Article
1. General Provisions and Definitions
39680.
(a) The Legislature finds and declares all of the following: (1) (A) California has established itself as a leader in national and international energy conservation and environmental stewardship.
(B) The California Global Warming Solutions Act of 2006 (Division 25.5 (commencing with Section 38500)) charges the state board as the lead agency to monitor and regulate sources of emissions of greenhouse gases. That act has set a goal of reducing greenhouse gas emissions to 40 percent below the 1990 level by 2030. That act also authorizes the state board to develop market-based
mechanisms, including the cap-and-trade system, which generates revenue for the Greenhouse Gas Reduction Fund, and other transactional mechanisms.
(C) The state board, when expending moneys from the Greenhouse Gas Reduction Fund, is required to maximize economic and environmental cobenefits, including job-related cobenefits, as California builds a low-carbon economy.
(D) However, the charge to seek job-related benefits is not required within any timeframe, nor is there any legislative guidance with respect to specific standards or implementation mechanisms.
(E) While the charge to develop job-related cobenefits is explicit for the Greenhouse Gas Reduction Fund, it is implied rather than explicit for other clean air funds that
the state board administers.
(2) To clarify the need for job-related cobenefits, Chapter 135 of the Statutes of 2017 required the California Workforce Development Board, in consultation with the state board, to submit a report to the Legislature. The California Workforce Development Board commissioned the Center for Labor Research and Education at the University of California, Berkeley, to prepare the report. Published in June 2020, the report is entitled, Putting California on the High Road: A Jobs and Climate Action Plan for 2030 (2020 Action Plan).
(3) A study by the University of California shows that fleet purchasers have a significant disparity of compliance with clean vehicle regulations. While 83 percent of large firms that employ drivers comply, only 61 percent of
contractors comply. Noncompliant trucks operated by contractors represent 44 percent of all noncompliant trucks, a significantly greater share than their share of all operating trucks. The study finds that many of the noncompliant contractors are actually misclassified employees who do not have the financial resources to comply with clean-vehicle regulations. Many companies take advantage of the fleet purchaser incentives but then pass on the cost of vehicles, maintenance, and upkeep to misclassified drivers who do not have the funds or ability to maintain those vehicles at a level that maximizes their environmental benefits. For example, in drayage, an investigation by USA Today found that “port trucking companies in Southern California have spent the past decade forcing drivers to finance their own trucks by taking on debt they could not afford.” Drivers at dozens of companies “were handed a
lease-to-own contract by their employer and given a choice: Sign immediately or be fired.” Such sublease arrangements directly impede the state’s ability to advance its environmental stewardship. Many contractors have later filed for bankruptcy, nullifying the benefit from the state’s climate investments.
(4) The 2020 Action Plan creates a “high road framework” based on demand-side strategies and supply-side strategies. The Action Plan does all of the following:
(A) Stresses that “[d]emand-side strategies affect the demand for labor, including the kinds of jobs that are generated, the skills that are needed, the wages and benefits employers provide, and who employers hire.”
(B) Emphasizes the importance of market participation
through incentive programs: “[a]gencies responsible for implementing climate investments and other measures play a key role here because they direct public investment and influence private investments in lower carbon economic activity.”
(C) Proposes workforce standards that in general terms do all of the following:
(i) Create high-quality jobs.
(ii) Prepare workers with the skills needed to adapt to and master new zero- and low-emission technologies.
(iii) Broaden career opportunities for workers from disadvantaged communities.
(iv) Support workers whose jobs may be at risk.
(D) Identifies industry sectors that pose challenges to attaining clean air objectives and opportunities to incentivize development of high-road jobs and working conditions. Among these are vehicle manufacturing and trucking, both of which the plan faults as high-risk subsectors for labor abuses, such as misclassification, unpaid wages, and denial of unemployment benefits, workers’ compensation, or disability benefits.
(b) In enacting this chapter, it is the intent of the Legislature to do all of the following:
(1) Implement the 2020 Action Plan’s high-road recommendations that would apply to crucial windows for high-road job development and working conditions. For vehicle manufacturing, the window is the span of
several years immediately before receiving the incentive when the vehicle is designed and manufactured. For the trucking industry, the window is a longer span of years immediately after a fleet purchaser receives the incentive when the vehicle is placed in service.
