By Jacob Herson
Managing Editor
Transit California
2022 has been another challenging year for the industry, but we have noteworthy successes to celebrate, as an organization, including nearly $8 billion dollars in capital funding through the FY 2022-2023 State Budget; the passage of three Association-sponsored bills; a court order that keeps federal transit grant funds flowing; an increasingly cooperative relationship with the California Air Resources Board (CARB); and more than $3.5 billion in the State Budget for zero-emission vehicle deployment and charging/refueling infrastructure. None of it would have been possible without the tireless work of our members in concert with Association staff and leaders in the State government.
$8 Billion in Capital Funding
THE INVESTMENTS INCLUDE:
- $4.2 billion (AB 180, Item 2665-301-6043) for the California High-Speed Rail project;
- $4 billion (SB 198 Section 15) in FYs 2023-24 and 2024-25 for transit capital projects statewide, allocated via population-based formula;
- $3.65 billion (AB 180, Item 0521-131-0001) starting in FY 2021-22 for transit capital projects to be administered through the Transit and Intercity Rail Capital Program;
- $3.53 billion in FY 2022-23 for zero-emission vehicle deployment and charging/refueling infrastructure;
- $1.049 billion (AB 180, Items 2660-101-0001 and 2660-102-0001) starting in FY 2021-22 for the Active Transportation Program;
- $350 million (AB 180, Items 0521-131-0001 and 2660-102-0001) starting in FY 2021-22 for grade separation projects;
- $198 million (AB 180, Item 2660-102-0001) starting in FY 2021-22 for local climate adaptation projects.
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On June 30, 2022, Governor Newsom signed a raft of legislation comprising the 2022-2023 State Budget. The final $300 billion spending plan reflected a $97 billion budget surplus and followed months of legislative budget hearings; direct engagement from stakeholders statewide, including the Association and our members, and negotiations between Governor Newsom, Senate President pro Tempore Toni G. Atkins, and Assembly Speaker Anthony Rendon. The budget included one of the largest one-time investments in clean transportation in the state’s history, totaling nearly $8 billion — the product of efforts that began with the previous year’s budget negotiations.
“This strong show of support for public transportation by state leaders owes much to the work of our member agencies who submitted letters, met with legislators, and presented before budget committees to emphasize the importance of directing a portion of the state's budget surplus to reinventing our transportation network,” said Michael Pimentel, the Association’s Executive Director. “On behalf of the California Transit Association, I thank Governor Newsom and the legislative and budgetary leaders in both houses for finding common ground to move the budget agreement forward and for prioritizing new investments for public transit in the agreement.”
Three Sponsored Bills
In late September 2022, Governor Newsom signed three bills sponsored by the Association into law: SB 922 (Wiener); SB 942 (Newman); and AB 2622 (Mullin).
State Senator Scott Wiener (D-San Francisco) introduced SB 922 to extend and expand upon his previous bill, SB 288, which became law in 2020. The law expanded statutory exemptions from the California Environmental Quality Act (CEQA) for specified transportation projects. Wiener explained: “We see CEQA unfortunately being misused to undermine environmentally sustainable projects, whether it’s putting more student housing on campus, or creating a bike lane, or a bus only lane, a light rail, or pedestrian infrastructure.”
California agencies launched 15 projects under SB 288, but the legislation was due to sunset January 1, 2023. SB 922 extends the sunset date through 2030. It also expands the projects that qualify for exemptions, prevents exemptions from being misapplied with a set of requirements, and for projects over $100 million, imposes more requirements for public participation and racial equity. 
State Senator Josh Newman (D-Fullerton) introduced SB 942 to build on his earlier legislation, SB 1119, which revised the eligibility requirements for transit fare subsidies to allow more low-income residents, particularly students, to be able to take advantage of the Low Carbon Transit Operations Program (LCTOP). Under previous law, an agency had to repeatedly demonstrate that it met the requirements for using LCTOP funds to maintain a program. SB 942 removes that hurdle, allowing agencies that use LCTOP funds for a fare free or reduced fare transit program to continue doing so once they demonstrate compliance in their initial program application.
SB 942 was one of three separate proposals involving free or reduced fare transit considered by the Legislature this year — the only one the Legislature moved forward with. “The California Transit Association’s co-sponsorship of SB 942 was clearly a key to the bill's ultimate success through their ability to access and leverage their broad network of transit agencies throughout the state,” said Senator Newman. “This led individual agencies to join us in advocating for the proposed change to LCTOP by effectively conveying to my colleagues the importance of free and reduced-fare programs across the state.”
State Assemblymember and Speaker Pro Tempore Kevin Mullin (D-San Mateo) pursued AB 2622 following his 2019 legislation, AB 784. That Sales and Use Tax Law provides various exemptions from those taxes, including for specified zero-emission technology transit buses sold to specified public agencies that are eligible for specified incentives from CARB. AB 2622 extends this exemption from its current sunset date of January 1, 2024 until January 1, 2026, recognizing that the financial impacts to agencies from the pandemic have prevented them from taking full advantage of these exemptions.
