California has often granted regulatory exemptions to certain industries—through closed-door negotiations in the Legislature or through agency rulemaking. Yet as the state races toward aggressive climate goals and pulls back on incentive grants supporting the energy transition, lawmakers are looking for other ways to ease some of the costs put on industries and Californians.
Carving out exemptions from ambitious climate and labor bills is not new to the Legislature. The issue grew heated in 2019 with Assembly Bill 5, which reclassified independent contractors as regular employees after Gov. Gavin Newsom signed it into law.
The bill’s author, then-Assemblymember Lorena Gonzalez of San Diego, individually negotiated exemptions for specific industries, such as licensed beauty care workers, emergency room doctors and musicians. While the measure initially targeted gig workers at Uber and Lyft, Gonzalez maintained that the trucking industry should be subject to the rules as well. The industry’s associations have unsuccessfully fought for an exemption in court. Farm groups had also pushed for exemptions, owing to the seasonal nature of farming and long hours for harvest.
These groups are still trying to navigate the exemption process for the Advanced Clean Fleets (ACF) regulation, which bans the sale of diesel-powered trucks starting with the 2036 model year, with certain provisions taking effect this year for public fleets.
A Republican lawmaker hopes to bring more transparency to that process at the Air Resources Board (CARB). Through Senate Bill 1393, Senator Roger Niello of Fair Oaks wants to create an advisory committee made up of state officials, industry experts, fleet operators and local governments to help CARB navigate the exemption and extension process for the ACF rules.
The proposal rides a wave of conservative outcry over exemptions following “Paneragate,” a controversy centering on allegations that Newsom pushed for a special exemption for a campaign donor from a wage boost for fast-food workers. While the governor’s office denied any connection to Panera Bread, Republican lawmakers have called for the attorney general to investigate the matter.
Sen. Roger Niello, R-Fair OaksFrustrations over regulatory costs for the state’s ambitious labor and climate laws have spread across the aisle lately as well. With electricity rates skyrocketing this year for many utility customers, a group of Democrats has advanced a proposal to block the California Public Utilities Commission from enacting a fixed fee on bills that would finance climate upgrades to the system.
And more regulatory exemptions may be on the horizon. Last year Newsom signed SB 253 into law, requiring large corporations to report Scope 3 supply chain emissions. Yet he had concerns over the feasibility and economic implications and directed agencies to work with lawmakers on cleanup legislation. While the administration has not revealed any details on a potential compromise to that legislation, farm groups have pushed for agricultural exemptions from the Scope 3 reporting.
Although he does not propose any specific CARB exemptions, Niello hopes to make such discussions more transparent to the public and to enable more groups to weigh in on the conversation.
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“CARB has created some pathways for narrow [ACF] exemptions and extensions in certain circumstances,” Niello told the Senate Environmental Quality Committee last week at a hearing on SB 1393. “It is a best practice to establish some kind of an appeals process when a regulation grants exemptions and extensions.”
He stressed that the measure would not diminish CARB’s authority and that the committee would only advise the agency in regard to the exemption requests that it rejects, as a way to improve the appeals process. He noted that several other agencies have such committees.
“This process can be particularly helpful and impactful in giving clearer and more feasible pathways to compliance,” he said, adding that companies are pleading for regulatory certainty with this evolving technology.
Testifying in support of the bill, Michael Taylor a policy advocate at NAFA Fleet Management Association, said the committee would ensure that fleet managers and other stakeholders have access to current compliance information for ACF.
“[Fleet managers] simply seek a clearer and more feasible pathway to compliance, so they may fully support a zero-emission future for California,” said Taylor.
Republican Sen. Brian Dahle, who runs a trucking business in Lassen County, asserted that the exemption process “doesn’t work very well.” He shared that some of his Lake Tahoe constituents have been pushing for an exemption because the electric vehicles currently available do not work well in cold climates, particularly for snow removal.
“There needs to be an opportunity somewhere to have just common-sense exemptions for those specialty vehicles that the technology hasn't quite caught up with,” said Dahle. “Getting the perfect in the way of the good is a problem for a lot of these areas throughout the Sierras.”
The California Farm Bureau, Western Agricultural Processors Association and Western Growers Association also registered their support for the measure.
Environmental groups, however, countered that ACF already grants a wide range of exemptions and that an advisory committee would only delay compliance and undercut the program.
Committee Chair Ben Allen of Santa Monica agreed, saying the bill would tie CARB’s hands and create more challenges, though he would be willing to explore the issue with CARB and fleet operators outside of the Capitol.
“We're not trying to throw bombs, we're actually trying to improve ACF,” replied Taylor.
Dahle pointed to California’s high regulatory costs and argued that rural counties are being “forced to have to buy these trucks that don't work.”
“We need some common sense here,” he said. “For crying out loud, drive the cost down.”
While the measure failed to pass, the committee granted Niello’s request for an appeal.
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