A BILL TO BE ENTITLED
AN ACT to reduce diesel emissions from certain diesel school buses registered in counties located in areas designated as nonattainment or maintenance for ozone through the use of retrofit technology.
The General Assembly of North Carolina enacts:
SECTION 1.  Article 21B of Chapter 143 of the General Statutes is amended by adding four new sections to read:
"§ 143‑215.107E.  Reduction of diesel emissions by retrofitting certain school buses in areas designated as nonattainment or maintenance for ozone.
(a)	Legislative Findings. – The General Assembly makes the following findings:
(1)	Diesel emissions, due in large part to their high concentrations of particulate matter, are associated with severe and multiple health risks to the citizens of North Carolina, including increased risk of cancer, decreased lung function, aggravated asthma, heart attacks, and premature death.
(2)	The United States Environmental Protection Agency (USEPA), recognizing the harmful effects of diesel emissions, issued new fuel and engine emission standards that will reduce particulate matter emissions from new engines ninety percent (90%) below previous levels, beginning with vehicle model year 2007.
(3)	The same technology that makes ninety percent (90%) reductions in diesel emissions possible for new engines can be retrofitted onto existing engines.
(4)	The Safe Accountable, Flexible, Efficient Transportation Equity Act – A Legacy for Users (SAFETEA‑LU) clarified eligibility for diesel retrofit projects from federal congestion mitigation and air quality improvement program funds appropriated to the State by the United States pursuant to 23 U.S.C. § 104(b)(2) and 23 U.S.C. § 149 and establishes such projects as a priority for funding. North Carolina should act now to position itself to maximize matching dollars available through this program.
(b)	Definitions. – As used in this section, the following definitions apply:
(1)	Level 1 Control. – A verified diesel emission control device that achieves a particulate matter (PM) emission reduction of twenty‑five percent (25%) or more but less than fifty percent (50%) from uncontrolled engine emissions levels.
(2)	Level 2 Control. – A verified diesel emission control device that achieves a PM emission reduction of fifty percent (50%) or more but less than eighty‑five percent (85%) from uncontrolled engine emission levels.
(3)	Level 3 Control. – A verified diesel emission control device that achieves a PM emission reduction of eighty‑five percent (85%) or more from uncontrolled engine emission levels, or that reduces emissions to less than or equal to 0.01 grams of PM per brake horsepower‑hour. Level 3 Control includes repowering or replacing the existing diesel engine with an engine meeting USEPA's 2007 Heavy‑Duty Highway Diesel Standards published at 66 C.F.R. § 5002 (18 January 2001 edition), or, in the case of a nonroad engine, an engine meeting the USEPA's Tier 4 Nonroad Diesel Standards published at 69 C.F.R. § 38958 (29 June 2004 edition). Level 3 Control also includes new diesel engines for the 2007 model year or later that meet the emissions standards of reducing PM emissions ninety percent (90%) below previous levels.
(4)	Verified diesel emission control device. – An emission control device or strategy that has been verified by USEPA or the California Air Resources Board (CARB); or the replacement or repowering the vehicle with an engine that is certified to specific PM emissions performance by USEPA or CARB.
(c)	Retrofit Certain School Buses. – Any school bus that has a model year 1994 through model year 2006 engine, that is registered in a county that is located in an area that is designated by the United States Environmental Protection Agency as nonattainment or maintenance for ozone, that is capable of operating on diesel fuel, and that is used for the transportation of public school students shall be retrofitted in order to utilize retrofit technology as provided in this section. Subject to subsection (d) of this section, the Secretary shall adopt rules to specify procedures for complying with this subsection according to the following schedule: 
(1)	Not less than fifty percent (50%) of school buses subject to this subsection shall have Level 3 Control installed and operational no later than December 31, 2009.
(2)	All school buses subject to this subsection shall have Level 3 Control installed and operational no later than December 31, 2010. 
(d)	Exceptions. – If the Secretary makes a written finding that a school bus subject to subsection (c) of this section cannot be retrofitted with Level 3 Control, the school bus shall have Level 2 Control, if it is available and appropriate for the school bus, installed and operational. If the Secretary makes a written finding that a school bus subject to subsection (c) of this section cannot be retrofitted with Level 2 or Level 3 Control, the school bus shall have Level 1 Control, if it is available and appropriate for the school bus, installed and operational. Further, any school bus that has Level 1 Control installed and operational prior to July 1, 2007, shall have an additional two years to meet the requirement under subsection (c) of this section, and any school bus that has Level 2 Control installed and operational prior to July 1, 2007, shall have an additional four years to meet the requirement under subsection (c) of this section.
(e)	Venting Emissions Prohibited. – No later than December 31, 2009, the venting of crankcase emissions from any school bus shall be prohibited. The installation of equipment that completely closes the crankcase of a diesel engine of a school bus to the atmosphere and routes the crankcase vapor to the engine intake air system or the exhaust system, or by any other equally effective means permitted by rules under this section, is not prohibited under this subsection.
(f)	Tampered Emission Controls. – No school bus shall operate in the State with tampered, nonconforming, or defective emission control components. No later than October 1, 2009, the Secretary, in consultation with the Department of Transportation, shall, by rule, create and implement a program of inspection of school buses to determine whether emission control components are tampered, conforming, or defective. The rules shall specify at least:
(1)	An inspection procedure.
(2)	A periodic inspection frequency of at least once each year.
(3)	Action the local school administrative unit is required to take to bring any defective, nonconforming, or tampered emission control equipment into compliance.
