BILL ANALYSIS �
AB 527
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Date of Hearing: May 2, 2013
ASSEMBLY COMMITTEE ON JUDICIARY
Bob Wieckowski, Chair
AB 527 (Gaines) - As Amended: March 19, 2013
As Proposed to be Amended by the Committee
SUBJECT : Global Warming Solutions Act: Western Climate
Initiative
KEY ISSUES :
1)Should a corporation established to assist a State Agency be
subject to the state's open meeting Requirements and open its
corporate records to public inspection?
2)Can the Legislature prohibit, AS THIS BILL CURRENTLY ATTEMPTS
TO DO, a state agency from making payments that the agency is
already contractually obligated to make?
FISCAL EFFECT : As currently in print this bill is keyed
fiscal.
SYNOPSIS
California's Global Warming Solutions Act (Act) of 2006 requires
the Air Resources Board (ARB) to monitor and regulate greenhouse
gas emissions and sets a goal of reducing greenhouse gas
emissions to their 1990 level by 2020. In order to assist the
ARB in implementing the Act, SB 1018 (Chapter 39, Stats. of
2012) formally recognized the Western Climate Initiative (WCI),
Inc., a non-profit 501(c) corporation made up of California
officials and officials from other jurisdictions. Existing law
expressly exempts WCI, Inc. from the open meeting requirements
of the Bagley-Keene Act. Although the Bagley-Keene Act
generally only applies to "state bodies," it defines that term
broadly enough to include non-governmental entities, including
private corporations, if the boards of those entities are
required to include state officials acting in their official
capacity, and if the entity is funded by a state body. By this
broad definition, WCI, Inc. would qualify as a "state body"
subject to Bagley-Keene. It is unclear from the legislative
history why SB 1018 expressly exempted WCI, Inc., though it may
reflect the fact that the WCI, Inc. board includes members from
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other U.S. and Canadian jurisdictions. This bill, as proposed
to be amended, would remove that express exemption, thereby
making WCI, Inc. subject to the Bagley-Keene Act. In addition,
this bill would require WCI, Inc. to adopt bylaws that would
provide access to its corporate records in the same manner as
public records under the California Public Records Act. As
currently in print - and as passed out the Assembly Natural
Resources Committee on a 6-2 vote - this bill would also have
prohibited the ARB from making a payment pursuant to a contract
made with WCI, Inc., unless WCI, Inc. had complied with the
provisions of this bill. The analysis recommends, and this
analysis assumes that the Committee will approve the suggestion,
that this latter provision be eliminated from the bill for the
reasons stated below. The bill is thus analyzed here with a
slight modification of the conceptual amendments agreed to in
the prior Committee. With the proposed committee amendments,
the potential support for and opposition to the measure is not
known.
SUMMARY : Extends the requirements of the Bagley-Keene and the
Public Records Acts, as specified, to the Western Climate
Initiative, Inc., a non-governmental entity. Specifically, this
bill , as proposed to be amended by the Committee:
1)Deletes a provision of existing law that exempts the Western
Climate Initiative, Inc., from the requirements of the
Bagley-Keene Open Meetings Act.
2)Requires the Western Climate Initiative, Inc., to adopt in its
corporate bylaws provisions that make its corporate records
open to public inspection in the same manner that records
maintained by state and local governmental agencies must be
open to public inspection under the California Public Records
Act.
EXISTING LAW :
1)Requires, under the California Global Warming Solutions Act of
2006, that the Air Resources Board (ARB) monitor, report, and
regulate sources of greenhouse gas emissions in order to
reduce greenhouse gas emissions to their 1990 level by 2020,
and to adopt rules and regulations in an open process to
achieve the maximum, technologically feasible, and
cost-effective greenhouse gas reductions. (Health & Safety
Code Sections 38500-38599.)
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2)Recognizes the Western Climate Initiative (WCI), Inc., as a
nongovernmental entity to assist the ARB in the implementation
of the California Global Solutions Act of 2006. (Government
Code Section 12894(a).)
3)Provides that the following persons shall constitute the
California membership of the board of directors of WCI, Inc.:
a) One appointee or his or her designee who shall serve as
an ex officio nonvoting member shall be appointed by the
Senate Committee on Rules.
b) One appointee or his or her designee who shall serve as
an ex officio nonvoting member shall be appointed by the
Speaker of the Assembly.
c) The Chairperson of the ARB or her or his designee.
d) The Secretary for Environmental Protection or his or her
designee. (Government Code Section 12894 (b) (1) (A)-(D).)
