SB 416 — AN ACT CONCERNING TRANSPORTATION SYSTEM MODERNIZATION.

6.5.

(Effective July 1, 2026) (a) The Commissioner of Economic and Community Development, or the commissioner's designee, shall convene a working group to study and make recommendations regarding (1) potential state policies and incentives to increaseencourage the useutilization of freight rail for the transportation of goods within the state.state, including, but not limited to, construction materials, metals and industrialmaterials, agricultural andfoodproductsand municipalsolid waste, as defined in section 22a-207 of the general statutes, (2) opportunities to expand freight rail infrastructure within the state, and (3) the environmental, economic and transportation impacts of increasing freight rail utilization.

(b) The working group shall consist of the LCOCommissioners of Transportation and Energy and Environmental Protection, or their designees, the executive director of the Connecticut Port Authority and any other member invited to participate by the Commissioner of Economic and Community Development, including, but not limited to, representatives of organizations representing the interests of sSB416 / File No.

2604468 65 ofsSB416 9File RaisedNo. Bill No.416 executive director oftheConnecticut Port Authority andother members selected by the commissioner, including representatives from organizations representing the interests of manufacturers in the state, representatives from freight rail carriers and any other members as deemed necessary by the commissioner.

The468 commissionermanufacturers shallin servethe aschairpersonoftheworkinggroupandshallschedulethefirststate, meetingrepresentatives of thefreight workingrail groupcarriers, notcollectors laterof thansolid Septemberwaste 1,and 2026.recyclable items and any other member as deemed necessary by the Commissioner of Economic and Community Development.

(b)The NotCommissioner laterof thanEconomic Januaryand 1,Community 2027,Development the commissioner shall submit,serve inas accordancechairperson with the provisions of section 11-4a of the generalworking statutes,group the results of such study and anyshall recommendationsschedule to the jointfirst standingmeeting committee of the Generalworking Assemblygroup havingnot cognizancelater ofthan mattersSeptember relating1, to2026. transportation.

The(c) workingNot grouplater than January 1, 2027,the Commissioner of Economic and Community Development shall terminatesubmit, onin accordance with the dateprovisions thatof section 11-4a of the commissionergeneral submitsstatutes, the results of such reportstudy orand Januaryany 1,recommendations 2027,to whicheverthe isjoint later.standing committee of the General Assembly having cognizance of matters relating to transportation.

Sec.The working group shall terminate on the date that the Commissioner of Economic and Community Development submits such report or January 1, 2027, whichever is later.

7.

(Effective July 1, 2026) (a) The Commissioner of Energy and Environmental Protection, or the commissioner's designee, shall convene a working group to study and make recommendations to increase the utilization of freight rail for the transportation of municipal solid waste, as defined in section 22a-207 of the general statutes.

Such study shall, at a minimum, (1) identify policies, incentives or investments that could promote or expand the use of freight rail for municipal solid waste transport, (2) identify any barriers that limit or discourage such transportation, and (3) recommend legislative action deemed necessary or desirable to facilitate such transportation.

(b) The working group shall consist of the Commissioner of Transportation, or the commissioner's designee, the executive director of the Connecticut Port Authority and other members selected by the Commissioner of Energy and Environmental Protection, including representatives from freight rail carriers, representatives from municipal governments, representatives from municipal authorities and regional authorities, as defined in section 22a-207 of the general statutes, collectors of solid waste and recyclable items and any other LCO No.

2604 7 of 9 Raised Bill No.

416 members as deemed necessary by the commissioner.

The commissioner mayinviterepresentativesofeconomicdevelopmentandtransportation agencies in those states that are destinations for transported municipal solid waste to attend meetings of the working group in an advisory capacity to promote coordinated interstate freight rail policy.

The commissioner shall serve as chairperson of the working group and shall schedule the first meeting of the working group not later than September 1, 2026.

