BILL ANALYSIS
SB 1351
SENATE COMMITTEE ON ENVIRONMENTAL QUALITY
Senator S. Joseph Simitian, Chairman
2009-2010 Regular Session
BILL NO: SB 1351
AUTHOR: Wright
AMENDED: April 19, 2010
FISCAL: Yes HEARING DATE: April 22, 2010
URGENCY: No CONSULTANT: Randy Pestor
SUBJECT : REGULATORY REQUIREMENTS
SUMMARY :
Existing law :
1) Under the Administrative Procedure Act (APA) (Government
Code 11340 et seq.) establishes rulemaking procedures and
standards for state agencies. State regulations must also
be adopted in compliance with regulations adopted by the
Office of Administrative Law (OAL). The APA, among other
things:
a) Requires every agency to prepare and submit a
specified notice of the proposed action and make certain
information available to the public (e.g., draft
regulation in "plain English;" statement of reasons for
proposing the adoption, amendment, or repeal of a
regulation; evidence to support a determination that the
action will not have a significant adverse economic
impact on business). (11346.2). The statement of
reasons must identify each technical, theoretical, and
empirical report upon which the agency relies in
proposing the regulation (11346.2(b)(2)), and ARB must
make this information public that is related to, but not
limited to, air emissions, public health impacts, and
economic impacts before the comment period for any
regulation proposed for adoption by the ARB (Health and
Safety Code 39601.5).
b) Requires state agencies in proposing to adopt, amend,
or repeal any regulation to assess the potential for
adverse economic impact on California business
SB 1351
Page 2
enterprises and individuals. In assessing the potential
for adverse economic impact, state agencies must meet
certain requirements (e.g., be based on adequate
information concerning the need for, and consequences
of, proposed action; consider industries affected
including the ability to compete with businesses in
other states). State agencies must also assess whether,
and to what extent, regulations will affect certain
matters (e.g., creation or elimination of jobs in the
state, creation of new businesses or elimination of
existing businesses in the state, expansion of
businesses currently doing business in the state).
(Government Code 11346.3).
c) Requires the notice of proposed adoption, amendment,
or repeal of a regulation to include certain matters
(e.g., include specified information if there may be a
significant, statewide adverse economic impact;
description of all cost impacts to be incurred by a
private person or business; statement of the results of
the economic impact assessment). (11346.5).
d) Requires OAL to either approve a submitted regulation
and transmit it to the Secretary of State for filing, or
disapprove it, within 30 working days. If OAL fails to
act within 30 days, the regulation is deemed approved
and OAL must transmit it to the Secretary of State.
(11349.3).
2) Provides the California Air Resources Board (ARB) with
primary responsibility for control of mobile source air
pollution, including adoption of rules for reducing vehicle
emissions and the specification of vehicular fuel
composition. (Health and Safety Code 39000 et seq. and
39500 et seq.).
3) Requires ARB to develop and adopt regulations that achieve
the maximum feasible and cost-effective reduction in
greenhouse gas emissions from motor vehicles, and in
developing regulations requires the ARB to comply with
certain requirements, such as considering technological
feasibility, economic impact, and automobile workers and
SB 1351
Page 3
affiliated business in the state (43018.5).
4) Requires ARB to provide written findings with supporting
information relating to certain matters, including the
availability and technological feasibility of control
technologies, prior to adopting rules and regulations that
would affect the operation of existing powerplants.
(41514.8).
5) Under the Carl Moyer Memorial Air Quality Standards
Attainment Program, provides grants to offset the
incremental cost of projects that reduce covered emissions
from covered sources in the state (44275 et seq.).
General eligibility and cost-effectiveness criteria are
established and funds allocated to local air pollution
control districts are subject to specified terms and
conditions (44299.2).
