By Bill Guerry, partner at Kelley Drye & Warren (counsel to OPEI and CERT)
Outdoor Power Equipment Institute (OPEI) members continue to invest millions of dollars toward building the cleanest engines and products that comply with stringent “Phase III” emission standards that apply to lawn, garden and forestry equipment. OPEI and its members support strong, transparent and consistent compliance and enforcement programs.
In the June 2010 edition of Outdoor Power Equipment magazine, James McNew, SVP of technical and market services at OPEI, wrote about OPEI’s success in creating a level playing field given the rise in grossly non-compliant products being imported from off-shore, new-market entrants. These cheaper, non-compliant products hurt both air quality and reputable manufacturers that produce (and the dealers and retailers that sell) emission-compliant products. OPEI has worked proactively with the U.S. Environmental Protection Agency (EPA) to help prioritize and strengthen EPA’s enforcement authority against high-risk, off-shore producers. As outlined in McNew’s column, this effort culminated in EPA’s new bonding requirements for importers and off-shore manufacturers with no U.S. assets and creating potential enforcement liability to include any entity that “causes” the importation.
In contrast to EPA’s recent tougher stance on “high-risk” imported product, the California Air Resources Board’s (CARB) enforcement actions against grossly non-compliant, unsafe products have appeared less aggressive. In fact, “deep pocket” domestic manufacturers have been hit with huge fines from CARB for what’s amounted to minor administrative errors. In response to this seemingly arbitrary and inconsistent levying of fines, OPEI became a founding partner and is one of 17 national and California-based associations belonging to Californians for Enforcement Reform and Transparency (CERT). CERT is committed to working cooperatively to help CARB more effectively and efficiently achieve our mutual environmental goals.
With the goal of making CARB enforcement transparent, consistent and fair, the incoming Senate Republican leader Bob Dutton championed this year’s Senate Bill 1402 (SB 1402) on behalf of CERT. This summer, SB 1402 passed unanimously without a single negative vote through both the California Senate and Assembly. On Sept. 28, Gov. Arnold Schwarzenegger signed SB 1402 into law. This is an extraordinary testament to the broad bipartisan support for these much-needed “good government” reforms.
SB 1402 will help CARB more effectively and transparently achieve its core mission — protecting air quality. Under SB 1402, OPEI members (and their downstream dealers and retailers) both inside and outside California will be ensured a transparent, consistent, and level playing field should mobile-source enforcement proceedings arise.
Closer look at SB 1402
Under the current situation, the public and the regulated community are left in the dark about how CARB calculates penalties. In most, if not all, proceedings, CARB fails to provide any meaningful information regarding the alleged violation. There is no per-unit penalty calculation; no statutory authority for the enforcement; or no explanation of the factors (aggravating or mitigating) considered in arriving at the penalty amount. Regulated entities currently have no metric by which to measure the reasonableness, consistency, or fairness of CARB’s actions.
In some cases, CARB has imposed massive penalties for alleged violations that have no air-quality impact (i.e. paperwork infractions). In others instances, CARB has either failed to prosecute or levied disproportionately small penalties for unsafe, grossly non-compliant off-shore products which harm California’s air quality. And in almost every case, CARB — without providing any written framework for the alleged violation — threatens immediate referral to the Attorney General for non-cooperating parties.
CARB’s non-transparent enforcement process has forced protracted enforcement disputes and litigation at the expense of what should often be expeditious settlements. Ironically, these protracted disputes, fed by a lack of transparency on CARB’s end, drain the agency’s already-limited resources — resources which are then directed away from pursuing the grossest violations at the expense of California’s air quality. At a time when California’s economy is teetering on the brink, this is the wrong approach.
What does SB 1402 require of CARB?
For manufacturers and distributors of mobile-source products in the California market, SB 1402 will ultimately ensure fairness and provide much-needed clarity and certainty for regulated entities. Specifically, SB 1402 requires CARB to do the following:
Provide clearly written explanation of how the agency determines penalty amounts (including aggravating or mitigating factors considered) and where applicable, the per-unit basis for the penalty;
Provide clearly written communication regarding the provision of law or regulation which CARB alleges has been violated;
Provide clearly written communication regarding the quantification of emission exceedences (where applicable);
Develop a written, consistent penalty policy (by March 1, 2011) to be applied in every mobile-source enforcement action that considers universal penalty criteria, including the magnitude of the impact on air quality (if any), the compliance history of the defendant, preventative and mitigation efforts taken, financial burden on defendant, and defendant’s cooperation; and
Provide an annual report to the Legislature and Governor, summarizing the mobile-source penalties assessed over a calendar year.
How will SB 1402 affect the OPE industry?
Any OPE manufacturer or dealer that introduces or sells mobile-source products in California will ultimately benefit from SB 1402.
Companies will be able to verify CARB’s assessment against other similar violations to ensure fairness and consistency. And the public, Legislature and Governor will occupy an oversight role, ensuring not only that CARB is acting fairly and consistently, but that it is also prioritizing its enforcement resources on the most egregious air-quality violations. The playing field will be leveled, which will benefit everyone — CARB, the public, manufacturers, distributors, retailers and dealers.
Bill Guerry is a partner in the environmental section at Kelley Drye & Warren, which serves as outside counsel to OPEI. For the past 20 years, Guerry has represented both OPEI and OPEI members on emissions certification, compliance and enforcement actions before both U.S. EPA and the California Air Resources Board (CARB). According to Kris Kiser, OPEI’s executive vice president, “Based on his comprehensive experience of handling enforcement cases, Bill developed the policy and legal framework supporting the enforcement reforms contained in SB 1402. OPEI and its members are grateful for all that Bill has accomplished for our industry — and the other 16 associations that belong to Californians for Enforcement Reform and Transparency (CERT).” OPEI is an international trade association representing the $15-billion landscape, forestry, utility and lawn and garden equipment manufacturing industry. For more information, log on to www.opei.org or www.turfmutt.com. For more information on the CERT coalition, visit www.certreform.org. For additional information on Kelley Drye & Warren, go to www.kelleydrye.com.