Section 95133 - Conflict of Interest Requirements for Verification Bodies(a) The conflict of interest provisions of this section shall apply to verification bodies, lead verifiers, and verifiers accredited by ARB to perform verification services for reporting entities. Any individual person or company that is hired by a reporting entity to contract with a verification body on behalf of the reporting entity is subject to the conflict of interest assessment in this article. In such instances, the verification body must assess the potential conflict of interest between itself and the contracting entity as well as between itself and the reporting entity, and must also address the potential conflict of interest between the contracting entity and the reporting entity, including a written assessment provided and signed by the contracting entity.(b) The potential for a conflict of interest must be deemed to be high where:(1) The verification body and reporting entity share any management staff or board of directors membership, or any of the senior management staff of the reporting entity have been employed by the verification body, or vice versa, within the previous five years; or(2) Any employee of the verification body, or any employee of a related entity, or a subcontractor who is a member of the verification team has provided to the reporting entity any of the following services within the previous five years: (A) Designing, developing, implementing, reviewing, or maintaining an inventory or information or data management system for facility air emissions, or, where applicable, electricity or fuel transactions, unless the review was part of providing greenhouse gas verification services;(B) Developing greenhouse gas emission factors or other greenhouse gas-related engineering analysis, including developing or reviewing a California Environmental Quality Act (CEQA) greenhouse gas analysis that includes facility specific information;(C) Designing energy efficiency, renewable power, or other projects which explicitly identify greenhouse gas reductions as a benefit;(D) Designing, developing, implementing, conducting an internal audit, consulting, or maintaining a GHG emissions reduction or GHG removal offset project as defined in the cap-and-trade regulation;(E) Owning, buying, selling, trading, or retiring shares, stocks, or emissions reduction credits from an offset project that was developed by or resulting reduction credits are owned by the reporting entity;(F) Dealing in or being a promoter of credits on behalf of an offset project operator or authorized project designee where the credits are owned by or the offset project was developed by the reporting entity;(G) Preparing or producing greenhouse gas-related manuals, handbooks, or procedures specifically for the reporting entity;(H) Appraisal services of carbon or greenhouse gas liabilities or assets;(I) Brokering in, advising on, or assisting in any way in carbon or greenhouse gas-related markets;(J) Directly managing any health, environment or safety functions for the reporting entity;(K) Bookkeeping or other services related to accounting records or financial statements;(L) Any service related to development of information systems, including consulting on the development of environmental management systems, such as those conforming to ISO 14001 or energy management systems such as those conforming to ISO 50001, unless those systems will not be part of the verification process;(M) Appraisal and valuation services, both tangible and intangible;(N) Fairness opinions and contribution-in-kind reports in which the verification body has provided its opinion on the adequacy of consideration in a transaction, unless the resulting services will not be part of the verification process;(O) Any actuarially oriented advisory service involving the determination of amounts recorded in financial statements and related accounts;(P) Any internal audit service that has been outsourced by the reporting entity or offset project operator that relates to the reporting entity's internal accounting controls, financial systems or financial statements, unless the result of those services will not be part of the verification process;(Q) Acting as a broker-dealer (registered or unregistered), promoter or underwriter on behalf of the reporting entity;(S) Expert services to the reporting entity, a trade or membership group to which the reporting entity belongs, or a legal representative for the purpose of advocating the reporting entity's interests in litigation or in a regulatory or administrative proceeding or investigation.(T) Verification services that are not conducted in accordance with, or equivalent to, section 95133 requirements, unless the systems and data reviewed during those services, as well as the result of those services, will not be part of the verification process. "Member" for the purposes of this section means any employee or subcontractor of the verification body or related entities of the verification body. "Member" also includes any individual with majority equity share in the verification body or its related entities. "Related entity" for the purposes of this section means any direct parent company, direct subsidiary, or sister company.
