BILL ANALYSIS �
AB 227
Page 1
Date of Hearing: April 30, 2013
ASSEMBLY COMMITTEE ON JUDICIARY
Bob Wieckowski, Chair
AB 227 (Gatto) - As Amended: April 9, 2013
As Proposed to be Amended
SUBJECT : PROPOSITION 65: ENFORCEMENT
KEY ISSUE : SHOULD CERTAIN VIOLATIONS OF PROPOSITION 65 BE
SUBJECT TO AN ALTERNATIVE ENFORCEMENT MECHANISM TO AVOID
UNNECESSARY LITIGATION?
FISCAL EFFECT : As currently in print this bill is keyed fiscal.
SYNOPSIS
This measure is motivated by the author's laudable goal to
prevent unnecessary litigation regarding alleged violations of
the Safe Drinking Water and Toxic Enforcement Act (Prop. 65)
where there is documented evidence of abusive claims while
preserving the vital public protection goals and rights of the
act. In consultation with stakeholders and experts, the bill as
proposed to be amended precludes litigation as well as the
payment of money in settlement for specified alleged violations
relating to exposure to alcohol and food-related chemicals,
tobacco smoke, and vehicle exhaust if the alleged violator has
taken appropriate remedial measures and has not committed other
prior offenses. The measure further provides that prescribed
notices must advise the alleged violators of the law in a clear
and reasonable fashion, and sets forth a mechanism for
resolution of disputes regarding the application of these
provisions and potential sanctions against the plaintiff.
Supporters argue that the bill addresses the alleged problem in
a manner that is reasonable and workable and consistent with the
purposes and design of Prop. 65. While there are some
outstanding technical concerns that the author will continue to
discuss with stakeholders, apart from those issues there is no
known opposition to the bill as proposed to be amended.
SUMMARY : Revises the Safe Drinking Water and Toxic Enforcement
Act. Specifically, this bill :
1)Prohibits any person who serves a notice of alleged violation
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as specified from filing an action for exposure against the
alleged violator, or recovering from the alleged violator in a
settlement any payment in lieu of penalties or any
reimbursement for costs and attorney's fees, under the
following conditions:
(1) The notice was served on or after the effective date
of this statute and alleges that the alleged violator
failed to provide clear and reasonable warning as required
under Health and Safety Code section 25249.6 regarding:
(A) an exposure to alcoholic beverages, or to a
chemical known to cause cancer or reproductive
toxicity to the extent the chemical is formed on the
alleged violator's premises by necessary preparation
of food or beverages which are sold on the alleged
violator's premises for immediate consumption;
(B) an exposure to environmental tobacco smoke
caused by entry of persons (other than employees) on
premises owned or operated by the alleged violator
where smoking is permitted at any location on the
premises; or
(C) an exposure to chemicals known to cause cancer
or reproductive toxicity in engine exhaust, to the
extent the exposure occurs inside a facility owned or
operated by the alleged violator and primarily
intended for parking noncommercial vehicles.
(2) Within 14 days after service of the notice, the
alleged violator has:
(A) corrected the alleged violation;
(B) paid a civil penalty for the alleged violation
of section 25496.6 in the amount of $500, to be
adjusted annually to reflect any increases in the cost
of living in California, as indicated by the annual
average of the California Consumer Price Index, per
facility or premises where the alleged violation
occurred, of which seventy-five percent shall be
deposited in the Safe Drinking Water and Toxic
Enforcement Fund, and twenty-five percent shall be
paid to the person that served the notice as provided
in section 25249.12; and
(C) served on the person that served the notice a
written statement, signed under penalty of perjury,
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that fully describes the actions taken to correct the
alleged violation and attaches a true and correct copy
of any warning provided as part of such actions.
(3) The alleged violator has not been served with a notice
under paragraph (1) of subdivision (d) for an exposure
identified in paragraph (1)(A),(B), or (C) of this
subdivision within the previous five years for failure to
provide clear and reasonable warning about the same
exposure in the same facility or on the same premises.
2)Further provides that any notice subject to the subdivision
above shall prominently include a clear and reasonable
description of the terms of the subdivision, and provides that
the lead agency may prescribe specific language for inclusion
in the notice that meets this requirement.
