BILL ANALYSIS Ó
SB 170
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Date of Hearing: July 6, 2011
ASSEMBLY COMMITTEE ON NATURAL RESOURCES
Wesley Chesbro, Chair
SB 170 (Pavley) - As Amended: June 23, 2011
SENATE VOTE : 25-14
SUBJECT : Air districts: adverse effects of air pollution:
intellectual property
SUMMARY : Authorizes local and regional air pollution control
districts and air quality management districts to sponsor air
pollution prevention and mitigation projects involving both
stationary and mobile sources, and allows districts to share in
revenues generated from the commercialization of intellectual
property (IP), as specified.
EXISTING LAW :
1)Provides the California Air Resources Board (ARB) with primary
responsibility for control of mobile sources of air pollution,
including the adoption of rules for reducing vehicle emissions
and the specifications of vehicular fuel composition.
Designates the ARB as the air pollution control agency
responsible for the coordination of the activities of air
pollution control districts and air quality management
districts for the purposes of the federal Clean Air Act.
2)Establishes county air pollution control districts in every
county, unless the entire county is included within the
Antelope Valley Air Quality Management District, the Bay Area
Quality Management District, the Mojave Desert Air Quality
Management District, the South Coast Air Quality Management
District (SCAQMD), the San Joaquin Valley Air Pollution
Control District, a regional district, or a unified district.
Requires air districts to adopt and enforce rules and
regulations to achieve and maintain the state and federal
ambient air quality standards in all areas affected by
non-vehicular emission sources under their jurisdiction.
3)Requires the Independent Citizen's Oversight Committee (ICOC),
as part of the California Institute for Regenerative Medicine
(CIRM), to establish standards that require that all grants
and loan awards be subject to IP agreements that balance the
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opportunity of the state to benefit from the patents,
royalties, and licenses that result from basic research,
therapy development, and clinical trials with the need to
ensure that essential medical research is not unreasonable
hindered by the IP agreements. Requires that all revenues
that are received through the IP agreements established
pursuant to this subdivision be deposited into the General
Fund. Allows the ICOC to accept additional revenue and real
personal property, including, but not limited to, gifts,
royalties, interest, and appropriations that may be used to
supplement annual research funding and the operations of the
institute.
4)Provides that to the extent that IP is developed under the
Public Interest Energy Research, Demonstration, and
Development Program (PIER) administered by the California
Energy Commission (CEC), an equitable share of rights in the
intellectual property or in the benefits derived therefrom
shall accrue to the state. Allows the CEC to determine what
share, if any, of the IP, or the benefits derived therefrom,
shall accrue to the state and to negotiate sharing mechanisms
for IP or benefits with award recipients.
THIS BILL :
1)Authorizes an air district to sponsor, coordinate, and promote
projects that will lead to the prevention, mitigation, or cure
of adverse air pollution effects, including adverse health
effects of air quality.
2)Authorizes an air district to negotiate what share of IP, or
benefits of IP, developed from use of district funds,
including funds from grants that will accrue to that district.
3)Authorizes an air district to negotiate revenue sharing
agreements with recipients of district funds, including the
collection of royalties.
4)Specifies that proceeds obtained by an air district from these
revenue sharing agreements shall accrue to the district and be
deposited into a special account that can only be used,
subject to the district's ability to recover its expenses and
its administrative costs, for either of the following
purposes:
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a) To fund projects that will lead to the prevention,
mitigation, or cure of the adverse effects of air
pollution, including the adverse health effects of air
pollution; or,
b) To fund projects to reduce or mitigate air pollution
through the development or implementation of pollution
controls, low or zero polluting fuels or technologies, or
pollution prevention measures.
5)Provides that a district shall not receive a benefit pursuant
to this section in excess of the amount of the district's
investment in the development of a process, machine, or
article of manufacture, if the district adopts a rule or
regulation that mandates the use of that process, machine, or
article of manufacture and that regulation or rule was adopted
after the development of the process, machine, or article of
manufacture.
6)Provides that if the state or a subdivision of the state
purchases or licenses a process, machine, or article or
manufacture for which a district accrues a benefit resulting
from an IP interest negotiated pursuant to subdivision (1) or
(2) above, upon the request of the Department of General
Services (DGS), the district shall prepare reimbursement to
the General Fund for the amount of the benefit accrued.