(2) Use market participation to increase demand for clean air vehicles through incentive programs to attain equity goals for jobs in disadvantaged communities and reward companies that respect worker rights. In so doing, the Legislature will require the state board to develop labor and workforce standards to determine eligibility for programs that provide clean air incentives for manufacturers of new vehicles and fleet purchasers of new vehicles that operate drayage and short-haul trucking in California.
(3) Maximize the environmental benefits of its investments by ensuring that recipients of fleet purchaser subsidies operate the equipment in compliance with all state laws rather than taking advantage of state incentives and then selling or otherwise transferring the equipment in question.
(4) Clarify that the state board’s authority to maximize job-related cobenefits applies to all of the incentive funds and programs that it administers.
(5) Collaborate with the Labor and Workforce Development Agency, including the California Workforce Development Board and the Labor Commissioner, to develop guidelines and implement contract remedies for labor and workforce standards that include repayment of incentive funds and public disclosure of labor and workforce data.
(6) Expand upon the state board’s current approach of using multiyear incentive contracts to clearly set the conditions for attaining the state’s clean air objectives with workforce cobenefits. Relevant conditions already in place for heavy-duty trucks include compliance with state law and contract terms for multiyear ownership and control of the equipment.
39681.
This chapter establishes labor and workforce standards as a cobenefit of incentive programs for the purchase of new vehicles that are based on clean air standards. To be eligible for an incentive program, a participant shall first meet the clean air standard, and then they may qualify for the incentive by meeting the labor and workforce standards under this chapter.39682.
For purposes of this chapter, the following definitions apply:(a) “Administering agency” means an agency administering an incentive program subject to this chapter.
(b) “Applicable law violation” means a violation that has a final determination, order, judgment, or award issued against a fleet purchaser of vehicles for engaging in illegal conduct related to the misclassification of employees as independent contractors, including the failure to pay wages, imposing unlawful expenses on employees, failure to remit payroll taxes, and failure to provide workers’ compensation insurance, and that remains unabated or
unsatisfied following the period during which an appeal may be made.
(a)
(c) “Clean air standards” include the standards that the state board sets to reduce air pollution or reduce emissions of greenhouse gases pursuant to this division or Division 25.5 (commencing with Section 38500).
(b)
(d) “Final assembly point” means the plant, factory, or other place, which is a building or series of buildings in close proximity, where a new light-duty vehicle, including a passenger vehicle, or a medium- or heavy-duty motor vehicle is produced or assembled in the United States from motor vehicle equipment and from which the vehicle is delivered to a dealer in a condition that all component parts necessary to the mechanical operation of the vehicle are included with the vehicle whether or not the component parts are permanently installed in or on the vehicle. For a multistage vehicle, the final assembly point is the location where the first-stage vehicle is assembled.
(e) “Fleet operations” includes, but is not limited to, port drayage service and short-haul transport of
goods. The state board may adopt guidance to interpret the scope of these operations to conform with law.
(c)
(f) “Incentive” includes a grant, loan, voucher, or other incentive, regardless of the source of revenue that funds the incentive, for the purchase of
new motor vehicles.
(d)
(g) “Short-haul trucking service” means movement of goods by truck within a 150-air-mile radius of the normal working reporting location while in service within the state.
39683.
(a) The state board, in consultation with the Labor and Workforce Development Agency, including the California Workforce Development Board and the Labor Commissioner, shall condition eligibility to participate in incentive programs for new vehicle purchasing on compliance with the labor and workforce standards described in this chapter.(b) (1) The state board, in collaboration with the Labor and Workforce Development Agency, including the California Workforce Development Board and the Labor Commissioner, shall develop operational guidelines for applying the standards in this chapter to incentive programs subject to this chapter. In these guidelines,
the state board may interpret the scope of applicability, terms of labor and workforce standards, and implementation, consistent with this chapter.
(2) The state board may solicit recommendations regarding implementation and delegate any duties in this chapter to the Labor and Workforce Development Agency.
39683.5.
(a) The state board shall provide an opportunity for public input before finalizing the operational guidelines developed pursuant to this chapter.(b) Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code does not apply to the adoption of the operational guidelines.
(c) (1) The state board shall adopt the operational guidelines on or before January 1, 2023, after consultation pursuant to subdivision (b) of Section 39683 and after receiving public input pursuant to subdivision (a).