3)Specifies that in the event of a dispute over whether an
action is barred by this statute the alleged violator shall
bear the burden of proving the applicability of subdivision
(k) and its compliance with all requirements of paragraph (2)
of subdivision (k). Upon the conclusion of an action brought
pursuant to subdivision (d), if the trial court determines
that the alleged violator has prevailed on the affirmative
defense under subdivision (k), the court may, upon motion of
that alleged violator or upon the court's own motion, review
the basis for the belief of the plaintiff that the action was
not precluded by subdivision (k). If the court finds that
there was no credible factual basis for the plaintiff's belief
that the action was not precluded by subdivision (k), then the
action shall be deemed a violation of Section 128.7(b) of the
Code of Civil Procedure. The court shall not find a factual
basis credible if it is based on a legal theory of liability
that is frivolous within the meaning of Section 128.5 of the
Code of Civil Procedure.
4)Provides that nothing in subdivision (k) shall prevent the
Attorney General, a district attorney, a city attorney, or a
prosecutor in whose jurisdiction the violation is alleged to
have occurred from filing an action pursuant to subdivision
(c) against an alleged violator. In any such action, the
amount of any civil penalty for a violation shall be reduced
to reflect any payment made by the alleged violator for the
same alleged violation pursuant to paragraph (2)(B) of
subdivision (k).
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5)Finds and declares that subsection 25249.7 (k) is necessary to
further the purposes of Section 25249.6, in terms of speed of
compliance and reasonableness as contemplated by the Section.
6)Finds and declares that subsection (k)(2) shall be independent
and severable from the rest of this enactment.
7)Further finds and declares that subsections (k)-(m) are
necessary to further the purposes of the intent of fairness
contemplated by the Safe Drinking Water and Toxic Enforcement
Act of 1986 as evinced by the fairness factors outlined in
Section 25249.10.
8)Specifies that this act is an urgency statute necessary for
the immediate preservation of the public peace, health, or
safety within the meaning of Article IV of the Constitution
and shall go into immediate effect. The facts constituting the
necessity are: In order to avoid unnecessary litigation and to
facilitate compliance with the Safe Drinking Water and Toxic
Enforcement Act of 1986.
EXISTING LAW :
1)Under the Safe Drinking Water and Toxic Enforcement Act of
1986 (Proposition 65) prohibits any person, in the course of
doing business, from knowingly and intentionally exposing any
individual to a chemical known to the state to cause cancer or
reproductive toxicity without giving a specified warning, or
from knowingly discharging or releasing such a chemical into
water or any source of drinking water, except as specified.
(Health and Safety Code section 25249.5 et seq.)
2)The act imposes civil penalties upon persons who violate those
prohibitions, and provides for the enforcement of those
prohibitions by the Attorney General, a district attorney, or
specified city attorneys or prosecutors, and by any person in
the public interest. The act requires any person bringing an
action in the public interest, or any private person filing an
action in which a violation of the act is alleged, to notify
the Attorney General, the district attorney, city attorney, or
prosecutor in whose jurisdiction the violation is alleged to
have occurred, and the alleged violator that such an action
has been filed. (Health and Safety Code section 25249.5 et
seq.)
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COMMENTS : The author explains the reason for the bill as
follows:
Prop. 65, the Safe Drinking Water and Toxic Enforcement
Act, was enacted by ballot initiative in 1986. It was
intended to protect Californians and their drinking water
from chemicals known to cause cancer, birth defects or
other reproductive harm, and to inform citizens about
exposure to such chemicals.
Since its enactment, Prop. 65 has been an effective tool to
keep toxic chemicals out of the state's water supplies and
has raised awareness about possible exposure to
carcinogens.
Unfortunately, there have been some who have taken
advantage of provisions in the proposition to ensnare
businesses in lawsuits, with the hope of obtaining
settlement payments that were never contemplated by the
voters when they passed Prop. 65.
These lawsuits are instigated by parties who target
businesses that, for various reasons, have neglected to
display the proper Prop. 65 warning sign. Prop. 65 was
motivated by voters' laudable wish to inform and protect
Californians from the potential exposure to dangerous
chemicals, not as a money-making venture. Businesses such
as restaurants or coffee shops or bars - places that must
provide Prop. 65 warnings for serving baked goods, beer,
wine, or coffee, because these everyday things happen to
contain substances deemed to pose some health risks -
should be helped to comply with the intent of the law.
