BILL ANALYSIS Ó
AB 1685
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Date of Hearing: April 18, 2016
ASSEMBLY COMMITTEE ON TRANSPORTATION
Jim Frazier, Chair
AB 1685
(Gomez) - As Amended April 11, 2016
SUBJECT: New motor vehicles: emission standards: civil
penalties
SUMMARY: Updates civil penalties for violations of California
Air Resources Board (ARB) regulations, orders, or rules, to
bring penalty assessments into alignment with those of the
United States Environmental Protection Agency (U.S. EPA).
Specifically, this bill:
1)Increases civil penalties for violations of certain air
quality orders, rules, or regulations adopted by ARB from a
maximum amount of $500 to a maximum of $37,500 per action and
requires, for violations committed by a manufacturer or
distributor, that payment of penalties be a condition for
further sales by the manufacturer or distributor.
2)Provides that violations involving portable fuel containers or
small off-road engines remain subject to civil penalties of
$500 per unit.
3)Expands penalties for selling motor vehicles or engines in the
state that do not meet ARB requirements to include businesses
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or persons who reside outside the state and includes
activities such as advertising and introducing commerce into
the state.
4)Deletes provisions defining an established place of business
as a place actually occupied either continuously or at regular
periods in order to include internet-based businesses.
5)Expands penalties from a maximum of $5,000 to $37,000 per
action for violations of ARB regulations committed by a
manufacturer or distributor and requires that payment of
penalties be a condition to further motor vehicle sales by the
manufacture or distributor in California.
6)Increases from $5,000 to $37,500, per action, the penalty for
any manufacturer who sells, as specified, any new motor
vehicle that fails to meet applicable emissions standards.
7)Authorizes ARB to order a manufacturer to bring its vehicles
into emissions configuration to which they were certified and
compliance with this requirement be a condition of further
sale of motor vehicles in California.
8)Authorizes ARB to adjust the maximum penalties for failure to
comply with specified regulations for inflation based on the
California Consumer Price Index without the requirement to go
through rulemaking procedures.
9)Makes related, clarifying amendments.
EXISTING LAW:
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1)Requires that persons who violates 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.
2)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.
3)Prohibits residents or businesses from importing, delivering,
purchasing, renting, leasing, acquiring, or receiving a new
motor vehicle or vehicle engine for use or resale in the state
unless the engine has been certified compliant with ARB
standards, as specified, with violations set at $5,000 per
vehicle.
4)Prohibits new vehicles from being sold in California that do
not meet the emissions standard adopted by ARB.
5)Provides penalties of $5,000 per action, for manufacturers who
sell, attempt to sell, or offer for sale, a new vehicles that
does not meet ARB emission standards.
6)Requires that any manufacturer or distributor who fails to
comply with ARB emissions standards or the test procedures
adopted by ARB be subject to a civil penalty of $50 for each
vehicle that does not comply with the standards or procedures,
and that penalties must be paid as a condition of further sale
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by the manufacturer or distributor in California.
7)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.
FISCAL EFFECT: Unknown
COMMENTS: Both nationally and statewide, the transportation
sector is known to be a major contributor of criteria pollutants
and climate change emissions. To address transportation sector
emissions, both ARB and U.S. EPA regulations require that, prior
to introducing a vehicle for sale, a manufacturer must
demonstrate that the vehicle meets certain emissions standards.
In California, manufacturers must additionally demonstrate
compliance with state air-quality standards and manufacturers
who fail to comply are subject to civil penalties and other
enforcement actions.
As with the federal program, vehicles are not legal for sale in
California until they are certified to be compliant with state
emissions standards. To be certified by ARB, a vehicle must
demonstrate that its exhaust and emission-control systems are
durable and comply with the emission standards for the vehicle's
useful life. This is done through durability and certification
testing of the prototype certification vehicles.
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In California, an application for certification must be
submitted to, and approved by, both the ARB and U.S. EPA
concurrently. ARB's In-Use Compliance Program aims to ensure
that manufacturers' vehicles meet emissions standards throughout
their useful lives. The program obtains a limited sample of
vehicles from a given test group or engine family and duplicates
the manufacturers' vehicle emissions certification tests.
On September 3, 2015, representatives of Volkswagen (VW)
admitted to the U.S. EPA and ARB that a large number of their
vehicle engines had been designed and manufactured with a
"defeat device" designated to bypass, or render inoperative,
elements of the vehicles' emissions control system. 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.
