BILL ANALYSIS Ó
SENATE COMMITTEE ON TRANSPORTATION AND HOUSING
Senator Jim Beall, Chair
2015 - 2016 Regular
Bill No: AB 1685 Hearing Date: 6/21/2016
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|Author: |Gomez |
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|Version: |6/14/16 |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant|Erin Riches |
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SUBJECT: Vehicular air pollution: civil penalties
DIGEST: This bill increases and clarifies the civil penalties
for certain emissions violations by vehicle and engine
manufacturers and distributors.
ANALYSIS:
Existing law:
1)Establishes a civil penalty of up to $500 per vehicle,
portable fuel container (e.g., gas can), spout, engine, or
other unit for a violation of statute, or a violation of any
order, rule, or regulation adopted by the state Air Resources
Board (ARB) pursuant to statute, for which there is no
specific civil penalty or fine.
2)Prohibits the import, delivery, purchase, rent, lease,
acquisition, or receipt of a new motor vehicle, new engine, or
motor vehicle with a new engine, for use, registration, or
resale in California unless the vehicle or engine has been
certified by ARB, with certain limited exceptions. Provides
that a person in violation of this provision shall be liable
for a civil penalty of up to $5,000 per vehicle.
3)Prohibits the sale of any new motor vehicle in California that
does not meet ARB emission standards. Provides that any
manufacturer that violates this provision shall be subject to
a civil penalty of $5,000 per action.
AB 1685 (Gomez) Page 2 of ?
4)Provides that any manufacturer or distributor not in
compliance with ARB emission standards or test procedures
shall be subject to a civil penalty of $50 for each vehicle
that is out of compliance and is first sold in this state.
Prohibits the manufacturer or distributor from selling more
vehicles until the penalties are paid.
This bill:
1)Establishes a civil penalty of $37,500 per action for a
violation of any statute, or any order, rule, or regulation
adopted by ARB pursuant to statute, for which there is no
specific civil penalty or fine. Maintains the civil penalty
of up to $500 per unit for violations involving portable fuel
containers or small off-road engines. Requires a manufacturer
or distributor who is in violation to pay the penalty or
penalties as a condition of continued sale in California.
Requires ARB to adjust the penalty for inflation based on the
California Consumer Price Index.
2)Increases, from $5,000 per vehicle to $37,500 per action, the
violation for the import, delivery, purchase, rent, lease,
acquisition, or receipt of a new vehicle, new engine, or
vehicle with a new engine that has not been certified by ARB.
Specifies that for dealers, the civil penalty shall increase
to $10,000 per action. Requires ARB to adjust the penalty for
inflation based on the California Consumer Price Index. Adds
"introduction into commerce" to the list of violations.
Replaces "a person who is a resident of, or who operates an
established place of business within, this state" with "a
person."
3)Increases the civil penalty from $5,000 per action to $37,500
per action for selling a new motor vehicle in California that
does not meet ARB emission standards. Requires ARB to adjust
the penalties for inflation based on the California Consumer
Price Index.
4)Increases the penalty from $50 per vehicle to a maximum of
$37,500 per vehicle for failure to comply with ARB emissions
standards or test procedures. Requires ARB to adjust the
penalty for inflation based on the California Consumer Price
Index.
AB 1685 (Gomez) Page 3 of ?
5)Authorizes ARB to order a manufacturer to bring its vehicles
into compliance with the emissions configuration they were
certified to meet. Requires a manufacturer to comply with
this order as a condition for continued sales in California.
COMMENTS:
1)Purpose. The author states that Volkswagen's egregious
actions (see "Background on the Volkswagen Scandal" below) not
only violated public trust, but have had deleterious effects
on human health and the environment. Although new car prices
have increased tens of thousands of dollars since the 1970s,
California's civil penalties relating to emissions standards
have remained flat for decades at $5,000 per vehicle. The
author states that in order to be effective, penalty levels
cannot simply be the cost of doing business. The federal
maximum penalty amount for analogous violations is $37,500;
moreover, the federal Environmental Protection Agency (U.S.
EPA) is required to review penalty amounts every four years
and adjust them for inflation. This bill seeks to strengthen
California's ability to deter bad actors that violate the
state's strict emissions standards, and to protect public
health and the environment.
2)Federal and state emissions testing requirements. Nationally
and statewide, the transportation sector is responsible for a
major portion of air pollution. To address transportation
sector emissions, the federal Clean Air Act authorizes U.S.
EPA to establish and regulate standards for mobile sources of
pollution. Because of its pre-existing vehicle emissions
standards and motor vehicle air pollution problems, California
is also authorized under the Clean Air Act to implement
separate stricter state mobile emission standards.
Both U.S. EPA and ARB regulations require a manufacturer,
prior to introducing a vehicle for sale, to demonstrate that
it meets certain federal and state emissions standards. Only
after undergoing this certification process are vehicles legal
for sale in California. In California, applications must be
concurrently submitted to, and approved by, both U.S. EPA and
ARB. A manufacturer that fails to comply is subject to civil
penalties and other enforcement actions. The current maximum
federal penalty is $37,500 per violation, while a violation of
the state certification carries a fine of up to $5,000 per
AB 1685 (Gomez) Page 4 of ?
vehicle.
