BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON ENVIRONMENTAL QUALITY
                              Senator Wieckowski, Chair
                                2015 - 2016  Regular 
           
          Bill No:            ACR 112
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          |Author:    |Hadley                                               |
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          |Version:   |6/6/2016               |Hearing      |6/29/2016       |
          |           |                       |Date:        |                |
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          |Urgency:   |                       |Fiscal:      |No              |
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          |Consultant:|Dan Brumbaugh                                        |
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          SUBJECT:  State Air Resources Board.

            ANALYSIS:
          
          Existing law:  
          
          1) Under the federal Clean Air Act, authorizes the United States  
             Environmental Protection Agency (US EPA) to establish and  
             regulate emissions standards for mobile sources, including  
             vehicle emission limits for hydrocarbons, carbon monoxide,  
             nitrogen oxides, and particulates.

             US EPA regulations require that, prior to introducing a  
             vehicle for sale in the U.S., manufacturers obtain a  
             certificate of conformity (COC). Certification requires  
             manufacturers to demonstrate that the vehicle meets emissions  
             standards. The COC application is required to list and  
             justify all "defeat devices."

          2) Defines, pursuant to the Clean Air Act, a defeat device as  
             "an auxiliary emission control device (AECD) that reduces the  
             effectiveness of the emission control system under conditions  
             which may reasonably be expected to be encountered in normal  
             vehicle operation and use." A manufacturer may equip a  
             vehicle with a defeat device if it can justify the need for  
             it in terms of preventing damage or accident, the AECD does  
             not go beyond the requirements of engine starting, and the  
             manufacturer discloses this information in its application to  
             US EPA for its COC.








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          3) Provides, pursuant to federal law, that violators be subject  
             to civil penalties up to $37,500 per non-compliant vehicle or  
             engine, $3,750 per tampering event or sale of defeat device,  
             and $37,500 per day for reporting and recordkeeping  
             violations.

          4) Authorizes, pursuant to the Clean Air Act, California to  
             implement separate mobile emission standards from the federal  
             government. Other states may choose to follow either the  
             national standard or the stricter California standards.

          5) Assigns, under state law, California Air Resources Board  
             (ARB) with primary responsibility for controlling  
             mobile-source air pollution, including adoption of rules for  
             reducing vehicle emissions and the specification of vehicular  
             fuel composition.

          6) Requires that persons who violate any ARB order, rule, or  
             regulation, where there is not a penalty described for the  
             specific violation, shall be subject to a civil penalty not  
             to exceed $500 per vehicle, portable fuel container, spout,  
             engine, or other unit subject to regulation and that the  
             penalty be collected by the State Treasurer and deposited  
             into the Air Pollution Control Fund. (Health and Safety Code  
             §43016)

          7) Prohibits new vehicles from being sold in California that do  
             not meet the emissions standard adopted by ARB, and provides  
             penalties of $5,000 per action, for manufacturers who sell,  
             attempt to sell, or offer for sale, a new vehicle that does  
             not meet ARB emission standards. (HSC §43211)

          8) Provides that manufacturers or distributors who do not comply  
             with emission standards or test procedures adopted by ARB may  
             be subject to civil penalties of $50 per vehicle that is not  
             in compliance and that no further sales of the vehicles can  
             take place until the penalty is paid. (HSC §43212)

          This Resolution:

          1) Makes various findings relating to ARB's role in the  
             detection of Volkswagen's defeat devices and subsequent  
             oversight leading up to the company's admissions of  
             wrong-doing and ARB's refusal to certify emissions compliance  








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             of affected 2016 diesel models.

          2) Acknowledges, praises, and thanks ARB for its diligence and  
             dedication to preserving state air quality and uncovering  
             Volkswagen's defeat devices.

          3) Supports ARB increasing its use of real-world emissions  
             testing, and enhanced authority by ARB for appropriate  
             penalties to deter further efforts to circumvent emissions  
             standards. 

