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In order to be offered for sale in California, vehicles, mobile engines, and emissions related components must be certified for compliance with state emission control standards (CA Health and Safety Code (HSC) §§ 43150, 43013(b)). After certification, in-use vehicles and engines show continued compliance with these standards through both reporting requirements and routine compliance testing. In 2018, CARB dedicated significant resources – roughly $40 million – to carry out these statutorily mandated certification, audit, and compliance activities. These costs are expected to reach $48.5 million by 2022.
The need for updated cost recovery
In 1988, recognizing the large contributions of vehicle emissions to smog-forming pollution and increased costs to ensure compliance with emissions regulations, the Legislature provided CARB with the authority to recover the costs of on-road certification (HSC § 43019) from vehicle manufacturers. These fees were capped at $4.5 million per year and could not increase by an amount greater than the California Consumer Price Index (CPI). With CPI adjustments, the cap for Calendar Year 2019 was $9.6 million.
Since that time, CARB’s on-road vehicle standards and requirements have greatly increased in scope and stringency to meet California’s air quality goals. As a result, more staff time is necessary to complete certification reviews, and greatly increased testing is required to ensure compliance with more sophisticated standards and test procedures. For example, since 2012, confirmatory testing has doubled, in-use testing has tripled, real-world emissions screening has increased five fold, and there has been an overall 75 percent increase in the number of emission-related recalls CARB now administers. Furthermore, the discovery of the use of emissions “defeat devices” in vehicles and engines has led to the need for added certification, audit, and compliance evaluations in the form of special test cycles and thorough engineering review of manufacturers’ control strategies.
Today, millions of Californians still breath unhealthful air as a result of vehicle pollution. CARB’s efforts to meet ambient air quality standards and climate change goals have continued to move forward, and actions to reduce emissions from mobile sources have evolved well beyond on-road vehicles. Starting in the 1990s, CARB expanded its programs to include off-road sources such as portable generators, lawn, garden, construction, and industrial equipment, off-road motorcycles, and all-terrain vehicles. Each of these programs require additional staff time and resources to review certification materials, and to carry out confirmatory and in-use testing – all activities that have not yet been subject to certification fees or cost recovery.
Simply put, CARB now faces dramatically increased expenses with limited options for cost recovery. This situation was not envisioned in the 1988 fee structure authorized by the Legislature. Accordingly, the Legislature recently enacted statutes [SB 854 (2018), AB 2381 (2018), and SB 85 (2019)] to provide for greater recovery of CARB’s reasonable certification, audit, and compliance costs – confirming its intent that the cost of these activities should be covered by the entities seeking certification.
CARB’s proposal
CARB is currently developing a rulemaking for Board consideration that will establish a schedule of fees to recover the reasonable costs of carrying out California’s mobile source certification, audit, and compliance program. Constitutional and statutory provisions prohibit CARB from using these fees to collect general revenue or assessing more in fees than the program costs. Initially, CARB staff is gathering information to develop fee structures for 25 different categories.