BILL ANALYSIS
SB 1402
SENATE COMMITTEE ON ENVIRONMENTAL QUALITY
Senator S. Joseph Simitian, Chairman
2009-2010 Regular Session
BILL NO: SB 1402
AUTHOR: Dutton
AMENDED: March 23, 2010
FISCAL: Yes HEARING DATE: April 19, 2010
URGENCY: Yes CONSULTANT: Caroll
Mortensen
SUBJECT : AIR POLLUTION PENALTIES
SUMMARY :
Existing law :
1)Generally establishes processes for assessing fines and
penalties and specifies the deposit of fines and penalties
for violations of vehicular air pollution control laws into
the Air Pollution Control Fund or the General Fund. (Health
and Safety Code 43000 et seq.).
2)Establishes a process to assess administrative penalties in
lieu of civil penalties for violation of specified vehicular
air pollution control laws up to $100,000 and establishes a
threshold of $100,000 for penalty assessments that qualify a
person for mutual settlement agreements and requires the
settlements to be deposited into the General Fund.
(43023).
3)Requires the California Air Resources Board (ARB) and the
courts to consider specified conditions when considering the
amount assessed for administrative or civil penalties for
violations of vehicular air pollution control laws such as:
(a) the extent of harm to public health, safety, and welfare
caused by the violation; (b) the nature and persistence of
the violation, including the magnitude of the excess
emissions; (c) the compliance history of the defendant,
including the frequency of past violations; (d) the
preventive efforts taken by the defendant, including the
record of maintenance and any program to ensure compliance;
(e) the innovative nature and the magnitude of the effort
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required to comply, and the accuracy, reproducibility, and
repeatability of the available test methods. (f) the
efforts to attain, or provide for, compliance; and (g) the
cooperation of the defendant during the course of the
investigation and any action taken by the defendant,
including the nature, extent, and time of response of any
action taken to mitigate the violation. (43023, 43031).
4)Requires any person who violates any vehicular air pollution
control law as specified to be liable for a civil penalty
not to exceed $5,000 per vehicle and those penalties be
deposited in the Air Pollution Control Fund (APCF).
(41354).
5)States that any action brought pursuant to 43154 above to
recover such civil penalties must take special precedence
over all other civil matters on the calendar of the court
except those matters to which equal precedence on the
calendar is granted by law.
6)Requires the revenues from penalties recovered by the ARB
pursuant to this chapter to be deposited in the APCF and
must only be expended by the ARB for environmental cleanup,
abatement, or pollution prevention technology. (43031.5).
7)Prohibits the sale of any new motor vehicle in California
that does not meet the emission standards adopted by the
ARB, and any manufacturer who sells, attempts to sell, or
causes to be offered for sale a new motor vehicle that fails
to meet the applicable emission standards must be subject to
a civil penalty of $5,000 for each such action, with the
penalty to be deposited into the General Fund. (43211).
This bill :
1) Requires written or oral communications from the ARB that
allege an imposition of a penalty to contain specific
information including the manner in which the ARB used to
determine the amount of a penalty, how much pollution was
emitted, and reasoning for the use of the particular
provision for assessing the violation.
2) Requires the ARB to make available to the public all final
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mutual settlement agreements arising from violations of
vehicular air pollution control laws.
3) Requires all penalties and proceeds for mutual settlement
agreements to be deposited into the General Fund rather
than the APCF.
4) Dismisses application of civil penalties for vehicular air
pollution control violations if a criminal complaint for a
violation under the vehicular air pollution control law is
brought.
5) Raises the threshold for ARB to assess administrative
penalties in lieu of civil penalties for violation of
vehicular air pollution control laws from $100,000 to
$300,000 and raises the threshold for penalty assessments
that qualify a person for mutual settlement agreements from
$100,000 to $300,000.
6) Allows a person who has alleged to have violated vehicular
air pollution control laws to be entitled to an
administrative hearing in lieu of a civil action.