Many of these lawsuits never get to a courtroom. They are
settled out of court, sometimes for tens of thousands of
dollars, because business owners do not have the means to
hire attorneys, and fear becoming entangled in protracted
legal proceedings that could result in significant damages
and attorney's fees.
AB 227 intends to reduce or eliminate frivolous legal
actions brought under Prop. 65 where plaintiffs are seeking
damages for alleged violations that involve a retail
business either neglecting to have a sign posted, or
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posting in a manner that isn't visible enough to the
public. There has been a recent wave of violation notices
sent to businesses like bars, restaurants and coffee shops,
(places that must post signs because of alcohol or
byproducts of coffee roasting) because of improperly posted
signs or signs that were not up due to an honest oversight.
These are cases where the business owners are not exposing
customers to unknown, dangerous chemicals. Rather, they
are serving things like the aforementioned coffee or
alcohol and are more than happy to post the proper signage.
Unfortunately, under the current regime, the cost to put up
a sign can be in the thousands or tens of thousands of
dollars due to the cost of settling these suits brought by
private attorneys. The punishment appears to be
disproportionate to the business' oversight. This measure
seeks to bring the severity of the punishment more in line
with the severity, or lack thereof, of the violation.
AB 227 will return Prop. 65 to what the voters intended it
do: punish violators who pollute our state's waterways or
expose workers to dangerous carcinogens and to inform
consumers of the risks in products they may purchase.
This Bill Would Establish Important New Limits On the Right To
Sue Or To Collect Money In Settlement For Specified Alleged
Violations of Prop. 65 That Have Been The Subject Of Alleged
Abuses. As proposed to be amended, the bill precludes
litigation as well as the payment of money in settlement for
specified alleged violations relating to exposure to alcohol and
food-related chemicals, tobacco smoke, and vehicle exhaust if
the alleged violator has taken appropriate remedial measures and
has not committed other prior offenses. The measure further
provides that prescribed notices must advise the alleged
violators of the law in a clear and reasonable fashion, and sets
forth a mechanism for resolution of disputes regarding the
application of these provisions and potential sanctions against
the plaintiff.
More specifically, the bill prohibits any person who serves a
notice of alleged violation as specified from filing an action
for exposure against the alleged violator, or recovering from
the alleged violator in a settlement any payment in lieu of
penalties or any reimbursement for costs and attorney's fees,
under the conditions set forth above.
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The bill further provides that any notice subject to the
subdivision above shall prominently include a clear and
reasonable description of the terms of the subdivision, and
provides that the lead agency may prescribe specific language
for inclusion in the notice that meets this requirement.
In addition the bill specifies that in the event of a dispute
over whether an action is barred by this statute the alleged
violator shall bear the burden of proving the applicability of
subdivision (k) and its compliance with all requirements of
paragraph (2) of subdivision (k). Upon the conclusion of an
action brought pursuant to subdivision (d), if the trial court
determines that the alleged violator has prevailed on the
affirmative defense under subdivision (k), the court may, upon
motion of that alleged violator or upon the court's own motion,
review the basis for the belief of the plaintiff that the action
was not precluded by subdivision (k). If the court finds that
there was no credible factual basis for the plaintiff's belief
that the action was not precluded by subdivision (k), then the
action shall be deemed a violation of Section 128.7(b) of the
Code of Civil Procedure. The court shall not find a factual
basis credible if it is based on a legal theory of liability
that is frivolous within the meaning of Section 128.5 of the
Code of Civil Procedure.
The bill also provides that nothing in subdivision (k) shall
prevent the Attorney General, a district attorney, a city
attorney, or a prosecutor in whose jurisdiction the violation is
alleged to have occurred from filing an action pursuant to
subdivision (c) against an alleged violator. In any such
action, the amount of any civil penalty for a violation shall be
reduced to reflect any payment made by the alleged violator for
the same alleged violation pursuant to paragraph (2)(B) of
subdivision (k).
Lingering Concerns Regarding Intent Language. While the
substantive provisions of the bill appear to have been resolved
with the proposed amendments, there are less critical but still
outstanding anxieties among some groups regarding the proposed
findings and declarations the author would add to the bill
regarding its relationship to the purposes of Prop. 65.
Specifically, the bill would find and declare:
1)That subsection 25249.7 (k) is necessary to further the
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purposes of Section 25249.6, in terms of speed of compliance
and reasonableness as contemplated by the Section.
