In September 1990, California AB 2766 was signed into law (Health & Safety Code Sections: 44220 - 44247). This legislation authorized $4 per vehicle surcharge on annual registration fees. This money is used to fund the implementation of programs to reduce air pollution from motor vehicles pursuant to air quality plans and provisions of the California Clean Air Act.

AB 2766 also provided that the monies collected by the Department of Motor Vehicles would be distributed to the SCAQMD as follows: thirty cents of every dollar is be used by the SCAQMD for programs to reduce air pollution from motor vehicles and to carry out planning, monitoring, enforcement and technical studies which are authorized by, or necessary to implement, the California Clean Air Act. Forty cents of every dollar shall be distributed by the SCAQMD to cities and counties located in the South Coast District to be used to reduce motor vehicle air pollution; and, thirty cents of every dollar shall be deposited by the SCAQMD in a discretionary account (the "Discretionary Fund") to be used to implement or monitor programs to reduce motor vehicle air pollution.

To determine which projects should be funded by the Discretionary Fund, AB 2766 called for the creation of the Mobile Source Air Pollution Reduction Review Committee (MSRC), which would develop a Work Program for evaluating programs, would evaluate said programs, and would make a final recommendation to the SCAQMD Governing Board as to which programs and/or projects would be funded. The legislation also allowed for the formation of a Technical Advisory Committee (TAC) to assist and advise the MSRC.