(3) The potential for conflict of interest shall be deemed to be high when any staff member of the verification body provides any type of non-monetary incentive to a reporting entity to secure a verification services contract.(4) The potential for a conflict of interest shall also be deemed to be high where any staff member of the verification body has provided verification services for the reporting entity except within the time periods in which the reporting entity is allowed to use the same verification body as specified in section 95130(a).(c) The potential for a conflict of interest shall be deemed to be low where the following conditions are met: (1) No potential for a high conflict of interest is found pursuant to section 95133(b); and(2) Any services provided by any member of the verification body or verification team to the reporting entity, within the last five years, are valued at less than 20 percent of the fee for the proposed verification services. Any verification conducted in accordance with, or equivalent to, section 95133 provided by the verification body or verification team outside the jurisdiction of ARB is excluded from this financial assessment but must be disclosed to ARB in accordance with section 95133(e).(3) Non-ARB verification services are deemed to be low risk if those services are conducted in accordance with, or equivalent to, section 95133, including, but not limited to, third-party certification of environmental management system under ISO 14001 or energy management system under 50001 standards.(d) The potential for a conflict of interest shall be deemed to be medium where the potential for a conflict of interest is not deemed to be either high or low as specified in sections 95133(b) and 95133(c). The potential for conflict of interest will also be deemed to be medium where there are any instances of personal or familial relationships between the members of the verification body and management or staff of the reporting entity, and when a conflict of interest self-evaluation is submitted pursuant to section 95133(h). (1) If a verification body identifies a medium potential for conflict of interest and intends to provide verification services for the reporting entity, the verification body shall submit, in addition to the submittal requirements specified in section 95133(e), a plan to avoid, neutralize, or mitigate the potential conflict of interest situation. At a minimum, the conflict of interest mitigation plan shall include: (A) A demonstration that any individuals with potential conflicts have been removed and insulated from the project.(B) An explanation of any changes to the organizational structure or verification body to remove the potential conflict of interest. A demonstration that any unit with potential conflicts has been divested or moved into an independent entity or any subcontractor with potential conflicts has been removed.(C) Any other circumstance that specifically addresses other sources for potential conflict of interest.(2) As provided in section 95133(f)(4), the Executive Officer shall evaluate the conflict of interest mitigation plan and determine whether verification services may proceed.(e)Conflict of Interest Submittal Requirements for Accredited Verification Bodies. (1) Before the start of any work related to providing verification services to a reporting entity, a verification body must first be authorized in writing by the Executive Officer to provide verification services. To obtain authorization the verification body shall submit to the Executive Officer a self-evaluation of the potential for any conflict of interest that the verification body, related entities, or any subcontractors performing verification services may have with the reporting entity for which it will perform verification services. The submittal shall include the following:(A) Identification of whether the potential for conflict of interest is high, low, or medium based on factors specified in sections 95133(b), (c), and (d);(B) Identification of whether the verification body, related entities, or any member of the verification team has previously provided verification services for the reporting entity or related entities and, if so, provide a description of such services and the years in which such services were provided;(C) Identification of whether any member of the verification team, verification body, or related entity has engaged in services of any nature, other than ARB verification services, with the reporting entity or related entities either within or outside California during the previous five years. If services other than ARB verification services have previously been provided, the following information shall also be submitted: 1. Identification of the nature and location of the work performed for the reporting entity or related entity and whether the work is similar to the type of work to be performed during verification, such as emissions inventory, auditing, energy efficiency, renewable energy, or other work with implications for the reporting entity's greenhouse gas emissions pursuant to this article;2. The nature of past, present or future relationships of any member of the verification team, verification body, or related entities with the reporting entity or related entities including: a. Instances when any member of the verification team, verification body, or related entities has performed or intends to perform work for the reporting entity or related entities;b. Identification of whether work is currently being performed for the reporting entity or related entities, and if so, the nature of the work;c. How much work was performed for the reporting entity or related entities in the last five years, in dollars;d. Whether any member of the verification team, verification body, or related entities has contracts or other arrangements to perform work for the reporting entity or a related entity;e. How much work related to greenhouse gases the verification team has performed for the reporting entity or related entities in the last five years, in dollars.3. Explanation of how the amount and nature of work previously performed is such that any member of the verification team's credibility and lack of bias should not be under question.(D) A list of names of the staff that would perform verification services for the reporting entity, and a description of any instances of personal or family relationships with management or employees of the reporting entity that potentially represent a conflict of interest; and,(E) Identification of any other circumstances known to the verification body, or reporting entity that could result in a conflict of interest.(F) Attest, in writing, to ARB as follows: "I certify under penalty of perjury under the laws of the State of California the information provided in the Conflict of Interest submittal is true, accurate, and complete."