2)That subsection (k)(2) shall be independent and severable from
the rest of this enactment; and
3)That subsections (k)-(m) are necessary to further the purposes
of the intent of fairness contemplated by the Safe Drinking
Water and Toxic Enforcement Act of 1986 as evinced by the
fairness factors outlined in Section 25249.10.
The outstanding concerns are to the effect that these proposed
findings are inoperative, unneeded, overbroad and potentially
confusing. The Committee is advised that the author and
stakeholders remain optimistic and committed to resolving these
remaining concerns.
ARGUMENTS IN SUPPORT : In support of the bill, the Consumer
Attorneys of California state:
By narrowly focusing on the issue at hand, the bill, as
proposed to be amended, avoids unintended consequences on
other Proposition 65 enforcement actions that are serving
the important goals of the ballot initiative. This will
also maximize the chances that the bill satisfies
Proposition 65's requirement that any amendments must
"further its purposes." Proposition 65, Section 1
(reproduced at Health & Safety Code � 25249.5, Historical
and Statutory Notes).
There is a workable solution to the problem presented.
The proposed amendments narrowly focus on the types of
pre-suit notices that have raised concerns: (1) pre-suit
notices sent to restaurants, cafes and other small
businesses for failing to post warnings about the health
hazards of consuming alcohol; (2) pre-suit notices sent to
apartment buildings and other establishments where smoking
is allowed for failing to post warnings about the health
hazards of secondhand smoke; and (3) pre-suit notices sent
to parking facilities for failing to post warnings about
the health hazards of gasoline engine exhaust.
By narrowly focusing on the issue at hand, the bill avoids
any unintended consequences on other Proposition 65
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enforcement actions that are serving the important goals of
the ballot initiative. This will also maximize the chances
that the bill satisfies Proposition 65's requirement that
any amendments must "further its purposes." Proposition
65, Section 1 (reproduced at Health & Safety Code �
25249.5, Historical and Statutory Notes).
The bill tracks existing law by providing an opportunity
for an alleged violator to recovery monetary sanctions if
the court determines that there was no credible factual
basis for the plaintiff's belief that the violation had not
been cured. This is the same mechanism that currently
exists in Proposition 65 when a court determines that there
was no credible factual basis for the plaintiff's
allegation that there was an exposure to a listed chemical.
See Health & Safety Code � 25249.7(h)(2).
Author's Proposed Refining and Narrowing Amendments. In
consultation with interested stakeholders including the Attorney
General's office, the author proposes the helpful amendments set
forth in the summary above to more precisely focus on the
concerns that motivate the legislation, revising proposed
subdivision (k), adding three additional subdivisions, two new
findings sections, and an urgency clause.
REGISTERED SUPPORT / OPPOSITION :
Support
Air Conditioning Trade Association
American Coatings Association
Apartment Association, California Southern Cities
BIOCOM
California Apartment Association
California Assisted Living Association
California Association of Health Facilities
California Automotive Business Coalition
California Bus Association
California Business Properties Association
California Chamber of Commerce
California Citizens Against Lawsuit Abuse
California Construction & Industrial Materials Association
California Craft Brewers Association
California Dental Association
California Framing Contractors Association
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California Grocers Association
California Hotel and Lodging Association
California Independent Grocers Association
California Independent Oil Marketers Association
California Independent Petroleum Association
California Metals Coalition
California Restaurant Association
California Retailers Association
California Service Station & Auto Repair Association
Civil Justice Association of California
Clovis Chamber of Commerce
Consumer Specialty Products Association
Culver City Chamber of Commerce
Duarte Chamber of Commerce
East Bay Rental Housing Association
National Association of Theatre Owners of CA/NV
National Federation of Independent Business
NOR CAL Rental Property Association
Palm Desert Chamber of Commerce
Plumbing-Heating-Cooling Contractors Association of California
Rancho Cordova Chamber of Commerce
San Fernando Valley Chamber of Commerce
Simi Valley Chamber of Commerce
United Chambers of San Fernando Valley
Valley Industry & Commerce Association
Visalia Chamber of Commerce
Western Electrical Contractors Association
Opposition (as proposed to be amended)
None on file
Analysis Prepared by : Kevin G. Baker / JUD. / (916) 319-2334