(c) Not later than January 1, 2027, the commissioner shall submit, in accordance with the provisions of section 11-4a of the general statutes, the results of such study and any recommendations to the joint standing committees of the General Assembly having cognizance of matters relating to transportation and the environment.

The working group shall terminate on the date that the commissioner submits such report or January 1, 2027, whichever is later.

SectionOctober 11, from2026 passageSection 22a-202(d)1 13b-23c Sec.

2 OctoberJuly 1, 2026 13b-23cPA 20-1, Sec.

3 July 1, 2026 PA 20-1, Sec.

43 July 1, 2026 22a-201d Sec.

54 July 1, 2026 New section Sec.

65 July 1, 2026 New section Sec.Statement of Legislative Commissioners:

7In JulySection 1, 2026Subdiv. New section Statement of Purpose:

Todesignators revise various transportation-related statutes concerning (1) theand type(2) ofwere vehiclesadded eligible for aclarity, rebatein orSection voucher3(b) underand the(c), Connecticutreferences Hydrogento and"all Electricschool Automobiledistricts" Purchasewere Rebatechanged program,to (2)"[all theschool matchingdistricts] granteach programschool district" for modernizingclarity, existingin trafficSection signal3(a)(3), equipment"was" andwas operations,changed (3)to the"is" requirements for zero-emissionconsistency schoolwith busesstandard anddrafting alternativeconventions, fuelin schoolSection buses3(e), and"subsection the(c) relatedof grantthis programsection" forwas thechanged purchasingto or"subsection leasing(b) of zero-emissionthis schoolsection" buses,for (4)accuracy, aand workingin groupSection to4(b), study"subsection incentives(f) toof" increasewas theinserted usebefore of"section freight22a-201d" railfor LCOclarity. No.

2604TRA 8Joint ofFavorable 9Subst. Raised Bill No.

416sSB416 transportation/ inFile theNo. state, and (5) a working group to study incentives to transport municipal solid waste by freight rail.

[Proposed468 deletions6 aresSB416 enclosedFile inNo. brackets.

Proposed468 additionsThe following Fiscal Impact Statement and Bill Analysis are indicatedprepared byfor underline,the exceptbenefit thatof whenthe members of the entireGeneral textAssembly, solely for purposes of ainformation, billsummarization orand resolutionexplanation orand ado sectionnot ofrepresent athe billintent orof resolutionthe isGeneral new,Assembly itor iseither notchamber underlined.]thereof LCOfor No.any purpose.

2604In 9general, fiscal impacts are based upon a variety of 9informational sources, including the analyst’s professional knowledge.

Whenever applicable, agency data is consulted as part of the analysis, however final products do not necessarily reflect an assessment from any specific department.

OFA Fiscal Note State Impact:

Agency Affected Fund-Effect FY 27 $ FY 28 $ Department of Economic & GF - Cost 150,000 None Community Development Treasurer, Debt Serv.

GF - Cost None See Below Note:

GF=General Fund Municipal Impact:

Municipalities Effect FY 27 $ FY 28 $ Local and Regional School See Below See Below See Below Districts Explanation The bill makes various changes to transportation, resulting in the fiscal impacts described below by section.

Sections 1 and 2 make various changes to the traffic light modernization program, which is funded through General Obligation (GO) bonds.

Future General Fund debt service costs may be incurred or incurred sooner due to the program changes to the degree that it causes authorized GO bond funds to be expended or to be expended more quickly than they otherwise would have been.

As of March 1, 2026, there is an unallocated bond balance of $98 million under the authorization, of which $75 million is available for the traffic light modernization program.

These sections do not change overall GO bond authorization levels.

Section 3 delays and reduces costs to local and regional boards of sSB416 / File No.

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468 education (BOEs) associated with existing school bus emissions requirements.

It also results in new costs to BOEs annually beginning in FY 28.

