully consis- tent with the stated purposes and benefits. EFFECT ON SMALL BUSINESSES It has been determined that the proposed regulations will not have a negative impact on small businesses in the ways identified in subsections (a)(1)−(4) of

Section 4, Title 1, CCR. Although the proposed regulations only apply to school districts for purposes of funding kinder- garten facilities, the demand on the manufacturing and construction−related industries could potentially stim- ulate the creation of small businesses in these areas be- cause of funds being released to school districts from both the FDKFGP and School Facility Program.

SUBMISSION OF COMMENTS, DOCUMENTS AND ADDITIONAL INFORMATION Any interested person may present statements, argu- ments or contentions, in writing, submitted via U.S. mail, e−mail or fax, relevant to the proposed regulatory action. Written comments submitted via U.S. mail, e−mail or fax must be received at OPSC no later than August 10, 2020. The express terms of the proposed regulations as well as the Initial Statement of Reasons are available to the public.

Written comments, submitted via U.S. mail, email or fax, regarding the proposed regulatory action, requests for a copy of the proposed regulatory action or the Ini- tial Statement of Reasons, and questions concerning the substance of the proposed regulatory action should be addressed to: Lisa Jones, Regulations Coordinator Mailing Address: Office of Public School Construction 707 Third Street, 6 th Floor West Sacramento, CA 95605 E−mail Address: Lisa.Jones@dgs.ca.gov Fax No.: (916) 375−6721 AGENCY CONTACT PERSONS General or substantive questions regarding this No- tice of Proposed Regulatory Action may be directed to Lisa Jones at (916) 376−1753.

If Ms. Jones is unavail- able, these questions may be directed to the backup con- tact person, Mr. Michael Watanabe, Chief of Adminis- trative Services, at (916) 376−1646. ADOPTION OF REGULATIONS Please note that, following the public comment peri- od, the SAB may adopt the regulations substantially as proposed in this notice or with modifications that are sufficiently related to the originally proposed text and notice of proposed regulatory activity.

If modifications are made, the modified text with the changes clearly in- dicated will be made available to the public for at least 15 days prior to the date on which the SAB adopts the regulations. The modified regulation(

s) will be made available and provided to: all persons who testified at and who submitted written comments at the public hearing, all persons who submitted written comments during the public comment period, and all persons who requested notification from the agency of the availability of such changes. Requests for copies of any modified regula- tions should be addressed to the agency’s regulations coordinator identified above. The SAB will accept writ- ten comments on the modified regulations during the 15−day period.

SUBSTANTIAL CHANGES WILL REQUIRE A NEW NOTICE If, after receiving comments, the SAB intends to adopt the regulations with modifications not sufficient- ly related to the original text, the modified text will not be adopted without complying anew with the notice re- quirements of the Administrative Procedure Act. RULEMAKING FILE Pursuant to Government Code

Section 11347.3, the SAB is maintaining a rulemaking file for the proposed regulatory action. The file currently contains: 1. A copy of the text of the regulations for which the adoption is proposed in strikeout/underline. 2. A copy of this Notice. 923

CALIFORNIA REGULATORY NOTICE REGISTER 2020, VOLUME NUMBER 26-Z 3. A copy of the Initial Statement of Reasons for the proposed adoption. 4. The factual information upon which the SAB is relying in proposing the adoption. As data and other factual information, studies, reports or written comments are received they will be added to the rulemaking file. The file is available for public in- spection at OPSC during normal working hours.

Items 1 through 3 are also available on OPSC’s Internet Web site at: https://www.dgs.ca.gov/OPSC/Resources/ Page−Content/Office−of−Public−School− Construction−Resources−List−Folder/Laws−and− Regulations, scroll down to “Full−Day Kindergarten Facilities Grant Program, FDK Pending Regulatory Changes” and click on one of the linked documents, such as the 45−day Public Notice, the Initial Statement of Reasons and the proposed regulatory text. ALTERNATIVES In accordance with Government Code

Section 11346.5(a)(13), the SAB must determine that no rea- sonable alternative it considered or that has otherwise been identified and brought to its attention would be more effective in carrying out the purpose for which the action is proposed, would be as effective and less bur- densome to affected private persons than the proposed action, or would be more cost−effective to affected pri- vate persons and equally effective in implementing the statutory policy or other provision of law. The proposed regulations clarify and make modifications to the exist- ing FDKFGP based on statute.

There are no other pro- grams or regulations in existence that address the lack of kindergarten facilities or the conversion of part−day kindergarten facilities to full−day kindergarten facilities. A V AILABILITY OF THE FINAL STATEMENT OF REASONS Upon its completion, the Final Statement of Reasons will be available and copies may be requested from the agency’s regulation coordinator named in this notice or may be accessed on the website listed above. TITLE 2. STATE PERSONNEL BOARD Notice is hereby given that the State Personnel Board (Board) proposes to adopt

Section 547.60.2 to clarify that contracting state agencies must notify all or- ganizations representing employees who perform or could perform the type of contracted work of all person- al services contracts not expressly exempted from the requirements of Government Code

section 19132, sub- division (b)(1). Additionally,

Section 547.60.2 speci- fies that it is the contracting agency’s responsibility to identify and notify the appropriate employee organiza- tion or, when the contracting agency is unable to deter- mine the appropriate employee organization, to notify all employee organizations. Contracting agencies can- not conclude that no union represented employees per- form or could perform the type of work to be contracted. PUBLIC HEARING A public hearing regarding the proposed regulatory action will be held at State Personnel Board on August 12, 2020, at 10:00 a.m. via teleconference.

In order to participate in the public hearing, you may call 1 (877) 848−7030 and dial participant code # 1223758. At the hearing, any person may present statements or argu- ments orally or in writing relevant to the proposed ac- tion described in the Informative Digest. The Board re- quests but does not require that persons who make oral comments at the hearing also submit a written copy of their testimony at the hearing. The telephonic confer- ence to be used for the public hearing is accessible to persons with mobility impairment.

Persons with sight or hearing impairments are requested to notify the con- tact person for these hearings (listed below) in order to make specific arrangements, if necessary. WRITTEN COMMENT PERIOD Any interested party, or his or her duly authorized representative, may submit written comments relevant to the proposed regulatory action to the contact person listed below. Lori Gillihan, Chief Policy Division State Personnel Board 801 Capitol Mall Sacramento, CA 95814 Email: lori.gillihan@spb.ca.gov The written comment period closes on August 10, 2020.

Only written comments received by that time shall be reviewed and considered by the Board before it adopts, amends, or repeals a regulation. AUTHORITY AND REFERENCE The Board proposes to adopt

Section 547.60.2 of Ti- tle 2,

Chapter 1 of the CCR pursuant to the authority vested in it by the California Constitution,

article 7, sec- tion 3, and Government Code

section 18701 and Public Contract Code

section 10337, subdivision (a). The pro- posed regulations will implement, interpret, and make specific the provisions of Government Code sections 18661 and 19132, subdivision (b)(1). 924

CALIFORNIA REGULATORY NOTICE REGISTER 2020, VOLUME NUMBER 26-Z INFORMATIVE DIGEST/POLICY STATEMENT OVERVIEW The Board is a constitutional body responsible for en- forcing California’s civil service statutes. (Cal. Const., art. VII, §§ 1, subd. (b) & 3; Gov.

Code, § 18660.) In ad- dition, the Board, by majority vote of all its members, prescribes probationary periods and classifications, adopts other rules authorized by statute, and reviews disciplinary actions imposed against state employees. (Ibid.) Regarding personal services contracts entered into between state agencies and private contractors, the Board is empowered to establish such standards and controls over DGS’s approval of these contracts as are necessary to assure that the approval is consistent with merit employment principles and

Article VII of the Cal- ifornia Constitution. (Pub. Contract Code, § 10337, subd. (a).) The Board is also empowered to audit a state agency’s personal services contracts to ensure compli- ance with civil service laws and Board regulations. (Gov. Code, § 18661, subd. (a).) Regulations adopted by the Board are exempt from the Administrative Procedure Act (APA), except as ex- pressly specified. (Gov. Code, §§ 18211, 18215, & 18216.) Regulations concerning contracting out are not exempt from the APA. (Gov. Code, §18216.) The purpose of this regulatory action is to update the Board’s regulations to clarify that, when state agencies enter into personal services contracts under Govern- ment Code

section 19130, subdivision (b), they must notify all organizations representing employees who perform or could perform the type of contracted work of all personal services contracts not expressly exempted from the requirements of Government Code

section 19132, subdivision (b)(1). Additionally,

section 547.60.2 clarifies the contracting agency’s responsibili- ty to identify and notify the appropriate employee orga- nization pursuant to Government Code

section 19132, subdivision (b)(1). The benefits of this regulatory change include: (1) en- abling the Board to conduct thorough and effective compliance reviews of Government Code

section 19130, subdivision (b), contracts; (2) increasing open- ness and transparency in state government related to personal services contracting; and (3) providing organi- zations representing state employees the opportunity to review and evaluate the appropriateness of personal services contracts to deter potential waste in state con- tract spending. In reviewing other state regulations, the Board found that the instant regulatory proposal is consistent and compatible with existing state regulations.

