BILL ANALYSIS
AB 846
Page 1
Date of Hearing: May 6, 2009
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Kevin De Leon, Chair
AB 846 (Torrico) - As Amended: April 13, 2009
Policy Committee: JudiciaryVote:7-3
Urgency: No State Mandated Local Program:
Yes Reimbursable: Yes
SUMMARY
This bill requires the Department of Toxics Substances Control
(DTSC), the Air Resources Board (ARB), the Department of
Industrial Relations (DIR), and the State Water Resources
Control Board (SWRCB) to levy penalties either at the maximum
statutory amount or in a lesser amount commensurate with the
economic benefits derived by violators from acts resulting in
the penalties. Specifically, this bill:
1.Requires the four departments to annually adjust the maximum
amounts of their civil and administrative penalties for
inflation.
2.Requires the four departments, including regional water
quality control boards and regional air quality management
districts, in cases where the departments seek to impose a
penalty below the maximum, to calculate and make express
findings concerning any economic benefits derived by the
violator from the acts constituting the violation. The
departments must assess liability at a level to recover those
economic benefits from the violator unless the department
expressly finds that: (a) good faith efforts to comply or
inability to pay justify a reduction, and (b) the liability
assessed will maintain the deterrent effect of the penalty.
3.Requires each of the departments to report to the Legislature
on its implementation of the above.
FISCAL EFFECT
1)DTSC . One-time special fund costs of about $40,000 for a
non-substantive rulemaking, the legislative report and
AB 846
Page 2
outreach, and ongoing costs of $115,000 for one analyst
position for the economic analyses.
The department indicates that, in 2007-08, it had 97
enforcement actions, resulting in $3.2 million in settlements.
In 2006-07, there were 91 enforcement actions resulting in
$5.1 million in settlements. The department indicates that it
rarely assesses the maximum fine.
2)SWRCB . Ongoing special fund costs of $560,000 for two
positions and $300,000 in contracts for the economic analyses.
Additional one-time costs of $65,000 for a rulemaking to
adjust the maximum penalties.
The department indicates that, in 2007-08 it assessed $19.5
million in penalties from 106 actions. Of this total, $7.8
represented actual cash recoveries and $11.7 million
represented other mitigation. In 2006-07, $11.3 million was
assessed in 110 enforcement actions, resulting in $6.1 million
in cash settlements and $4.2 in other mitigation. The
department also indicates that it rarely assessed the maximum
fine.
3)ARB . The board settles about 1,800 to 2,200 cases per year.
Based on this workload, the board would probably incur annual
special fund costs in the range of $1 million for additional
staff to conduct the economic analyses. The board indicates
that it currently never assesses the maximum penalty, and
indicates that the new requirements would be in conflict with
other provisions of current law that describe the settlement
process. (See Comment #2 below.)
4)DIR provided no cost estimate, but would likely incur costs in
the range of the other departments.
5)Revenues/Savings . No departments could estimate the amount of
additional revenues from levying the maximum or higher
penalties, but these would likely be significant.
COMMENTS
1)Purpose . The bill's sponsor, the National Resources Defense
Council (NRDC), believes AB 846 is needed to "level the
playing field for law-abiding businesses", who otherwise face
a competitive disadvantage from complying with the state's
AB 846
Page 3
environmental, health, and workplace safety laws." The NRDC
states, "A 2008 NRDC report showed widespread noncompliance
with environmental, health, and workplace safety laws
suggesting that current penalty assessments are inadequate to
deter unlawful conduct. Many state penalty caps are
significantly lower than the parallel federal penalty caps for
the same kinds of violations, and unlike federal penalties,
are not updated for inflation. [For example, the report
showed that maximum federal administrative penalties for
drinking water violations range from $6,000 to $27,500, while
maximum state administrative penalties for similar misconduct
are generally capped at $200 to $1000.]
"Even when environmental laws have penalty caps that are high
enough, enforcement agencies are not consistently using their
authority to impose penalties sufficient to strip violators of
the economic benefits of their misconduct. Polluters do not
have an incentive to comply with the law if the penalties for
noncompliance are less than the economic benefits the polluter
derives from the violation of the law or if the penalties do
not reflect current economic values."
2)Contradictory Provisions . The ARB points out that, while the
bill provides a new mechanism for determining civil
penalties, it does not modify the current statutory process
used by the board and local districts for settling cases.
Specifically, Health and Safety Code Section 42403 (b) states
the following:
In determining the amount assessed, the court, or in reaching
any settlement, the district, shall take into consideration
all relevant circumstances, including, but not limited to, the
following:
(1) The extent of harm caused by the violation.
(2) The nature and persistence of the violation.
(3) The length of time over which the violation occurs.
(4) The frequency of past violations.
(5) The record of maintenance.
(6) The unproven or innovative nature of the control
equipment.
(7) Any action taken by the defendant, including the
nature,
extent, and time of response of the cleanup and construction
undertaken, to mitigate the violation.
AB 846
Page 4
(8) The financial burden to the defendant.
Analysis Prepared by : Chuck Nicol / APPR. / (916) 319-2081