(f)Conflict of Interest Determinations. The Executive Officer must review the self-evaluation submitted by the verification body and determine whether the verification body is authorized to perform verification services for the reporting entity. (1) The Executive Officer shall notify the verification body in writing when the conflict of interest evaluation information submitted under section 95133(e) is deemed complete. Within 20 days of deeming the information complete, the Executive Officer shall determine whether the verification body is authorized to proceed with verification and must so notify the verification body.(2) If the Executive Officer determines the verification body or any member of the verification team meets the criteria specified in section 95133(b), the Executive Officer shall find a high potential conflict of interest and verification services may not proceed.(3) If the Executive Officer determines that there is a low potential conflict of interest, verification services may proceed.(4) If the Executive Officer determines that the verification body and verification team have a medium potential for a conflict of interest, the Executive Officer shall evaluate the conflict of interest mitigation plan submitted pursuant to sections 95133(d), and may request additional information from the applicant to complete the determination. In determining whether verification services may proceed, the Executive Officer may consider factors including, but not limited to, the nature of previous work performed, the current and past relationships between the verification body, related entities, and its subcontractors with the reporting entity and related entities, and the cost of the verification services to be performed. If the Executive Officer determines that these factors when considered in combination demonstrate an acceptable level of potential conflict of interest, the Executive Officer will authorize the verification body to provide verification services.(g)Monitoring Conflict of Interest Situations.(1) After commencement of verification services, the verification body shall monitor and immediately make full disclosure in writing to the Executive Officer regarding any potential for a conflict of interest situation that arises. This disclosure shall include a description of actions that the verification body has taken or proposes to take to avoid, neutralize, or mitigate the potential for a conflict of interest.(2) The verification body shall continue to monitor arrangements or relationships that may be present for a period of one year after the completion of verification services. During that period, within 30 days of the verification body or any verification team member entering into any contract with the reporting entity or related entity for which the body has provided verification services, the verification body shall notify the Executive Officer of the contract and the nature of the work to be performed, and revenue received. The Executive Officer, within 30 days, will determine the level of conflict using the criteria in section 95133(a)-(d), if the reporting entity must reverify their emissions data report, and if accreditation revocation is warranted.(3) The verification body shall notify the Executive Office, within 30 days, of any emerging conflicts of interest during the time verification services are being provided. (A) If the Executive Officer determines that a disclosed emerging potential conflict is medium risk and this risk can be mitigated, the verification body is deemed to have met the conflict of interest requirements to continue to provide verification services to the reporting entity and will not be subject to suspension or revocation of accreditation as specified in section 95132(d).(B) If the Executive Officer determines that a disclosed emerging potential conflict is medium or high risk and this risk cannot be mitigated, the verification body will not be able to continue to provide verification services to the reporting entity, and may be subject to suspension or revocation of accreditation under section 95132(d).(4) The verification body shall report to the Executive Officer any changes in its organizational structure, including mergers, acquisitions, or divestitures, for one year after completion of verification services.(5) The Executive Officer may invalidate a verification finding if a potential conflict of interest has arisen for any member of the verification team. In such a case, the reporting entity shall be provided 90 days to complete re-verification.(6) If the verification body or its subcontractor(s) are found to have violated the conflict of interest requirements of this article, the Executive Officer may rescind accreditation of the body, its verifier staff, or its subcontractor(s) as provided in section 95132(d).(h)Specific Requirements for Air Quality Management Districts and Air Pollution Control Districts. (1) If an air district has provided or is providing any services listed in section 95133(b)(2) as part of its regulatory duties, those services do not constitute non-verification services or a potential for high conflict of interest for purposes of this subarticle;(2) Before providing verification services, an air district shall either submit a conflict of interest self-evaluation pursuant to section 95133(e) for each reporting entity for which it intends to provide verification services, or shall submit an annual self-evaluation to ARB no later than April 10 of each calendar year containing the information specified in section 95133(e)(1)(A)-(F) for all reporting entities for which it intends to provide verification services;(3) As part of its conflict of interest self-evaluation submittal under section 95133(e), the air district shall certify that it will prevent conflicts of interests and resolve potential conflict of interest situations pursuant to its policies and mechanisms submitted under section 95132(b)(1)(G);(4) If an air district hires a subcontractor who is not an air district employee to provide verification services, the air district shall be subject to all of the requirements of section 95133.Cal. Code Regs. Tit. 17, § 95133