(2) The operational guidelines shall become effective on January 1, 2025, and shall condition the eligibility of new light-, medium-, and heavy-duty vehicles for incentives that meet both of the following: as follows:
(A)Consistency with the Federal Transit Administration’s guidance for domestic content standards for federal procurement of those types of vehicles.
(B)Require 100 percent of the vehicle be assembled at a final assembly point in the United States.
(A) Operational guidelines that implement Article 2 (commencing with Section 39690) shall become effective as follows:
(i) For light-duty vehicles, the operational guidelines shall be effective upon adoption of those guidelines.
(ii) For medium- and heavy-duty vehicles, the operational guidelines shall be effective on January 1, 2025.
(B) Operational guidelines that implement Article 3 (commencing with Section 39695) shall become
effective upon adoption of those guidelines.
(d) (1) As part of its operational guidelines development process, if the state board determines there are constraints to applying the requirements of Article 2 (commencing with Section 39690) and Article 3 (commencing with Section 39695) to each incentive program that is subject to this chapter, the state board may delay or suspend the implementation of the requirements of this chapter that are not feasible and shall reevaluate the feasibility of implementing those requirements in future operational guidelines.
(2) In determining whether there are any constraints to implementation, the state board may consider consistency with the statutory goals of the incentive program to reduce air
pollution or emissions of greenhouse gases and state board’s capacity to enforce the applicable labor and workforce standards.
(3) If the state board determines that there are constraints preventing the application of the requirements of Article 2 (commencing with Section 39690) and Article 3 (commencing with Section 39695) to an incentive program, the state board shall notify the Legislature, on or before January 1, 2023, with a written report, submitted in accordance with Section 9795 of the Government Code, of findings and constraints, and possible remedies that would eliminate the constraints in question.
39684.
This chapter applies to all incentive programs for the purchase of new vehicles that receive funding from, or are administered by, the state board, including, but not limited to, all of the following:(a) An incentive program funded by a fund, including, but not limited to, all of the following funds:
(1) The Greenhouse Gas Reduction Fund.
(2) The Air Quality Improvement Fund.
(3) The Carl Moyer Memorial Air Standards Attainment Trust Fund.
(4) The Air Pollution Control Fund.
(b) An incentive program funded wholly or partially by the state board, including, but not limited to, all of the following:
(1) The Truck Loan Assistance Program under subdivision (c) of Section 44274.
(2) A local or regional incentive program.
(3) A public-private partnership.
(c) An incentive program funded by a settlement fund under the state board’s jurisdiction, including, but not limited to, both of the following:
(1) The Appendix
D of the partial consent decree in United States of America v. Volkswagen AG et al., under Section 39614.
(2) The consent decree in United States of America v. Daimler AG and Mercedes-Benz USA, LLC., Case No. 1:20-cv-2564 (N.D. Cal.) and the partial consent decree in People of the State of California v. Daimler AG and Mercedes-Benz USA,
LLC., Case No. 1:20-cv-2565 (N.D. Cal.).
39685.
This chapter establishes baseline standards, job quality standards, and a structure for full or partial eligibility to participate in incentive programs for the purchase of new vehicles. This chapter applies the standards to the following program participants:(a) Manufacturers of new on-road vehicles.
(b) Fleet purchasers of new vehicles for drayage and short-haul trucking services within the state. The standards do not apply to other fleet purchases for operations outside of this scope.
39686.
The state board or an agency administering an incentive program subject to this chapter, administering agency, in collaboration with the Labor Commissioner, shall enforce the standards set forth in Article 2 (commencing with Section 39690) and Article 3 (commencing with Section 39695).39687.
(a) The Labor Commissioner, at the request of the agency administering an incentive program administering agency or the state board, may investigate an allegation regarding a violation of the standards set forth in Article 2 (commencing with Section 39690) or Article 3 (commencing with Section 39695).(b) Unless contrary to Section 19542 of the Revenue and Taxation Code, and notwithstanding any other law or effort to maintain their secrecy, the data and certifications disclosed by a manufacturer
pursuant to Article 2 (commencing with Section 39690) or a fleet purchaser pursuant to Article 3 (commencing with Section 39695) are public records that may be disclosed to the public and are not trade secrets.