In a joint hearing entitled Volkswagen's "Defeat Device:" Update
and Implications for California held by the Senate
Transportation and Housing and Environmental Quality Committees
on Tuesday March 8, 2016, the Legislature was updated with
regard to how the defeat device was discovered, VW's admissions,
ARB and U.S. EPA's actions, the status of federal litigation,
and the overall effect of the issue on California's air quality,
among other things. In the background paper for the hearing,
the Committees encouraged the Legislature to consider creating
stronger penalties to discourage non-compliance by automobile
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manufacturers, particularly given that federal penalties are
substantially higher and that penalties for non-compliance in
California were set in the 1970 and have not been indexed to
inflation. The Committees suggested that existing ARB penalties
do not provide sufficient deterrent, particularly for egregious
actions to circumvent emissions requirements, such as in case of
VW.
To ensure that California's air quality laws and regulations are
followed, and to better align fines with federal penalties, the
author has introduced AB 1685 which would increase the maximum
penalties for mobile source violations. By increasing ARB's
fines, the author believes that overall compliance will be
improved. Specifically, this bill would increase the maximum
penalty for mobile source violations from $500 to $37,500, while
retaining the current lower penalty amount for smaller, less
egregious, violations and violations for lower-value equipment
such as off-road engines and fuel containers. Additionally, AB
1685 would modernize statutes to allow penalties to be extended
to manufacturers outside of the state to better reflect modern
business practices whereby vehicles are advertised and sold over
the internet (from locations outside of California). Lastly,
this bill would allow ARB to periodically update mobile source
penalties by indexing them to inflation thereby ensuring that
penalties maintain their deterrent effect over time.
Committee comments: While increasing penalties will no doubt
provide a deterrent to violating state air quality laws and
regulations, increasing penalties from what are now $500-$5,000
to $37,500 could, if not judiciously applied, be overly
punitive. This concern, was highlighted by the Legislature with
the passage of SB 1402 (Dutton), Chapter 413, Statutes of 2010,
which required ARB to provide a written explanation prior to
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imposing administrative or civil penalties for a violation of
air pollution laws and to make those explanations available to
the public.
In a report developed pursuant to SB 1402, ARB outlined its
penalty policy explaining the process by which they work to
consistently reach swift and fair resolution of violations. In
their report, ARB notes that to be fair, they take into account
the specific circumstances for each enforcement case when
reaching a penalty determination. ARB also notes in the report,
that while there is not a "mathematical formula" that is applied
when calculating penalties, they do weigh individual
circumstances, make comparisons between individual cases, and
take into account individual circumstances. ARB also provides
that penalty determinations are designed specifically to prevent
harm to the public and the environment and are tailored so as
not to create undue financial hardship.
ARB's Enforcement Penalty Policy also describes the process
whereby ARB's Enforcement Division consistently engages
regulated industries and business in developing, understanding,
and complying with regulations adopted by ARB. This ensures
that the regulated community is aware of and has the ability to
comply with pertinent air quality and emissions-related laws and
regulations.
Related legislation: ACR 112 (Hadley), thanks ARB for its
exemplary work and tenacity in uncovering emissions control
defeat devices on certain diesel-fueled VW motor vehicles.
ACR 112 is scheduled to be heard in the Assembly Natural
Resources Committee on
May 2, 2016.
Previous legislation: SB 1402 (Dutton), Chapter 413, Statutes
of 2010, required 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
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available to the public, annually report specified
administrative penalties imposed, and publish a penalty policy
pertaining to vehicular air pollution control.
AB 1085 (Mendoza), Chapter 384, Statutes of 2009, required the
ARB to release all technical data that is used to develop
regulations prior to the comment period of any proposed
regulation.
SB 163 (Johannessen), Chapter 966, Statutes of 1995, expanded
ARB's authority to assess and enforce administrative penalties
by allowing them to adopt rules and regulations pertaining to
fuel requirements and standards.
REGISTERED SUPPORT / OPPOSITION:
Support
American Lung Association in California
Bay Area Air Quality Management District
Breathe California
Clean Power Campaign
Coalition for Clean Air
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Natural Resources Defense Council
Sierra Club California
Opposition
None on file
Analysis Prepared by:Victoria Alvarez / TRANS. / (916) 319-2093