            Background
          
          1) Federal and state air quality laws. The federal Clean Air Act  
             and its implementing regulations are intended to protect  
             public health and environmental quality by limiting and  
             reducing pollution from various sources. Under the Clean Air  
             Act, the US EPA establishes National Ambient Air Quality  
             Standards (NAAQS) that apply to outdoor air throughout the  
             country.  These federal standards exist for several air  
             pollutants due to their negative impact on public health when  
             above specified thresholds, including ozone, particulate  
             matter (PM), nitrogen oxides (NOx), sulfur oxides (SOx),  
             carbon monoxide, and lead. US EPA reviews each NAAQS at  
             five-year intervals to ensure that the standards are based on  
             the most recent scientific information.

             Regions that do not meet the national standards for any one  
             of the standards are designated nonattainment areas.  The  
             Clean Air Act sets deadlines for attainment based on the  
             severity of nonattainment and requires states to develop  
             comprehensive plans, known as the state implementation plan  
             (SIP), to attain and maintain air-quality standards for each  
             area designated nonattainment for an NAAQS.

             California has some of the most severe air pollution problems  
             in the country.  In particular, the South Coast and San  
             Joaquin air basins, which contain over half of the state's  
             population, are extreme nonattainment regions (the highest  
             degree of severity) for ozone pollution and are both  
             nonattainment regions for PM.

          2) Why transportation emissions standards matter.  Nationally  
             and statewide, the transportation sector is responsible for a  








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             major fraction of air pollution, especially NOx (including NO  
             and NO2), which contributes to both ozone and PM formation.   
             People who live and work in closer proximity to roadways are  
             especially exposed to and impacted by this pollution.  
             Nationwide, approximately 16% of US housing units (including  
             48 million people) are located within 300 ft. of a major  
             highway, railroad, or airport, and the affected population is  
             disproportionately economically disadvantaged and non-white.

             Ground-level ozone (or tropospheric ozone) is a primary  
             component of smog and is formed from the reaction of NOx with  
             volatile organic compounds in sunlight. Ozone has a number of  
             negative health effects including irritated respiratory  
             system, reduced lung function, aggravated asthma, and  
             inflammation and damage of the lining of the lungs.  Active  
             children are at highest risk from ozone exposure.

             PM can be directly emitted or can be formed in the atmosphere  
             when gaseous pollutants such as sulfur dioxide and NOx react  
             to form fine particles.  Very fine particulate matter is  
             particularly dangerous since it burrows deep into the lungs  
             where it can enter the bloodstream and harm the heart and  
             other organs. Fine particulate pollution poses an especially  
             critical health danger for children, the elderly, and people  
             with existing health problems.  Exposure to PM 2.5 (i.e.,  
             particles or droplets that are 2.5 ?m or less in diameter) is  
             also linked to cardiovascular disease.  A 2010 ARB analysis  
             based on scientific assessments by US EPA reported that  
             approximately 9,000 people in California are estimated to die  
             prematurely each year as a result of exposure to fine  
             particle pollution.

             In addition, the specialized cancer agency of the World  
             Health Organization, the International Agency for Research on  
             Cancer, classified outdoor air pollution, and PM as a major  
             component of outdoor air pollution, as carcinogenic to  
             humans. 

          3) US EPA and ARB vehicle testing requirements.  To address  
             transportation sector emissions, the federal Clean Air Act  
             authorizes the US EPA to establish and regulate standards for  
             hydrocarbons, carbon monoxide, NOx, and PM from mobile  
             sources of pollution.  Because of its pre-existing  
             vehicle-emission standards and motor vehicle air pollution  








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             problems, California is also authorized under the Clean Air  
             Act to implement separate stricter state mobile emission  
             standards.  State law assigns ARB with primary responsibility  
             for control of mobile-source air pollution.  Both US EPA and  
             ARB regulations require that, prior to introducing a vehicle  
             for sale, a manufacturer must demonstrate that the vehicle  
             meets certain federal and state emissions standards. In  
             particular, manufacturers must demonstrate that its vehicle's  
             exhaust and emission-control systems are durable and comply  
             with the emission standards for the vehicle's useful life.   
             Only after going through this "certification of conformity"  
             (COC) process are vehicles legal for sale. Manufacturers that  
             fail to comply are subject to civil penalties and other  
             enforcement actions.  The current maximum federal penalty for  
             violating the Clean Air Act through the sale of new vehicles  
             without a valid COC is $37,500 per violation.