The section:

(1) replaces the requirement for school districts in an environmental justice community to have all zero-emission buses by January 1, 2030 with a phase in for distressed municipalities only beginning in FY 31 (starting at 10% and reaching 90% of buses are zero- emission beginning in FY 41);

(2) delays for six months (until FY 36) the requirement that all school buses in all other districts be zero-emission or alternative fuel;

(3) delays for six months (until FY 41), and reduces, to90%,therequirementthatallschoolbusesinallotherdistrictsbezero- emission;

and (4) requires diesel buses to be fueled with a biodiesel blend, beginning in FY 28.

These changes delay costs a district would incur in order to comply with the requirements.

Additionally, they allow distressed municipalities to more gradually shift their school bus fleets toward compliance, compared to the previous deadline for environmental justice communities, which may delay their costs.

The requirement that 90% of school buses must be zero-emission, instead of all school buses, potentially results in a savings to districts to the extent the lesser requirement allows for decreased costs associated with fueling and maintaining alternatives.

The requirement to fuel diesel buses with a biodiesel blend results in a potential cost to districts, dependent on the need to winterize the biodiesel blend and any associated cost increases in bussing contracts.

The section additionally may shift zero-emission bus grant program funds from school districts, towns, and bus operators in environmental justice communities to those in distressed municipalities, beginning in FY 27.

All distressed municipalities are also environmental justice communities;

some environmental justice communities are U.S.

census tracts that are not within distressed municipalities.

Section 4 authorizes $40 million in General Obligation bonds for the zero-emission bus grant program.

To the extent bonds are fully allocated and expended, total debt service is expected to be sSB416 / File No.

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468 approximately $61 million over the 20-year duration of the bonds.

Section 5 results in a one-time cost of $150,000 in FY 27 to the Department of Economic and Community Development (DECD) by requiring the agency to convene a working group to study and make recommendations by January 1, 2027 regarding freight rail utilization.

It isanticipatedthatDECDwillrequireconsultation servicesastheagency does not have the expertise or resources necessary to analyze this topic.

The cost may be partially mitigated to the extent that the working group's consulting agencies, including the Departments of Transportation and Energy and Environmental Protection and the Connecticut Port Authority, can provide relevant expertise.

The Out Years The annualized ongoing fiscal impact identified above would continue into the future subject to inflation and the terms of any bonds issued.

sSB416 / File No.

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468 OLR Bill Analysis sSB 416 AN ACT CONCERNING TRANSPORTATION SYSTEM MODERNIZATION.

TABLE OF CONTENTS:

SUMMARY §§ 1 & 2 — TRAFFIC SIGNAL GRANT PROGRAM Requires DOT to give priority under the traffic signal modernization grant program to projects located in heavily congested areas, rather than to grant applications submitted by two or more municipalities § 3 — ZERO-EMISSION SCHOOL BUS REQUIREMENTS Requires 90%, rather than 100%, of school buses to be zero-emission by 2040 and sets earlier interim deadlines for distressed municipalities;

eliminates the requirement that environmental justice communities fully transition to zero-emission school buses by 2030;

requires municipalities to submit plans outlining how they will meet the requirements § 3 — BIODIESEL IN SCHOOL BUSES Starting July 1, 2027, requires school bus carriers to fuel any fully diesel-poweredschoolbuswithabiodieselblendthatcontainsatleast 20% biodiesel, unless doing so would void the manufacturer’s warranty §§ 3 & 4 — ZERO-EMISSION SCHOOL BUS GRANT PROGRAM Authorizes $40 million in general obligation bonds for DEEP’s zero- emission school bus grant program;

modifies program requirements, including by broadening the purposes for which grants may be awarded beyond providing matching funds for federal grant applications § 5 — FREIGHT RAIL WORKING GROUP Requires the DECD commissioner, or his designee, to convene a working group to study, among other things, freight rail’s impacts and policies to encourage its use to transport goods in the state BACKGROUND sSB416 / File No.

