BILL ANALYSIS AB 2289 Page 1 Date of Hearing: April 19, 2010 ASSEMBLY COMMITTEE ON TRANSPORTATION Bonnie Lowenthal, Chair AB 2289 (Eng) - As Amended: April 21, 2010 SUBJECT : Smog check program enhancements SUMMARY : Establishes new industry operating standards and technology upgrades to the current biennial inspections of vehicle emission control equipment and systems (smog check) program. Specifically, this bill : 1)Establishes legislative intent to encourage the state's community college system and other training institutions to develop innovative programs that respond to industry demands for automotive technicians. 2)Authorizes an alternative smog check test method and corresponding test equipment for the year 2000 and newer motor vehicles equipped with updated on-board diagnostic systems (OBD II). 3)Authorizes the Bureau of Automotive Repair (BAR) to establish performance standards and requires vehicles that cause most of the pollution to have smog checks performed by stations that meet high performance standards. For test-only stations, requires BAR to automatically suspend operations when the test-only station fails the performance standards. Establishes suspension and appeal procedures. 4)Revises the existing procedures for the provision of referees by BAR. Requires referees to make inspections of specially constructed vehicles, as defined. 5)Requires an annual evaluation of the performance of the smog check program by BAR, in cooperation with the California Air Resources Board (CARB), using data collected from a roadside audit program. The required annual report, beginning July 1, 2011, is to include, at a minimum, the following: a) An independent analysis done on the report's evaluation methods, findings, and conclusions; b) The percentage of vehicles that initially passed a smog AB 2289 Page 2 check inspection and then failed a subsequent inspection; c) The percentage of vehicles that initially failed a smog check inspection and then failed a subsequent inspection; d) An estimate of excessive emissions resulting from vehicles identified in (b) and (c); e) Recommended changes to the smog check program. Requires authorization by the Legislature, through enactment of statute, prior to implementing any recommendations on contracting the management of smog check stations; and, f) A comparison to the findings of the report "Evaluation of the California Smog Check Program Using Random Roadside Data" dated March 12, 2009. 6)Authorizes BAR to enter into a contract for the supply or service of certified equipment with the manufacturers and service providers. Requires BAR to provide to smog check stations the option to purchase the equipment or service directly from the contractor or any other provider of certified equipment or service. 7)Requires BAR to indicate the implementation date for the use of the new equipment in their adoption of regulations. 8)Repeals the existing fine and penalty structure and adopts a more stringent fine and penalty structure to respond to stations and technicians that perform improper inspections. Establishes a minimum fine penalty of $100, but not more than $5,000, based upon various factors of consideration by BAR. Increases the minimum daily civil penalty to not more than $5,000 per day. 9)Increases the penalties to customers who obtain or attempt to obtain a repair cost waiver, or economic hardship extension, by falsifying information to not more than $5,000. Adds a new penalty violation to a customer who obtains or attempts to obtain a smog certificate by falsifying information to not more than $5,000. EXISTING LAW : 1)Requires, generally, gasoline and diesel-fueled vehicles that AB 2289 Page 3 are registered in nonattainment areas for ozone or carbon monoxide pollutant emissions to undergo smog check. Authorizes BAR to enforce and administer the smog check program to ensure the reduction of gaseous emissions of hydrocarbons, carbon monoxide, and oxides of nitrogen. 2)Requires the smog tests to include, at minimum, loaded mode dynamometer testing in enhanced areas, and 2-speed testing in all other program areas, and a visual or functional check of emission control devices specified by smog technicians. 3)Requires the periodic evaluation of the smog check program by BAR and CARB. Establishes the Inspection and Maintenance Review Committee Inspection and Maintenance Review Committee (IMRC) to review the BAR/CARB joint evaluation and to submit a report on the proposed plan to the Legislature. 4)Establishes procedures for the issuance of citations for operating violations by underperforming stations and establishes a schedule of civil penalties for the violations. 5)Requires BAR, if existing smog check stations, in order to participate in the enhanced program, have been required to make additional investments of more than $10,000, to submit recommendations to the Governor and the Legislature for any appropriate mitigation measures. FISCAL EFFECT : Unknown COMMENTS : BAR and CARB are jointly sponsoring this bill that they assert is projected to save consumers money, save time, and provide greater air quality from the state's smog check program, which is administered by BAR. According to smog station industry sources, this is the second attempt within several years to try to achieve major smog check program upgrades. That unsuccessful attempt, they claim, was due to the inability to foster a sense of trust as well as a consensus agreement on program goals/needs between the stakeholders - - the air quality regulators, BAR management, smog check industry, equipment suppliers, and environmental organizations. This bill represents, for the most part, an earnest negotiated consensus among those parties. The author's office contends that this bill is designed to AB 2289 Page 4 