BILL ANALYSIS Ó AB 335 Page 1 Date of Hearing: April 13, 2015 ASSEMBLY COMMITTEE ON NATURAL RESOURCES Das Williams, Chair AB 335 (Patterson) - As Amended April 6, 2015 SUBJECT: Air quality: minor violations SUMMARY: Requires the Air Resources Board (ARB) and each local air district to establish a "minor violation" program, where ARB and the air districts must issue a "notice to comply" for minor violations, as defined, and violators have a right to cure the violation in lieu of facing a penalty or other further enforcement. This bill reestablishes a law that had been in effect from 1997-2006. EXISTING LAW: 1)Designates 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)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)Authorizes ARB and air districts to enforce air pollution AB 335 Page 2 laws, including imposing administrative and civil penalties for violations. 4)Generally prohibits a person from discharging air contaminants or other material that cause injury, detriment, nuisance, or annoyance or endanger the comfort, repose, health or safety to any considerable number of persons, or to the public, or that cause, or have a tendency to cause, injury or damage to a business or property. a) Provides that for a violation of the above, a person is strictly liable for a penalty of not more than $1,000 or $10,000, as specified. In the case that the violation results in actual injury, as defined, a person is liable for a civil penalty of not more than $15,000. b) Provides that a person who violates the above provision and who is found to have acted negligently is liable for a civil penalty up to $25,000. Persons found to have acted knowingly or willfully and intentionally are liable for penalties up to $40,000 and $75,000, unless injury or bodily harm is shown, in which case a greater penalty maximum applies. c) Requires that, in determining the amount of penalty assessed, that the extent of harm, nature and persistence of violation, length of time, frequency of past violations, the record of maintenance, the unproven nature of the control equipment, actions taken by the defendant to mitigate the violation and the financial burden to the defendant be taken into consideration. THIS BILL: 1)Requires ARB and each air district to adopt a regulation or rule that classifies minor violations, as determined by considering: a) The magnitude, scope and severity of the violation. AB 335 Page 3 b) The degree to which a violation jeopardizes human health, safety or welfare or the environment. c) The degree to which a violation could contribute to the failure to accomplish an important established air pollution goal or program objective. d) The degree to which a violation may make it difficult to determine if the violator is in compliance with other air pollution requirements. 2)Excludes from the definition of a minor violation any of the following: a) Any knowing, willful, or intentional violation. b) Any violation that enables the violator to benefit economically from noncompliance, either by realizing reduced costs or by gaining a competitive advantage. c) Any violation that is a chronic violation or that is committed by a recalcitrant violator, as determined by ARB or a district according to specified evidence. 3)Requires the issuance of a notice to comply, as defined, for minor violations, including a clear statement of the alleged violation, a means by which compliance may be achieved, and a time limit to comply, not exceeding 30 days. Generally prohibits any other enforcement action for minor violations, unless ARB or the district determines that enforcement is necessary to prevent harm to the public health or safety or to the environment, or that assessment of a civil penalty is warranted or required under federal law. 4)Provides that the provisions above do not apply to a district that, as of January 1, 2015, has in effect a program with provisions similar to those required by this bill. AB 335 Page 4 5)Requires ARB to report to the Legislature by January 1, 2020 regarding actions taken by ARB and the districts to implement the minor violation program and the results of that implementation. FISCAL EFFECT: Unknown COMMENTS: 1)Background. Under current law, the ARB and local air districts are authorized to impose civil or administrative penalties for a variety of violations of state air pollution laws and regulations. The agencies and the courts are required to consider eight factors when determining the amount of an administrative or civil penalty: a) extent of harm caused by the violation; b) nature and persistence of the violation; c) length of time over which the violation occurs; d) frequency of past violations; e) record of maintenance; f) unproven or innovative nature of the control equipment; g) any action taken by the defendant, including nature, AB 335 Page 5 extent, and time of response to cleanup and construction undertaken to mitigate the