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468 SUMMARY This bill modifies the traffic signal modernization grant program and zero-emission school bus requirements, establishes a biodiesel requirement for school buses, and creates a freight rail working group.

A section-by-section analysis follows.

EFFECTIVE DATE:

July 1, 2026, except the changes to the traffic signal grant program (§ 1) are effective October 1, 2026.

§§ 1 & 2 — TRAFFIC SIGNAL GRANT PROGRAM Requires DOT to give priority under the traffic signal modernization grant program to projects located in heavily congested areas, rather than to grant applications submitted by two or more municipalities Existing law requires the Department of Transportation (DOT) commissioner to establish a matching grant program to help municipalities modernize their traffic signal equipment and operations to make them responsive to congestion and to reduce idling.

It also earmarks $75 million from a DOT bond authorization for a matching grant to modernize existing traffic signal equipment and operations.

Under current law, DOT must give preference to grant applications submitted by, and create incentives for projects implemented by, two or more municipalities.

The bill instead requires DOT to give priority to projects located in heavily congested areas.

§ 3 — ZERO-EMISSION SCHOOL BUS REQUIREMENTS Requires 90%, rather than 100%, of school buses to be zero-emission by 2040 and sets earlier interim deadlines for distressed municipalities;

eliminates the requirement that environmental justice communities fully transition to zero-emission school buses by 2030;

requires municipalities to submit plans outlining how they will meet the requirements Deadline Extensions Existing law requires school districts to gradually transition to zero- emission school buses (see BACKGROUND) and sets deadlines for doing so.

Under current law, 100% of school buses that provide transportation for school districts in the state must be (1) either zero-emission or sSB416 / File No.

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468 alternative-fuel (such as natural gas or propane) by January 1, 2035, and (2) zero-emission only by January 1, 2040.

The bill (1) lowers the percentage of buses in each district that must be zero-emission in 2040 to 90% and (2) extends these deadlines to July, rather than January in the same years, aligning with the legal school year (July 1 to June 30 of the following year).

Requirement in Environmental Justice Communities and Distressed Municipalities Current law sets an earlier deadline for some school districts, requiring that 100% of buses providing transportation for school districts located in or containing at least one environmental justice community (as of July 1, 2022) be zero-emission by January 1, 2030.

By law, an environmental justice community is (1) any U.S.

census block group, as determined by the most recent census, for which at least 30% of the population consists of low-income people who are not institutionalized and have an income below 200% of the federal poverty level or (2) a distressed municipality (CGS § 22a-20a).

The bill eliminates this requirement and instead sets earlier deadlines for school buses in municipalities that were distressed municipalities on July 1, 2026 (see BACKGROUND).

Because the definition of environmental justice community includes distressed municipalities, this change effectively reduces the number of municipalities who must meet earlier deadlines for transitioning to zero-emission school buses.

Under the bill, buses providing transportation for each school district in a distressed municipality must be (1) 10% zero-emission by July 1, 2030, and (2) 50% zero-emission by July 1, 2035.

Like all school districts under the bill, the school buses in a distressed municipality must also be 90% zero-emission by July 1, 2040.

Plans The bill requires municipalities to submit plans and schedules outlining how they will comply with the bill’s requirements to the Department of Energy and Environmental Protection (DEEP) commissioner.

Distressed municipalities must submit their plans by sSB416 / File No.

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468 July 1, 2029, and all other municipalities must do so by July 1, 2035.

§ 3 — BIODIESEL IN SCHOOL BUSES Starting July 1, 2027, requires school bus carriers to fuel any fully diesel-powered school bus with a biodiesel blend that contains at least 20% biodiesel, unless doing so would void the manufacturer’s warranty Starting July 1, 2027, the bill requires school bus carriers to fuel any fully diesel-powered school bus with a biodiesel blend that contains at least 20% biodiesel, unless doing so would void the manufacturer’s warranty.Thisrequirement appliestotheextent thefuelisavailableand until the school buses in the municipality are zero-emission as required under the bill.

