Existing law requires a manufacturer of a new motor vehicle to allow the State Air Resources Board to conduct surveillance emissions testing at its assembly facilities or at any other location where the manufacturers assembly line testing is performed and testing records are kept. Existing law authorizes the state board to impose a fee on the manufacturers of new motor vehicles to recover the state boards costs associated with this surveillance.

This bill would require the state board to enhance its certification, audit, and compliance activities for new motor vehicles to detect defeat devices or other software used to evade emissions testing, as specified. The bill would authorize the state board to impose a fee on the manufacturers of new motor vehicles to cover the state boards costs associated with the state boards certification, audit, and compliance activities. The bill would authorize the state board to impose a penalty on the manufacturers of new motor vehicles relating to the state boards certification, audit, and compliance activities if specified conditions are met. The bill would create the Certification Fund and the Certification Penalty Account, with the moneys in both the fund and account available upon appropriation.

Existing law requires a manufacturer of a new motor vehicle to allow the State Air Resources Board to conduct surveillance emissions testing at its assembly facilities or at any other location where the manufacturers assembly line testing is performed and testing records are kept. Existing law authorizes the state board to impose a fee on the manufacturers of new motor vehicles to recover the state boards costs associated with this surveillance.

This bill would require the state board to enhance its certification, audit, and compliance workload activities for new motor vehicles to detect defeat devices or other software used to evade emissions testing, as specified. The bill would authorize the state board to impose a fee on the manufacturers of new motor vehicles to cover the state boards costs associated with the state boards certification, audit, and compliance workload. activities. The bill would authorize the state board to impose a penalty on the manufacturers of new motor vehicles relating to the state boards certification, audit, and compliance workload activities if specified conditions are met. The bill would create the Certification Fund and the Certification Penalty Account, with the moneys in both the fund and account available upon appropriation.

Existing law requires a manufacturer of a new motor vehicle to allow the State Air Resources Board to conduct surveillance emissions testing at its assembly facilities or at any other location where the manufacturers assembly line testing is performed and testing records are kept. Existing law authorizes the sale and registration of a new motor vehicle to be rescinded or withheld if a manufacturer of a new motor vehicle prevents the state board from conducting surveillance of assembly line testing. Existing law authorizes the state board to impose a fee on the manufacturers of new motor vehicles to recover the state boards costs associated with this surveillance. Existing law continuously appropriates those fees to the state board.

This bill would require the state board to enhance its surveillance of emissions from certification, audit, and compliance workload for new motor vehicles to detect defeat devices or other software used to evade the surveillance of emissions, emissions testing, as specified. The bill would authorize the state board to impose a fee on the manufacturers of new motor vehicles to cover the state boards costs associated with the enhanced surveillance. By expanding an existing continuous appropriation, this bill would make an appropriation. state boards certification, audit, and compliance workload. The bill would authorize the state board to impose a penalty on the manufacturers of new motor vehicles relating to the state boards certification, audit, and compliance workload if specified conditions are met. The bill would create the Certification Fund and the Certification Penalty Account, with the moneys in both the fund and account available upon appropriation.

Existing law requires a manufacturer of a new motor vehicle to allow the State Air Resources Board to conduct surveillance emissions testing at its assembly facilities or at any other location where the manufacturers assembly line testing is performed and testing records are kept. Existing law authorizes the sale and registration of a new motor vehicle to be rescinded or withheld if a manufacturer of a new motor vehicle prevents the state board from conducting surveillance of assembly line testing. Existing law authorizes the state board to impose a fee on the manufacturers of new motor vehicles to recover the state boards costs associated with this surveillance. Existing law continuously appropriates those fees to the state board.

This bill would require the state board to enhance its surveillance of emissions from new motor vehicles to detect defeat devices or other software used to evade the surveillance of emissions, as specified. The bill would authorize the state board to impose a fee on the manufacturers of new motor vehicles to cover the state boards costs associated with the enhanced surveillance. By expanding an existing continuous appropriation, this bill would make an appropriation.

Existing law requires a manufacturer of a new motor vehicle to allow the State Air Resources Board to conduct surveillance emissions testing at its assembly facilities or at any other location where the manufacturers assembly line testing is performed and testing records are kept. Existing law authorizes the sale and registration of a new motor vehicle to be rescinded or withheld if a manufacturer of a new motor vehicle prevents the state board from conducting surveillance of assembly line testing. Existing law authorizes the state board to impose a fee on the manufacturers of new motor vehicles to recover the state boards costs associated with this surveillance. Existing law continuously appropriates those fees to the state board.

This bill would require the state board to enhance its surveillance of emissions from new motor vehicles to detect defeat devices or other software used to evade the surveillance of emissions, as specified. The bill would authorize the state board to impose a fee on the manufacturers of new motor vehicles to cover the state boards costs associated with the enhanced surveillance. By expanding an existing continuous appropriation, this bill would make an appropriation.

SENATE COMMITTEE ON APPROPRIATIONS

Senator Ricardo Lara, Chair

2017 - 2018 Regular Session

AB 582 (Cristina Garcia) - Vehicles: emissions: certification, auditing, and compliance

This bill meets the criteria for referral to the Suspense File.

Bill Summary:

AB 582 requires the Air Resources Board (ARB) to enhance its certification, audit, and compliance workload activities for new motor vehicles to detect defeat devices or other software used to evade emissions testing. The bill also authorizes the ARB to impose new fees and penalties, and creates the Certification Fund and the Certification Penalty Account.

Fiscal Impact:

• Approximately $1 million (including three positions and $450,000 in contract funds) in year one for ARB to develop new surveillance methods and test cycles, procure equipment, and coordinate enforcement actions (Air Pollution Control Account).
• Ongoing costs of approximately $1.42 million (including eight positions) for ARB to increase the utilization of on-the-road testing methods, and perform testing using the newly-developed methods and test cycles (Air Pollution Control Account).
• Some or all of these costs could be offset by the fee and penalty authority granted to ARB in the bill.

Background:

In September 2015, following a California Air Resources Board (CARB) investigation, Volkswagen (VW) officials admitted to having secretly and deliberately installed an emissions defeat device on nearly 600,000 VW and Audi branded 2.0-liter and 3-liter diesel vehicles sold to consumers in the U.S.

The defeat device was software designed to cheat State and federal emission tests and resulted in oxides of nitrogen (NOx) emissions that were up to 40 times higher than allowed for each of the approximately 85,000 vehicles in California.

On October 25, 2016, the United States District Court for the Northern District of California approved a Partial Consent Decree (Consent Decree) that partially resolves Clean Air Act and California claims against VW for the use of the defeat devices in their 2.0-liter diesel vehicles. A second Consent Decree for the 3.0-liter diesel vehicles was lodged in December 2016 and is expected to be approved in May 2017.

As a result of the two Consent Decrees, California is expected to be allocated about $423 million from an Environmental Mitigation Trust, explained in the first Consent Decree. That money is to mitigate the lifetime excess NOx emissions of the VW vehicles with the defeat device. VW is also expected to invest $800 million for zero-emission vehicle projects in California over a 10-year period.

Proposed Law:

This bill:

1. Makes findings and declarations.
   
2. Defines that “real-world conditions emissions testing” may include both new and used vehicles being driven on-road, outside of normal laboratory testing conditions.
   
3. Requires ARB to enhance its certification, audit, and compliance of new motor vehicles to detect defeat devices or other software used to evade emissions testing, including the utilization of real-world conditions emissions testing.
   
4. Allows ARB to enter into agreements with academic institutions and laboratories to develop new surveillance methods and test cycles, perform emissions testing on behalf of the state, or conduct research on vehicle emissions testing.
   