FISCAL IMPACT ON PUBLIC AGENCIES  Mandate on local agencies and school districts: None.  Cost to any local agency or school district that must be reimbursed in accordance with Government Code sections 17500 through 17630: None.  Cost or savings to any State agency: None, since State agencies are currently required to record and maintain certain documents and files related to personal services contracts.  Other nondiscretionary cost or savings imposed on local agencies: None.  Cost or savings in federal funding to the State: None. SIGNIFICANT EFFECT ON HOUSING COSTS None.

ECONOMIC IMPACT ON BUSINESS  Significant, statewide adverse economic impact directly affecting businesses including the ability of California businesses to compete with businesses in other states: None.  Effect on small business: The proposed regulations set a standard only related to the recordkeeping and transmittal procedures state agencies must follow when entering into personal services contracts under Government Code

section 19130, subdivision (b). Accordingly, it has been determined that the adoption of the proposed regulations would not affect small businesses in any way. COST IMPACT ON A REPRESENTATIVE PRIV ATE PERSON OR BUSINESS The agency is not aware of any cost impacts that a representative private person or business would neces- sarily incur in reasonable compliance with the proposed action since the regulatory change only impacts record- keeping requirement for state agencies and transmittal procedures state agencies must follow when entering into personal services contracts under Government Code

section 19130, subdivision (b). RESULTS OF ECONOMIC IMPACT ASSESSMENT Adoption of these regulations will not: 925

CALIFORNIA REGULATORY NOTICE REGISTER 2020, VOLUME NUMBER 26-Z 1. Create or eliminate jobs within California. 2. Create new businesses or eliminate existing businesses within California. 3. Affect the expansion of businesses currently doing business within California. 4. Affect worker safety or the state’s environment.

The adoption of these regulations, however, will have a positive impact on the health and welfare of California residents in that the benefits of this regulatory action, as mentioned under the INFORMATIVE DIGEST/ POLICY STATEMENT OVERVIEW, include open- ness and transparency in state government and im- proved efficiency in the Board’s compliance reviews of personal services contracts.

CONSIDERATION OF ALTERNATIVES The Board must determine that no reasonable alterna- tive it considered or that is otherwise identified and brought to its attention would be more effective in car- rying out the purpose for which the action is proposed or would be as effective and less burdensome to affected private persons than the proposed action or would be more cost−effective to affected private persons and equally effective in implementing the statutory policy or other provision of law.

CONTACT PERSONS Inquiries concerning the proposed regulatory action, including questions regarding procedure, comments, or the substance of the proposal, may be directed to: Lori Gillihan, Chief Policy Division State Personnel Board 801 Capitol Mall Sacramento, CA 95814 Phone: (916) 651−1043 Email: lori.gillihan@spb.ca.gov The backup contact person for these inquiries is: Carlos Gomez, Analyst Policy Division State Personnel Board 801 Capitol Mall Sacramento, CA 95814 Phone: (916) 651−8350 Email: carlos.gomez@spb.ca.gov Please direct requests for copies of the proposed text of the regulations, the initial statement of reasons, or other information upon which the rulemaking is based to Policy Division Chief, Lori Gillihan, at the above address.

A V AILABILITY OF RULEMAKING FILE The Board is maintaining a rulemaking file for the proposed regulatory action, which as of the date of this notice contains the following: 1. A copy of the text of the regulations for which the adoption is proposed in strikeout and underline; 2. A copy of this notice and statement of reasons for the proposed adoption; and 3. Any factual information upon which the proposed rulemaking is based. If written comments, data or other factual informa- tion, studies or reports are received, they will be added to the rulemaking file.

The file is available for public in- spection during normal working hours at the State Per- sonnel Board, 801 Capitol Mall, Sacramento, CA 95814. Items 1 through 3 are also available on the Board’s website at www.spb.ca.gov under “What’s New?” Copies may be obtained by contacting the per- son via the address, email, or phone number listed above. A V AILABILITY OF CHANGED OR MODIFIED TEXT After considering all timely and relevant comments received, the Board may adopt the proposed regulations substantially as described in this notice.

If the Board makes modifications that are sufficiently related to the originally proposed text, it will make the modified text (with the changes clearly indicated) available to the public for at least 15 days before the Board adopts the regulations as revised. Please send requests for copies of any modified regulations to the attention of the per- son at the address indicated above. The Board will ac- cept written comments on the modified regulations for 15 days after the date on which they are made available to the public.

A V AILABILITY OF THE FINAL STATEMENT OF REASONS It is anticipated that the proposed regulations will be filed with the Office of Administrative Law and shall include a Final Statement of Reasons. Copies of the Fi- nal Statement of Reasons may be obtained from the contact person when it becomes available. 926

CALIFORNIA REGULATORY NOTICE REGISTER 2020, VOLUME NUMBER 26-Z A V AILABILITY OF DOCUMENTS ON THE INTERNET Copies of the Notice of Proposed Action, the initial Statement of Reasons, and the text of the regulations in underline and strikeout can be accessed on the Board’s website atwww.spb.ca.gov under “What’s New?” State of California | Government Operations Agency | State Personnel Board Executive Office 916−653−1028 Appeals Division 916−653−0799 Compliance Review Division 916−651−0924 Policy Division 916−651−0795 Legal Office 916−653−1403 TITLE 10.

DEPARTMENT OF BUSINESS OVERSIGHT The Commissioner of the Department of Business Oversight (Department) proposes to amend the regula- tions listed below after considering all comments, ob- jections, and recommendations regarding the proposed action. PUBLIC HEARING The Department has not scheduled a public hearing on this proposed action. However, the Department will hold a hearing if it receives a written request for a public hearing from any interested person, or his or her autho- rized representative, no later than 15 days before the close of the written comment period.

WRITTEN COMMENT PERIOD Any interested person, or his or her authorized representative, may submit written comments relevant to the proposed regulatory action to the Department, addressed as follows: Regular Mail Department of Business Oversight Attn: Regulations Coordinator, Legal Division 1515 K Street, Suite 200 Sacramento, CA 95814 Electronic Mail: regulations@dbo.ca.gov Comments may be submitted through August 10, 2020. AUTHORITY Financial Code sections 321, 326, 334, and 14201 au- thorize the Department to promulgate regulations gov- erning credit unions.

REFERENCE The propose regulations implement, interpret, and make specific Financial Code sections 14200, 14203, 14205, 14250, 14409, 14652, 14653, 14653.5, 14950, 14952, 14953, 14954, 14955, 14957, 14958, 15100, 16000, 16006, and 16022. INFORMATIVE DIGEST Policy Statement and Specific Benefits Anticipated from Regulatory Action The objectives of the proposed regulations are several−fold. One is to modernize the regulations in or- der to reflect changes to the Financial Code and federal regulations. Another is to streamline the process for out−of−state credit unions that apply to operate in Cali- fornia.

A third objective is to allow credit unions a greater choice of permissible investments The proposed regulations accomplish these objec- tives in several ways. They update references to sec- tions of the Financial Code and National Credit Union Administration’s regulations. They require out−of− state credit unions to specifically address each statutory factor regarding their eligibility to operate in Califor- nia. The proposed regulations also repeal obsolete ap- plication requirements for out−of−state credit unions.

