Cal. Code Regs. tit. 13 § 2478.4

Current through Register 2024 Notice Reg. No. 43, October 25, 2024
Section 2478.4 - Spending Account
(a) By July 1, 2026, each Locomotive Operator not exempted from this section shall establish a Spending Account to be held in the name of the Responsible Official. Locomotive Operators may elect to use an Alternative Compliance Plan or the Alternative Fleet Milestone Option instead of direct compliance with the requirements in this section, in which case they instead shall follow the requirements in section 2478.7 or section 2478.8, respectively.
(1) A Locomotive Operator with a sufficient sum of ZE and Spending Account Deposit credits to offset their entire Spending Account Funding Requirement is exempt from the requirement in subsection (a) to establish a Spending Account until such time as their Spending Account Funding Requirement exceeds their available credits.
(b)Annual Spending Account Funding Requirement. On or before July 1, 2026, and every July 1 thereafter, a Locomotive Operator that has Operated one or more Locomotives in California during the immediately preceding Calendar Year shall deposit the Spending Account Funding Requirement into their Spending Account unless the Spending Account Funding Requirement as calculated in subsection (c) is equal to or less than zero. Funds deposited are to be solely dedicated to compliance with the Spending Account requirements. No other funding sources shall be comingled in this account.
(c) The Spending Account Funding Requirement, which is the total amount an Operator is required to deposit into their Spending Account for a given Calendar Year, shall be calculated by subtracting the total ZE Credit and Spending Account Deposit Credit as set forth in subsections (g)(3), (g)(4), and (h) from the total Spending Account Calculation, as set forth in subsection (f), for an Operator's Locomotive fleet.
(d) Funds deposited in a Spending Account and any interest earned on funds held in a Spending Account shall only be used as follows:
(1) Until January 1, 2030, for the purchase, lease, or rental of a Cleaner Locomotive(s), or for the Remanufacture or Repower to a Cleaner Locomotive(s).
(2) At any time, for the purchase, lease, or rental of ZE Locomotive(s), ZE Capable Locomotive(s), or ZE Rail Equipment, or to Repower to ZE Locomotive(s) or ZE Capable Locomotive(s).
(3) At any time, to purchase ZE Infrastructure intended to support ZE Locomotive(s), ZE Capable Locomotive(s), or ZE Rail Equipment.
(4) At any time, to pilot or demonstrate ZE Locomotive(s) or ZE Rail Equipment technologies.
(e) Within one year from the purchase date, the Locomotive Operator shall not transfer to another party the ownership or lease of equipment purchased using Spending Account funds.
(f)Spending Account Calculation Per Locomotive. The Spending Account Calculation Per Locomotive shall be calculated for each Calendar Year. For each Locomotive Operated in California during the immediately preceding Calendar Year, the Locomotive Operator shall use the following formula to calculate the Spending Account Calculation Per Locomotive:

Spending Account Calculation Per Locomotive [$] = {(Weighted Factor) x (PM EF [g/bhp-hr]) + (NOx EF [g/bhp-hr])} x (Annual Factor) x (Usage [MWhs])

(1) Weighted Factors can be found in Table 2 for the corresponding Calendar Year.
(2) The PM EF is the Locomotive PM certification level as shown in the U.S. EPA Locomotive ECD.
(3) The NOx EF is the Locomotive NOx certification level as shown in the U.S. EPA Locomotive ECD.
(4) When a Locomotive Operator does not have EF information, the Locomotive Operator shall use the following emission factors, as applicable.
(A) For each Freight Line Haul or Passenger Locomotive: 0.32 g/bhp-hr for PM and 13.0 g/bhp-hr for NOx emission factors.
(B) For each Switch or Industrial Locomotive: 0.44 g/bhp-hr for PM and 17.4 g/bhp-hr for NOx emission factors.
(5) Annual Factors are found in Table 2 for the corresponding Calendar Year.