(c) The state board shall develop an internet website that displays public information from manufacturers or fleet purchasers participating in incentive programs that are subject to this chapter regarding their disclosures and certifications of compliance with the labor and workforce standards.
39687.5.
(a) (1) In addition to requiring accurate certification of compliance and disclosure of data, the state board or the agency administering an incentive program shall require that manufacturers of a new vehicle eligible for an incentive sign a contract conditioning the eligibility on compliance with this chapter. (2) In addition to requiring accurate certification of compliance and disclosure of data, the state board or the agency administering an incentive program administering agency
shall require that fleet purchasers receiving an incentive sign contracts conditioning any incentive received on compliance with this chapter.
(b) The contract entered into pursuant to subdivision (a) shall state a timeframe for compliance with standards under this chapter, as follows:
(1) For manufacturers, the timeframe includes the application process and the three-year six-month period before a vehicle is eligible to receive the incentive.
(2) For fleet purchasers, the timeframe includes the application process and a multiyear
period after receiving the incentive of at least three years.
years or the duration of the loan, grant, or incentive received, whichever is longer.
39688.
A manufacturer of a new vehicle that is eligible to participate in, or a fleet purchaser receiving an incentive from, an incentive program subject to this chapter shall comply with the labor and workforce standards set forth in Article 2 (commencing with Section 39690) or Article 3 (commencing with Section 39695), as
applicable.39688.5.
(a) (1) If an agency administering an incentive program, administering agency, the state board, or the Labor Commissioner finds that a manufacturer of new vehicles that is eligible for an incentive is in violation of the standards set forth in Article 2 (commencing with Section 39690), the vehicles of that manufacturer shall not be eligible for an incentive under the incentive program and the manufacturer shall be liable for the repayment
of an amount that is equal to the total aggregate amount of the incentives provided for the purchase of each vehicle of that manufacturer during the time period that the manufacturer was out of compliance with this chapter. vehicles that were awarded rebates during the six-month period before the finding of noncompliance.(2) An administering agency, the state board, or the Labor Commissioner may determine noncompliance of a manufacturer for a given model year of an eligible vehicle under an incentive program within six months of publishing a manufacturer’s certification and disclosure of data under Section 39687.
(b) If, at any point during the term of the contract entered into pursuant to Section 39687.5, an agency administering an incentive program, administering agency, the state board, or the Labor Commissioner finds that a fleet purchaser receiving that received an incentive is
was in violation of the standards set forth in Article 3 (commencing with Section 39695),
39695) during any portion of the term of the contract entered into pursuant to Section 39687.5, or that the fleet purchaser failed to make correct and accurate disclosures required under Section 39698, 39697, the fleet purchaser is in breach of the contract and shall be liable for the repayment of the incentive amount that is equal to the total aggregate amount of incentives received by the fleet purchaser, during the period that the fleet purchaser was out of compliance, up to three years after the purchases to which the contract applies.
any incentive for which the contract entered into under Section 39687.5 was still in effect during the time period that the fleet purchaser was out of compliance. The time period shall include the claim period of any judgment issued against the fleet purchaser for an applicable law violation, along with any other period identified by the administering agency, the state board, or the Labor Commissioner.
(c) The contract remedies specified in this section shall also bind the manufacturer’s or the fleet purchaser’s successors or assignees. The Labor Commissioner, the state board, or the agency administering the incentive program may require that a successor or assignee repay any incentives received by manufacturers or fleet purchasers.
39688.6.
(a) The state board, in collaboration with the Labor and Workforce Development Agency, shall implement a process for the appeal of violations of this chapter.(b) The state board, in collaboration with the Labor and Workforce Development Agency, shall implement a process for purposes of reinstating eligibility for vehicle manufacturers or fleet purchasers for participation in an incentive program.
39689.
The provisions of this chapter are severable. If any provision of this chapter or its application is held invalid, that invalidity shall not affect other provisions or applications that can be given effect without the invalid provision or application.
Article
2. Vehicle Manufacturing Labor and Workforce Standards
39690.
(a) This article establishes labor and workforce standards for manufacturers to meet to qualify their new vehicles, excluding public transit buses, for incentive programs subject to this chapter.(b) A new vehicle is eligible for an incentive if the manufacturer demonstrates to the agency administering the incentive program and the state board that it is in compliance with the labor and workforce standards set forth in Sections 39691 and 39692 for the prior three-year period.