(g)	Approval Regarding Retrofits. – The Department may direct the Department of Administration to perform the retrofits under this section or may develop and maintain a list of businesses approved by the Department as being capable of performing retrofits in a satisfactory and uniform manner.
(h)	Coordination Among Departments. – The Secretary shall coordinate with the Department of Public Instruction, the Department of Transportation, and the Department of Administration to determine if the effective and efficient implementation of this section requires any of these departments to have a role, and if so, the Department of Public Instruction, the Department of Transportation, and the Department of Administration, as applicable, may adopt rules needed to implement this section.
"§ 143‑215.107F. School Bus Diesel Emissions Reduction Account.
(a)	The School Bus Diesel Emissions Reduction Account is established as a nonreverting account within the Department. The Account shall consist of funds appropriated to it by the General Assembly and the federal congestion mitigation and air quality improvement program funds appropriated to the State by the United States pursuant to 23 U.S.C. § 104(b)(2) and 23 U.S.C. § 149 that are available for diesel retrofits and that are transferred from the Department of Transportation to the Account.
(b)	Subject to G.S 143‑215.107G, the Department shall use funds in the Account to make grants to local administrative units to reimburse a local school administrative unit for any costs it incurs to retrofit a school bus as required under G.S. 143‑215.107E. To administer the grants, the Department and the Department of Public Instruction shall establish procedures for applying for a grant.
"§ 143‑215.107G. Penalties.Any local school administrative unit that is found to be in noncompliance with G.S. 143‑215.107E shall immediately bring each noncomplying school bus into compliance at its own expense, shall be ineligible to receive funds from the School Bus Diesel Emissions Reduction Account for the costs of bringing any such school bus into compliance, and may have the registration of each such school bus revoked.
"§ 143‑215.107H. Report required.
On or before January 1, 2008, and every year through January 1, 2012, the Secretary shall report to the General Assembly, the Environmental Management Commission, and the Environmental Review Commission on the use of retrofit technology to retrofit school buses as required under G.S. 143‑215.107E. The information contained in this report shall include, for the Department of Transportation and each local administrative unit:
(1)	The total number of school buses registered in the State.
(2)	The total number of school buses that have the retrofit technology installed and operational under G.S. 143‑215.107E, including a breakdown by vehicle model year, engine year, and the type of technology used for each school bus.
(3)	The number of school buses that are equipped with an engine certified to the applicable 2007 USEPA standard for particulate matter as set forth in 40 C.F.R. §§ 86.007 through 86.011 or to any subsequent USEPA standard for particulate matter that is at least as stringent.
(4)	All exceptions and findings made by the Secretary under G.S. 143‑215.107E(d).
(5)	Any recommendations for improving the reduction of diesel emissions from school buses and whether the program to retrofit certain school buses registered in a county that is located in an area that is designated by the United States Environmental Protection Agency as nonattainment or maintenance for ozone under G.S. 143‑215.107E is accomplishing its purpose to reduce diesel emissions and improve air quality."
SECTION 2.  If any clause, sentence, paragraph, section, or part of G.S. 143‑215.107E, 143‑215.107F, or 143‑215.107G, as enacted by Section 1 of this act, is adjudged by any court of competent jurisdiction to be invalid and after exhaustion of all further judicial review, the judgment shall not affect, impair, or invalidate the remainder thereof, but shall be confined in its operation to the clause, sentence, paragraph, section, or part of the section directly involved in the controversy in which the judgment has been rendered.
SECTION 3.  Within one year of the effective date of this act, the Secretary of Environment and Natural Resources shall:
(1)	Produce guidelines, protocols, and criteria for eligible emission reduction measures and the distribution of grants under G.S. 143‑215.107F;
(2)	Develop methodologies for evaluating diesel emission reduction measure benefits and cost‑effectiveness under this act;
(3)	Develop procedures for monitoring whether the emissions reductions projected for grants awarded under G.S. 143‑215.107F, as enacted by Section 1 of this act, are actually achieved; and
(4)	Take all appropriate and necessary actions so that emissions reductions achieved through this act may be the credited by the United States Environmental Protection Agency to the appropriate emissions reduction objectives in the State implementation plan.
SECTION 4.  There is appropriated from the General Fund to the School Bus Diesel Emissions Reduction Account, established in G.S. 143‑215.107F, as enacted by Section 1 of this act, the sum of three million four hundred twenty thousand dollars ($3,420,000) for the 2007‑2008 fiscal year and the sum of three million four hundred twenty thousand dollars ($3,420,000) for the 2008‑2009 fiscal year to be used to reimburse local school administrative units for the costs of retrofitting certain school buses as required under G.S. 143‑217.107E, as enacted by Section 1 of this act. 
SECTION 5.  The Department of Transportation shall transfer the sum of thirteen million seven hundred thousand dollars ($13,700,000) for the 2007‑2008 fiscal year and the sum of thirteen million seven hundred thousand dollars ($13,700,000) for the 2008‑2009 fiscal year from the federal congestion mitigation and air quality improvement program funds appropriated to the State by the United States pursuant to 23 U.S.C. § 104(b)(2) and 23 U.S.C. § 149, to the School Bus Diesel Emissions Reduction Account, established in G.S. 143‑215.107F, as enacted by Section 1 of this act, to be used as funds to reimburse local school administrative units for the costs of retrofitting school buses as required under G.S. 143‑215.107E, as enacted by Section 1 of this act. 
SECTION 6.  Section 4 and Section 5 of this act become effective July 1, 2007.  The remainder of this act is effective when it becomes law.