5. Creates the Certification Fund and the Certification Penalty Account in the state treasury and requires the moneys in the funds be available upon appropriation by the Legislature.
   
6. Allows ARB, by regulation, to impose fees on new motor vehicles in order to implement this bill, requires that the amount collected not exceed $7 million in fiscal year 2018-19, and prohibits an increase in subsequent years except as warranted by the annual increase in the California Consumer Price Index and as necessary for operational and labor costs.
   
7. Imposes penalties on manufacturers who fail to pay a fee under the bill as follows:
   
   1. A 10% additional charge if the invoice is not paid within 60 days, unless the manufacturer asks for additional information in order to honor the invoice, upon which an additional 90 days is granted to pay a fee without penalty.
      
   2. Sixty days after receiving the invoice, an interest penalty is added that is equal to the rate earned by the Pooled Money Investment Account of all cumulative penalties for each 30-day period the invoice remains unpaid.
      
   3. An additional 100% penalty of all cumulative penalties for any invoice that remain unpaid a year after the receipt of the invoice.
      
   4. An additional 100% penalty of all cumulative penalties for any invoice that remain unpaid two years after the receipt of the invoice.
   5. Requires all fees to be deposited into the Certification Fund and all penalties to be deposited into the Certification Penalty Account.

Related Legislation:

AB 1685 (Gomez, Chapter 604, Statutes of 2016) updates civil penalties for violations of ARB regulations, orders, or rules, to bring penalty assessments into alignment with those of the United States Environmental Protection Agency.

ACR 112 (Hadley, Chapter 117, Statutes of 2016) describes the events that led to the discovery of the Volkswagen defeat devices. Declares that the Legislature thanks ARB for its exemplary work uncovering the Volkswagen defeat devices. Declares that the Legislature supports ARB increasing the use of real-world emissions verification testing.

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 available to the public, annually report specified administrative penalties imposed, and publish a penalty policy pertaining to vehicular air pollution control.

Staff Comments:

Purpose of Bill. According to the author, “AB 582 would provide new tools and resources to ARB to assist them in staying current on any new vehicle technology that could game California clean air laws. This includes partnerships with academic institutions, laboratories, and experts. AB 582 would direct ARB to enhance their new motor vehicle emission testing program to include more real-world condition testing. AB 582 will keep ARB at the forefront of protecting California’s air from deceitful polluters and ensure the rules apply to everyone.”

-- END --

SENATE COMMITTEE ON ENVIRONMENTAL QUALITY

Senator Wieckowski, Chair

2017 - 2018 Regular

Bill No: AB 582

SUBJECT: Vehicles: emissions: surveillance.

ANALYSIS:

Existing federal law:

1. The Federal Clean Air Act (FCAA) and its implementing regulations set National Ambient Air Quality Standards (NAAQS) for six criteria pollutants, designate air basins that do not achieve NAAQS as nonattainment, allow only California to set vehicular emissions standards stricter than the federal government, and allow other states to adopt either the federal or California vehicular emissions standards. (42 U.S.C. §7401 et seq.)
   

Existing state law:

1. Establishes the Air Resources Board (ARB) as the air pollution control agency in California and requires the ARB, among other things, to control emissions from a wide array of mobile sources. (Health and Safety Code (HSC) §39500 et seq.)
   
2. Requires ARB to promulgate and enforce rules and regulations necessary for the proper execution of its statutory mandates. (HSC §39601 et seq.)
   
3. Requires, with exceptions, all new motor vehicles to meet ARB’s emission standards in order to be sold and registered in this state. (HSC §43202)
   
4. Authorizes ARB to asses fees on vehicle manufacturers to recover the costs associated with emissions testing. (HSC §43203)
   
5. Establishes the Motor Vehicle Inspection Program, commonly known as the smog check program, to help the state meet federal air quality standards. (HSC §44000 et seq.)
   
6. Prohibits a person from installing, selling, offering for sale, or advertising any device, apparatus, or mechanism intended for use with, or as a part of, a required motor vehicle pollution control device or system that alters or modifies the original design or performance of the motor vehicle pollution control device or system; and imposes a fine for doing so. (Vehicle Code (VEH) §27156)
   

This bill:

1. Makes findings and declarations.
   
2. Defines that “real-world conditions emissions testing” may include both new and used vehicles being driven on-road, outside of normal laboratory testing conditions.
   
3. Requires ARB to enhance its certification, audit, and compliance of new motor vehicles to detect defeat devices or other software used to evade emissions testing, including the utilization of real-world conditions emissions testing.
   
4. Allows ARB to enter into agreements with academic institutions and laboratories to develop new surveillance methods and test cycles, perform emissions testing on behalf of the state, or conduct research on vehicle emissions testing.
   
5. Creates the Certification Fund and the Certification Penalty Account in the state treasury and requires the moneys in the funds be available upon appropriation by the Legislature.
   
6. Allows ARB, by regulation, to impose fees on new motor vehicles in order to implement this bill, requires that the amount collected not exceed $7 million in fiscal year 2018-19, and prohibits an increase in subsequent years except as warranted by the annual increase in the California Consumer Price Index and as necessary for operational and labor costs.
   
7. Imposes penalties on manufacturers who fail to pay a fee under the bill as follows:
   
   1. A 10% additional charge if the invoice is not paid within 60 days, unless the manufacturer asks for additional information in order to honor the invoice, upon which an additional 90 days is granted to pay a fee without penalty.
      
   2. Sixty days after receiving the invoice, an interest penalty is added that is equal to the rate earned by the Pooled Money Investment Account of all cumulative penalties for each 30-day period the invoice remains unpaid.
      
   3. An additional 100% penalty of all cumulative penalties for any invoice that remain unpaid a year after the receipt of the invoice.
      
   4. An additional 100% penalty of all cumulative penalties for any invoice that remain unpaid two years after the receipt of the invoice.
      
   5. Requires all fees to be deposited into the Certification Fund and all penalties to be deposited into the Certification Penalty Account.
      

Background

1. Health Impacts of Air Pollution. When not adequately controlled, air pollution has dire consequences on the health and safety of both people and the environment. Poor air quality causes the lungs to constrict, resulting in wheezing, shortness of breath and chest tightness, especially during exercise or physical activity.
   
   It is well known that air pollution causes asthma. According to the Centers for Disease Control and Prevention, nationwide 7.4% of adults and 8.6% of children have been diagnosed with asthma. In California, the numbers are significantly higher: 13.1% of adults and 12.5% of children have been diagnosed with asthma. Lower income and minority groups are disproportionately affected by asthma due to their increased exposure to air pollution.
   
   Depending on exposure, air pollution alone can cause an increased risk of cardiovascular and respiratory illness, lung disease, cancerous tumors, birth defects, premature births, developmental disorders, central nervous system damage, intellectual disability, persistent memory impairments, epilepsy, dementia, and premature death.
   
2. Air Quality Standards. The Federal Clean Air Act (FCAA) passed in 1963 and has been revised many times thereafter. The FCAA and its implementing regulations are intended to protect public health and environmental quality by limiting and reducing pollution from various sources. Under the FCAA, the United States Environmental Protection Agency (US EPA) establishes National Ambient Air Quality Standards (NAAQS) that apply to outdoor air throughout the country.
   
   In 1969 and 1971, ARB set the first air quality standards for ozone, Particulate Matter (PM), oxides of nitrogen (NOx), oxides of sulfur (SOx), and carbon monoxide due to their negative impacts on public health above specified concentrations.
   
