California Air Resources Board New Draft Enforcement Penalty Policy

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Today, CARB held another workshop to explain its new draft enforcement penalty policy and the factors it will use in assessing penalties in future enforcement cases. The factors are qualitative and narrative and subjective, which is bad for business that craves certainty and predictability but fun for the art of lawyering (our quills are aquiver).

An increasing problem for industry is that the reporting requirements under the climate change rules, such as diesel fleet, low carbon fuel and cap and trade, are becoming so voluminous and complex that it is easy to make honest errors in these reports. However, the new enforcement policy will not consider these reporting errors minor violations, even though they have no impact on the environment, and are voluntarily disclosed. Rather they will be considered “harms to the regulatory program.” Since these “harms” are self-reported by companies, the investigation costs are low to non-existent (like shooting fish in a barrel.)

Total penalties assessed by CARB in the past 3 calendar years (2014-2016) was $67,410,550. Who gets to keep that money? Yep, CARB. For use in carrying out its duties and functions.

We can expect these numbers to increase now that the maximum penalty has gone from $5,000 to $37,500 per violation (pursuant to AB 1685), and that each day from the date the company reported the error until the date CARB discovered the error is considered a “violation”.

Comments on the proposed draft enforcement penalty policy may be submitted until August 1, 2017 to The proposed policy is expected to be on the September Board hearing agenda for final approval.