39691.
For a new vehicle to be eligible for an incentive amount, a manufacturer shall meet do all of the following requirements: following:(a)(1)Comply with the labor laws of the state where the new vehicle
is manufactured.
(2)A manufacturer shall have a three-year history of compliance with state labor laws, including classification of employees, wages and hours, and occupational safety and health. A manufacturer is in compliance if, at the time of applying for an incentive, it does not have any state labor law violations that are (A) repeated, willful, or serious as confirmed in a final determination, assessment, finding, order, judgment, or award; and (B) remain unabated or
unsatisfied following the period for which any appeal may be made. Serious wage-and-hour violations include those that affect more than 100 workers or involve more than ten thousand dollars ($10,000) in wages. Serious safety and health violations include those that risk death or serious physical harm, as described in Section 666 of Title 29 of the United States Code.
(3)A manufacturer shall certify to the agency administering the incentive program compliance for the past three years with state labor laws that apply to the point of manufacturing of vehicles that qualify for an incentive.
(b)
(a) (1) Respect internationally recognized labor rights.
(2) A manufacturer shall comply Comply with internationally recognized labor rights in its supply chain of imported components. These rights include, but are not limited to, the prohibitions on forced labor, child labor, and discrimination with respect to work, and the freedom of association and right to organize.
(3) A manufacturer shall certify Certify to the
administering agency administering the incentive program and the state board compliance with internationally recognized labor rights. The state board may provide standards for this certification based on the California Sweatfree Policy, Section 6108 of the Public Contract Code, the core conventions of the International Labour Organization, Social Accountability 8000 standards, or comparable certification standards.
(c)Assemble
(b) Beginning January 1, 2025, assemble 100 percent of the
each eligible vehicle, at the final assembly point, in the United States.
(d)
(c) Disclose data that supports the certification of compliance with this section and Section 39692. eligibility pursuant to this article and Article 1 (commencing with Section 39680) on an annual basis.
39692.
For a new vehicle to be eligible for an incentive amount, a manufacturer shall do all of the following:(a) Demonstrate to the agency administering the incentive program administering agency and the state board its commitment to hiring disadvantaged workers by doing both of the following:
(1) Demonstrate that it has commitments through a community partnership to recruit, hire, and train all of the following:
(A) Individuals with employment barriers that limit their ability to gain employment, including, but not limited to, unemployment, lack of work experience, lack of English language skills, technical skills or educational attainment, criminal justice history, disability status, foster care history, vulnerability to discrimination, or other barriers. The state board may further define the scope of employment barriers with reference to eligibility factors for unemployment insurance in California or other states.
(B) Workers who have been displaced, on and after January 1, 2020, from the fossil fuel industry for nondisciplinary reasons after more than six months of service.
(2) Disclose to the agency administering the incentive program
administering agency and the state board both of the following:
(A) A community benefit or workforce agreement that commits to hiring and training workers, to the extent it is available.
(B) Data showing that the manufacturer has hired disadvantaged workers, including those recruited through a community partnership.
(b) Demonstrate to the agency administering the incentive program administering agency and the state board participation in job training programs by doing both of the following:
(1) Produce new vehicles using apprentices who are certified by a state or federal program, in conjunction with a contractually mandated training program or a plan provided to the state to train production workers, in the skills and technical knowledge needed to manufacture the vehicle and related technologies.
(2) Certify or disclose data to the agency
administering the incentive program administering agency and the state board that demonstrates its use of certified apprentices, contractually mandated training, or a plan to train production workers.
(c) (1) Demonstrate to the agency administering the incentive program administering agency and the state board that it pays workers in a facility where the new vehicle is assembled the following:
(A) For all workers, at least 120 percent of the California minimum wage.
(B) For production workers, the prevailing wage for specific occupational titles. The state board may provide guidance on the prevailing wage based on data for average wages reported for production employees in the motor vehicle industry by the United States Bureau of Labor Statistics Occupational Employment Statistics.
(2) The manufacturer shall disclose to the agency administering the incentive program administering agency and the state board the wage average and range that it pays for specific occupational titles in facilities that assemble vehicles or vehicle technologies.
(d) (1) Preserve employee access to dispute settlement options available under the laws of the state where the vehicle or vehicle technology is assembled.
