Section 2478.14 - Small Business Hardship Extension(a) A Locomotive Operator whose gross revenue has not exceeded a gross revenue cap of five million dollars annually, adjusted for inflation, in each year for the last three years may submit an application to the Executive Officer requesting a Small Business Hardship Extension. (1) An inflation adjustment shall be made annually using the following methodology: Inflation Adjusted Gross Revenue Cap = $5,000,000 * (U.S. Consumer Price Index [reference year]/U.S. Consumer Price Index [2019]).(2) Gross revenue cap shall be adjusted annually using Bureau of Labor Statistics' Consumer Price Index for All Urban Consumers.(b) Locomotive Operators must submit the application no later than March 1 of the year following the Calendar Year for which the extension is sought for Spending Account Requirements and no later than 90 calendar days prior to the start date of the extension for extensions sought for the In-Use Operational Requirements.(c) Approval of a Small Business Hardship Extension may grant the applicant any of the following (including any combination), as specified in the Executive Order approving the Small Business Hardship Extension: (1) A reduction in the amount of funds, up to the total requirement, required to be set aside in the Spending Account for up to three years.(2) Up to a three-year extension of the time the Locomotive Operator is allowed to continue Operation of a Locomotive(s) in California that does not comply with the In-Use Operational Requirements in section 2478.5.(d)Small Business Hardship Extension Application. Locomotive Operators that meet the requirements of subsection (a) may apply for a Small Business Hardship Extension by submitting an application as required in section 2478.15 that includes the following: (1) Financial documentation demonstrating gross revenue for the three Calendar Years preceding the submission of the application per subsection (a).(2) An identification of the type of relief that the Locomotive Operator requests per subsection (c) and the following information:(A) If the Locomotive Operator seeks the relief set forth in subsection (c)(1): 1. The amount of reduction requested for up to three years.2. The timeframe over which the applicant would like that reduction to apply (up to three years).3. An explanation of why the reduction is needed throughout that timeframe.4. Evidence demonstrating that setting aside funds into the Spending Account as required by section 2478.4 will prevent the Locomotive Operator from meeting financial obligations that will cause bankruptcy or the closure of their business.(B) If the Locomotive Operator seeks the relief set forth in subsection (c)(2):1. The amount of time requested for the extension for up to three years.2. An explanation of why that time is needed.3. Evidence demonstrating that the application of the applicable requirements from the In-Use Operational Requirements will prevent the Locomotive Operator from meeting financial obligations that will cause bankruptcy or the closure of their business.4. Identifying information about any Locomotives that would Operate under the extension if approved, including: a. Locomotive road number.b. Locomotive serial number.(C) A minimum of three years of the Locomotive Operator's tax data including one of the following: 1. Sole proprietorship or one-member LLCs/partnership's file Internal Revenue Service (IRS) Form 1040 ("U.S. Individual Income Tax Return") and Schedule C.2. S-corporations file IRS Form 1120S ("U.S. Income Tax Return for an S Corporation") and Schedule K-1.3. C-corporations file IRS Form 1120 ("U.S. Corporation Income Tax Return").4. Multi-member LLCs file IRS Form 8832 ("Entity Classification Election") and can elect to be treated as either an S- or C-corporation.5. Multi-member partnerships file IRS Form 1065 ("U.S. Return of Partnership Income") and Schedule K-1.6. Governmental entities shall supply annual financial reports, bond prospectuses, and budgets.7. Not-for-profit entities shall provide IRS Form 990 if gross receipts are more than $200,000 or assets greater than $500,000 and annual financial reports.(D) Any other evidence necessary to demonstrate hardship, including, where applicable: 1. Financial statements prepared by an outside accounting firm.2. Budgets and year-to-date results.4. Real estate and property tax records.(e) CARB will determine whether the financial hardship of the Locomotive Operator justifies an approval of an application for a Small Business Hardship Extension by analyzing the information provided using one of the following:(1) ABEL will be used for S- or C-corporations or multi-member LLC/partnerships;(2) INDIPAY will be used for individuals, sole proprietorships or one-member LLC/partnerships;(3) MUNIPAY will be used for government agencies; or(4) Any other means necessary to determine the financial hardship.(f)Notice of Approval. Within 90 calendar days after the Executive Officer has received a complete application for a Small Business Hardship Extension, the Executive Officer shall issue a notice of approval if the application meets the requirements of this section. (1) An Executive Order approving an application will specify the type(s) of relief granted and the parameters of that relief, including the date when the extension begins to be applicable and the duration of the extension. In the event of an approval, the Locomotive Operator is only granted relief from the specific provisions identified in the Executive Order approving the extension according to the terms set forth therein. (A) If the Executive Order approves a reduction in the Spending Account Funding Requirement per subsection (c)(1), the Executive Order will specify the amount of any reduction granted.(B) If the Executive Order provides relief to the In-Use Operational Requirements in section 2478.5 per subsection (c)(2), the Executive Order will specify the timeframe, up to three years, the Locomotive(s) may continue to Operate in California without penalty.(2) Approval is contingent upon the submission of a complete, accurate, and timely application following the requirements of section 2478.15. The Executive Officer may disapprove of an application if the Locomotive Operator is out of compliance with the Locomotive Regulation.(g)Notice of Disapproval. Within 90 business days after the Executive Officer has received an application for a Small Business Hardship Extension, the Executive Officer shall issue a notice of disapproval if the application is incomplete or does not meet the requirements of this section. The Executive Officer shall summarize the application deficiencies in the notice of disapproval.(h)Expiration and Revocation. A Small Business Hardship Extension that has expired or has been revoked shall not be used for compliance with this Locomotive Regulation.(1) An approved Small Business Hardship Extension is only valid for the time period specified in the Executive Order approving the extension and shall expire after the time period specified in the Executive Order.(2) An approved Small Business Hardship Extension may be revoked at any time by the Executive Officer for any of the following reasons: (A) The Locomotive Operator's annual gross revenue during the duration of the Small Business Hardship Extension exceeds the Inflation Adjusted Gross Revenue Cap calculated as described in subsection 2478.14(a)(1).(B) The Locomotive Operator fails to meet any of the requirements set forth in the Executive Order granting the Small Business Hardship Extension.(C) The Locomotive Operator fails to meet any other applicable requirements of this Locomotive Regulation, including Idling, Registration, and annual Reporting Requirements.(3) CARB will provide notice of revocation, including the date of the official revocation, to the applicant in writing at least 30 business days prior to the official revocation.Cal. Code Regs. Tit. 13, § 2478.14
Note: Authority cited: Sections 38560, 39600, 39601, 39658, 39659, 39666, 41511, 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).