On December 2, 2020, the California Air Resources Board (CARB) issued a notice advising of the 15-day public comment period for the revised “Procedures for the Exemption of Add-On and Modified Part(s) for On Road Vehicles/Engines” (Exemption Procedures). The Exemption Procedures clarify the process by which manufacturers may seek Executive Orders (EO) for aftermarket parts that have the potential to impact emissions. California law prohibits the sale, offer for sale, or installation of aftermarket parts, unless such parts are “replacement parts” or have been exempted by CARB through issuance of an EO.

CARB’s Exemption Procedures, which date back to 1977 and were last amended in 1990, were overdue for an update, particularly given the many advances in technology over the past 30 years. In June 2020, CARB announced its proposed amendments with the intent to “clarify, streamline, and update” the exemption process, resulting in “faster turnaround on staff review and approval” and “providing a pathway for manufacturers to bring products to market faster.” The key changes to the Exemption Procedures, which were approved for adoption following a public hearing in July, include:

• Creation of categories for various types of parts to streamline the CARB review process, including Category I for administrative changes (e.g., extension of an existing EO to subsidiaries or other manufacturers).
• Specific application content and testing requirements.
• Smaller grouping of vehicles per application, which makes it easier for CARB staff to assess potential emission impacts but may also result in more applications from manufacturers.
• New requirement that manufacturers submit a plan for collecting VINs from purchasers’ vehicles for “any device that modifies a stock engine, body, or transmission control module’s calibration software, excluding speedometer or wheel speed adjusters.”
• New Letter of Intent process under which manufacturers submit information by January 30 each year on proposed submissions that they plan to make during the subsequent 12 months.
• New statement of CARB’s audit testing process and procedures, under which CARB may select up to 5 new aftermarket parts/kits per manufacturer per year for audit testing.

Overall, these changes appear to be beneficial for both manufacturers and CARB staff, clarifying and improving the existing exemption process. The VIN collection requirement, however, is likely to pose significant challenges for manufacturers of tuning and other devices falling into CARB’s definition, requiring review and revamping of current business practices. CARB intends to share the VIN data with the Bureau of Automotive Repair so that Smog Check inspectors are better able to identify tampered vehicles without also failing approved modified vehicles that are covered by an EO. In addition, CARB’s explicit statement of its audit authority and process demonstrates that CARB will continue to prioritize aftermarket parts for scrutiny and enforcement.

The version of the Exemption Procedures now available for comment reflects modifications made to the language post-hearing. The proposed modifications include:

1. Removing the requirement for a manufacturer to demonstrate that the onboard diagnostic (OBD) system will detect emission system malfunctions before exceeding applicable emission thresholds with the aftermarket device installed.
2. Confirming that new exemption applications submitted concurrently can be combined into one EO.
3. Allowing manufacturers to add reference, device, or kit part numbers to product labels.

The 15-day comment period for the revised Exemption Procedures ends on December 17, 2020. Only comments responsive to the proposed modifications will be addressed.

CARB’s proposed revisions to the Exemption Procedures should be read in context with the recent updates by EPA to the mobile source Tampering Policy, as more fully described in our alert. We welcome the opportunity to work with you to navigate how the potential changes to the Exemption Procedures as well as the Tampering Policy could impact your business.

This alert was authored by Jennifer Adams, Joanne Rotondi, Hannah Roskey, and Katie Lannon.