(2) The manufacturer shall disclose to the agency administering the incentive program administering agency and the state board the incentive program policies or contract terms that preserve dispute options, including access to public agencies and courts, and availability of judicial remedies.
(e) Demonstrate to the agency administering the incentive program
administering agency and the state board its commitment to using full-time employees by disclosing both of the following:
(1) A community benefit or workforce agreement that sets full-time employment as a goal.
(2) The number and percentage of its employees who are full time and part time, permanent and temporary, and direct hire and contractor employees.
39693.
(a) Except as provided in subdivision (b), a (1) A new light-duty vehicle shall be eligible for an 100 percent of the amount of incentive provided by an incentive program subject to this chapter as follows:
if the manufacturer demonstrates compliance with Section 39691.(1)If the manufacturer demonstrates compliance with Sections 39691 and 39692, the vehicle is eligible for 40 percent of the amount of the incentive provided.
(2)In addition to paragraph (1), if the manufacturer demonstrates that the domestic content of the vehicle, by January 1, 2025, complies with the Federal Transit Administration’s domestic content standards for federal procurement of light-duty vehicles, the vehicle is eligible for 100 percent of the amount of the incentive provided.
(2) A new light-duty vehicle is eligible for additional incentives as follows:
(A) An additional 40 percent if the manufacturer demonstrates compliance with Section 39692.
(B) An additional 20 percent if the manufacturer demonstrates that the components of the eligible vehicle have been manufactured in the United States. The state board may provide guidance on this requirement based on the practices for federal procurement of light-duty vehicles, including practices that implement the federal Buy American Act (41 U.S.C. Sec. 8301 et seq.).
(C) An additional 10 percent if the eligible vehicle meets either of the following:
(i) One hundred percent of the eligible vehicle is assembled entirely at a final assembly point in California.
(ii) One hundred percent of the battery component of an eligible vehicle is produced in California.
(b) (1)Notwithstanding subdivision (a), if If
the state board determines that there are constraints to the implementation of the domestic content a requirement specified in paragraph (2) of subdivision (a) and delays or suspends the implementation of that requirement pursuant to subdivision (d) of Section 39683.5, a vehicle shall be eligible for 100 percent of the amount of the incentive provided if paragraph (1) of subdivision (a) is satisfied.
a delay or suspension of that requirement does not affect the eligibility of a vehicle based on other requirements specified in subdivision (a).
(2)If the state board determines that there are constraints to the implementation of a requirement of Section 39691 or 39692 and delays or suspends the implementation of that requirement pursuant to subdivision (d) of Section 39683.5, noncompliance with that requirement shall not affect the eligibility of the vehicle for an incentive pursuant to this section.
39694.
(a) Except as provided in subdivision (b), a (1) A new medium- or heavy-duty vehicle shall be eligible for 100 percent of the amount of an incentive if the manufacturer complies with Sections 39691 and 39692, and if the vehicle, by January 1, 2025, complies with the Federal Transit Administration’s domestic content standards for federal procurement, the vehicle shall be eligible to receive 100 percent of the incentive provided.
Section 39691.(2) A new medium- or heavy-duty vehicle is eligible for additional incentives as follows:
(A) An additional 10 percent if the manufacturer demonstrates compliance with Section 39692.
(B) An additional 5 percent if the manufacturer demonstrates that the components of the vehicle have been manufactured in the United States. The state board may provide guidance on this requirement based on the practices for federal procurement of light-duty vehicles, including
practices that implement the federal Buy American Act (41 U.S.C. Sec. 8301 et seq.).
(C) An additional 5 percent if the eligible vehicle meets either of the following:
(i) One hundred percent of the eligible vehicle is assembled entirely at a final assembly point in California.
(ii) One hundred percent of the battery component of an eligible vehicle is produced in California.
(b) If the state board
determines that there are constraints to the implementation of a requirement of Section 39691 or 39692, or the domestic content standards described in subdivision (a),
subdivision (a) and delays or suspends the implementation of that requirement pursuant to subdivision (d) of Section 39683.5, noncompliance with that requirement shall not
affect the eligibility of the vehicle for an incentive pursuant to this section. the delay or suspension does not affect the eligibility of a vehicle based on other requirements specified in subdivision (a).