The proposed regulations also repeal an exhaustive list of permissible investments and instead provide the credit union with broader discretion in making invest- ment choices. Anticipated Benefits of the Proposed Regulations: The benefits anticipated by the proposed adoption of the rules include modest relief to out−of−state credit unions that apply to operate in California. The proposed amendments also afford credit unions broader invest- ment choices and eliminate the requirement to obtain the Department’s prior approval for routine invest- ments.

The updated references to statutes and federal regulations ensure their accuracy. For further discus- sion of benefit analysis, see Results of the Economic Im- pact Assessment below.

Summary of Existing Laws and Regulations and Effect of Proposed Action Credit unions are licensed and regulated under the California Credit Union Law. 1 Financial Code

section 1 Fin. Code, § 14000 et seq. 927

CALIFORNIA REGULATORY NOTICE REGISTER 2020, VOLUME NUMBER 26-Z 16009 requires out−of−state credit unions to publicly post at each location their name, type of office, and their home state. The effect of the proposed changes to Sec- tion 30.101.5. is to update the citation to the relevant

section of the Financial Code. Financial Code

section 16022 requires out−of−state credit unions to apply for a license to establish a branch office in California. The effect of the proposed changes to

Section 30.200 is to allow out−of−state credit unions to use the format of their choice rather than a prescribed application form. The effect is also to require the appli- cation to satisfy the factors in Financial Code

section 16022. Another effect is to eliminate the requirement to submit certain information about the credit union that is already available to the Department by other means or unnecessary and thus reduce the administrative burden on the applicant. Financial Code

section 14652 permits credit unions to invest in securities and other assets described in

Chapter 10 of Division 1, which governs legal invest- ments for nonbank licensees. In addition, Financial Code

section 14653.5 permits credit unions to invest in any investment authorized by regulation or in writing by the Department. The effect of the proposed changes to

Section 30.300 is to reduce redundant paperwork caused by the requirement to obtain approval for rou- tine investments. The effect is also that credit unions will have greater discretion over their choice of invest- ments while investing no more than 10 percent of the sum of their net worth and allowance for loan and lease losses in any single person. Financial Code

section 14950 permits credit unions to loan money to their members. It also provides restric- tions on loans. Currently,

section 30.803 states that those credit unions which are insured by the National Credit Union Share Insurance Fund are subject to cer- tain federal regulations. The proposed changes will up- date the reference to the federal regulations regarding member business lending and will remove references to two specific restrictions, which are repetitive of exist- ing state law. The first restriction prohibits family mem- bers of a credit union official from receiving preferen- tial treatment for loans over $20,000.

The second re- striction prohibits family members from receiving fees, compensation, or commissions in connection with any loan made by the credit union. Existing Federal Regulation or Statute The Federal Credit Union Act 2 and National Credit Union Administration’s regulations3 do not include a provision comparable to the signage requirement for foreign (other state) credit unions in California Code of Regulations, title 10,

section 30.101.5. The Federal Credit Union Act allows federal credit unions to invest in securities that are sold pursuant to

section 4(5) of the Securities Act of 1933, are mortgage related as that term is defined in

section 3(a)(41) of the Securities Exchange Act of 1934, and small business re- lated as defined in

section 3(a)(53) of the Securities Ex- change Act of 1934.4 12 Code of Federal Regulations

part 703.14 provides a detailed list of permissible in- vestments for federal credit unions. The Financial Code contains a similar list of investments permitted to credit unions. In addition, Financial Code

section 14653.5 permits credit unions to make any investment autho- rized by the commissioner by regulation, which is the purpose of the proposed amendments to

Section 30.300. The Federal Credit Union Act allows federally in- sured credit unions to engage in member business lend- ing. 5 The National Credit Union Administration ad- ministers the member business lending regulations in 12 Code of Federal Regulations

part 723. After the adoption of

Section 30.803, the federal regulations gov- erning member business lending 6 were renumbered as 12 Code of Federal Regulations

part 723. 7 The pro- posed changes to

Section 30.803 update the reference to the corresponding federal regulations to reflect this change. Existing State Regulations The Department has conducted an evaluation of whether the proposed regulations are consistent with existing state regulations and has concluded that the proposed changes are consistent and compatible with those regulations. 2 12 U.S.C. § 1751 et seq. 3 12 C.F.R. § 700 et seq. 4 12 U.S.C. § 1757(15). 5 12 U.S.C. § 1757a. 6 12 C.F.R § 723. 7 64 Fed. Reg. 28721 (Sept. 9, 1998). 928

CALIFORNIA REGULATORY NOTICE REGISTER 2020, VOLUME NUMBER 26-Z Forms Incorporated by Reference 12 Code of Federal Regulations

part 723, as of Febru- ary 5, 2019, is incorporated by reference in

Section 30.803, subdivision (a). DISCLOSURES REGARDING THE PROPOSED ACTION The Department has made the following initial determinations: Mandate on local agencies and school districts: none. Cost or savings to any state agency: none. Cost to any local agency or school district which must be reimbursed in accordance with Government Code Sections 17500 through 17630: none. Other nondiscretionary cost or savings imposed on local agencies: none. Cost or savings in federal funding to the state: none.

Cost or impacts on a representative private person or business: The Department is not aware of any cost im- pacts that a representative private person or business would necessarily incur in reasonable compliance with the proposed action. Significant, statewide adverse economic impact di- rectly affecting business, including the ability of Cali- fornia businesses to compete with businesses in other states: none.

Although the proposed action will directly affect credit unions in California, the Department con- cludes that any adverse economic impact, including the ability of California credit unions to compete with cred- it unions in other states, will not be significant. Significant effect on housing costs: none.

Results of the Economic Impact Analysis/Assessment: The Department has determined that:  The proposed action will not create or eliminate jobs within California;  The proposed action will not create new businesses or eliminate existing businesses within this state;  The proposed action will not have a negative impact on the expansion of businesses currently doing business within California, but it is possible that credit unions will choose to invest in businesses within California, which could indirectly allow businesses to grow; and  No benefits or adverse impacts to worker safety are anticipated from this regulatory action.  The proposed action will indirectly benefit the health and welfare of California residents by streamlining the application process for out−of−state credit unions, which may provide more financial service options for Californian residents.

This regulatory action will also indirectly benefit the environment by accepting electronic filings and using existing databases to gather information that was previously required to be submitted on paper. Business Reporting Requirement This regulatory action does not require businesses to file a report with the Department. Effect on Small Business The proposed regulations will not affect small busi- ness because credit unions are not a small business within the meaning of Government Code

section 11342.610. Subdivision (b)(1) of Government Code

section 11342.610 provides that “small business” does not include a credit union.

CONSIDERATION OF ALTERNATIVES The Department must determine that no reasonable alternative considered by the Department or that has otherwise been identified and brought to the attention of the Department would be more effective in carrying out the purpose for which the action is proposed, would be as effective and less burdensome to affected private per- sons than the proposed action, or would be more cost− effective to affected private persons and equally effec- tive in implementing the statutory policy or other provi- sion of the law.

A V AILABILITY OF THE NOTICE, STATEMENT OF REASONS, TEXT OF PROPOSED REGULATIONS AND RULEMAKING FILE The Department will have the entire rulemaking file available for inspection and copying throughout the rulemaking process at its office located at the address listed in this notice. As of the date this notice is pub- lished, the rulemaking file consists of this notice, the initial statement of reasons, the proposed text of the reg- ulation, and any factual information upon which the proposed rulemaking is based.

Copies may be obtained by contacting the contact person at the address or phone number listed in this notice. A V AILABILITY OF THE DOCUMENTS ON THE INTERNET The notice, initial statement of reasons and proposed text are also available on the Department’s website at www.dbo.ca.gov. To access the documents from the Department’s website, click on the “Laws and Regula- tions” tab at the top of the home page, click on the 929

CALIFORNIA REGULATORY NOTICE REGISTER 2020, VOLUME NUMBER 26-Z “Rulemaking” link, and then click on the “Credit Union Law” link. A V AILABILITY OF CHANGED OR MODIFIED TEXT After holding the hearing and considering all timely and relevant comments received, the Department may adopt the proposed regulations substantially as de- scribed in this notice. If the Department makes modifi- cations which are sufficiently related to the originally proposed text, it will make the modified text (with the changes clearly indicated) available to the public for at least 15 days before the Department adopts the regula- tions as revised. A request for a copy of any modified regulation(

s) should be addressed to the contact person named in this notice. The Department will accept writ- ten comments on the modified regulations for at least 15 days after the date on which they are made available. A V AILABILITY OF THE FINAL STATEMENT OF REASONS Upon its completion, the Final Statement of Reasons will be available and copies may be requested from the contact person named in this notice or may be accessed on the website listed above.