   The federal government followed suit and set NAAQS for six “criteria pollutants.” These included ground-level ozone, PM, NOx, SOx, and carbon monoxide, and added lead. Now, the US EPA reviews each NAAQS at five-year intervals to ensure that the standards are based on the most recent scientific information.
   
   Regions that do not meet the national standards for any one of the standards are designated “nonattainment areas.” The FCAA sets deadlines for attainment based on the severity of nonattainment and requires states to develop comprehensive plans, known as the state implementation plan (SIP), to attain and maintain air-quality standards for each area designated nonattainment for an NAAQS.
   
3. Vehicles and Air Pollution. Vehicles are one of the primary sources of air pollution nationally. As such, the FCAA authorizes US EPA to establish and regulate emissions standards for mobile sources.
   
   California, due to its preexisting vehicle-emission standards and severe motor vehicle air pollution problems, is authorized under the FCAA to implement separate mobile emission standards from the federal government. Other states may choose to follow either the national standard or the stricter California standards.
   
   State law assigns the ARB with primary responsibility for control of mobile-source air pollution, including adoption of rules for reducing vehicle emissions, the specification of vehicular fuel composition, emissions control devices, and engine standards.
   
4. Volkswagen and Fiat Chrysler Automobiles. On September 3, 2015, representatives of Volkswagen (VW) admitted to staff of US EPA and ARB that a large number of their vehicle engines had been designed and manufactured with a “defeat device” to bypass, defeat, or render inoperative elements of the vehicles’ emissions control system. As a result, these vehicles are able to pass emissions tests despite exceeding federal emissions standards by up to 40 times. This is due to the fact that the emission control system works while the vehicle is being tested, but is turned off by the defeat device when the car is being driven on the road.
   
   There are an estimated half-million of these vehicles in the US, of which about 70,000 are in California. On January 4, 2016, the US filed a complaint alleging that VW violated the Clean Air Act by selling approximately 590,000 diesel motor vehicles, model year 2009-2016, equipped with defeat devices.
   
   On March 8, 2016, the Senate Transportation and Housing Committee and the Senate Environmental Quality Committee held a hearing titled “Volkswagen’s ‘Defeat Device:’ Update and Implications for California.” This hearing examined how the defeat device was discovered, how US EPA and ARB were addressing the violations, how California’s air quality would be impacted, and how we can prevent such violations from occurring again.
   
   Since that hearing, US EPA, ARB, and the United States Department of Justice (US DOJ) have reached a settlement with VW relating to the affected 2.0-liter engines, as well as an initial settlement relating to the affected 3.0-liter engines. Further, on January 11, 2017, US DOJ announced a settlement of civil and criminal penalties.
   
   On January 12, 2017, ARB and US EPA issued Notices of Violation to Fiat Chrysler Automobiles (FCA) for failing to disclose auxiliary emissions control devices (AECDs); ARB has not yet determined whether these AECDs are actually defeat devices. ARB’s investigation involves about 14,000 Jeep Grand Cherokees and Ram 1500 pickup trucks, model years 2014-16 (there are approximately 104,000 of these vehicles nationwide). The discovery of the AECDs occurred as part of the expanded testing implemented by ARB and US EPA as a result of the VW investigation.
   
5. Auxiliary Emission Control Devices (AECD). According to ARB regulations, an AECD means “any device or element of design that senses temperature, vehicle speed, engine revolutions per minute, transmission gear, manifold vacuum, or any other parameter for the purpose of activating, modulating, delaying, or deactivating the operation of the emission control system.” AECD is usually not a physical device, but instead code in the vehicle’s software. This code modifies the vehicle’s emission control system’s performance. AECD can have legitimate uses to protect the emission control system during extreme cold weather or when there is a heavy load in the vehicle. However, manufacturers are required to disclose AECDs to ARB for their review and approval. An AECD is a defeat device when it reduces the effectiveness of the emission control system under conditions that a vehicle can be reasonably expected to encounter. Auto manufacturers may use defeat devices to avoid investing in more durable emission control systems.
   
6. Settlement with Volkswagen. On June 28, 2016, the US filed with the court a partial settlement with VW addressing vehicles containing 2.0-liter diesel engines; on October 25, 2016, the settlement was approved by the US District Court for the Northern District of California. The partial consent decree was agreed upon by VW, ARB, US EPA, and US DOJ. This $14.7 billion agreement is the largest settlement in history involving an automaker. California will receive about $1.2 billion from the consent decree, intended to mitigate the environmental damage caused by VW’s deception.
   
   The partial consent decree applies to the entire US, with special provisions for California. Specifically:
   
   1. Appendices A and B specify buyback, lease termination, and potential vehicle modification terms. VW will offer affected customers the option of (a) a buyback (based on fair replacement value as of September 17, 2015) or lease termination (at no cost) or (b) an emissions modification. Customers can also choose to do neither. VW must remove from commerce in the US, or perform an emissions modification on, at least 85% of the affected 2.0 liter vehicles; in California, VW must meet an 85% recall rate. Any proposed emissions modification must be approved by both US EPA and ARB; if no emissions fix is approved, any vehicles bought back or with terminated leases must be recycled or scrapped. If VW fails to meet these numbers, it must pay specified penalties.
      
   2. Appendix C specifies VW’s $2 billion national investment commitment in zero-emission vehicles (ZEVs) over 10 years ($800 million in California). The decree stipulates that VW has final say over its proposal for spending Appendix C funding (provided it complies with the terms of the decree). Eligible investments include ZEV infrastructure, brand-neutral education and public awareness campaigns, ZEV access improvements for consumers at all income levels (e.g., scrap-and-replace programs, ZEV rideshare or ride hailing services), and a “Green City” initiative (e.g., ZEV car-sharing or ZEV freight transport projects). VW was required to submit a draft ZEV Investment Plan to ARB by February 22, 2017, which ARB may approve in whole or in part. The consent decree specifies what ARB may approve or partially approve. VW submitted the first proposed spending plan to ARB on March 8, 2017; ARB has posted the plan on its website for review and public comment, and will discuss it at their board meeting on March 23rd.
      
   3. Appendix D requires VW to pay $2.7 billion into an Environmental Mitigation Trust to address past and future excess emissions of NOx from VW 2.0 liter vehicles sold in the US. Of this, California will receive $381 million over a three-year period to fund projects to replace older and dirtier heavy-duty diesel vehicles and equipment with cleaner vehicles and equipment, including advanced zero- or near-zero-emission technologies. Once the trust is established, the Governor will have 30 days to appoint a lead agency to implement trust spending. According to ARB, the state will engage in a public process to help determine project selection.
      

As noted above, any emissions modification must be approved by ARB and US EPA and will be specific to the three types of engines in question, known as Generation 1, Generation 2, and Generation 3. On January 6, 2017, the two agencies announced approval of an emissions modification for a limited number of VW 2.0 liter diesel vehicles; specifically, Generation 3 vehicles for model year 2015. No other emissions modifications have been approved to date.

1. VW Settlement Relating to 3.0-Liter Vehicles. On December 20, 2016, another partial consent decree was filed with the court relating to the affected 3.0-liter diesel vehicles, model years 2009-16. This decree requires VW to pay $225 million, of which California will receive about $41 million, into the Environmental Mitigation Trust established pursuant to the 2.0-liter settlement, The decree also requires VW to offer to buy back, cancel leases, or modify (upon US EPA and ARB approval) the affected vehicles. Similar to the 2.0 liter agreement, VW must meet an 85% recall rate in California for the affected vehicles. This case affects about 83,000 vehicles, of which nearly 15,000 are in California.
   