“Working with the California Transit Association on this measure was extremely helpful,” said Assemblymember Mullin. “Their knowledge and expertise in the area and being able to answer questions about the technology and cost differentials with traditional diesel technology was invaluable.”
Federal Transit Grants
On October 28, the United States Department of Labor (USDOL) released a letter nullifying their previous 2019 determination on the impact of the California Public Employees’ Pension Reform Act (PEPRA) on collective bargaining rights and prohibiting the further certification of federal transit grants owed to California transit agencies.
With support from the Association, the State of California secured temporary injunctive relief against implementation of the USDOL October 28 determination, permitting federal transit grants to continue to flow to California transit agencies. As of now, this injunctive relief remains in place.
The Association will continue to monitor this ongoing legal matter and will engage, as appropriate, the Biden Administration and the United States Congress to ensure funding to California transit agencies continues to flow unimpeded. The Association will pursue legal action in concert with the State of California, as appropriate, and may support transferring the transit grant certification process from USDOL to the United States Department of Transportation, if necessary.
CARB Cooperation
The Association’s advocacy efforts resulted in amendments to the 2018 Innovative Clean Transit (ICT) regulation, including the requirement that CARB conduct a third-party assessment of the status of the transit industry’s transition toward zero-emission buses (ZEBs) and the state of ZEB technology before the first ZEB purchase requirements takes effect at the beginning of 2023. That “comprehensive review” was released on August 22, 2022, and CARB held a hearing at a public meeting on September 22.
At this meeting, California transit agencies and our industry at large received a chorus of applause and commendations from members of the CARB Board for the progress achieved so far. Vice Chair Sandy Berg said, “We asked you in 2018 to come to the table and lead the way, and transit has truly done that…great job…congratulations.” Board Member Dr. John Balmes noted that it was “refreshing to see how CTA and its members have stepped up to try to work with us and make the Innovative Clean Transit regulation a reality.”
Board members acknowledged that the industry is still “in crisis” and described its challenges as “dire,” stating that they do not want to “crush” the industry. Board members directed staff to implement all six of the recommendations prepared by the Association and presented at the meeting. Though formal action was not taken on the recommendations, several board members, including the Vice Chair, discussed that beyond 2023, the regulation should be updated to tie compliance obligations to funding availability. The Association will follow up to see how CARB staff will follow through on the intent of the statement. Board Members also requested more regular check-ins by CARB staff and the industry. In restating the direction, Vice Chair Berg remarked, “This is not a regulated entity that we need to push, prod, and cajole…these are partners.”
On September 23, CARB released the draft In-Use Locomotive regulation, which aims to transition passenger rail and freight locomotives to zero-emission technologies. The draft regulation, as first released, posed serious challenges for the state's passenger rail and commuter rail agencies and led Association leadership to create a new Rail Subcommittee in our ZEV Task Force to guide the Association’s ongoing engagement with CARB on the regulation, with the goal of establishing an alternative to the draft regulation that would take into consideration the limited financial resources of the state’s passenger rail and commuter rail agencies. The Rail Subcommittee, which met weekly throughout fall 2022, ultimately identified a consensus alternative to the draft regulation for consideration by CARB and organized the Association’s advocacy efforts targeted at CARB executive leadership and board members. On November 18, CARB held a public hearing on the draft regulation, which included participation by the Association and our passenger rail and commuter rail agency members Due to the Association’s advocacy before and at the hearing, a majority of CARB board members present expressed their concerns with the draft regulation’s impacts on passenger rail and commuter rail agencies, and directed CARB staff to continue to work with the Association and our members to identify a mutually agreeable path forward. As of the drafting of this story, the Association is working productively with CARB to inform a final regulation that will be implementable by our passenger rail and commuter rail agency members.
ZEV Funding
As mentioned, the FY 2022-23 State Budget includes $3.53 billion in FY 2022-23 for zero-emission vehicle deployment and charging/refueling infrastructure. Of this total, $100 million is earmarked for zero-emission transit buses and supporting infrastructure (SB 178 (Skinner), Item 3900-101-0001 and SB 154 (Skinner), Item 3360-101-0001). A further $600 million may be available to transit agencies through CARB’s Clean Trucks, Buses, and Off-Road Equipment Program, which funds HVIP, advanced technology demonstrations, and pilot commercial deployment projects (SB 178, Item 3900-101-3228).
Additionally, of this total, $1.12 billion will be subject to future legislative negotiations, with the potential to support zero-emission transit projects. The remaining balance of funds support the transition to zero-emission technologies for school buses, drayage trucks, and low-income Californians (SB 178, Section 232; AB 180, Section 47).
Furthermore, AB 194 (Committee on Budget), the Revenue and Taxation trailer bill, institutes a partial sales and use tax exemption for diesel fuel from October 1, 2022 to October 1, 2023, impacting only revenues collected by the State and deposited into the General Fund. The partial sales and use tax exemption would not impact revenues that support transportation programs.
Though the times remain very challenging for the industry, we move into 2023 with the confidence that our coordinated action yields meaningful results.