             In California, applications for certification must be  
             concurrently submitted to and approved by both the ARB and US  
             EPA.  By obtaining and testing a limited sample of vehicles  
             from a test group or engine family, and attempting to  
             duplicate the manufacturers' vehicle emissions certification  
             tests, ARB's In-Use Compliance Program aims to ensure that  
             manufacturers' vehicles meet emissions standards throughout  
             their useful lives.

          4) The Volkswagen case and its lessons.  As detailed in the  
             background paper of the Joint Oversight Hearing by the Senate  
             Transportation and Housing and Environmental Quality  
             Committees (Volkswagen's "Defeat Device:" Update and  
             Implications for California, March 8, 2016), a 2014 study by  
             researchers at the Center for Alternative Fuels, Engines and  
             Emissions at West Virginia University, followed by an  
             expanded 2015 investigation by ARB and US EPA of  
             discrepancies between emissions during stationary tests and  
             while driving, led to admission by Volkswagen (VW) that  
             several of their "clean diesel" engines had been designed  
             with software-based defeat devices to bypass key elements of  
             the emissions control systems.  As a result, these vehicles  
             were able to pass emissions tests despite exceeding federal  
             emissions standards by up to 40 times.  According to vehicle  
             sales data, there are estimated to be 617,000 of these  
             vehicles nationally, 79,400 of which are in California.









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             During the hearing, Members of the Senate Committees  
             expressed the need for stronger state penalties to discourage  
             further non-compliance by automobile manufacturers,  
             particularly given that federal penalties are substantially  
             higher and that state penalties in California were set in  
             1974 and have not been indexed to inflation.  Members  
             suggested that existing ARB penalties do not provide  
             sufficient deterrent, particularly for egregious actions to  
             circumvent emissions requirements, such as with VW.

            Federal and state investigations of Volkswagen continue, with  
            the strong likelihood of additional enforcement actions. In  
            addition, there are many individual and class action lawsuits  
            against the company. On April 21, 2016, several parties to  
            various lawsuits stated in federal court they have reached an  
            agreement in principle to address approximately 480,000 of the  
            2.0 liter engine vehicles with defeat devices.  Details of the  
            settlement are currently being worked out, but it appears to  
            provide consumers several options to return their vehicles or  
            have their vehicles modified. The settlement will also deal  
            with compensation for consumers and how to remediate excess  
            emissions.

           Comments
          
          1) Purpose of bill.  According to the author, "the ARB was the  
             regulatory body that distinguished itself in uncovering VW's  
             malfeasance. ACR 112 is meant to show the Legislature is  
             open-minded in overseeing the agency. After all, you're only  
             credible if you are fair-minded enough to acknowledge good  
             work when it's done."

          2) Legislative versus ARB authority? The language of ACR 112 can  
             be seen to suggest that ARB has the authority to enhance its  
             penalties for emissions cheaters, but maximum penalties are  
             specified by the Legislature in statute. AB 1685 (Gomez),  
             which is currently working its way through the Senate,  
             proposes to increase the specified maximum state penalties  
             for such emissions violations to the level of federal  
             penalties, with periodic increases scaled to inflation  
             thereafter.

             Similarly, ACR 112 states that it supports the ARB in  
             increased use of real-world emissions testing. Because such  








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             testing is more difficult and costly than conventional  
             testing, however, ARB may need additional budgetary support  
             to significantly expand their real-world testing program.

            Related/Prior Legislation

          SB 1402 (Dutton, Chapter 413, Statutes of 2010) requires ARB to  
          provide a specified written explanation prior to imposing an  
          administrative or civil penalty for a violation of air pollution  
          law, make these explanations available to the public, annually  
          report specified administrative penalties imposed, and publish a  
          penalty policy pertaining to vehicular air pollution control. 

          AB 1685 (Gomez) increases and clarifies the civil penalties for  
          certain emissions violations by vehicle and engine manufacturers  
          and distributors. AB 1685 passed out of the Senate Environmental  
          Quality Committee (4-2) on June 8, 2016, and will be heard by  
          the Senate Transportation and Housing Committee on June 21,  
          2016.
            
          SOURCE:                    Author  

           SUPPORT:               

          Professional Engineers in California Government (PECG)
           
           OPPOSITION:    

          None received  
           
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