7) Beginning in March 2011, and annually thereafter, requires
ARB to prepare an annual report on administrative penalties
imposed in lieu of civil penalties as specified in #5
above.
8) For specified violations of vehicular air pollution control
law, limits the liability of a person from civil,
administrative, or criminally penalty to one violation
arising from the same conduct.
9) Prohibits the ARB from assessing multiple persons for the
production or sale of the same vehicle or units under
specified vehicular air pollution control laws and requires
the ARB to impose the penalty only on the person the ARB
determines to be most responsible for the violation.
10)No later than March 1, 2011, requires the ARB to adopt and
submit to the Legislature a written penalty policy that is
based on specified criteria (#3 under Existing Law) and the
"United States Environmental Protection Agency's 2009 Clean
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Air Act Mobile Source Civil Penalty Policy for Vehicle and
Engine Certification Requirements".
11)Expands the process for application of civil or
administrative penalties for violations of fuel regulations
to other vehicular air pollution control violations and
requires the penalty to be assessed according to the policy
in #10 above.
12)Specific to new engine certifications, limits the civil
penalty to $10,000 per engine family for which the person
failed to obtain certification rather than per vehicle.
13)Limits accumulation of civil penalties to $5,000 per
vehicle for specified violations relating to certification
and sale of new vehicles and engines regardless of the
number of violations or violators.
14)Deletes the requirement that revenues from penalties
recovered by the ARB for violations of fuel regulations be
deposited in the APCF and be only expended by the ARB for
environmental cleanup, abatement, or pollution prevention
technology (#6 under Existing Law).
15)Contains an urgency clause.
COMMENTS :
1) Purpose of Bill . According to the author, "Numerous
affected stakeholders have repeated expressed concern over
the lack of information on how ARB determines and assesses
penalties as well as the lack of consistency from one
violation to the rest. This confusion undermines ARB's
credibility and effectiveness in achieving its core mission
- protection of air quality. This confusion also makes it
increasingly difficult for ARB to effectively resolve
settlements or for regulated entities to comply with ARB
regulations and to do business in California."
2) Background .
a) Fines and Penalties: In general, not just for
environmental or public health and safety violations,
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fines and penalties are established for three main
objectives. The first is to ensure swift compliance
with the law. This helps to minimize the negative
impact that continued violation in law could pose.
Second, it is to remove any advantage the violator may
have obtained by failing to comply with the law. This
strives to eliminate competitive and/or economic
advantage that a non-compliant entity may gain by being
out of compliance. This helps ensure a level playing
field for regulated entities. Finally, penalties are
set at levels sufficient to discourage future
violations. This should deter the violator and others
from violating requirements in the future.
b) General Fund vs. The APCF: The APCF is the
depository for ARB's fee revenue streams, as well as
other revenue streams, such as fines, interest, and
transfers. ARB's operating budget is fully supported by
the fee portion of the APCF. The Health and Safety Code
specifies that monies in this fund are only available to
ARB upon legislative appropriation. By law, ARB does
not control the penalty monies deposited into APCF and,
therefore, cannot use penalties for any of its program
needs without appropriation by the Legislature.
Air quality laws protect the public health, safety and
welfare. When an air violation occurs, the environment
is negatively impacted and the public is exposed to
excessive air pollution emissions. For this reason when
ARB assesses penalties for violations of air quality
requirements, one of the many considerations for penalty
assessment is to seek mitigation related to the
environmental harm the violation caused. Depositing
those penalties into APCF ensures that those penalty
monies will be applied towards air pollution programs.
Diverting penalties to the General Fund would decrease
the likelihood of those penalties being applied to
mitigate air pollution.
c) ARB Enforcment Policy - Ongoing Efforts. Since late
last year, the ARB has focused efforts to work on its
enforcment policy in repsonse to comments from
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stakeholders during open comment periods of several ARB
meetings regarding transparency and consistency in its
enforcement program. The ARB held a workshop on October
12, 2009 to explore ways to achieve higher levels of
compliance, expedite settlements, prioritize actions,
eliminate economic advantage from violations, ensure
consistent enforcement results, serve environmental
justice communities, encourage voluntary compliance,
increase access to ARB's administrative hearing process,
and communicate the goals of ARB's enforcement program.