violation; and h) financial burden to the defendant. No minimum penalty is required, leaving the amount prosecuted at the discretion of the air pollution control officer. Offenses are generally strict liability, but affirmative defenses are allowed when officers seek more than $1,000 per day for certain violations. Civil penalties for stationary source air emission violations are assessed based on the number of days of violation and the intention of the violator. In the absence of evidence to indicate negligence or worse (i.e., knowledge and failure to correct or willful and intentional behavior), civil penalties are assessed at penalty ceilings for the strict liability classification, where the violation is found to occur without proof of carelessness or fault. The current penalty ceiling for strict liability violations can range from $1,000 to $10,000. 2)History of minor violation law. In 1996, AB 1827 (Brulte) created minor violation enforcement programs for air and water quality standards, including the same requirements as this bill for ARB and air districts. The intent of the program was to establish enforcement mechanisms that recognize the difference between violations with little or no potential to cause public health or environmental harm and those that are clearly the result of a bad actor, behaving in a willful and egregious manner. AB 1827 included reporting requirements to evaluate the effectiveness of the program and a provision sunsetting the program on January 1, 2001. In 2000, SB 1865 (Perata), which increased civil and criminal penalties for air quality violations, also included a provision extending the sunset on the minor violation program AB 335 Page 6 for air quality violations until January 1, 2006. In 2005, SB 109 (Ortiz) contained a provision that would have extended the minor violation program for air quality standards until January 1, 2012. However, the bill failed passage on the Assembly Floor for unrelated provisions that would have increased the criminal and civil penalties for significant violations of air quality standards. Following the failure of SB 109, the minor violation program statute was repealed by its own terms on January 1, 2006. In 2006, AB 2394 (Aghazarian) proposed to reenact the minor violation program without reporting requirements or a sunset. AB 2394 passed this committee, but was held in the Assembly Appropriations Committee. This bill again proposes to reenact the same minor violation program which was in effect from 1997-2006. The bill includes a report to the Legislature, but does not include a sunset. According to California Air Pollution Control Officers Association (CAPCOA), 25 of the 35 local air districts currently have a notice to comply rule or program. CAPCOA was not able to confirm whether these existing programs would comply with the requirement proposed by this bill. 3)Purpose of the regulatory system. Regulatory systems encourage or deter behaviors through the threat of penalty for non-compliance. In regulatory systems, there are varying degrees of culpability, ranging from strict liability, or no fault, to negligent and intentional violations. Strict liability is vital to the maintenance of a regulatory system because it encourages individuals to know and comply with the law or risk penalty regardless of intent. AB 335 Page 7 In some regulatory agencies, the risk of enforcement has been described as similar to winning the lottery. Since the chances of being monitored are often slim, the only incentive for complying with the law is the threat of a substantial penalty. To achieve deterrence, the penalty must be sufficient to deprive any economic benefit resulting from a violation, to reflect the seriousness of the violation taking into account the violator's financial condition, to and deter others from the temptation of noncompliance. By mandating a warning, this bill could undermine the deterrent effect by signaling to regulated entities that they don't need to comply until they are caught. REGISTERED SUPPORT / OPPOSITION: Support California Chamber of Commerce California Manufacturers and Technology Association California Professional Association of Specialty Contractors California Trucking Association Construction Industry Air Quality Coalition AB 335 Page 8 Consumer Specialty Products Association Fresno Chamber of Commerce Industrial Environmental Association National Marine Manufacturers Association Opposition American Lung Association of California Bay Area Air Quality Management District Breathe California California Air Pollution Control Officers Association California League of Conservation Voters Central Valley Air Quality Coalition Coalition for Clean Air AB 335 Page 9 Coastal Environmental Rights Foundation Natural Resource Defense Council Sierra Club California South Coast Air Quality Management District Analysis Prepared by:Lawrence Lingbloom / NAT. RES. / (916) 319-2092