Table 2: Weighted Factors and Annual Factors by Year

YearWeighted FactorAnnual Factor
202513.189.0
202613.192.6
202713.196.2
202813.199.9
202913.1103.8
203013.1107.3
203113.1111.4
203213.1115.8
203313.1120.4
203413.2125.1
203513.2130.1
203613.2135.1
203713.2140.6
203813.2146.4
203913.2152.1
204013.2158.5
204113.2164.8
204213.2171.5
204313.2178.5
204413.2185.7
204513.2193.3
204613.3201.2
204713.3209.6
204813.4218.5
204913.4228.0
2050+13.5238.1

(g)ZE Credit. From January 1, 2024, to December 31, 2029, Operation of ZE Locomotive(s) and ZE Rail Equipment, and use of Wayside Power, by the Locomotive Operator in California may result in credits that reduce a Locomotive Operator's annual Spending Account Funding Requirement.
(1) Operation of a ZE Locomotive or ZE Rail Equipment, or use of Wayside Power may only result in ZE Credit if the Operation or use is prior to January 1, 2030.
(2) Starting July 1, 2026, ZE Credits shall be reported to CARB as set forth in subsection 2478.11(c)(8).
(3) For each Operation of a ZE Locomotive or ZE Rail Equipment or use of Wayside Power reported for ZE Credit, the ZE Credit shall be determined according to the following formula:

ZE Credit [$]={0.16x(Weighted Factor) + 6.5}x(Annual Factor)x(Usage [MWhs])

(A) The Weighted Factor and Annual Factor are found in Table 2 for the corresponding Calendar Year.
(B) Usage is:
1. For ZE Locomotives or ZE Rail Equipment, Usage as defined in section 2478.3, or
2. The total MWh provided to a non-ZE Locomotive that is connected to Wayside Power in California through the connection to Wayside Power for the immediately preceding Calendar Year.
(4) Prior to January 1, 2030, for each ZE Locomotive or ZE Rail Equipment Operating in a DAC or for Wayside Power connections made in a DAC, the ZE Credit as provided in subsection (g)(3) shall be multiplied by two for the Usage within a DAC for the immediately preceding Calendar Year.
(5) If, for a given Calendar Year, a Locomotive Operator has a negative Funding Requirement due to ZE Credits, the negative balance may be banked and applied to any subsequent Calendar Year prior to expiration of the ZE Credit.
(6) All ZE Credits expire on January 1, 2030, if not used by that date.
(7) ZE Credits do not constitute property or a property right and have no monetary value. ZE Credits are not tradeable.
(h)Spending Account Deposit Credit. Beginning January 1, 2024, a Locomotive Operator may receive a credit equal to the amount spent on items listed in subsection (d).
(1) To receive credit, a Locomotive Operator must submit the information required in subsection 2478.11(c) by July 1 of the year following the initial receipt, operation, installation, or implementation (whichever is earliest, and as applicable) of a qualifying Spending Account purchase. The Executive Officer shall issue credits based on the total qualifying purchase, minus any amount of the purchase funded through use of existing Spending Account funds.
(2) One credit reduces the Operator's Spending Account Funding Requirement for that reporting year by one dollar. Once applied against a Spending Account Funding Requirement for a given year, that credit is automatically retired and cannot be used again.
(3) Credits for ZE Locomotives, ZE Rail Equipment, and ZE Infrastructure can be banked and used in subsequent years but cannot be used retroactively for Spending Account Funding Requirements incurred before the relevant purchase.
(4) Locomotive Operators with joint projects or purchases cannot share credit but may determine, through written agreement, how to allocate credits among them. Any written agreement to allocate credits must be submitted with each Operator's Spending Account Annual Report to receive credit for the purchase.
(5) Spending Account Deposit Credits do not constitute property or a property right and have no monetary value. Spending Account Deposit Credits are not tradeable.
(i) A Locomotive Operator may cash out and close their Spending Account if all Locomotives are Operated in a ZE Configuration in California in the immediately preceding Calendar Year. If the Locomotive Operator Operates a Locomotive that is not in ZE Configuration in California after they close their Spending Account, they shall be required to reopen the Spending Account and comply with the requirements of this section.
(j) A Locomotive Operator may close their Spending Account if it has a zero balance, but shall reopen the Spending Account and comply with the requirements of this section if it incurs a Spending Account Funding Requirement in the future that cannot be fully offset by Spending Account Deposit Credits.
(k) CARB and any CARB designee, including the California Department of Finance, may audit a Spending Account at any time. The Spending Account Owner shall give CARB and any CARB designee access to documents and information required to conduct an audit of the Spending Account upon CARB request.

Cal. Code Regs. Tit. 13, § 2478.4

Note: Authority cited: Sections 38560, 39600, 39601, 39658, 39659, 39666, 43013 and 43018, Health and Safety Code. Reference: Sections 39650, 39659, 41511, 43013 and 43018, Health and Safety Code.

1. New section filed 10-27-2023; operative 1/1/2024 (Register 2023, No. 43).