   The separate California Consent Decree requires VW to add a second “Green City” initiative in California in addition to the one required in Appendix C of the consent decree related to 2.0 liter vehicles. This second initiative must be implemented in a city with a population of approximately 500,000 that predominantly consists of disadvantaged communities. The decree also requires VW to provide at least two new battery electric vehicle (BEV) models for sale in California – including at least one sport utility BEV by 2019. VW must offer and sell an additional sport utility BEV model in California by 2020. VW must sell an average of 5,000 of these three additional BEV models in California from 2019 through 2025 for a total of 35,000 BEVs. ZEV credits generated by placement of these vehicles in California may not be sold in the ZEV credit market.

The California Consent Decree also requires VW to pay ARB $25 million by July 1, 2017, to support efforts to make ZEVs available to more Californians. According to ARB, this funding will likely be used to expand programs such as EFMP Plus-Up and the Clean Vehicle Rebate Program, primarily or wholly in disadvantaged communities.

1. California Civil Penalty and Costs Settlement. On January 10, 2017, VW and ARB agreed on a resolution of the last part of the case (though it is still not final). VW agreed to pay an additional $153.8 million to resolve ARB’s remaining claims. Of this, $93.8 million is for civil penalties for sales of 2.0 and 3.0 Liter vehicles that violated emissions standards. The remaining $60 million (in payments of $10 million per year, for six years is intended to act as a penalty to VW as well as a deterrent to VW and other manufacturers from similar actions in the future, and will cover future testing and implementation costs. VW also agreed to an injunction not to violate California law.
   
2. ARB Guidance to VW. As discussed above, the 2.0 Liter settlement requires VW to submit a proposed ZEV investment plan to ARB every 30 months for approval. In February 2017, following a public workshop and request for public comments in December, ARB published a document intended to guide VW on its first 30-month expenditure plan. In it, ARB states that it expects the plan to:
   
   1. Provide investments that are complementary and additional to those already being made by the public and private sector in California;
      
   2. Focus significant, targeted investments in a limited number of communities that represent a variety of community types, to create transformative outcomes;
      
   3. Dedicate at least 35% of its investment to disadvantaged, low-income, underserved, and disproportionately impacted communities, identified in consultation with state agencies;
      
   4. Place an initial priority on ZEV infrastructure and public awareness;
      
   5. Include investment in hydrogen refueling infrastructure;
      
   6. Include data collection and reporting; and
      
   7. Refrain from interfering with or undermining established and emerging businesses in the marketplace.
      
   8. ARB’s guidance also recommends that about half of the ZEV investment plan be directed to infrastructure, with the remainder to be split between public awareness, ZEV access, and the Green City initiative.
      

On March 14, 2017, VW submitted its first investment plan, which ARB discussed at its April 28, 2017 hearing. On May 24, 2017, ARB sent a letter to VW saying ARB was eager to move forward with the investment plan, but needed additional information relating to the ten-year vision for the investment plan, investment in disadvantaged and underserved communities, transparency, accountability, coordination, brand-neutral public education that includes fuel cell vehicles, credible costs, and other data requests. Upon receiving this information, ARB will move forward with approving the investment plan, in whole or in part.

Finally, it must be noted that ARB’s guidance is not totally binding; as long as the plan submitted by VW is consistent with the consent decree, ARB has little legal ground to reject the plan.

Comments

1. Purpose of Bill. According to the author, “AB 582 would provide new tools and resources to ARB to assist them in staying current on any new vehicle technology that could game California clean air laws. This includes partnerships with academic institutions, laboratories, and experts. AB 582 would direct ARB to enhance their new motor vehicle emission testing program to include more real-world condition testing. AB 582 will keep ARB at the forefront of protecting California’s air from deceitful polluters and ensure the rules apply to everyone.”
   

Related/Prior Legislation

AB 1685 (Gomez, Chapter 604, Statutes of 2016) updates civil penalties for violations of ARB regulations, orders, or rules, to bring penalty assessments into alignment with those of the United States Environmental Protection Agency.

ACR 112 (Hadley, Chapter 117, Statutes of 2016) describes the events that led to the discovery of the Volkswagen defeat devices. Declares that the Legislature thanks ARB for its exemplary work uncovering the Volkswagen defeat devices. Declares that the Legislature supports ARB increasing the use of real-world emissions verification testing.

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 available to the public, annually report specified administrative penalties imposed, and publish a penalty policy pertaining to vehicular air pollution control.

DOUBLE REFERRAL:

This measure was heard in Senate Transportation and Housing Committee on June 27, 2017, and passed out of committee with a vote of 9-3.

SOURCE:

Author

SUPPORT:

American Lung Association in California

American Veterans (AMVETS)

Apostolic Faith Center

California Communities Against Toxics

California Kids IAQ

California League of Conservation Voters

California Safe Schools

Coalition For A Safe Environment

Community Dreams

Del Amo Action Committee

EMERGE

National Association for the Advancement of Colored People (NAACP)

San Pedro & Peninsula Homeowners Coalition

Sierra Club California

Society for Positive Action

St. Philomena Social Justice Ministry

Valley Clean Air Now

Wilmington Improvement Network

OPPOSITION:

Alliance of Automobile Manufacturers

-- END --

SENATE COMMITTEE ON TRANSPORTATION AND HOUSING

Senator Jim Beall, Chair

2017 - 2018 Regular

Bill No: AB 582 Hearing Date: 6/27/2017

SUBJECT: Vehicles: emissions: certification, auditing, and compliance.

DIGEST: This bill requires the state Air Resources Board (ARB) to enhance its emissions testing of new motor vehicles and authorizes ARB to impose a fee on vehicle manufacturers to cover implementation costs.

ANALYSIS:

Existing law:

1. Prohibits a motor vehicle from being sold and registered in California unless the manufacturer permits the state Air Resources Board (ARB) to conduct emissions testing on the vehicle.
2. Authorizes ARB, by regulation, to impose fees on vehicle manufacturers to recover the costs of emissions surveillance.
3. Requires a manufacturer who fails to pay this fee to pay ARB an additional fee of 10%. Provides an additional 90 days for payment if the manufacturer informs ARB that additional information is needed to honor the invoice. Requires a manufacturer who fails to pay all fees within one year to pay a penalty fee equal to 100% of all fees imposed and imposes a subsequent 100% penalty for each year the fees go unpaid.
4. Establishes a civil penalty of $37,500 per action for the following violations:
   1. 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.
   2. Sale of a new motor vehicle in California that does not meet ARB emissions standards.
   3. Failure to comply with ARB emissions standards or test procedures.

This bill:

1. Requires ARB to enhance its certification, audit, and compliance workload for new motor vehicles to detect defeat devices or other software used to evade emissions testing.
2. Requires this enhancement to include, but need not be limited to, increased utilization of in-use and real-world conditions emissions testing.
3. Authorizes ARB to consult or partner with academic institutions and laboratories to develop new surveillance methods and test cycles, perform emissions testing on behalf of ARB, and conduct research on vehicle emissions testing.
4. Authorizes ARB to impose fees on manufacturers of new motor vehicles to recover implementation costs. Caps the fees at $7 million for fiscal year 2018-19 and limits subsequent increases to inflation, operational costs, and labor costs.
5. Requires a manufacturer who fails to pay this fee within 60 days to pay ARB a penalty equal to 10% of the fee. Provides an additional 90 days for payment if the manufacturer informs ARB that additional information is needed to honor the invoice. Requires a manufacturer who fails to pay all fees within one year to pay a penalty fee equal to 100% of all fees imposed and imposes a subsequent 100% penalty for each year the fees go unpaid.