§§ 3 & 4 — ZERO-EMISSION SCHOOL BUS GRANT PROGRAM Authorizes $40 million in general obligation bonds for DEEP’s zero-emission school bus grant program;

modifies program requirements, including by broadening the purposes for which grants may be awarded beyond providing matching funds for federal grant applications Current law requires DEEP to administer a grant program to give matching funds to municipalities, school districts, and bus operators who apply for federal grants to purchase zero-emission school buses and related charging infrastructure in order to maximize federal funding.

The bill authorizes $40 million in general obligation bonds for DEEP to fund the zero-emission school bus grant program.

The bonds are subject to standard issuance procedures and have a maximum term of years.

The bill also makes several changes to this program.

First, it broadens the purposes for which grants can be awarded by eliminating the requirement that the program provide matching funds for federal grants and instead requires that it provide a portion of funds necessary to maximize federal, state, or other sources of funding or financing.

It also requires DEEP to (1) administer the program in consultation with the Connecticut Green Bank and (2) give preference to grant applications for school buses that will operate in a distressed municipality rather than an environmental justice community, sSB416 / File No.

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468 conforming with the change to the zero-emission school bus transition requirements (see above).

§ 5 — FREIGHT RAIL WORKING GROUP Requires the DECD commissioner, or his designee, to convene a working group to study, among other things, freight rail’s impacts and policies to encourage its use to transport goods in the state The bill requires the Department of Economic and Community Development (DECD) commissioner, or his designee, to convene a working group to study and make recommendations on:

1.

potential state policies and incentives to encourage using freight rail to transport goods within the state, such as construction materials, industrial materials, agricultural and food products, and municipal solid waste;

2.

opportunities to expand freight rail infrastructure in the state;

and 3.

the environmental, economic, and transportation impacts of increasing freight rail use.

Under the bill, the DECD commissioner serves as chairperson of the group, and the DEEP and DOT commissioners (or their designees) and the Connecticut Port Authority executive director must be members.

The group must also include any other member the DECD commissioner invites to participate, including representatives of manufacturer organizations, freight rail carriers, solid waste and recyclable collectors, and other members the DECD commissioner deems necessary.

The DECD commissioner must schedule the working group’s first meeting by September 1, 2026.

DECD must report its findings and recommendations to the Transportation Committee by January 1, 2027.

The group ends when it submits its report or January 1, 2027, whichever is later.

BACKGROUND sSB416 / File No.

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468 Zero-Emission School Bus By law, a zero-emission school bus is a school bus certified by the Environmental Protection Agency (EPA) as having a drivetrain that does not produce any exhaust emission of any EPA-listed air pollutant orgreenhouse gas under any possibleoperationalmodeor condition(42 U.S.C.

§ 16091(a)(8)).

Distressed Municipalities DECD annually designates distressed municipalities, based on high unemployment and poverty, aging housing stock, and low or declining rates of job, population, and per capita income growth (CGS § 32-9p).

The current (issued October 2025) distressed municipalities are Ansonia, Bridgeport, Bristol, Chaplin, Derby, East Hartford, East Haven, Griswold, Groton, Hartford, Killingly, Lisbon, Mansfield, Meriden, Montville, Naugatuck, New Britain, New Haven, New London, North Canaan, North Stonington, Norwich, Plainfield, Plymouth, Putnam, Preston, Sprague, Stafford, Sterling, Stratford, Torrington, Voluntown, Waterbury, West Haven, Willington, Winchester, and Windham.

Related Bill HB 5470, favorably reported by the Energy and Technology Committee, eliminates the requirement to fully transition to zero- emission buses and instead sets a deadline by which all school buses must be zero-emission, alternative fuel, or hybrid.

COMMITTEE ACTION Transportation Committee Joint Favorable Substitute Yea 25 Nay 11 (03/16/2026) sSB416 / File No.

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