CONTACT PERSONS Inquiries concerning the proposed administrative ac- tion including requests for copies of the proposed text (the “express terms”) of the regulations, the initial state- ment of reasons, or the modified text of the regulation, or questions regarding the timelines or rulemaking sta- tus, may be directed to: Department of Business Oversight Attn: Julie Jacob, Senior Counsel 1515 K Street, Suite 200 Sacramento, California 95814 Telephone: (916) 322−6927 e−mail: Julie.Jacob@dbo.ca.gov The backup contact person for these inquiries is: Department of Business Oversight Attn: Sandra Sandoval, Legal Assistant 300 S.

Spring Street, Suite 15513 Los Angeles, California 90013 Telephone: (213) 897−3432 e−mail: Sandra.Sandoval@dbo.ca.gov TITLES 13 AND 17. AIR RESOURCES BOARD EDITOR’S NOTE: The following Air Resources Board Notice contained many tables, which, as format- ted, would not have met the ADA Website Compliance requirements. The tables were removed for purposes of publication in the Notice Register.

The Notice with all the tables is available from the contact persons listed in the Notice under “AGENCY CONTACT PERSONS” or “A V AILABILITY OF DOCUMENTS.” The full Notice is also available on the Board’s website (url ad- dress listed below under “INTERNET ACCESS”) at: https://ww2.arb.ca.gov/rulemaking/2020/ hdomnibus- lownox PROPOSED AMENDMENTS TO THE EXHAUST EMISSIONS STANDARDS AND TEST PROCEDURES FOR 2024 AND SUBSEQUENT MODEL YEAR HEAVY−DUTY ENGINES AND VEHICLES, HEAVY−DUTY ON−BOARD DIAGNOSTIC SYSTEM REQUIREMENTS, HEAVY−DUTY IN−USE TESTING PROGRAM, EMISSIONS WARRANTY PERIOD AND USEFUL LIFE REQUIREMENTS, EMISSIONS WARRANTY INFORMATION AND REPORTING REQUIREMENTS, AND CORRECTIVE ACTION PROCEDURES IN−USE EMISSIONS DATA REPORTING REQUIREMENTS, AND PHASE 2 HEA VY−DUTY GREENHOUSE GAS REGULATIONS, AND POWERTRAIN TEST PROCEDURES The California Air Resources Board (CARB or Board) will conduct a public hearing at the date and time noted below to consider approving for adoption the proposed Heavy−Duty Engine and Vehicle Om- nibus Regulation and Associated Amendments (HD Omnibus Regulation).

DATE: August 27, 2020 TIME: 9:00 a.m. Please see the Public Agenda which will be posted ten days before the August 27, 2020, Board Meeting for any appropriate direction regarding a possible remote−only Board Meeting. If the meeting is to be held in person, it will be held at the California Air Resources Board, By- ron Sher Auditorium, 1001 I Street, Sacramento, Cali- fornia 95814. This item will be considered at a meeting of the Board, which will commence at 9:00 a.m., August 27, 2020, and may continue at 8:30 a.m., on August 28, 2020. Please consult the agenda for the hearing, which 930

CALIFORNIA REGULATORY NOTICE REGISTER 2020, VOLUME NUMBER 26-Z will be available at least ten days before August 27, 2020, to determine the day on which this item will be considered. WRITTEN COMMENT PERIOD AND SUBMITTAL OF COMMENTS In accordance with the Administrative Procedure Act, interested members of the public may present com- ments orally or in writing at the hearing and may pro- vide comments by postal mail or by electronic submittal before the hearing. The public comment period for this regulatory action will begin on June 26, 2020.

Written comments not submitted at the hearing must be submit- ted on or after June 26, 2020, and received no later than August 25, 2020. Comments submitted outside that comment period are considered untimely. CARB may, but is not required to, respond to untimely comments, including those raising significant environmental is- sues. CARB requests that when possible, written and email statements be filed at least ten days before the hearing to give CARB staff and Board members addi- tional time to consider each comment.

The Board also encourages members of the public to bring to the atten- tion of staff in advance of the hearing any suggestions for modification of the proposed regulatory action. Comments submitted in advance of the hearing must be addressed to one of the following: Postal mail: Clerks’ Office, California Air Resources Board 1001 I Street, Sacramento, California 95814 Electronic submittal: http://www.arb.ca.gov/lispub/ comm/bclist.php Please note that under the California Public Records Act (Gov.

Code, § 6250 et seq.), your written and oral comments, attachments, and associated contact infor- mation (e.g., your address, phone, email, etc.) become part of the public record and can be released to the pub- lic upon request. Additionally, the Board requests but does not require that persons who submit written comments to the Board reference the title of the proposal in their comments to facilitate review.

AUTHORITY AND REFERENCE This regulatory action is proposed under the authority granted in California Health and Safety Code sections 38501, 38505, 38510, 38560, 38580, 39500, 39600, 39601, 40000, 43013, 43018, 43100, 43101, 43102, 43104, 43105, 43106, 43205.5, and 43806; and Califor- nia Vehicle Code

section 28114. This action is proposed to implement, interpret, and make specific California Health and Safety Code sections 38501, 38505, 38510, 38560, 38580, 39500, 39600, 39601, 43013, 43018, 43100, 43101, 43102, 43104, 43105, 43106, 43205.5, 43210.5, and 43806; and California Vehicle Code sec- tion 28114. INFORMATIVE DIGEST OF PROPOSED ACTION AND POLICY STATEMENT OVERVIEW (GOV .

CODE, § 11346.5, subd. (a)(3)) Sections Affected: Proposed amendments to sec- tions: 1900, 1956.8, 1961.2, 1965, 1968.2, 1971.1, 2035, 2036, 2111, 2112, 2113, 2114, 2115, 2116, 2117, 2118, 2119, 2121, 2123, 2125, 2126, 2127, 2128, 2129, 2130, 2131, 2133, 2137, 2139, 2140, 2141, 2142, 2143, 2144, 2145, 2146, 2147, 2148, 2149, 2166, 2166.1, 2167, 2168, 2169, 2170, 2423, and 2485 to California Code of Regulations, title 13, and sections 95662 and 95663 to California Code of Regulations, title 17.

Pro- posed adoption of sections: 2139.5, 2169.1, 2169.2, 2169.3, 2169.4, 2169.5, 2169.6, 2169.7, and 2169.8, California Code of Regulations, title 13. DOCUMENTS INCORPORATED BY REFERENCE (Cal.

Code Regs., tit. 1, § 20, subd. (c)(3)) The following documents would be incorporated in the regulation by reference as specified by the follow- ing sections:  “California Exhaust Emission Standards and Test Procedures for 2004 and Subsequent Model Heavy−Duty Diesel Engines and Vehicles,” adopted December 12, 2002, as last amended on [Insert Date of Amendment], incorporated by reference in 13 CCR 1956.8 and 2139.  “California Exhaust Emission Standards and Test Procedures for 2004 and Subsequent Model Heavy−Duty Otto−Cycle Engines,” adopted December 27, 2000, as last amended on [Insert Date of Amendment], incorporated by reference in 13 CCR 1956.8 and 2139.  “California 2015 and Subsequent Model Criteria Pollutant Exhaust Emission Standards and Test Procedures and 2017 and Subsequent Model Greenhouse Gas Exhaust Emission Standards and Test Procedures for Passenger Cars, Light−Duty Trucks, and Medium−Duty Vehicles,” as last amended on [Insert Date of Amendment] , incorporated by reference in 13 CCR 1961.2.  “California Environmental Performance Label Specifications for 2021 and Subsequent Model Year Medium−Duty Vehicles, Except Medium−Duty Passenger Vehicles,” adopted December 19, 2018, as last amended on [Insert 931

CALIFORNIA REGULATORY NOTICE REGISTER 2020, VOLUME NUMBER 26-Z Date of Amendment], incorporated by reference in 13 CCR 1965.  “California Exhaust Emission Standards and Test Procedures for New 2011 and Later Tier 4 Off−Road Compression−Ignition Engines,

Part I−D,” adopted October 20, 2005, as last amended on [Insert Date of Amendment], incorporated by reference in 13 CCR 2423.  “California Greenhouse Gas Exhaust Emission Standards and Test Procedures for 2014 and Subsequent Model Heavy−Duty Vehicles,” adopted October 21, 2014, as last amended on [Insert Date of Amendment], incorporated by reference in 17 CCR 95663. The above listed documents are being amended by this regulation and thus the amendment date would be the date that the regulation is adopted by CARB.

