BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | ACR 112| |Office of Senate Floor Analyses | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- THIRD READING Bill No: ACR 112 Author: Hadley (R), et al. Amended: 6/6/16 in Assembly Vote: 21 SENATE ENVIRONMENTAL QUALITY COMMITTEE: 7-0, 6/29/16 AYES: Wieckowski, Gaines, Bates, Hill, Jackson, Leno, Pavley ASSEMBLY FLOOR: Read and adopted, 6/6/16 SUBJECT: State Air Resources Board SOURCE: Author DIGEST: This resolution outlines the events that led to the discovery of the Volkswagen (VW) defeat devices, and declares that the Legislature thanks the State Air Resources Board (ARB) for its exemplary role in uncovering the defeat devices. This resolution declares the Legislature's support for the increased use of real-world emissions verification testing and enhanced penalty authority for ARB to deter future efforts to circumvent emissions standards. ANALYSIS: Existing law: 1)Authorizes, under the federal Clean Air Act, 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, ACR 112 Page 2 nitrogen oxides, and particulates. US EPA regulations require that, prior to introducing a vehicle for sale in the US, 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. 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, 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. (Health and Safety Code §43013) 6)Requires that persons who violate any ARB order, rule, or ACR 112 Page 3 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. (HSC §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 VW's defeat devices and subsequent oversight leading up to the company's admissions of wrong-doing and ARB's refusal to certify emissions compliance of affected 2016 diesel models. 2)Acknowledges, praises, and thanks ARB for its diligence and dedication to preserving state air quality and uncovering VW'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. ACR 112 Page 4 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, 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, 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 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 U.S. housing units (including 48 million people) are located within 300 ft. of a major ACR 112 Page 5 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 PM 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 problems, California is also authorized under the Clean Air Act to implement separate stricter state mobile emission standards. State law ACR 112 Page 6 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 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. ACR 112 Page 7 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 VW 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, 2016), ACR 112 Page 8 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 testing is more difficult and costly than conventional testing, however, ARB may need additional budgetary support to significantly expand their real-world testing program. FISCAL EFFECT: Appropriation: No Fiscal Com.:NoLocal: No SUPPORT: (Verified 7/7/16) Professional Engineers in California Government OPPOSITION: (Verified 7/7/16) None received Prepared by:Dan Brumbaugh / E.Q. / (916) 651-4108 7/29/16 10:50:13 **** END *** ACR 112 Page 9