COMMENTS:

1. Purpose. The author states that while ARB was instrumental in catching the Volkswagen emissions control violations, Volkswagen vehicles were able to pollute California’s air for nine years before this occurred. This bill would provide new tools and resources to ARB to assist them in staying current on any new vehicle technology that could game California’s clean air laws. This bill would direct ARB to enhance their new motor vehicle emissions testing program to include more real-world conditions testing. This bill will keep ARB at the forefront of protecting California’s air from deceitful polluters and ensure that the rules apply to everyone.
2. Background: the VW 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 US EPA to launch their own investigations. On September 3, 2015, representatives of Volkswagen admitted to staff of US EPA and ARB that a large number of their vehicles 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, those 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 about 79,000 are in California. US EPA and ARB are currently also investigating Fiat Chrysler for alleged similar violations.^[1]
3. 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 US EPA to establish and regulate standards for mobile sources of air 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 emissions standards.

Both US 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 US 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. A violation of the state certification carried a fine, up until this year, of up to $5,000 per vehicle; AB 1685 (Gomez, Chapter 604, Statutes of 2016) brought the state fine in line with the federal fine.

1. Catching cheaters at the front end. Under partial settlements with ARB and US EPA, Volkswagen is now paying billions of dollars in penalties, mitigation, and investments in zero emission vehicles. In addition, Volkswagen must make a concerted effort to either repair the offending vehicles or remove them from the road. No payment or action, however, can undo the negative air quality impact of these vehicles to date. This bill aims to ensure that ARB is able to catch any emissions violators prior to the vehicles hitting the road, e.g., before they can negatively impact California’s air quality.
2. Opposition concerns. The Alliance of Automobile Manufacturers, writing in opposition to this bill, seeks amendments to tie fees to certifications and to expand certifications to non-vehicular engines and equipment. The Alliance also raises concerns about expanding ARB authority to contract with private parties to conduct testing and surveillance, and objects to potentially allowing private party access to proprietary data and sensitive business information. The author states that she is continuing to work with the Alliance to address their concerns.
3. Amendments. The author will accept the following clarifying amendments:
   1. Page 2, line 12, change “workload” to activities.”
   2. Page 2, line 16, change “enhancement” to “certification, audit, and compliance activities.”
   3. Add the following definition: “For purposes of this section, ‘real-world conditions emissions testing’ may include both new and used vehicles being driven on-road, outside of normal laboratory testing conditions.”
4. Double referral. This bill has also been referred to the Environmental Quality Committee.

Related Legislation:

AB 1685 (Gomez, Chapter 604, Statutes of 2016) — increases and clarifies the civil penalties for certain emissions violations by vehicle and engine manufacturers and distributors.

ACR 112 (Hadley, Resolution Chapter 112, Statutes of 2016) — Commends ARB for its role in uncovering emissions control 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.

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:

Floor: 62-13

Appr: 13-2

Trans: 12-1

Nat Res: 8-1

FISCAL EFFECT: Appropriation: No Fiscal Com.: Local:

POSITIONS: (Communicated to the committee before noon on Wednesday,

June 21, 2017.)

SUPPORT:

American Lung Association in California

American Veterans (AMVETS)

Apostolic Faith Center

California Communities Against Toxics

California Kids IAQ

California League of Conservation Voters

California Safe Schools

Coalition for a Safe Environment

Coalition for Clean Air

Community Dreams

Del Amo Action Committee

EMERGE

NAACP San Pedro-Wilmington Branch #1069

San Pedro & Peninsula Homeowners Coalition

Sierra Club California

Society for Positive Action

St. Philomena Social Justice Ministry

Valley Clean Air Now

Wilmington Improvement Network

OPPOSITION:

Alliance of Automobile Manufacturers

-- END --

1. For more information, see “Volkswagen and Fiat-Chrysler Emissions Control Violations: Impact on California,” a joint hearing of the Transportation and Housing Committee and the Environmental Quality Committee, March 21, 2017, at http://stran.senate.ca.gov/content/oversightinfo-hearings. ↑

ASSEMBLY THIRD READING

ATR Bill Id:AB 582

Author:(Cristina Garcia)

As Amended Ver:March 22, 2017

Majority vote

SUMMARY: Requires the California Air Resources Board (ARB) to enhance its surveillance of emissions from new motor vehicles to detect defeat devices or other software used to evade the surveillance of emissions. Specifically, this bill:

1. Requires ARB to enhance its surveillance of emissions from new motor vehicles to detect defeat devices or other software used to evade the surveillance of emissions.
2. Requires the enhancement to include all of the following:
   1. Partnerships with academic institutions, national laboratories, and private laboratories; and,
   2. Increased utilization of real-world conditions emissions testing.
3. Authorizes ARB to enter into agreements with nonstate entities to develop new surveillance methods and test cycles and to perform testing on behalf of ARB.
4. Authorizes ARB to impose fees on manufacturers of new motor vehicles to recover ARB's costs of enhancing its surveillance of emissions.

EXISTING LAW:

1. Declares that the Legislature finds emissions of air pollutants from motor vehicles is the primary cause of air pollution in many parts of the state.
2. Requires ARB to endeavor to achieve the maximum degree of emission reductions possible from vehicular and other mobile sources in order to achieve attainment of state ambient air standards.
3. Requires ARB to adopt and implement emission standards for new motor vehicles that ARB finds to be necessary and technologically feasible.
4. Prohibits a new motor vehicle or new motor vehicle engine from being certified by ARB, unless the vehicle or engine meets the emission standards adopted by ARB.
5. Prohibits a new motor vehicle required to meet the emission standards adopted by the state from being sold and registered in this state unless the new motor vehicle manufacturer permits ARB to conduct surveillance testing of emissions of new motor vehicles.
6. Authorizes ARB to adopt, by regulation, a schedule of annual fees for the certification of motor vehicles and engines sold in the state to cover costs of state programs related to mobile sources. Limits fees to $4.5 million in the 1989-90 fiscal year and allows annual increases to not exceed the annual increase in the California Consumer Price Index.
7. Authorizes ARB to impose a fee on manufacturers of new motor vehicles to recover ARB's cost of conducting surveillance of new motor vehicles prior to retail sales.
8. Requires ARB to establish criteria for the evaluation of the effectiveness of motor vehicle pollution control devices.
9. Prohibits a person from installing, selling, or offering for sale any device, apparatus, or mechanism intended for use with, or as a part of, a required motor vehicle pollution control device or system that alters or modifies the original design or performance of the motor vehicle pollution control device or system.
10. Establishes civil penalties for violations of new motor vehicle emission standards or altering or modifying the motor vehicle pollution control device.

FISCAL EFFECT: According to the Assembly Appropriations Committee:

1. Increased first year ARB costs of approximately $1 million including three positions and $450,000 in contract funds to develop new surveillance methods and test cycles, procure equipment, and coordinate enforcement actions (Air Pollution Control Account);
2. Ongoing increased ARB costs of approximately $1.42 million including eight positions to increase the utilization of on-the-road testing methods, and perform testing using the newly developed methods and test cycles (Air Pollution Control Account); and,
3. This bill authorizes ARB to impose fees, by regulation, on manufacturers of new vehicles to cover surveillance costs. If ARB, opted to do this, the costs of developing regulations would likely be in the $100,000 to $300,000 range (Air Pollution Control Account).

COMMENTS:

1. Author's statement.

AB 582 would provide new tools and resources to ARB to assist them in staying current on any new vehicle technology that could game California clean air laws. This includes partnerships with academic institutions, laboratories, and experts. AB 582 would direct ARB to enhance their new motor vehicle emission testing program to include more real-world condition testing. AB 582 will keep ARB at the forefront of protecting California's air from deceitful polluters and ensure the rules apply to everyone.