Background and Effect of the Proposed HD Omnibus Regulation: Existing Regulatory Requirements On−road heavy−duty vehicles 1 operate throughout California and are an essential part of the state’s econo- my; they include long−haul trucks, drayage trucks, tran- sit buses, refuse trucks, and other commercial work ve- hicles. According to California’s emissions inventory model, almost a million heavy−duty vehicles operate on California roads each year. These vehicles are signifi- cant sources of oxides of nitrogen (NOx), particulate matter (PM), and greenhouse gas (GHG) emissions.

In fact, heavy−duty vehicles comprise the largest NOx emission source category in the state, contributing to 31 percent of all statewide NOx emissions as well as 26 percent of total statewide diesel PM emissions. Since 2010, in California and the rest of the United States, heavy−duty engines have been subject to a PM emission standard of 0.01 grams per brake horsepower hour (g/bhp−hr) and a NOx standard of 0.20 g/bhp−hr.

As discussed in more detail below, one element of the proposed rulemaking action establishes an approxi- mately 90 percent lower NOx standard for on−road heavy−duty engines, and constitutes the largest mea- sure in CARB’s entire 2016 State Strategy for the State Implementation Plan (SIP), the State of California’s of- ficial and legally binding plan to meet federal air quality standards.

This measure is responsible for nearly half of the NOx emission reduction commitment in the entire 1 Under California regulations, heavy−duty vehicles are those ve- hicles with a gross vehicle weight rating (GVWR) greater than 8,500 pounds, while medium−duty vehicles are a subcategory of heavy−duty vehicles with a GVWR between 8,501 and 14,000 pounds. Manufacturers have the option to certify medium−duty engines used in vehicles from 10,001 to 14,000 pounds GVWR to the engine standards specified for engines in vehicles over 14,000 pounds. plan, 52 tons per day (tpd) out of 111 total tpd NOx in 2031.

To legally sell new engines, manufacturers must demonstrate that their engines comply with applicable emission standards throughout a period called the regu- latory useful life (which for the heaviest diesel engines is currently 10 years, 435,000 miles, or 22,000 hours, whichever comes first). To simulate aging out to useful life and to demonstrate that emission−related compo- nents are durable throughout the full useful life of the engine, manufacturers follow procedures as specified in a durability demonstration program (DDP).

Manu- facturers must demonstrate that the deteriorated emis- sions test results obtained at the end of useful life either meet or are below all applicable emission standards be- fore a certification Executive Order is issued. To demonstrate compliance, California and the U.S. Envi- ronmental Protection Agency (U.S. EPA) require heavy−duty engine manufacturers to test their engines over two test cycles, the heavy−duty transient Federal Test Procedure 2 (FTP) and the Supplemental Emission Test Ramped Modal Cycle3 (RMC−SET). The FTP test cycle represents a transient medium load duty cycle.

The RMC−SET simulates steady−state engine opera- tion during suburban and highway truck speeds. Manufacturers also must provide warranties of emis- sion−related parts for a certain time−period, currently 100,000 miles or 10 years, whichever first occurs. For parts that fail under warranty, manufacturers are re- quired to report certain data to CARB, as specified in CARB’s Emission Warranty Information Reporting (EWIR) program.

If failure rates meet or exceed estab- lished thresholds, manufacturers are required to con- duct corrective actions such as providing extended war- ranties and/or recalling faulty components. Manufacturers are also required to conduct testing of their products while actually on the road using portable emissions measurement systems. All heavy−duty en- gine manufacturers are required to conduct heavy−duty in−use testing (HDIUT) on a fraction of their engine families, with the specific engine families specified by U.S. EP A and CARB.

The in−use test data are evaluated via the not−to−exceed (NTE) method and submitted to CARB and U.S. EPA. CARB also has the ability to in- dependently test any engine family through CARB’s in−house Heavy−Duty In−Use Compliance (HDIUC) Program. Engine families that fail HDIUT or HDIUC requirements are subject to potential recall. 2 “FTP” is the heavy−duty transient Federal Test Procedure duty cycle specified in 40 CFR 86.007−11(a)(2), as amended October 25, 2016. 3 “RMC−SET” is the supplemental emission test procedure with the steady−state duty cycle specified in 40 CFR 86.1360, as amended October 25, 2016. 932

CALIFORNIA REGULATORY NOTICE REGISTER 2020, VOLUME NUMBER 26-Z Manufacturers of heavy−duty diesel engines have been able to meet the current PM emission standard through the use of diesel particulate filters (DPF), and the NOx emission standard through the use of selective catalytic reduction (SCR) systems. SCR systems typi- cally use a solution made up of urea and water called Diesel Exhaust Fluid (DEF) to supply the ammonia that converts NOx to harmless nitrogen gas and water.

Changes to these programs are warranted because (1) some elements of the programs discussed above are falling short of program expectations, (2) it is cost− effective and technically feasible to reduce the stan- dards significantly below today’s levels to achieve needed NOx reductions, and (3) some provisions would benefit from clarification. Recent Regulatory Revisions and Actions Since 1990, NOx emission standards for on−road new heavy−duty engines have become more stringent, decreasing from 6.0 grams per brake horsepower hour (g/bhp−hr) in 1990 to the current 0.20 g/bhp−hr stan- dard in 2010.

In addition to the increasingly stringent new engine standards, California has also adopted pro- grams that substantially reduce in−use emissions from heavy−duty vehicles, such as vehicle idling restrictions, and in−use fleet rules such as the Drayage Truck Regu- lation and the Truck and Bus Regulation. These fleet rules require the upgrade of older trucks and buses to newer and cleaner engines that meet 2010 engine stan- dards by 2023. To comply with these in−use regulations fleets have made substantial investments to purchase lower−emitting vehicles.

However, despite all of these efforts, on−road heavy−duty vehicles are still a signifi- cant source of NOx emissions in the state, and are re- sponsible, as previously mentioned, for about 31 per- cent of total statewide NOx emissions, a precursor to ambient ozone and secondary PM formation. In order to meet California’s air quality goals, further reductions of heavy−duty NOx emissions are necessary. In 2013, California established optional low−NOx standards 4 for heavy−duty diesel engines, with the most aggressive standard being 0.02 g/bhp−hr, which is 90 percent below the current standard.

The optional low− NOx standards were developed to pave the way for more stringent mandatory standards by encouraging manufacturers to develop and certify low−NOx en- gines, and incentivizing potential customers to pur- chase these low−NOx engines. In 2019, a total of fifteen 4 Optional Reduced NOx Emission Standards for On−Road Heavy−Duty Engines, adopted 12/12/2013, (https://ww2.arb.ca. gov/our−work/programs/optional−reduced−NOx−standards) (last accessed 3/5/2020). engines families,5 some using natural gas and others us- ing liquefied petroleum gas, have been certified to the optional NOx standards.

In March 2017, CARB approved the 2016 State Strat- egy for the State Implementation Plan (2016 SIP). 6 One of the key measures in the 2016 SIP is the establishment of on−road heavy−duty engine low−NOx emission re- quirements that provide a 90 percent reduction in NOx emissions compared to today’s engines. To comple- ment this measure, the 2016 SIP also included a “Lower In−Use Emission Performance Level” measure that would ensure that heavy−duty vehicles remain as “clean” in−use, as they were originally certified when new.

These two measures are critical for attaining feder- al health−based air quality standards for ozone in 2031 in the South Coast and San Joaquin Valley air basins, as well as PM2.5 standards in the next decade. On October 25, 2016, U.S. EPA and the National Highway Traffic Safety Administration jointly adopted the federal Phase 2 GHG standards for tractors, voca- tional vehicles, and pick−up truck and vans, engines used in tractors and vocational vehicles, and trailers hauled by heavy−duty tractors.