1. New section filed 12-2-2008; operative 1-1-2009 (Register 2008, No. 49).
2. Amendment of section and NOTE filed 12-14-2011; operative 1-1-2012 pursuant to Government Code section 11343.4 (Register 2011, No. 50).
3. Amendment of subsections (b)(1)-(2) and (c), new subsections (c)(1)-(2), amendment of subsections (e)(1)-(e)(1)(C)2.e., (f)(4) and (g)(2) filed 12-19-2012; operative 1-1-2013 pursuant to Government Code section 11343.4 (Register 2012, No. 51).
4. Amendment of subsections (a), (b)(2) and (b)(2)(L), new subsection (b)(2)(T), amendment of subsection (c)(2), new subsection (c)(3) and amendment of subsection (g)(2) filed 12-31-2013; operative 1-1-2014 pursuant to Government Code section 11343.4(b)(3) (Register 2014, No. 1).
5. Amendment of subsections (a) and (b)(2)(S) filed 12-31-2014; operative 1-1-2015 pursuant to Government Code section 11343.4(b)(3) (Register 2015, No. 1).
6. Amendment of subsections (f)(1) and (g)(2) filed 9-1-2017; operative 1-1-2018 (Register 2017, No. 35). Note: Authority cited: Sections 38510, 38530, 39600, 39601, 39607, 39607.4 and 41511, Health and Safety Code. Reference: Sections 38530, 39600 and 41511, Health and Safety Code.
1. New section filed 12-2-2008; operative 1-1-2009 (Register 2008, No. 49).
2. Amendment of section and Note filed 12-14-2011; operative 1-1-2012 pursuant to Government Code section 11343.4 (Register 2011, No. 50).
3. Amendment of subsections (b)(1)-(2) and (c), new subsections (c)(1)-(2), amendment of subsections (e)(1)-(e)(1)(C)2.e., (f)(4) and (g)(2) filed 12-19-2012; operative 1-1-2013 pursuant to Government Code section 11343.4 (Register 2012, No. 51).
4. Amendment of subsections (a), (b)(2) and (b)(2)(L), new subsection (b)(2)(T), amendment of subsection (c)(2), new subsection (c)(3) and amendment of subsection (g)(2) filed 12-31-2013; operative 1-1-2014 pursuant to Government Code section 11343.4(b)(3) (Register 2014, No. 1).
5. Amendment of subsections (a) and (b)(2)(S) filed 12-31-2014; operative 1/1/2015 pursuant to Government Code section 11343.4(b)(3) (Register 2015, No. 1).
1. New section filed 12-2-2008; operative 1-1-2009 (Register 2008, No. 49).
2. Amendment of section and Note filed 12-14-2011; operative 1-1-2012 pursuant to Government Code section 11343.4 (Register 2011, No. 50).
3. Amendment of subsections (b)(1)-(2) and (c), new subsections (c)(1)-(2), amendment of subsections (e)(1)-(e)(1)(C)2.e., (f)(4) and (g)(2) filed 12-19-2012; operative 1-1-2013 pursuant to Government Code section 11343.4 (Register 2012, No. 51).
4. Amendment of subsections (a), (b)(2) and (b)(2)(L), new subsection (b)(2)(T), amendment of subsection (c)(2), new subsection (c)(3) and amendment of subsection (g)(2) filed 12-31-2013; operative 1-1-2014 pursuant to Government Code section 11343.4(b)(3) (Register 2014, No. 1).
5. Amendment of subsections (a) and (b)(2)(S) filed 12-31-2014; operative 1-1-2015 pursuant to Government Code section 11343.4(b)(3) (Register 2015, No. 1).
6. Amendment of subsections (f)(1) and (g)(2) filed 9-1-2017; operative 1/1/2018 (Register 2017, No. 35).