1. Volkswagen. According to a Volkswagen PowerPoint that was discovered as part of the defeat device investigation, ten years ago Volkswagen engineers realized that the emissions control equipment installed in their diesel engines did not have the durability to meet federal and California's emissions standards. Durable and effective emissions control equipment would have cost Volkswagen hundreds of dollars more per vehicle and would have increased the sticker price to consumers. Instead of pursuing the more expensive emissions control equipment, Volkswagen developed software, known as a defeat device, which could detect when the vehicle was being put through an emissions test and activate the emissions control equipment only for the purposes of passing the test. This would extend the life of the emissions control equipment and allow Volkswagen to appear to be in compliance with federal and California emissions standards. However, when not being tested, the vehicles were emitting nitrous oxides (NOx) up to 40 times the legal limit.

The events that led to the discovery of Volkswagen's defeat device began when the Center for Alternative Fuels, Engines and Emissions at West Virginia University was attempting to understand the difference between vehicle emissions in real-world conditions and lab performance in both America and Europe. The real-world emissions of a Volkswagen Passat and Jetta were much higher than the lab tests at ARB's Haagen-Smit Laboratory (HSL). The University turned its data over to ARB. This prompted ARB to open an investigation on the discrepancy. Subsequently, Volkswagen's engineers admitted they were using defeat devices to ARB.

There were over 70,000 2.0L and almost 15,000 3.0L Volkswagen diesel vehicles registered in California that have emitted excess tons of harmful NOx emissions. NOx emissions create nitrogen dioxide, particulate matter, and ozone pollution. California has made large strides in cleaning up the air, but Volkswagen's cheating was particularly harmful because in many parts of the state our air quality is still much worse than anywhere else in the nation: 23 million Californians live within the nation's only severe non-attainment areas for ozone pollution, and 12 million Californians live in areas with nation-leading levels of fine particle pollution. These pollutants cause lung disease, heart disease, and premature death, especially among the most vulnerable populations.

Recently, ARB has discovered that other automakers may also be using defeat devices. It has become clear that some automakers are willing to develop new software designed to cheat California's clean air laws. While ARB was instrumental in catching Volkswagen, the automaker's vehicles were able to pollute California's air for nine years before Volkswagen was brought to justice.

As result of the partial settlements with ARB and United State Environmental Protection Agency, Volkswagen will be paying billions of dollars in air quality mitigation, investments in the Zero-Emission Vehicle market, and penalties. These funds will be spent throughout the country, but the settlements have specific California requirements and amounts.

1. Auxiliary Emission Control Devices (AECD). According to ARB regulations, an AECD means "any device or element of design that senses temperature, vehicle speed, engine revolutions per minute, transmission gear, manifold vacuum, or any other parameter for the purpose of activating, modulating, delaying, or deactivating the operation of the emission control system." AECD is usually not a physical device, but instead code in the vehicle's software. This code modifies the vehicle's emission control system's performance. AECD can have legitimate uses to protect the emission control system during extreme cold weather or when there is a heavy load in the vehicle. However, manufacturers are required to disclose AECDs to ARB for their review and approval. An AECD is a defeat device when it reduces the effectiveness of the emission control system under conditions that a vehicle can be reasonably expected to encounter. Auto manufacturers may use defeat devices to avoid investing in more durable emission control systems.
2. AB 582. In California, the transportation sector accounts for approximately 80% of NOx emissions. In 2012, ARB adopted the Low Emission Vehicle III amendments, which included more stringent emission standards for both criteria pollutants, including NOx and greenhouse gases for new passenger vehicles. In complying with current and future emission standards, vehicles' emission control systems will likely become more costly and there may be new types of defeat devices or other software used to mask noncompliance to reduce costs. This bill requires ARB to enhance its surveillance of emissions and provide it new fee authority to discover any new attempts to circumvent emission standards. This includes requiring ARB to increase the use of real-world emissions verification testing, which the Legislature declared its support for last year in ACR 112 (Hadley), Chapter 117, Statutes of 2016. ARB's current fee authority only permits recovery of costs on tests that are conducted prior to retail sale. This bill provides ARB new tools to verify that vehicles are meeting emissions standards in real-world conditions regardless of whether the vehicle has been placed on the market.

Analysis Prepared by: Michael Jarred / NAT. RES. / (916) 319-2092 FN: 0000605

Date of Hearing: April 26, 2017

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez Fletcher, Chair

ABPCA Bill Id:AB 582

Author:(Cristina Garcia) – As Amended Ver:March 22, 2017

Urgency: No State Mandated Local Program: No Reimbursable: No

SUMMARY:

This bill requires the California Air Resources Board (ARB) to enhance its emissions surveillance of new motor vehicles to better detect software that may be used to evade the surveillance of emissions. Specifically, this bill:

1. Requires ARB to enhance its surveillance of emissions from new motor vehicles to detect software that may be used to evade the surveillance of emissions by taking certain actions, including, but not necessarily limited to, the following:

1. Partnering with academic institutions and national and private laboratories;
2. Increasing utilization of real-world condition emissions testing; and,
3. Contracting with experts to develop new surveillance methods and test cycles and performing testing on behalf of ARB.
4. Authorizes ARB, by regulation, to impose fees on manufacturers of new motor vehicles to recover ARB’s costs of enhancing its surveillance of emissions.

FISCAL EFFECT:

1. Increased first year ARB costs of approximately $1 million including 3 positions and $450,000 in contract funds to develop new surveillance methods and test cycles, procure equipment, and coordinate enforcement actions (Air Pollution Control Account).
2. Ongoing increased ARB costs of approximately $1.42 million including 8 positions to increase the utilization of on-the-road testing methods, and perform testing using the newly developed methods and test cycles (Air Pollution Control Account).
3. This bill authorizes ARB to impose fees, by regulation, on manufacturers of new vehicles to cover surveillance costs. If ARB, opted to do this, the costs of developing regulations would likely be in the $100,000 to $300,000 range (Air Pollution Control Account).

COMMENTS:

1. Purpose. According to the author, this bill will provide new tools and resources to ARB to assist them in staying current on any new vehicle technology that could game California clean air laws. The author further contends, this bill will keep ARB at the forefront of protecting California’s air from deceitful polluters and ensure the rules apply to everyone.
2. Background. In September 2015, EPA issued a notice of violation of the Federal Clean Air Act to Volkswagen after it was found that the company had intentionally programmed certain diesel engines in model years 2009 to 2015 to activate emissions controls only during laboratory emissions testing. The software (also called defeat device) caused the vehicles' nitrous oxide (NOx) output to meet EPA standards during regulatory testing but to emit up to 40 times more NOx in real-world driving conditions. Volkswagen deployed this defeat device in about eleven million cars worldwide. Five hundred thousand of these vehicles were deployed in the United States and 79,400 of these were sold in California.

NOx emissions create nitrogen dioxide, particulate matter, and ozone pollution. These pollutants cause lung disease, heart disease, and premature death, especially among the most vulnerable populations. Volkswagen vehicles were able to pollute California’s air for nine years before Volkswagen was brought to justice. Recently, ARB has discovered that other automakers may also be using defeat devices.

This bill provides the necessary framework and funding to help ARB ensure that in the future automakers comply with existing laws and regulations as they relate to vehicle emissions.

1. Prior legislation. AB 1685 (Gomez), Chapter 604, Statutes of 2016, updates civil penalties for violations of ARB regulations, orders, or rules, to bring penalty assessments into alignment with those of the United States Environmental Protection Agency.