The progressively more stringent federal Phase 2 standards are phased−in from 2021 to 2027 for tractors, vocational vehicles, and large pick−up trucks and vans. In 2018, California aligned with the federal Phase 2 standards in structure, timing, and stringency, but with some minor California differences.

Because heavy−duty vehicles that are newly pur- chased outside of California contribute significantly to the total heavy−duty vehicle miles traveled in Califor- nia (i.e., approximately 60 percent of total heavy−duty vehicle miles traveled in the South Coast Air Basin on any given day are by such vehicles), it is critical that U.S. EPA take action to establish a new national low− NOx standard for heavy−duty vehicles. In response to petitions for a low−NOx rulemaking from over 20 orga- nizations, 7 including state and local air agencies from across the country, on November 13, 2018, U.S.

EPA announced the “Cleaner Trucks Initiative” to develop regulations to further reduce NOx emissions from new on−road heavy−duty vehicles and engines. U.S.

EPA in- 5 Optional Low NOx Certified Heavy−Duty Engines, (https://ww2.arb.ca.gov/our−work/programs/optional−reduced− NOx−standards) (last accessed 3/5/2020) 6 Proposed 2016 State Strategy for the State Implementation Plan, May 17, 2016, (https://ww3.arb.ca.gov/planning/sip/ 2016sip/2016sip.htm) (last accessed 3/5/2020) 7 Brakora, Jessica. “Petitions to EPA for Revised NOx Standards for Heavy−Duty Engines” Memorandum to Docket EP A−HQ− OAR−2019−0055, December 4, 2019. 933

CALIFORNIA REGULATORY NOTICE REGISTER 2020, VOLUME NUMBER 26-Z tends to publish a proposed rule in 2020.8 Accordingly, to the extent possible, CARB plans on coordinating its regulatory efforts with U.S. EPA. To support the development of more stringent NOx emission standards for heavy−duty engines and vehi- cles, CARB, in partnership with the South Coast Air Quality Management District, the Manufacturers of Emission Controls Association, U.S.

EPA, Clean High− Efficiency Diesel Engine VII (CHEDE−VII) Consor- tium (managed by Southwest Research Institute), V ol- vo, Cummins, and Eaton are currently funding $5 mil- lion research programs with Southwest Research Insti- tute to demonstrate the feasibility of lower NOx emis- sions for on−road heavy−duty engines.

In addition to a new lower NOx standard on current certification test cycles, CARB staff also plan to pro- pose a new certification low−load cycle, and the associ- ated NOx emission standard, and further propose provi- sions to strengthen engine and emission control system durability requirements, to increase useful life require- ments and lengthen emissions warranty periods, to im- prove reporting and corrective actions of emission war- ranted parts that are covered under warranty, and to en- hance the in−use compliance testing program.

Summary of Proposal [Because of ADA Website Compliance Require- ments, OAL is unable to publish the various tables re- ferred to below in the Notice Register. The tables in the Notice are contained in Air Resources Board’s Initial Statement of Reasons (ISOR). The tables in the Notice Attachment can be found on the agency’s website (http://ww2.arb.ca.gov/rulemaking/2020/ hdomnibuslownox). Please refer to the Contact Persons listed below or to the agency’s website for their ISOR information, including the Tables.

In addition, a cross− reference listing “Proposed Heavy−Duty Omnibus Regulation Tables in Notice vs Tables in ISOR” is be- ing included right after this Notice and the Attachment to Public Notice indicating where the tables can be found in the Board’s ISOR.] CARB’s proposed HD Omnibus Regulation, or Pro- posed Amendments, would comprehensively overhaul how NOx emissions from new heavy−duty engines are regulated in California, and comprises the following primary elements. 1.

Proposed NOx and PM Exhaust Emission Standards The proposed NOx and PM exhaust emission stan- dards would apply to new California−certified heavy− duty Otto−cycle (HDO) and heavy−duty diesel engines 8 EPA Acting Administrator Wheeler Launches Cleaner Trucks Initiative, November 13, 2018, (https://archive.epa.gov/epa/ newsreleases/epa−acting−administrator−wheeler−launches− cleaner−trucks−initiative.html) (last accessed 3/5/2020). intended for use in vehicle service classes with gross ve- hicle weight ratings (GVWR) greater than 10,000 pounds.

As shown in Tables 1 and 2, the proposed NOx emission standards would be implemented in two steps, with the first step for 2024−2026 model year engines and the second step for 2027 and subsequent model year engines. CARB staff is also proposing to provide manufactur- ers the option to certify 2024 through 2026 model year engines to a less stringent NOx standard, if they meet that standard on a nationwide basis.

This proposed op- tional 50−state−directed engine emission standards, shown within parentheses in Table 1, would provide air quality benefits to California since federally certified trucks that travel to California would be lower−emitting than they would have been absent this option. CARB staff is also proposing a PM standard of 0.005 g/bhp−hr for 2024 and subsequent model year engines HDO and heavy−duty diesel engines. Table 1. Proposed Heavy−Duty Diesel− and Otto−Cycle Engine NOx Standards (Model Year 2024 to 2026) [Table — Removed] Table 2.

Proposed Heavy−Duty Diesel− and Otto−Cycle Engine NOx Standards (Model Year 2027 and Subsequent) [Table — Removed] 2. Proposed Amendments to the Heavy−Duty In−Use Testing (HDIUT) Program CARB staff is proposing amendments to the HDIUT program that revise procedures to better represent heavy−duty vehicle operations in real world conditions, that establish clearer criteria for engine family pass/fail determination, and that require on−board diagnostic (OBD) data during testing to verify the condition of the test vehicle and sensors.

These amendments would ap- ply to 2024 and subsequent model year engines, and would replace the current NTE−based methodology with a new three−bin moving average windows based methodology. The three bins cover idle, low−load, and medium to high load operation. Compliance would be determined by comparing the average NOx emissions for each bin to the in−use threshold, defined as one and a half times the applicable standard for the model year. 3.

Proposed Amendments to Warranty and Useful Life Periods To help ensure emission controls are well− maintained and repaired when needed, and to help en- sure more durable emission control systems, CARB 934

CALIFORNIA REGULATORY NOTICE REGISTER 2020, VOLUME NUMBER 26-Z staff is proposing to extend the criteria pollutant emis- sions warranty and useful life period requirements for heavy−duty vehicles and engines. The proposed revi- sions would be phased−in beginning with the 2027 model year engines with the final phase−in occurring in 2031. The current and proposed useful life and warranty periods are shown in Tables 3 and 4, respectively. Table 3. Current and Proposed Useful Life Periods [Table — Removed] Table 4. Current and Proposed Warranty Periods [Table — Removed] 4.

Proposed Amendments to Heavy−Duty Durability Demonstration Program For heavy−duty diesel engines, the Proposed Amend- ments would establish a new standardized methodolo- gy for demonstrating durability. The standardized methodology would increase the default break−in peri- od from the current 125 hours to 300 hours for on−road heavy−duty diesel engines, and require standardized certification cycles for engine and aftertreatment sys- tem aging in order to validate component durability and determine exhaust emissions deterioration factors.

The Proposed Amendments would also require additional engine aging (i.e., increased durability hours) com- pared to what existing certification requirements. The Proposed Amendments would also allow manu- facturers to use of accelerated aging cycles for a portion of the useful life demonstration for aftertreatment sys- tems, provided that those manufacturers periodically submit in−use emissions data generated from their on− road heavy−duty diesel engines. 5.

Proposed Amendments to the Emissions Averaging, Banking, and Trading Program The Proposed Amendments would establish a sepa- rate California−only averaging, banking, and trading (CA−ABT) program starting with 2022 model year en- gines. This element of the rulemaking action is needed to reflect the difference in heavy−duty emission stan- dards between the proposed California heavy−duty en- gine standards and the existing federal heavy−duty en- gine standards.

The Proposed Amendments would al- low manufacturers to transfer credits from their existing federal ABT accounts for 2010 to 2021 model years, as adjusted based on the fraction of California to 50−state sales volumes for 2019−2021 model years. The Pro- posed Amendments would also allow heavy−duty ze- ro−emission vehicles (ZEV) to generate NOx credits in order to incentivize the sales of heavy−duty ZEVs earli- er than would be required by CARB’s proposed Ad- vanced Clean Trucks (ACT) Regulation. 6.