6) Under the California Global Warming Solutions Act of 2006,
requires ARB to determine the 1990 statewide greenhouse gas
(GHG) emissions level and approve a statewide GHG emissions
limit that is the equivalent to that level, to be achieved
by 2020 (Health and Safety Code 38500 et seq.). ARB must
adopt rules and regulations to achieve greenhouse gas
emission reductions to achieve the maximum technologically
feasible and cost-effective reductions in GHGs, subject to
certain requirements (38562(h)).
This bill , under the Administrative Procedure Act:
1) Adds restrictions for regulations relating to a new or
emerging technology that:
a) Require an agency adopting a regulation that requires
a new or emerging technology, or other equipment to
achieve the regulation's purpose, to post on its
Internet website and in the California Regulatory Notice
Register upon the effective date of the regulation that
the required technology is commercially available or
will be commercially available prior to the regulation's
effective date.
SB 1351
Page 4
b) Prohibit an adopting agency from enforcing a
violation of the regulation until at least 6 months
after the required technology or other equipment becomes
commercially available and the information is posted, if
a new or emerging technology, or other equipment, is not
commercially available on the effective date of the
regulation.
2) Adds conditions on regulations relating to an
"implementation schedule, procedure, or form" that:
a) Require any implementation schedule, procedure, or
form necessary for initial compliance with a proposed
regulation to be publicly available upon adoption of the
regulation and, if not available on the effective date
of that adopted regulation, then the adopting agency
cannot enforce a violation of that adopted regulation
until at least six months after the implementation
schedule, procedure, or form becomes available and is
posted.
b) Provide that the above requirement cannot be
construed to require an agency to readopt a regulation
already approved by OAL and filed with the Secretary of
State.
3) Contains legislative intent relating to the affect of
regulations on the state's economy and public health
without adequate notice and compliance tools and the need
for compliance tools while ensuring that compliance
technologies are commercially available.
COMMENTS :
1) Purpose of Bill . According to the author, "To meet
deadlines, regulations have been adopted without the
guidelines, implementation schedules, procedures, and other
relevant compliance mechanisms that should accompany the
regulations in order for regulated entities to comply or
prepare for compliance with the new regulations. Several
regulations have been adopted without providing clear
direction to the regulated entities. Without a clear
SB 1351
Page 5
compliance path regulated entities are forced to guess and
make decisions without proper guidance which exposes these
entities to potentially costly noncompliance enforcement
actions and penalties."
In response to this concern, SB 1351 adds the following new
requirements for agencies adopting regulations: a) post
information that required technology is commercially
available or will be commercially available prior to the
effective date of the regulation, and if it is not
commercially available, the adopting agency cannot enforce
a violation of that regulation until at least six months
after the required technology is commercially available -
and the agency posts the information; and b) make any
implementation schedule, procedure, or form necessary for
initial compliance with a proposed regulation publicly
available upon adoption of the regulation, and if that is
not available on the effective regulation date then the
adopting agency cannot enforce a violation of that adopted
regulation until at least six months after the
implementation schedule, procedure, or form becomes
available and is posted.
2) Deterrence to drive for new and emerging technology
(11346.6) ? It is unlikely that an agency can make a
determination that a required technology is available when
a regulation is adopted and effective. Also, potential
manufacturers of a technology may not proceed to more
aggressively develop and market a device until they are
assured that a requirement has been adopted and is
effective.
While there are many examples where new requirements drive new
and cleaner technologies, the premise of SB 1351 is that
new requirements will be driven by the availability of the
technology upon the effective date of the regulation.
Based on that premise, the state would not be able to
pursue, for example, emission reduction measures (e.g.,
Phase II reformulated gasoline, diesel truck emission
standards, on-board diagnostics for heavy duty trucks, low
emission vehicles, and "AB 1493 (Pavley) clean car
standards"), lead free product requirements, reduction of
SB 1351
Page 6
hazardous substances (ROHS) standards, and energy saving
product standards, until there are assurances that the
technologies are available.