Analysis Prepared by: Jennifer Galehouse / APPR. / (916) 319-2081

Date of Hearing: March 27, 2017

ASSEMBLY COMMITTEE ON TRANSPORTATION

Jim Frazier, Chair

ABPCA Bill Id:AB 582 (

Author:Cristina Garcia) – As Amended Ver:March 22, 2017

SUBJECT: Vehicles: emissions: surveillance

SUMMARY: Requires the California Air Resources Board (ARB) to enhance its emissions surveillance of new motor vehicles to better detect software that may be used to evade the surveillance of emissions. Specifically, this bill:

1. Requires ARB to enhance its surveillance of emissions from new motor vehicles to detect software that may be used to evade the surveillance of emissions by taking certain actions, including, but not necessarily limited to, the following:
   1. Partnering with academic institutions and national and private laboratories;
   2. Increasing utilization of real-world condition emissions testing; and,
   3. Contracting with experts to develop new surveillance methods and test cycles and performing testing on behalf of ARB.
2. Authorizes ARB to, by regulation, impose fees on manufacturers of motor vehicles to recover the costs of conducting the enhanced emissions surveillance activities.

EXISTING LAW:

1. Requires ARB to achieve the maximum degree of emission reductions possible from vehicular and other mobile sources in order to achieve attainment of state ambient air quality standards.
2. Requires ARB to adopt and implement emission standards for new motor vehicles that are necessary and technologically feasible.
3. Prohibits a new motor vehicle or new motor vehicle engine from being certified by ARB, unless the vehicle or engine meets certain emission standards adopted by ARB.
4. Prohibits a new motor vehicle from being sold and registered in the state unless the manufacturer allows ARB to conduct surveillance testing on the vehicle.
5. Authorizes ARB to impose a fee on manufacturers of new motor vehicles to recover the costs of conducting surveillance of new motor vehicles prior to retail sales and to impose penalties if the fees are not paid.
6. Requires ARB to establish criteria for the evaluation of the effectiveness of motor vehicle pollution control devices.
7. Prohibits a person from installing, selling, or offering for sale any device, apparatus, or mechanism intended for use with, or as a part of, a required motor vehicle pollution control device or system that alters or modifies the original design or performance of the motor vehicle pollution control device or system.
8. Establishes civil penalties for violations of new motor vehicle emission standards or altering or modifying the motor vehicle pollution control device.

FISCAL EFFECT: Unknown

COMMENTS: According to the author, this bill would provide ARB with the tools and resources needs to help stay current on new vehicle technology that could be used to circumvent California's clean air requirements. Specifically, this bill would allow ARB to impose fees on vehicle manufacturers and to use the revenues to enhance their new motor vehicle emission testing program to ensure that manufacturers comply with California’s clean air regulations.

Nationally and statewide, the transportation sector is responsible for a major portion of air pollution and emissions. To address this, the United States Environmental Protection Agency (EPA) has established regulations requiring that, prior to introducing a vehicle for sale in the United States, manufacturers must demonstrate that the vehicle meets federal emissions standards. In California, manufacturers must additionally demonstrate compliance with state air quality standards. Manufacturers who fail to comply with both state and federal requirements are subject to civil penalties and other enforcement actions.

In September 2015, EPA issued a notice of violation of the federal Clean Air Act to Volkswagen after it was found that the company had intentionally programmed certain diesel engines in model years 2009 to 2015 to activate emissions controls only during laboratory emissions testing. The software (also called defeat device) caused the vehicles' nitrous oxide (NOx) output to meet EPA standards during regulatory testing but to emit up to 40 times more NOx in real-world driving conditions. Volkswagen deployed this defeat device in about eleven million cars worldwide. Five hundred thousand of these vehicles were deployed in the United States and 79,400 of these were sold in California.

The federal Clean Air Act defines a defeat device as an auxiliary emission control device (AECD) that reduces the effectiveness of the emission control system under conditions which may reasonably be expected to be encountered in normal vehicle operation and use. A manufacturer may equip a vehicle with a defeat device if it can justify the need for it in terms of preventing damage, provided the AECD does not go beyond the requirements of engine starting and the manufacturer discloses this information in its application to EPA for its certificate of conformity. Volkswagen failed to disclose the defeat device in any of its applications.

California has made great strides in cleaning up the air, but despite these efforts, many regions in the state continue to experience poor air quality. For example, 23 million Californians live in the nation’s most severe non-attainment areas for ozone pollution, and 12 million Californians live in areas with extremely high levels of fine particle pollution. These pollutants cause lung disease, heart disease, and premature death, especially among the most vulnerable populations.

While ARB was instrumental in discovering that one vehicle manufacturer was cheating the system, many years went by before the issue was discovered. It is hoped that the billions of dollars in air quality mitigation, investments, and penalties that have been imposed on Volkswagen will serve as a deterrent to other vehicle manufactures, this situation demonstrates that California cannot assume that automakers will willingly comply with California's clean air requirements. As a result, ARB must take additional action, as required in this bill, to ensure that automakers are complying with existing laws and regulations. This bill provides the necessary framework and funding to help ARB ensure that in the future automakers comply with existing laws and regulations as they relate to vehicle emissions.

Writing in support, the American Lung Association in California notes that this bill would give ARB the ability to secure needed funding, if necessary, to perform additional independent testing and to partner with experts to develop the best possible methodologies to determine if defeat devices are being used. They note that these added resources will help keep California at the forefront of protecting Californians by ensuring that our clean air standards are producing the intended health benefits.

Double Referral: This bill passed out of the Assembly Natural Resources Committee on March 20, 2017, with an 8-1 vote.

Previous legislation: AB 1685 (Gomez), Chapter 604, Statutes of 2016, updated civil penalties for violations of ARB regulations, orders, or rules, to bring penalty assessments into alignment with those of the EPA.

ACR 112 (Hadley), Chapter 117, Statutes of 2016, thanked ARB for its exemplary work and tenacity in uncovering the emissions control defeat devices on certain diesel-fueled Volkswagen motor vehicles and expressed the Legislature’s support for specified future emissions test-related actions by ARB.

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 available to the public, annually report specified administrative penalties imposed, and publish a penalty policy pertaining to vehicular air pollution control.

REGISTERED SUPPORT / OPPOSITION:

Support

American Lung Association in California

California League of Conservation Voters

Coalition for Clean Air

Sierra Club California

Valley Clean Air Now

Opposition

None on file

Analysis Prepared by: Victoria Alvarez / TRANS. /

Date of Hearing: March 20, 2017

ASSEMBLY COMMITTEE ON NATURAL RESOURCES

Cristina Garcia, Chair

ABPCA Bill Id:AB 582 (

Author:Cristina Garcia) – As Introduced Ver:February 14, 2017

SUBJECT: Vehicles: emissions: surveillance

SUMMARY: Requires the California Air Resources Board (ARB) to enhance its surveillance of emissions from new motor vehicles to detect defeat devices or other software used to evade the surveillance of emissions.

EXISTING LAW:

1. Declares that the Legislature finds emissions of air pollutants from motor vehicles is the primary cause of air pollution in many parts of the state.
2. Requires ARB to endeavor to achieve the maximum degree of emission reductions possible from vehicular and other mobile sources in order to achieve attainment of state ambient air standards.
   
3. Requires ARB to adopt and implement emission standards for new motor vehicles that ARB finds to be necessary and technologically feasible.
   
