AB 153 creates the Low Carbon Transit Operations Program (LCTOP) to provide operating and capital assistance to transit operators that reduce greenhouse gas emissions and improve mobility, with a statutory priority on projects that benefit disadvantaged communities. The program is funded via a continuous appropriation from the Greenhouse Gas Reduction Fund (GGRF) and requires Department of Transportation (DOT) approval that proposed expenditures meet program criteria before the Controller distributes formula funds.
Beyond eligibility for zero‑emission buses and infrastructure, the bill authorizes operating support — including fare subsidies and new or expanded service — sets a 50 percent minimum spend requirement for disadvantaged communities (with specified waivers), requires annual reporting and audits, and builds flexibility for agencies to retain, loan, or reassign their shares subject to DOT guidelines. The measure packs a mix of accountability rules and programmatic flexibility that will shape how transit agencies plan fleet purchases, service expansions, and fare programs tied to climate goals.
At a Glance
What It Does
Creates the Low Carbon Transit Operations Program, continuously funded from the GGRF, and requires the Controller to allocate funds on a statutory formula after DOT determines proposed expenditures meet the bill’s criteria. Eligible uses include expanded service, operational actions to shift mode share, zero‑emission bus purchases, and associated infrastructure and maintenance.
Who It Affects
California transit operators that receive formula funding under the Public Utilities Code, state agencies that set guidelines (DOT and the State Air Resources Board), bus manufacturers and infrastructure vendors, and riders in disadvantaged and low‑income communities who are targeted for service and fare benefits.
Why It Matters
The bill channels GGRF dollars directly into transit operations and zero‑emission transitions while tying funding to GHG reductions and disadvantaged‑community benefits. It combines multi‑year allocation rules, auditing and reporting mandates, and operational flexibility (retention, transfers, fare programs) that will alter capital planning, procurement, and service decisions across California transit systems.
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What This Bill Actually Does
AB 153 establishes LCTOP as a standing program to pay for transit operating and capital activities that reduce greenhouse gases and improve mobility. The money comes from the state’s Greenhouse Gas Reduction Fund via a continuous appropriation, making the program a recurring source of climate‑focused transit funding.
DOT must approve agencies’ proposed expenditures and confirm requested funds are available before the Controller makes allocations according to the statutory formula.
Eligible expenditures range from direct service expansion (including bus, rail, waterborne, and intermodal facilities) to operational measures that increase transit mode share and the purchase and support of zero‑emission buses. The bill makes two linked policy choices: it requires recipient agencies to show each expenditure will reduce GHG emissions and prohibits using program funds to supplant other funding sources.
For agencies whose service areas include disadvantaged communities, at least half of program receipts must be spent on projects that meet the bill’s criteria and demonstrably benefit those communities, although the statute creates explicit waivers for connecting services, fare and technology integration (including discounted student passes), and zero‑emission bus purchases and infrastructure.The bill lays out procedural and compliance rules: DOT, working with the State Air Resources Board (CARB), will create the demonstration and reporting guidelines, and those guidelines are exempt from the Administrative Procedure Act (chapter 3.5 of the Government Code). Agencies must submit expense lists, required documentation, and — for capital projects — phasing and funding sources before disbursement.
Agencies can retain their formula share for a limited period (up to four fiscal years), transfer or loan shares within a region, reassign surplus or completed‑project funds to other eligible uses, and continue operational programs year to year if they can still demonstrate GHG reductions. A distinct exception allows indefinite continuation of free or reduced fare programs once initially approved, with a simplified reauthorization window for three subsequent fiscal years.
Finally, the statutory audit under the Mills‑Alquist‑Deddeh Act is expanded to verify receipt and appropriate expenditure of LCTOP funds, and agencies must file annual reports to DOT.
The Five Things You Need to Know
The program is continuously appropriated from the Greenhouse Gas Reduction Fund under Health and Safety Code Section 39719, so funds do not require a separate annual appropriation.
Recipient agencies must show each expenditure both reduces greenhouse gas emissions and does not supplant other funds; DOT will vet documentation before the Controller issues allocations.