3) "Tools" relating to regulations (11346.65) . The sponsor
of SB 1351 is concerned that regulations have been adopted
without guidance needed by regulated entities to comply
with the law. SB 1351 refers to "implementation schedule,
procedure, or form" - which are undefined. The sponsor
also cites as examples GHG documents released in March 2009
when GHG emission reports were required on April 1, 2009.
However, GHG Reporting Advisory 09-01 provides for a
two-month grace period. According to the advisory, "ARB
will administratively delay the enforcement of reporting
deadlines until after June 1, 2009. This action provides a
two-month (61 days) grace period . . ."
The sponsor also cites the low carbon fuel standard (LCFS),
where, according to the sponsor, "The LCFS reporting tool
is still under development and not expected to be completed
until mid Mar[ch] 2010. The quarterly report for January
to March of 2010 is due on May 31, 2010." However,
according to LCFS Reporting Advisory 10-01, "ARB will
administratively delay the enforcement of the electronic
filing requirement, as noted in this advisory, until after
July 1, 2010."
Since ARB has extended the period for filing the forms, the
sponsor's concerns may have already been addressed. It
should also be noted that the form or "reporting tool"
referenced by the sponsor was developed by the ARB to
"facilitate orderly, effective and complete reporting . .
."
4) Support and opposition concerns . In supporting SB 1351,
the National Federation of Independent Business is
concerned about costs of complying with federal, state, and
local requirements compared to larger companies, and notes
that "The enforcement of new requirements by regulatory
agencies, under the crush of arbitrary deadlines, compounds
this imbalance. In some cases the forms to comply with a
major regulation have not been made available to the very
SB 1351
Page 7
businesses that are expected to complete them. SB 1351
puts in place a commonsense provision that regulatory
agencies make the tools required to comply with a
regulation available to regulated businesses that are
expected to comply with them."
According to some opponents, "SB 1351 would hamper the ability
of agencies to adopt regulations that require the use of
new or emerging technologies by requiring the regulatory
agency to announce at the time of the final rulemaking that
technology needed to comply with the regulation is
commercially available. However, many effective
regulations are designed to bring emerging technologies to
market. SB 1351 would place similar restrictions on
rulemaking as related to schedules, forms and other
procedures needed for reporting and compliance. This bill
would threaten technological innovation needed to address
California's air quality and global warming goals."
5) Addressing concerns . Because the sponsor seems most
concerned over the need to ensure that required reporting
forms under the CGWSA are provided in accordance with an
implementation schedule for an adopted regulation, it may
be appropriate to replace the provisions of this bill with
requirements for ARB under the CGWSA to: a) make any
implementation schedule required for initial compliance
with a proposed regulation to be made available to the
public upon the agency's final adoption of the regulation;
and b) if a reporting form is required for initial
compliance with that regulation, require ARB to make that
form available within a certain period (i.e., 45 days)
prior to the required date to file that reporting form in
accordance with the implementation schedule.
SOURCE : California Council for Environmental and
Economic Balance
SUPPORT : Association of California Insurance Companies,
California Business Properties Association,
California Cement Manufacturers Environmental
Coalition, California Chamber of Commerce,
California Chapter of the American Fence
SB 1351
Page 8
Association, California Construction and
Industrial Material Association, California
Fence Contractors' Association, California
Forestry Association, California Grocers
Association, California Hospital Association,
California Independent Oil Marketers
Association, California League of Food
Processors, California Manufacturers &
Technology Association, California Nevada
Cement Association, California-Nevada
Conference of Operating Engineers, California
Precast Concrete Association, California
Retailers Association, California Small
Business Association, California State Council
of Laborers, Engineering Contractors'
Association, Independent Environmental
Association, Marin Builders' Association,
National Federation of Independent Business,
Shell Oil Company, Western Growers, Western
States Petroleum Association
OPPOSITION : American Lung Association, Breathe California,
Coalition for Clean Air, Planning and
Conservation League, Sierra Club California,
Union of Concerned Scientists