4. Prohibits a new motor vehicle or new motor vehicle engine from being certified by ARB, unless the vehicle or engine meets the emission standards adopted by ARB.
5. Prohibits a new motor vehicle required to meet the emission standards adopted by the state from being sold and registered in this state unless the new motor vehicle manufacturer permits ARB to conduct surveillance testing of emissions of new motor vehicles.
6. Authorizes ARB to impose a fee on manufacturers of new motor vehicles to recover ARB’s cost of conducting surveillance of new motor vehicles prior to retail sales.
7. Requires ARB to establish criteria for the evaluation of the effectiveness of motor vehicle pollution control devices.
8. Prohibits a person from installing, selling, or offering for sale any device, apparatus, or mechanism intended for use with, or as a part of, a required motor vehicle pollution control device or system that alters or modifies the original design or performance of the motor vehicle pollution control device or system.
9. Establishes civil penalties for violations of new motor vehicle emission standards or altering or modifying the motor vehicle pollution control device.

THIS BILL:

1. Requires ARB to enhance its surveillance of emissions from new motor vehicles to detect defeat devices or other software used to evade the surveillance of emissions.
2. Requires the enhancement to include all of the following:
   1. Partnerships with academic institutions, national laboratories, and private laboratories;
   2. Increased utilization of real-world conditions emissions testing; and,
   3. Contracts with experts in the surveillance of emissions and motor vehicle software to develop new surveillance methods and test cycles and to perform testing on behalf of ARB.
3. Authorizes ARB to impose fees on manufacturers of new motor vehicles to recover ARB’s costs of enhancing its surveillance of emissions.

FISCAL EFFECT: Unknown

COMMENTS:

1. Author’s statement.

AB 582 would provide new tools and resources to ARB to assist them in staying current on any new vehicle technology that could game California clean air laws. This includes partnerships with academic institutions, laboratories, and experts. AB 582 would direct ARB to enhance their new motor vehicle emission testing program to include more real-world condition testing. AB 582 will keep ARB at the forefront of protecting California’s air from deceitful polluters and ensure the rules apply to everyone.

1. Volkswagen. According to a Volkswagen PowerPoint that was discovered as part of the defeat device investigation, ten years ago Volkswagen engineers realized that the emissions control equipment installed in their diesel engines did not have the durability to meet federal and California’s emissions standards. Durable and effective emissions control equipment would have cost Volkswagen hundreds of dollars more per vehicle and would have increased the sticker price to consumers. Instead of pursuing the more expensive emissions control equipment, Volkswagen developed software, known as a defeat device, which could detect when the vehicle was being put through an emissions test and activate the emissions control equipment only for the purposes of passing the test. This would extend the life of the emissions control equipment and allow Volkswagen to appear to be in compliance with federal and California emissions standards. However, when not being tested, the vehicles were emitting nitrous oxides (NOx) up to 40 times the legal limit.

The events that led to the discovery of Volkswagen’s defeat device began when the Center for Alternative Fuels, Engines and Emissions at West Virginia University was attempting to understand the difference between vehicle emissions in real-world conditions and lab performance in both America and Europe. The real-world emissions of a Volkswagen Passat and Jetta were much higher than the lab tests at ARB’s Haagen-Smit Laboratory (HSL). The University turned its data over to ARB. This prompted ARB to open an investigation on the discrepancy. Subsequently, Volkswagen’s engineers admitted they were using defeat devices to ARB.

There were over 70,000 2.0L and almost 15,000 3.0L Volkswagen diesel vehicles registered in California that have emitted excess tons of harmful NOx emissions. NOx emissions create nitrogen dioxide, particulate matter, and ozone pollution. California has made large strides in cleaning up the air, but Volkswagen’s cheating was particularly harmful because in many parts of the state our air quality is still much worse than anywhere else in the nation: 23 million Californians live within the nation’s only severe non-attainment areas for ozone pollution, and 12 million Californians live in areas with nation-leading levels of fine particle pollution. These pollutants cause lung disease, heart disease, and premature death, especially among the most vulnerable populations.

Recently, ARB has discovered that other automakers may also be using defeat devices. It has become clear that some automakers are willing to develop new software designed to cheat California’s clean air laws. While ARB was instrumental in catching Volkswagen, the automaker’s vehicles were able to pollute California’s air for nine years before Volkswagen was brought to justice.

As result of the partial settlements with ARB and United State Environmental Protection Agency, Volkswagen will be paying billions of dollars in air quality mitigation, investments in the Zero-Emission Vehicle market, and penalties. These funds will be spent throughout the country, but the settlements have specific California requirements and amounts.

1. Auxiliary Emission Control Devices (AECD). According to ARB regulations, an AECD means “any device or element of design that senses temperature, vehicle speed, engine revolutions per minute, transmission gear, manifold vacuum, or any other parameter for the purpose of activating, modulating, delaying, or deactivating the operation of the emission control system.” AECD is usually not a physical device, but instead code in the vehicle’s software. This code modifies the vehicle’s emission control system’s performance. AECD can have legitimate uses to protect the emission control system during extreme cold weather or when there is a heavy load in the vehicle. However, manufacturers are required to disclose AECDs to ARB for their review and approval. An AECD is a defeat device when it reduces the effectiveness of the emission control system under conditions that a vehicle can be reasonably expected to encounter. Auto manufacturers may use defeat devices to avoid investing in more durable emission control systems.
2. AB 582. In California, the transportation sector accounts for approximately 80% of NOx emissions. In 2012, ARB adopted the Low Emission Vehicle III amendments, which included more stringent emission standards for both criteria pollutants, including NOx and greenhouse gases for new passenger vehicles. In complying with current and future emission standards, vehicles’ emission control systems will likely become more costly and there may be new types of defeat devices or other software used to mask noncompliance to reduce costs. AB 582 requires ARB to enhance its surveillance of emissions and provide it new fee authority to discover any new attempts to circumvent emission standards. This includes requiring ARB to increase the use of real-world emissions verification testing, which the Legislature declared its support for last year in ACR 112 (Hadley), Chapter 117, Statutes of 2016. ARB’s current fee authority only permits recovery of costs on tests that are conducted prior to retail sale. AB 582 provides ARB new tools to verify that vehicles are meeting emissions standards in real-world conditions regardless of whether the vehicle has been placed on the market.
3. New ARB emissions testing facility. In 1971, ARB opened HSL in El Monte, California. HSL is the center of California’s mobile source regulatory activities and extensive vehicle emission testing is conducted there. However, ARB has identified HSL facilities and infrastructure as insufficient to meet existing and future equipment, fuel, and emissions testing needs. ARB is currently in the process of relocating its existing southern California motor vehicle and engine emissions testing and research facilities to a new facility that will be built near the University of California, Riverside. This new facility will increase ARB’s capacity to conduct more complex vehicle emission testing to detect defeat devices. The new facility will also allow ARB to conduct more testing in house rather than contracting with outside parties. AB 582 requires ARB to continue to contract with outside parties when enhancing their surveillance of emissions. The author and committee may wish to amend the bill to authorize ARB to enter into agreements with outside entities rather than requiring them to contract with experts to conduct independent testing.
4. Prior legislation.

AB 1685 (Gomez), Chapter 604, Statutes of 2016, updates civil penalties for violations of ARB regulations, orders, or rules, to bring penalty assessments into alignment with those of the United States Environmental Protection Agency.

ACR 112 (Hadley), Chapter 117, Statutes of 2016, describes the events that led to the discovery of the Volkswagen defeat devices. Declares that the Legislature thanks ARB for its exemplary work uncovering the Volkswagen defeat devices. Declares that Legislature supports ARB increasing the use of real-world emissions verification testing.

1. Double Referral. This bill has been double referred to Assembly Transportation Committee.

REGISTERED SUPPORT / OPPOSITION:

Support

American Lung Association in California
California League of Conservation Voters

Coalition for Clean Air
Sierra Club California
Valley Clean Air Now

Opposition

None on file

Analysis Prepared by: Michael Jarred / NAT. RES. /