7)Requires a district that attempts to negotiate for benefits to
report annually to the Legislature, and include the following
in the report:
a) The number of district-funded projects and the number of
district-funded projects for which a benefit was
negotiated, regardless of the outcome of the negotiation.
b) The outcome of all negotiations regarding intellectual
property pursuant to this section, including agreed terms
for revenue sharing.
c) A list of all district-funded projects from previous
years that have resulted in a benefit pursuant to this
section, if any, and the total amount of that benefit to
date.
8)Provides that a district may include a report required by this
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section as part of another report submitted to the Legislature
by the district.
9)Provides that this section does not apply to a contract
governed by Chapter 14.27 (beginning with Section 67325) of
Part 40 of Division 5 of Title 3 of the Education Code.
10)Provides that provisions of this bill related to IP and
benefits shall become inoperative on January 1, 2018.
11)Provides that an agreement made prior to January 1, 2018,
pursuant to the bill's provisions, shall remain in effect for
the duration of the agreement.
FISCAL EFFECT : Unknown
COMMENTS :
1)Background . According to the author, air districts throughout
the state cosponsor and fund research, development,
demonstration, and commercialization of clean technologies to
reduce or eliminate emissions. Presently, there is no clear
authority for air districts to share in revenue streams of
ventures resulting, in part, from district funding. Such
additional revenues would enable air districts to sponsor
additional research, achieve further reductions in diesel and
toxic emissions, and provide greater health protection in
impacted communities.
According to the author, this bill seeks to, on a voluntary
basis, allow state air districts the option of sharing in
revenues generated from the commercialization of intellectual
property developed with air district research grant funding.
2)Federal Policy Regarding IP and Grants . The Bayh-Dole Act, or
Patent and Trademark Law Amendments Act, was adopted in 1980
to give universities, small businesses, and non-profits
control of IP they developed with federal funding. After
passage of the Act, IP created using federal grant funds is
largely retained by the grantee with requirements that the
grantee disclose the discovery, seek patent protection, and
take reasonable steps to apply the discovery. Additional
requirements exist for nonprofit grantees, such as reasonable
efforts at small business licensing and a requirement that any
products sold in the United States resulting from such IP be
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substantially manufactured in the U.S.
3)State Policy Regarding IP and Grants . The author identified
CIRM and the CEC's PIER program as two examples of state
agencies with specific authority to negotiate royalty
agreements. PIER negotiates royalty payments only when the
CEC determines a reasonable exception of royalties applies, in
which case standard contract terms apply. CIRM does not take
IP ownership, but does have royalty requirements and retains
march-in rights on abandoned IP. Revenue sharing is requires
for any CIRM grantee when licensing revenue exceeds $500,000.
CIRM has yet to receive royalties.
4)Sunset is relatively long for a new program . This bill's IP
provisions sunset January 1, 2018, but allow agreements
executed prior to 2018 to continue in effect for the duration
of the agreement. The author and the committee may wish to
consider whether a somewhat earlier
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sunset would be adequate allow districts to demonstrate the
authority the bill provides, but provide more effective
legislative oversight over the districts' management of any IP
funds that may accrue.
5)Related Legislation .
AB 2721 (Mullin, 2006) would have established the Office of
Intellectual Property in the Business, Transportation and
Housing Agency. The Agency would have been responsible for,
among other things, tracking IP generated by state employees
and by state funded research. AB 2721 passed the Assembly,
but was held in the Senate Governmental Organization
Committee.
SB 778 (Pavley, 2010) would have specifically allowed SCAQMD to
sponsor, coordinate, and promote air pollution prevention or
mitigation projects and would have authorized SCAQMD to
determine what share, if any, of the intellectual property, or
benefits resulting from intellectual property, developed from
the use of district funds, including funds discharged as
grants, would have accrued. This version of SB 778 was never
heard in policy committee and the bill did not move.
AB 744 (John Perez, 2011) would establish the Office of
Intellectual Property in the Business, Transportation and
Housing Agency, similar to that which would have been created
by AB 2721. AB 744 passed Business, Professions & Consumer
Protection Committee, but was held on the Appropriations
Committee suspense file.
REGISTERED SUPPORT / OPPOSITION :
Support
South Coast Air Quality Management District (sponsor)
Opposition
None on file
Analysis Prepared by : Lynn Kirshbaum / NAT. RES. / (916)
319-2092
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