ARB staff also discussed strict liability for
violations, model penalty policies and ways to increase
opportunities for public access, outreach, compliance
assistance and training.
According to ARB's website, the notice was distributed
widely via the largest email broadcast in ARB's history
and reached approximately 350,000 people, businesses and
other organizations. The workshop was attended by over
200 attendees in person and 150 more people via the
internet and 30 individuals testified in person and many
more submitted written comments.
On January 28, 2010, staff presented an update to the
ARB on progress made to address comments on its
enforcement program received at the October 12, 2009
workshop. Many of the comments mirror the issues raised
in this bill. The ARB continues to work on the
enforcment policy and plan to hold another workshop in
the future (A comment period on the information
presented by staff at the January 28th workshop closed
March 30th).
In reviewing the various documents used for workshop
discussion and reading transcripts from the workshop,
there are some areas that could be considered for
improvement. While there is not consensus as how to
specifically proceed on this complex issue, there are
several areas that do seem to lend themselves to
possible legislative attention including transparency in
assessing penalties, some sort of ARB guidance for
regulated entities on penalties and reports on
enforcement efforts and resulting penalties.
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3) Support and Opposition Arguments .
a) Supporters generally state that this bill will
promote fairness, equity, transparency, and efficiency
for air pollution law in California. They contend that
ARB often imposes overlapping and duplicative penalties
for similar violations. They also contend that
regulated entities are faced with uncertainty regarding
their potential exposure for non-compliance.
b) Opponents state that the caps on penalties proposed
are a disincentive for compliance as they drop the
penalties so low it is no longer a deterrent. They are
also concerned that the proposed changes to the penalty
assessment processes impacts the ability of prosecuters
to tailor the fine or penalty to fit the violation.
4) Amendments Needed . Several amendments to this bill are
needed.
a) This bill proposes to direct fines and penalties to
the General Fund rather than the APCF. This would have
a detrimental effect on air quality in California.
Those references should be deleted.
b) This bill proposes to make significant changes to
many aspects of vehicular air pollution control law
dealing with expansion of existing penalties assessment
mechanisms and capping penalties for violations. The
effect of some of the changes are difficult to quantify,
thus at this time, they should be removed from the bill
and the author should work with Committee staff,
stakeholders and the ARB to investigate these options or
others that will be protective of public health and
safety by decreasing air pollution while increasing
transparency and clarity, enhance enforcement and help
ensure a level playing field for regulated entities.
Specifically, strike sections 2, 3, 4, 5, 7, 9, 10, 11,
and 12.
c) Consistent with the need for transparency and
clarity:
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i) Section 6 should be amended to remove the
proposed changes to current law except for
subdivision (l) that establishes an enforcement
reporting requirement. That should be retained.
ii) Section 8 should be amended to remove the
proposed changes to current law except for the
proposed subdivision (c) dealing with a written
penalty policy. This section should be amended to
delete the reference to the US EPA policy as the
specific model.
d) Technical amendment: Page 3, line 5 strike "both of
the".
SOURCE : Californians for Enforcement Reform and
Transparency (CERT)
SUPPORT : CERT Members including:
American Home Furnishing Alliance
California Chapter of the American Fence
Contractors Association
California Dump Truck Owners Association
California Motorcycle Dealers Association
California Moving and Storage Association
California Retailers Association
Compliant Car Builders Association
Construction Industry Air Quality Association
Engineering Contractors Association
Flasher/Barricade Association
Independent Waste Oil Collectors and
Transporters
Marine Builders Association
Moving and Storage Association
National Marine Manufacturers Association
Outdoor Power Equipment Institute
Southern California Contractors Association
One Individual
OPPOSITION : American Lung Association
Bay Area Air Quality Management District
Breathe California
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