Proposed Amendments to Powertrain Certification Test Procedures for Heavy−Duty Hybrid V ehicles The Proposed Amendments would provide manufac- turers a voluntary option to certify hybrid powertrains to criteria pollutant emission standards, using specified powertrain testing procedures. The proposed power- train testing procedures would align with federal proce- dures for powertrain testing and would be based on the U.S. EP A Phase 2 GHG technical amendments for pow- ertrain testing. 7.

Proposed Amendments to Emissions Warranty Information and Reporting (EWIR), and Corrective Action Procedures The Proposed Amendments would amend the exist- ing EWIR program and specify corrective actions to improve the effectiveness of the existing program and to ensure that corrective action is taken in a timely man- ner if failure rates exceed specified corrective action thresholds. 8.

Proposed Amendments to Clean−up Items, and Provide Clarifications, and Corrections The Proposed Amendments would make some minor but needed clarifications and corrections related to the Phase 2 GHG standards, diesel auxiliary power unit re- quirements, OBD system requirements, and medium− duty engine and medium−duty vehicle requirements. These amendments are needed to better align with fed- eral requirements, to clarify existing requirements, to conform with proposed emission standards, and to cor- rect inadvertent ambiguities. 9.

Proposed Amendments to Existing Phase 2 GHG Regulations In addition to the minor clarifications and corrections needed for the California Phase 2 GHG Regulation mentioned above, the Proposed Amendments would update the environmental performance label specifica- tions to clarify and improve the implementation of the original label specifications requirements.

The pro- posed revisions would also modify certain trailer re- quirements of the California Phase 2 GHG regulation, including providing compliance flexibility to exempt specific trailer configurations if it is determined that technology is not available for trailers subject to the Phase 2 requirements. U.S. EPA has recently proposed technical amend- ments to the Phase 2 GHG test procedures for heavy− duty engines that are largely intended to provide manu- facturers compliance flexibility and to reduce variabili- ty in test results.

CARB staff is currently not proposing any amendments to the California Phase 2 GHG regula- tion or to the test procedures in response to that U.S. 935

CALIFORNIA REGULATORY NOTICE REGISTER 2020, VOLUME NUMBER 26-Z EPA notice of proposed rulemaking on Improvements for Heavy−Duty Engine and Vehicle Test Procedures, and Other Technical Amendments, 9 but may propose specific amendments as this rulemaking action proceeds. CARB may also consider other changes to the sec- tions affected, as listed on page 2 of this notice, during the course of this rulemaking process.

Objectives and Benefits of the Proposed Regulatory Action: Objectives The Proposed Amendments are designed to reduce NOx emissions from the engines in heavy−duty vehi- cles with GVWR greater than 14,000 pounds (Class 4 and above), and engines used in medium−duty vehicles with GVWR 10,001 to 14,000 pounds (Class 3 vehi- cles). The proposed NOx certification emission stan- dards and in−use standards would significantly reduce tailpipe NOx emissions during most vehicle operating modes such as high−speed steady−state, transient, low− load urban driving, and idling modes of operation.

The proposed revisions to the emissions warranty, useful life, emissions warranty and reporting information and corrective action procedures, and durability demonstra- tion procedures would also provide emission benefits by encouraging more timely repairs to emission− related malfunctions and encouraging manufacturers to produce more durable emission control components, thereby reducing the rate at which emissions deterio- rate. Environmental and Health Benefits Table 5 below shows the projected NOx reductions attributable to the Proposed Amendments.

In 2031, the target SIP date to meet the 2008 ozone ambient air qual- ity standards, NOx emission benefits relative to the le- gal baseline 10 are estimated to be approximately 23.2 tpd statewide and 7.0 tpd in the South Coast Air Basin. Table 5.

Projected NOx Emission Benefits from the Proposed Amendments (tpd) [Table — Removed] The proposed PM standard of 0.005 g/bhp−hr is in- tended to prevent “backsliding” by encouraging manu- facturers to continue using current robust DPFs capable of reducing PM emissions down to 0.001 g/bhp−hr lev- 9 “Improvements for Heavy−Duty Engine and V ehicle Test Proce- dures, and Other Technical Amendments,” Proposed Rule, Feder- al Register, V ol. 85, No. 92, page 28140−28361, May 12, 2020, (https://www.govinfo.gov/content/pkg/FR−2020−05−12/pdf/20 20−05963.pdf) (last accessed May 13, 2020) 10 The legal baseline reflects implementation of currently existing state and federal laws and regulations. els.

Manufacturers would likely continue to use the same DPFs that they are currently using and thus no ad- ditional PM benefits are expected from this require- ment. However, since NOx is also a precursor to sec- ondary PM2.5 formation, NOx emission reductions would also provide ambient PM2.5 emission benefits resulting in significant health benefits. The emission re- ductions from the Proposed Amendments are expected to prevent nearly 3,900 deaths, as well as more than 1,300 hospitalizations and 1,800 emergency room visits.

Other proposed associated amendments related to the Phase 2 GHG regulation are not expected to have addi- tional GHG emission benefits beyond those claimed in that regulation. However, they would improve imple- mentation as well as effectiveness of the Phase 2 GHG regulations, and help realize the expected GHG emis- sion benefits of the regulation. Economic Impacts The Proposed Amendments would require engine manufacturers to produce lower−emitting heavy−duty engines, which would increase upfront production and operational costs.

Elements contributing to increased costs include reduction of emission standards over ex- isting regulatory cycles, amendments to in−use test pro- cedures, modifications to the durability demonstration for certification, lengthened warranty periods, length- ened useful life periods, amendments to EWIR report- ing, and emissions data collection and reporting. Table 6 presents the total statewide incremental costs of the Proposed Amendments on manufacturers. All costs were evaluated relative to the baseline scenario in 2018 dollars.

As Table 6 shows, the Proposed Amendments’ costs on manufacturers are expected to total $4.07 bil- lion from calendar year 2022 through 2050. Table 6. Projected Cost Impact of the Proposed Amendments to Manufacturers [Table — Removed] Medium− and heavy−duty engine/vehicle manufac- turers would likely pass their costs on to their cus- tomers, i.e., to the California vehicle fleets who pur- chase vehicles with California−certified engines.

Vehi- cle owners would also face increased costs for DEF us- age, because the Proposed Amendments would require SCR systems to operate for a greater proportion of the time and hence consume more DEF. At the same time, the Proposed Amendments would provide savings to vehicle owners via repair cost savings resulting from longer emission warranties. Table 7 below shows the net cost impact upon full implementation of the regula- tion for various affected vehicle classes with 2031 or later engine model year. As Table 7 shows, on average, 936

CALIFORNIA REGULATORY NOTICE REGISTER 2020, VOLUME NUMBER 26-Z the net impact of the Proposed Amendments would be equivalent to an approximately 5.8 percent increase in the baseline purchase price of vehicles. Table 7. Net Cost Impact of a Vehicle with Engine Model Year 2031 or Later Under the Proposed Amendments (2018$) [Table — Removed] As the requirements of the Proposed Amendments would go into effect, they would have a small negative impact on the rate of growth of the state’s economy.

Af- fected sectors such as retail and wholesale trade, truck transportation, construction, and manufacturing sectors and upstream industries would experience increases in production costs and decreases in employment growth. Overall, CARB staff expects the Proposed Amend- ments would cause very small slowing in the rate of growth of California employment, gross state product, output, and investment; the Proposed Amendments would cause no more than a 0.02 percent decrease in any of these quantifies in any year from 2022 to 2050.

Overall, because the impact is projected to be so small compared to the scale of the California economy, CARB staff estimates the Proposed Amendments would be unlikely to have a significant impact on the California economy. Comparable Federal Regulations: Both California and U.S. EPA have the authority and responsibility to set emission standards for new heavy− duty engines and vehicles. For the past several decades, California’s and U.S. EPA’s heavy−duty engine emis- sions standards and other emission−related require- ments have largely been harmonized.