improve smog check in reducing pollution through the use of new technologies (OBD II) that provide considerable time and cost savings to consumers while at the same time improving consumer protections by adopting more stringent fine structures to respond to station and technicians that perform improper and incomplete inspections. While making the transition to new equipment and reducing the need for the old equipment, the author's office wants to provide clear direction to BAR/CARB and especially to the regulated smog stations regarding the new scope of the law as envisioned. With program implementation changes clearly delineated by this bill, smog stations will be better able to make informed business decisions along with the ability of BAR personnel to better manage, investigate, and enforce the program. Statewide smog check program : In 1982, California became the 20th state in the nation to adopt a vehicle inspection and maintenance (smog check) program. Unlike the other states, BAR administers a "decentralized" program, which means that smog check stations are privately owned and operated. In 2008/2009, BAR licensed approximately 8,400 smog check stations (although only 7,300 are considered active stations in the 1st quarter of 2009). During this time, BAR also licensed almost 14,000 smog check technicians. This bill authorizes BAR to contract with one or more private entities to manage smog check stations and evaluate performance based upon standards set by them. According to CARB, this is a management method used by other states to reduce program costs and simplify enforcement. In response, the smog station industry contends that governmental oversight, management and regulation of private businesses should stay with BAR and its public employees. The proposed contracting out functions are duplicative of existing BAR staffing responsibilities and as such are wasteful. Industry further believes that privatizing this government function will only increase costs to the smog check program, which will be passed on to consumers, thus, recommend its deletion from the bill. OBD II : According to CARB, OBD II is an acronym for On-Board Diagnostics II, the second generation of on-board self-diagnostic equipment requirements for California vehicles. On-board diagnostic capabilities are incorporated into the hardware and software of a vehicle's on-board computer to monitor virtually every component that can affect emission AB 2289 Page 5 performance. Standard equipment on 1996 and newer vehicles, the electronic component allows smog technicians to plug into the vehicle's computer and diagnose in-use driving vehicle emission performance. According to IMRC, with the exception of California and Colorado, all states with federally- mandated smog check programs have discontinued tailpipe, visual, and functional testing for newer model-year vehicles, because they were deemed not cost effective. The U.S. Environmental Protection Agency (USEPA) has supported OBD-only testing and testified before the IMRC last year that it would agree with this approach in California. The primary advantages of OBD II-only testing are a lower cost to the consumer and a more effective testing procedure. The California Automotive Business Coalition, writing in opposition to this bill, indicates that "the vast majority of vehicles in the State of California would instead only be required to be tested using only the on-board diagnostic (OBD) equipment of the vehicle. The shift of vehicles away from tailpipe testing requirements will erode the ability of existing businesses to generate future income on their investments; and could also deteriorate our state's air quality. At a minimum, there is significant dispute about the accuracy of OBD systems to properly detect excess emissions." Additionally, the Automotive Service Councils of California (ASCCA), also in opposition to this bill, contends that "it may be possible for "gross polluting" vehicles to pass smog check under AB 2289, since the tailpipe emissions testing would not be required for vehicles 1996 or newer. Although OBD II systems have steadily improved over the years, concerns still remain with faulty OBD systems in late 1990's and early 2000 vehicles passing the OBD II portion of the test but still failing the tailpipe emissions test. Furthermore, oxides of nitrogen, or NOx, is a key contributor to air pollution and is currently measured through the tailpipe emissions test. ASCCA recommends that OBD II-only testing be performed on 2000 model year and newer vehicles." This bill provides BAR the authority to employ the OBD II-only testing option on model year 2000 and newer vehicles. Impact upon remaining fleet : According to CARB, eliminating AB 2289 Page 6 tailpipe testing for the newer fleet would result in changes to the current smog check equipment and practices within the industry. Even in 2008, the newer fleet (i.e., OBD II-equipped vehicles) made up over 66% of all vehicles inspected, and the percentage is growing every year. The number of older cars in the fleet that need a tailpipe test, on the other hand, will continue to diminish over time. At some point, tailpipe testing volumes may be reduced to the point that it is impractical or not cost effective to have tailpipe testing equipment at every smog check station, and other infrastructure options would need to be considered (e.g., tailpipe testing at a subset of stations, allowing individual stations to opt in or out of tailpipe testing from a business point of view, etc.). Maintaining a tailpipe testing infrastructure, however, is a vital element to the smog check program. As the test-only stations currently handle approximately 60% of smog inspections, the impact upon that segment of the smog check industry could