At least 50% of an agency’s LCTOP receipts must benefit disadvantaged communities in the agency’s service area, but that requirement is waived if funds are used for connecting services, fare/technology integration (including student passes), or zero‑emission buses and supporting infrastructure.
A transit agency may retain its formula share for up to four fiscal years for a larger future expenditure; free or reduced fare programs are exempt from the four‑year restriction and, after initial funding, do not require a new allocation request for three fiscal years (though reporting still applies).
Audits required under the Mills‑Alquist‑Deddeh Act will be expanded to verify receipt and appropriate expenditure of LCTOP moneys, and each audited recipient must send a copy to DOT for legislative/Controller review on request.
Section-by-Section Breakdown
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Program created and purpose
This subsection formally creates the Low Carbon Transit Operations Program and sets its twin purposes: reduce greenhouse gas emissions and improve mobility, with a statutory priority on serving disadvantaged communities. Practically, that frames every eligibility, reporting, and allocation decision: projects and operating uses must tie back to emissions reductions and community benefit.
Funding source and continuous appropriation
The bill directs funding from the Greenhouse Gas Reduction Fund (via Health and Safety Code §39719) and makes that funding continuously appropriated. That structure bypasses the normal annual budgetary appropriation process for these funds, creating a predictable revenue stream but also tying transit program dollars directly to GGRF receipts and any volatility in that source.
Allocation mechanics and special allocation years
Allocations come from the Controller on a formula basis consistent with the part and Health and Safety Code §39719, but only after DOT determines a recipient’s proposed expenditures meet statutory and guideline requirements and funds are available. Paragraph (2) of (c) instructs the Controller to allocate the formula portion of funds for fiscal years 2019–20 through 2025–26 using the individual operator ratios in Public Utilities Code §99314.10. Subdivision (w) inserts a separate directive that the Controller allocate funding for 2019–20 through 2022–23 pursuant to those same ratios, creating a narrower covered range. In practice this creates explicit statutory allocation periods tied to the Public Utilities Code ratios and requires coordination among DOT, the Controller, and PUC‑defined operator shares.
Eligibility criteria and disadvantaged‑community rules
Recipients must demonstrate that every expenditure will reduce greenhouse gases and that program funds do not supplant other sources. Eligible costs include direct service expansion, operational measures to increase transit mode share, zero‑emission buses, and related fueling and maintenance infrastructure. If an agency’s service area includes disadvantaged communities, at least half of its LCTOP receipts must fund qualifying projects that benefit those communities, but the bill lists three explicit waivers (connecting services, fare/technology integration, and ZEB purchases/infrastructure) that count toward the 50% target when used.
Guidelines, application materials, and capital project requirements
DOT, coordinating with CARB, must develop the methodologies and reporting formats agencies will use to demonstrate compliance with the statute’s GHG, non‑supplanting, eligibility, and disadvantaged‑community requirements. The development of those guidelines is statutorily exempt from the Administrative Procedure Act, speeding rule issuance but limiting formal notice‑and‑comment. Agencies must submit expense lists and guideline‑specified documentation before disbursement; capital project requests also require phased work descriptions and a full accounting of other funding sources and timing for each project phase.
Continuation of operational programs and fare program exception
Agencies that used LCTOP for operational assistance in a prior fiscal year may continue the same service in later years only if they can demonstrate continued GHG reductions. Free or reduced fare programs are treated differently: once an initial allocation request meets requirements, an agency may continue such a program without the §(l) restriction and need not submit a new allocation request for the next three fiscal years (though it must still meet reporting requirements). This creates a streamlined path for fare programs while keeping operational continuations subject to emissions verification.