Thus, for many years the regulated industry has been able to design and produce a single product line of engines and vehicles that comply with both U.S. EPA and CARB emission standards and sold in all 50 states. So−called “50−state” standards enable technology suppliers and manufactur- ers to efficiently produce a single set of reliable and compliant products.

Staff is now proposing California emission standards and other emission−related requirements for new heavy−duty engines that are more stringent than corre- sponding federal emission standards and emission−re- lated requirements for heavy−duty engines and vehi- cles, because California needs those standards to meet the State’s SIP commitments to attain federal ambient air quality standards and to protect the health and wel- fare of its citizens.

Heavy−duty vehicles comprise the largest NOx emis- sion source category in California, and further emission reductions from them are urgently needed to meet the State’s SIP commitments and protect public health. Due to the contribution of heavy−duty trucks to the NOx in- ventory nationwide, and as mentioned earlier, in re- sponse to a petition from over 20 organizations, U.S. EPA announced on November 13, 2018 the “Cleaner Trucks Initiative” to develop regulations to reduce NOx emissions from on−road heavy−duty vehicles and en- gines. 11 Due to the federal lead time requirements de- scribed above and because U.S.

EPA began their effort after CARB began work on the proposed HD Omnibus Regulation, the Cleaner Trucks Initiative would take ef- fect a few years later than the proposed HD Omnibus Regulation, most likely beginning with the 2027 model year. CARB has been developing its proposed HD Om- nibus Regulation for many years because it has long recognized that it needs to significantly reduce emis- sions from new heavy−duty engines and vehicles as soon as possible. However, to maintain a future harmo- nized national heavy−duty program, CARB staff has encouraged U.S.

EPA to align with the Proposed Amendments contained in the HD Omnibus Regulation as much as possible in the Cleaner Trucks Initiative. In addition, to encourage manufacturers to make one set of 50−state clean vehicles, CARB staff has proposed that the amendments include an option allowing manufac- turers to voluntarily certify their engines to a proposed standard on a national basis, beginning in model year 2024. AN EV ALUATION OF INCONSISTENCY OR INCOMPATIBILITY WITH EXISTING STATE REGULATIONS (Gov.

Code, § 11346.5, subd. (a)(3)(D)) During the process of developing the proposed HD Omnibus Regulation, CARB staff conducted a search of any similar regulations on this topic and concluded these regulations are neither inconsistent nor incompat- ible with existing state regulations. DISCLOSURE REGARDING THE PROPOSED REGULATION Fiscal Impact/Local Mandate Determination Regarding the Proposed Action (Gov.

Code, § 11346.5, subds. (a)(5)&(6)): The determinations of the Board’s Executive Officer concerning the costs or savings incurred by public agencies and private persons and businesses in reason- able compliance with the proposed HD Omnibus Regu- lation are presented below. 11 Refer to footnote 8. 937

CALIFORNIA REGULATORY NOTICE REGISTER 2020, VOLUME NUMBER 26-Z Under Government Code sections 11346.5, subdivi- sion (a)(5) and 11346.5, subdivision (a)(6), the Execu- tive Officer has determined that the proposed regulato- ry action would create costs or savings to any State agency, would create costs or savings in federal funding to the State, would create costs or mandate to any local agency or school district, whether or not reimbursable by the State under Government Code, title 2, division 4,

part 7 (commencing with

section 17500), or other nondiscretionary cost or savings to State or local agencies. Cost to any Local Agency or School District Requiring Reimbursement under

section 17500 et seq.: Pursuant to Government Code sections 11346.5, sub- division (a)(5) and 11346.5, subdivision (a)(6), the pro- posed HD Omnibus Regulation is a mandate that would create costs and cost−savings to local agencies and school districts. However, these costs to local agencies are not reimbursable by the State under Government Code, title 2, division 4,

part 7 (commencing with sec- tion 17500). The mandate is not reimbursable because costs associated with the proposed HD Omnibus Regu- lation apply generally to all entities that purchase af- fected vehicles, including local agencies. Therefore, the regulation does not constitute a “Program” imposing any unique requirements on local agencies as set forth in

section 17514 of the California Government Code. Cost or Savings for State Agencies: The proposed HD Omnibus Regulation implementa- tion would create additional workload on CARB staff that would be impossible to absorb with existing staff resources.

Staff estimates an addition of ten positions (two Air Pollution Specialists and eight Air Resources Engineers) would be needed to implement the proposed HD Omnibus Regulation:  Two Air Resources Engineers would be required starting in 2024 to review certification applications using new strategies and technologies, and to manage and review the new standardized extended durability testing.  Two additional Air Resources Engineers would be required starting in 2024 to coordinate test plans with manufacturers, implement new procedures, and verify submitted test data with the amended HDIUT program.  Two additional Air Resources Engineers would be required starting in 2024 to review the NOx sensor data submissions and certify the additional OBD certification requirements associated with the newer technologies expected in low NOx engines.  Two Air Resources Engineers would be required starting 2024 for increased enforcement at dealerships due to the difference in emission standards compared to the federal program.  Two Air Pollution Specialists would be required starting in 2027 to process anticipated increased EWIR claims and corrective actions.

Sales taxes are levied in California to fund a variety of programs at the state and local level. The proposed HD Omnibus Regulation would result in the sale of more expensive (higher upfront cost) vehicles as well as in- creased DEF consumption in those vehicles in Califor- nia, which would result in higher sales taxes collected by the state government. The entire population of new California−sold vehicles and DEF consumption over the entire state was used for this analysis.

State govern- ment collects about 46 percent of the total sales tax rev- enue (i.e., approximately 3.9 percent out of 8.6 percent of the sales tax rate) based on data from the REMI (Re- gional Economic Models, Inc.) model. The Proposed Amendments could encourage Cali- fornia fleets to hold onto their existing vehicles slightly longer, to purchase used vehicles in lieu of new vehicles in California, or to purchase more out−of−state vehi- cles.

Staff did not attempt to quantify any such changes in fleet purchase behavior and hence any state sales tax impacts of such changes in fleet purchase behavior are also not included. The fiscal impacts to the state government due to the proposed HD Omnibus Regulation were estimated rela- tive to baseline conditions. The net fiscal impact on state government in 2022 and 2023 would be $1,000 and $55,000 in revenue, respectively. Starting in 2024, state government would have an annual fiscal cost im- pact ranging from $561,000 to $1,496,000 within the considered regulations’ period of analysis.

Other Non−Discretionary Costs or Savings on Local Agencies: Sales taxes are levied in California to fund a variety of programs at the state and local level. The Proposed Amendments would increase the upfront cost of each heavy−duty vehicle and engine sold in the state in 2024 and subsequent model years by about 0.5 to 10.4 per- cent. The Proposed Amendments would also require additional DEF fluid consumption in California, which would result in a direct increase in sales tax revenue col- lected by local governments. The average local tax rate in California is 0.853 percent.

Overall, local sales tax revenue may increase less than the direct increase from vehicle sales if overall business spending does not increase. Local government fleets are estimated to own 10.7 percent of California’s total heavy−duty vehicles. So, for example, in year 2025, local government fleets would face approximately $6.09 million of the total statewide cost of $56.9 million due to the Proposed 938

CALIFORNIA REGULATORY NOTICE REGISTER 2020, VOLUME NUMBER 26-Z Amendments. Similarly, in year 2028, local govern- ment fleets would expect approximately $16.1 million of the total statewide $150 million in cost expected due to the Proposed Amendments. The net fiscal impact on local government in 2022 would be a cost of $11,000 and the ongoing fiscal im- pact on local government would range from $165,000 to $10.5 million in cost within the proposed HD Om- nibus Regulation’s lifetime of 29 years.

Cost or Savings in Federal Funding to the State: The proposed HD Omnibus Regulation is not expect- ed to impose any costs or savings in Federal Funding to the state. HOUSING COSTS (Gov. Code, § 11346.5, subd. (a)(12)) The Executive Officer has also made the initial deter- mination that the proposed HD Omnibus Regulation will not have a significant effect on housing costs. SIGNIFICANT STATEWIDE ADVERSE ECONOMIC IMPACT DIRECTLY AFFECTING BUSINESS, INCLUDING ABILITY TO COMPETE (Gov. Code, §§ 11346.3, subd. (a), 11346.5, subd. (a)(7), 11346.5, subd. (a)(8)) The Executive Officer has made an