result in the majority of those stations to be economically unviable, according to the California Emissions Testing Industries. Sierra Research Report (March 2009) : CARB, in cooperation with BAR, hired Sierra Research, Inc. to conduct an independent research and analysis of the smog check program using data collected from roadside inspections conducted in 2003-2006. It is believed that the study's findings spurred the need for smog program changes, thus leading to the introduction of this bill. The study compared roadside inspection results for 1976-95 (pre-OBD II) model year vehicles to the smog check inspection results reported by smog check stations for these same vehicles. Key findings from the study included: 1)Of the 1976-95 vehicles sampled, 19% of the vehicles initially passed a tailpipe inspection at a licensed smog check station, but failed a roadside audit inspection within a year. 2)The data also showed that 49% of the vehicles that failed a roadside audit inspection had failed, and then subsequently passed, a tailpipe inspection at a smog check station within the past year. To better address the extent to which improper and/or falsified test results may be factors in the smog check program, the report recommended corrective steps, some of which are incorporated in this bill. AB 2289 Page 7 Smog check equipment change - Transitioning from BAR-97 to BAR-2012 : Approximately 10,000,000 smog check inspections are performed on motor vehicles each year in California. Smog check inspections are performed by approximately 7,300 licensed smog check stations located throughout California. Smog check inspections are currently performed using a BAR-97 Emissions Inspection System (EIS). The BAR-97 EIS equipment is required in all smog check stations located in enhanced areas, or California's smoggiest regions. The BAR-97 EIS tests vehicles under simulated driving conditions to detect oxides of nitrogen, hydrocarbons, and carbon monoxide emissions. These are the major chemical components of smog. The equipment consists of a 5-gas analyzer, additional hardware, software, a fuel cap tester, and a dynamometer with safety restraints. The most distinctive component of the equipment is the dynamometer, a treadmill-like device that simulates driving conditions. Originally certified by BAR in 1997/1998, the state's current BAR-97 EIS units are more than 13 years old. The BAR-2012 EIS Project is an information technology project to procure the development of standardized state-owned software and integrate that software with various equipment components of the BAR-2012 EIS. According to BAR, the current BAR-97 EIS relies on older technology that cannot be easily updated to respond to needed smog check program improvements. The BAR-2012 EIS will be flexible, scalable, and responsive to the demands for program change and allow increased program effectiveness and efficiency. BAR anticipates award of contract to develop the new equipment on September 2010. Furthermore, they expect a transition from BAR-97 to BAR 2012 at the end of 2012. Accordingly, to give business some certainty in making informed business decisions, this bill requires BAR to specify, in regulation, the implementation date for the conversion of the new equipment. Further, under current law, if equipment purchases are mandated and exceed $10,000, BAR is required to submit recommendations to the Governor and the Legislature for any appropriate mitigation measures. Enforcement issues : According to IMRC, problems identified in the Sierra Research report indicate that current fines for conducting improper smog check inspections fail to change technician's behavior. "When technicians are issued a citation under current provisions of the Health and Safety Code, they are only required to undergo additional training. They pay no AB 2289 Page 8 monetary fine. Unfortunately, this training appears to have little impact since almost 50% of the inspections conducted on vehicles that originally failed appear to have been performed improperly. Further, although BAR's enforcement division identifies stations and technicians that fail to perform in this area, the penalties, as specified in statute, are too small to change their poor behavior. Therefore, BAR needs a statutory change that will increase penalties in order to change poor and fraudulent behavior." This bill increases and expands existing fines and penalties for violations committed by smog station owners, technicians, and customers. Annual report : On an on-going basis, BAR conducts random roadside audits (smog tests) on vehicles. The results from these inspections are used to evaluate the performance of the smog check program in achieving Clean Air Act requirements. This bill requires that the results of these audits be evaluated and reported annually, beginning July 1, 2011. This bill also requires approval by the Legislature, through enactment of statute, prior to the implementation of any report recommendation pertaining to contracting out the management of the smog check program. REGISTERED SUPPORT / OPPOSITION : Support California Air Resources Board (co-sponsor) California Department of Consumer Affairs/ Bureau of Automotive Repair (co-sponsor) American Lung Association in California Breathe California California Council for Environmental and Economic Balance Clean Power Campaign National Parks Conservation Association Natural Resources Defense Council Planning and Conservation League South Coast Air Quality Management District Union of Concerned Scientists Opposition Automotive Service Councils of California California Automotive Business Coalition California Emissions Testing Industries AB 2289 Page 9 Clean Air Performance Professionals Analysis Prepared by : Ed Imai / TRANS. / (916) 319-2093