Approval, Controller notice, retention, transfers, reporting and audits
DOT (with CARB) determines eligibility and notifies the Controller of approved expenditures and allocations; the Controller then distributes funds. Agencies may retain a funding share for up to four fiscal years for larger future uses and may loan or transfer shares within the same region according to DOT procedures that must respect the disadvantaged‑community requirement. Agencies can reassign surplus or de‑prioritized allocations to other eligible uses. Annual reporting to DOT is mandatory, and audits under the Mills‑Alquist‑Deddeh Act will be expanded to verify receipt and appropriate expenditure of LCTOP funds; audited copies must be filed with DOT and made available to the Legislature and Controller on request.
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Every bill creates winners and losers. Here's who stands to gain and who bears the cost.
Who Benefits
- Transit riders in disadvantaged communities — the statutory 50% benefit target and qualifying waivers steer funds and service expansions toward lower‑income and overburdened communities, increasing the chance of more routes, fare subsidies, or improved connections.
- Transit agencies engaged in zero‑emission bus transitions — the program explicitly funds ZEB purchases and supporting infrastructure, lowering capital barriers for fleet electrification and related maintenance/fueling upgrades.
- Students and low‑income riders — the bill explicitly counts fare subsidies and integrated network/fare technology (including discounted student passes) as eligible investments that can meet disadvantaged‑community spending requirements.
- Regional planning bodies and larger operators — ability to loan/transfer shares within a region and retain shares for up to four years gives planners flexibility to assemble larger projects or shift funding to higher‑impact uses.
- Bus and charging‑infrastructure vendors — sustained, formulaic GGRF funding for ZEBs and infrastructure creates predictable demand for manufacturers and contractors involved in procurement and installation.
Who Bears the Cost
- Recipient transit agencies — they bear the administrative and documentation burden to prove GHG reductions, non‑supplanting, capital phasing, and annual reporting, and face audit scrutiny verifying appropriate expenditure.
- Department of Transportation and CARB — both agencies must develop, review, and enforce guidelines and determinations, which raises staff and coordination costs (and timing pressure because guideline development is exempt from standard rulemaking).
- Smaller transit operators with limited capacity — agencies lacking grant‑writing, compliance, or engineering staff may struggle to meet capital‑project phasing and funding‑source documentation, potentially disadvantaging them in allocations.
- State Controller and Legislature — the Controller must implement formula allocations and respond to DOT notifications; the Legislature and Controller may need to review audits and resolve disputes, adding oversight workload.
Key Issues
The Core Tension
The bill balances the need to move funding quickly into transit operations and zero‑emission transitions against the state’s interest in strict, demonstrable greenhouse‑gas reductions and targeted benefits for disadvantaged communities; that creates a central trade‑off between accountability (detailed documentation, audits, and demonstrable emissions reductions) and operational flexibility (continued operating support, a fare program exemption, fund retention and transfers) that will determine who can realistically access and sustain program dollars.
The bill combines targeted accountability with operational flexibility, but those choices create real implementation questions. First, the text contains overlapping allocation directives: one provision ties formula allocations to Public Utilities Code operator ratios for fiscal years 2019–20 through 2025–26, while a separate clause narrows a similar instruction to 2019–20 through 2022–23.
That creates potential ambiguity about which years are governed by which formula direction and whether allocations for later years require different handling. Second, the statute requires agencies to demonstrate GHG reductions for each expenditure but also permits ongoing operational assistance and an open‑ended exemption for continuing free or reduced fare programs once initially approved.
Measuring the incremental GHG benefit of continued operating subsidies or fare programs is methodologically challenging and may encourage agencies to favor easier‑to‑document capital investments over operational changes that could yield equal or greater climate benefits but are harder to quantify.
Several administrative design choices increase speed but reduce procedural safeguards. DOT and CARB guidelines are explicitly exempt from the Administrative Procedure Act, which will accelerate rule issuance but limits formal public comment and established regulatory checks.
The audit expansion imposes verification duties without specifying additional funding for audits or DOT/CARB enforcement capacity, so compliance may strain local and state administration. Finally, the bill bars DOT and CARB from requiring individual rider data from agencies, which protects privacy but constrains how agencies can demonstrate mode‑shift and equity outcomes, potentially leaving room for disputes over whether reported outcomes meet the statutory GHG and disadvantaged‑community tests.
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