3)Background on the Volkswagen scandal. As early as 2013,
regulators in California and the European Union noticed that
emissions for Volkswagen diesel engines were higher than
expected when the cars were tested in actual operating
conditions. Clear evidence that the vehicles' on-road
emissions deviated from laboratory testing levels came in May
2014 in a study by university researchers working in
cooperation with ARB. The study results prompted ARB and U.S.
EPA to launch their own investigations. On September 3, 2015,
representatives of Volkswagen admitted to staff of U.S. EPA
and ARB that a large number of their vehicle engines had been
designed and manufactured with a software-based "defeat
device" to bypass, defeat, or render inoperative elements of
the vehicles' emissions control systems. As a result, these
vehicles are 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, of which 79,400 are in California.
4)Legislative hearing. On March 8, 2016, this committee held a
joint hearing with the Senate Environmental Quality Committee
titled, "Volkswagen's 'Defeat Device:' Update and Implications
for California." During the hearing, committee members
expressed the need for stronger penalties to discourage
non-compliance by automobile manufacturers, particularly given
that the federal penalties are substantially higher and that
the state's penalties were set in 1970 and have not been
indexed to inflation. Committee members suggested that
existing ARB penalties do not provide a sufficient deterrent,
particularly for egregious actions such as in the Volkswagen
case. This bill seeks to address those concerns.
5)Fixing the "catchall" provision. Existing law contains a
"catchall" provision establishing a $500 penalty for mobile
source violations that do not carry a specific penalty
elsewhere in statute. This provision is commonly applied to
violations such as lawn equipment, where a $500 penalty may be
appropriate. It also applies, however, to violations
involving much more expensive pieces of equipment. This bill
increases the maximum penalty to $37,500 for expensive
equipment, consistent with federal law, but retains the $500
penalty for smaller, less expensive equipment such as small
off-road engines.
AB 1685 (Gomez) Page 5 of ?
6)Increasing penalties. This bill establishes penalties of up
to $37,500 for specified violations, and increases the penalty
for others from $5,000 per vehicle to $37,500 per action, in
line with U.S. EPA penalties. While the increased amounts may
sound high, the author notes that this bill does not require
ARB to impose penalties of this amount, but up to this amount.
In a report developed pursuant to SB 1402 of 2010 (see
"Related Legislation" below), ARB noted that it takes into
account the specific circumstances for each enforcement case
when determining a penalty. ARB also noted 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.
7)Accounting for Internet sales. In addition to updating the
civil penalties for emissions violations, this bill makes
various updates to statute. For example, this bill replaces
"a person who is a resident of, or who operates an established
place of business within, this state" with "a person," and
adds "introduction into commerce" to the prohibitions related
to new vehicles and engines that are not certified by ARB.
The author states that these modernizations address the fact
that today's new vehicles can be advertised or sold over the
Internet rather than at a brick-and-mortar establishment.
8)Stakeholder concerns. Global Automakers has taken an "oppose
unless amended" position. They raise a number of concerns,
some of which the author has addressed in the June 14th
amendments, as indicated below. The Alliance of Automobile
Manufacturers, which has taken an "oppose" position, raises
similar concerns.
a. This bill would result in a ban on advertising upcoming
models, such as through auto shows or in teaser ads, if a
manufacturer has committed a violation under this bill.
The prior version of this bill added "advertise" and
"introduce into commerce" to the list of violations related
to engines that have not been certified by ARB. The new
amendments address Global Automakers' concern by removing
"advertise" from this provision.
b. This bill would require payment of civil penalties as a
condition for continued sale of any vehicles in the state,
AB 1685 (Gomez) Page 6 of ?
even if the party wishes to avail itself of its right to
appeal the order imposing the penalty. The author is
working with stakeholders to address this issue.
c. This bill's change of the terminology from "per vehicle"
to "per action" is unclear as it may permit multiple
penalties per vehicle, or broaden the scope of what
"actions" are subject to penalty. The author is working
with stakeholders to address this issue.
d. This bill would increase the penalties associated with
the zer-emission vehicle (ZEV) mandate to $37,500; a
manufacturer should not be subject to such punitive
penalties for a failure to sell the requisite number of
ZEVs in the state. The author is continuing to work with
stakeholders on this issue.
e. This bill imposes maximum penalties in several sections
with no opportunity for reduction should circumstances
warrant. The June 14th amendments address this concern by
amending the penalties in this bill to be "up to" the
maximum amount, rather than the specific amount.
9) Triple-referral. This bill was approved by the
Environmental Quality Committee on June 8 on a 4-2 vote.
It will also be heard by the Judiciary Committee.
Related Legislation:
ACR 112 (Hadley) - commends ARB for its work uncovering the
Volkswagen defeat devices and 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. This bill is pending
referral in the Senate Rules committee.
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 it has imposed, and
publish a penalty policy in relation to vehicular air pollution
control.
Assembly Votes:
AB 1685 (Gomez) Page 7 of ?
Floor: 48-29
Appr: 14-6
Trans: 10-5
FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes
Local: No
POSITIONS: (Communicated to the committee before noon on
Wednesday,
June 15, 2016.)
SUPPORT:
American Lung Association in California
Bay Area Air Quality Management District
Breathe California
California Air Pollution Control Officers Association
California Railroad Industry
CALPIRG
Clean Power Campaign
Coalition for Clean Air
Environment California
Natural Resources Defense Council
Sierra Club California
OPPOSITION:
Alliance of Automobile Manufacturers
Global Automakers
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