BILL ANALYSIS �
SB 170
SENATE COMMITTEE ON ENVIRONMENTAL QUALITY
Senator S. Joseph Simitian, Chairman
2011-2012 Regular Session
BILL NO: SB 170
AUTHOR: Pavley
AMENDED: April 25, 2011
FISCAL: Yes HEARING DATE: May 2, 2011
URGENCY: No CONSULTANT: Peter Cowan
SUBJECT : AIR POLLUTION CONTROL DISTRICTS
SUMMARY :
Existing law :
1) 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.). ARB must coordinate efforts to attain and
maintain ambient air quality standards. (�39003).
2) Provides that air pollution control districts (APCDs) and
air quality management districts (AQMDs) have primary
responsibility for controlling air pollution from all
sources, other than emissions from mobile sources. (�40000
et seq.).
This bill :
1) Authorizes an APCD or AQMD to sponsor, coordinate, and
promote projects that will lead to the prevention,
mitigation, or cure of adverse air pollution effects,
including adverse health effects of air quality.
2) Authorizes an APCD or AQMD to negotiate a share of
intellectual property (IP), or benefits of IP, developed
from use of district funds, including funds from grants
that will accrue to that district.
3) Authorizes a district to negotiate revenue sharing
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agreements with recipients of district funds, including
collection of royalties. Proceeds obtained by the district
from these revenue sharing agreements must accrue to the
district and be deposited into a special account that may
only be used to: a) fund projects that will lead to the
prevention, mitigation, or cure of adverse air pollution
effects, including the adverse effects of air pollution; or
b) to develop low-polluting fuels or technologies.
4) Limits the benefit accrued to an APCD or AQMD to the
district's initial investment in the development of a
process, machine, or article of manufacture if the district
adopts a rule or regulation mandating it after its
development.
5) Requires an APCD or AQMD to reimburse the General Fund for
the amount of benefit accrued if the state purchases or
licenses a good, service, or process for which the APCD or
AQMD accrues a benefit from an IP interest negotiated under
the above terms (#2 and 3 above), upon the request of the
Department of General Services.
COMMENTS :
1) Purpose of Bill . According to the author, "Air districts
throughout the state cosponsor and fund research,
development, demonstration and commercialization of clean
technologies to reduce or eliminate emissions. The
deficiency in the present law is that there is no clear
authority for air districts to share in revenue streams of
ventures resulting, in part, from their funding. Such
additional revenues would enable air districts to sponsor
additional research, achieve further reductions in diesel
and toxic emissions, and provide greater health protection
in impacted communities."
The author notes that "The California Institute for
Regenerative Medicine (CIRM) and the California Energy
Commission's Public Interest Energy Research,
Demonstration, and Development (PIER) Program are prime
examples of what air districts hope to achieve - clear
authorization which allows them to negotiate revenue
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sharing agreements with grant recipients."
According to the author, SB 170 "seeks to, on a voluntary
basis, allow state air districts the option to share in
revenues generated from the commercialization of IP
developed with air district research grant funding. Said
revenues would be deposited in a special account created by
the air district and spent on the prevention, mitigation,
or cure of the adverse effects of air pollution or to
develop low-polluting fuels or technologies."
2) Related legislation . AB 744 (P�rez) establishes the Office
of Intellectual Property in the Business, Transportation,
and Housing Agency to track IP generated by state employees
and by state funded research, and set related requirements
(passed to Assembly Appropriations Committee by Business,
Professions and Consumer Protection April 12, 2011 (6, 0)).
AB 2781 (Mullin) of 2006 established a similar office for
tracking IP (June 27, 2006, Senate Governmental
Organization hearing cancelled at request of author).
3) Purpose of granting . The state should endeavor to fund
projects with the greatest potential for public good as
potential societal benefits will be many times any direct
financial benefit. Rather than funding research,
technologies, or products that are likely to be
economically successful, the state should focus its limited
resources on those that would not mature to the point of
widespread use in the absence of those funds.
4) IP policy for state grants . The author identified the
Public Interest Energy Research (PIER) program and the
California Institute for Regenerative Medicine (CIRM) as
models of state agencies with royalty agreements. PIER
negotiates royalty payments only when the commission
agreement manager determines a reasonable expectation of
royalties applies, in which case standard contract terms
apply. Through the fiscal year 2009/10 PIER has collected
$4.8 million in royalties on over $761 million in grants,
over 40% of which results from a single grant and 80% from
two companies. CIRM does not take IP ownership, but does
have royalty requirements and retains march-in rights on
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abandoned IP. Revenue sharing is required for any CIRM
grantee when licensing revenue exceeds $500,000.
Additional requirements exist for pharmaceuticals developed
by grantees. CIRM has yet to receive royalties.
5) Federal Bayh-Dole Act . IP created using federal grant
funds are largely retained by the grantee with requirements
that they disclose the discovery, seek patent protection,
and take reasonable steps to apply the discovery. The
federal government retains a nonexclusive nontransferable
royalty-free license for use on behalf of the government on
discoveries made with grant funds and reserves the right to
take title or exercise march-in rights if the grantee fails
to protect or commercialize the IP, respectively.
Additional requirements exist for nonprofit grantees, such
as reasonable efforts at small business licensing and a
requirement that any products sold in the U.S. resulting
from such IP be substantially manufactured in the U.S.
6) Amendments needed . To maintain oversight of the APCD or
AQMD grant making process any district that attempts to
negotiate any royalties or IP as this bill allows should
report annually on those negotiations and their outcome.
Furthermore, the provisions should sunset after three years
in order for the Legislature to review the IP and grant
making process (any IP agreement, however, should remain in
effect after the sunset).
SOURCE : South Coast Air Quality Management District
SUPPORT : American Lung Association, Environmental
Defense Fund, South Coast Air Quality
Management District
OPPOSITION : None on file