4)Exempts WCI, Inc., from the open meeting requirements of the
Bagley-Keene Act. (Government Code Section (b) (2).)
5)Requires, under the Bagley-Keene Open Meeting Act, that all
meetings of a state body be open and public. Defines a "state
body" to include a board, commission, committee, or similar
multimember body on which a member of a body that is a state
body serves in his or her official capacity as a
representative of that state body and that is supported, in
whole or in part, by funds provided by the state body, whether
the multimember body is organized and operated by the state
body or by a private corporation. (Government Code Sections
11120-11121; emphasis added.)
6)Provides, under the California Public Records Act, that all
records maintained by local and state governmental agencies
are open to public inspection unless specifically exempt.
(Government Code sections 6250 et seq.)
7)Prohibits a state from enacting any law impairing the
obligations of a contract. (United States Constitution
Article I, Section 10; California Constitution Article 1,
Section 9.)
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COMMENTS : The Western Climate Initiative - not to be confused
with Western Climate Initiative, Inc. - is a collaboration of
independent jurisdictions working together to identify,
evaluate, and implement emissions trading policies and take a
regional approach to the problem of global warming and climate
change. In February 2007, the governors of Arizona, California,
New Mexico, Oregon, and Washington signed an agreement directing
their respective states to develop a regional target for
reducing greenhouse gas emissions, participate in a multi-state
registry to track and manage greenhouse gas emissions in the
region, and develop a market-based program to reach the target.
In the following years, the governors of Montana and Utah along
with the premiers of British Columbia, Manitoba, Ontario, and
Quebec joined the original five states in committing to tackle
climate change at a regional level.
Western Climate Initiative (WIC), Inc. - not to be confused with
the Western Climate Initiative - is a non-profit corporation
that includes on its board of directors public officials from
California and the other jurisdictions that have joined the
Western Climate Initiative. SB 1018 effectively recognized WCI,
Inc., as a non-governmental entity that would assist the
California Air Resources Board (ARB) in implementing the
California Global Warming Solutions Act of 2006. More popularly
known as AB 32, this Act requires the ARB to monitor and
regulate greenhouse gas emissions with the goal of reducing
those emissions to 1990 levels by 2020.
Purpose of the Bill : This bill seeks to make the actions of
WCI, Inc., open and transparent by subjecting that
non-governmental entity to the open meeting requirements of the
Bagley-Keene Act and open record requirements of the California
Public Records Act.
Making WCI, Inc. Subject to Bagley-Keene : When SB 1018
recognized WCI, Inc., as a non-governmental entity that would
assist the ARB in implementing AB 32 and reaching its emission
targets, it also expressly exempted WCI, Inc., from the open
meeting requirements of the Bagley-Keene Open Meeting Act.
Bagley-Keene requires that all "state bodies" conduct meetings
that are properly noticed and open to the public. Although
Bagley-Keene was primarily intended to apply to "public"
entities (and the advisory bodies that might serve them), it
nonetheless defines the term "state body" broadly enough to
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include non-governmental entities, including private
corporations, if the boards of those private corporations
include state officials who are acting in their official
capacity and if the entity receives state funds.
By this broad definition, WCI, Inc. would clearly qualify as a
"state body" subject to Bagley-Keene - since its board includes
California officials acting in their official capacity and the
entity receives state funds. It is unclear from the legislative
history why SB 1018 expressly exempted WCI, Inc., though the
prior Committee reasons that it may have reflected the fact that
the board of WCI, Inc., includes members from other western
states and Canadian provinces. Thus, the geographical
dispersion of board members might make it difficult for all
members to convene in a common location to which the public
could attend, although it should be noted that Bagley-Keene
allows for phone or video conferencing that could allow public
participation. Thus, while it might be more difficult for this
body to comply with the open meeting requirements, it is by no
means impossible.
This bill, as proposed to be amended by the Committee, would
remove WCI, Inc.'s express exemption in existing law, thereby
making WCI, Inc. subject to the Bagley-Keene Act. Amendments
conceptually approved by the Natural Resources Committee, sought
to achieve this result by leaving the existing exemption in
place but then requiring WCI, Inc., to adopt bylaws that would
establish open meetings that were "consistent" with all of the
provisions of Bagley-Keene. It is not clear to this Committee
why a statute would expressly exempt an entity from Bagley-Keene
Act in one clause and, then, in the immediately following
clause, require the same entity to adopt bylaws that require it
to comply with Bagley-Keene.
Because WCI, Inc., is a state body within the meaning of
Bagley-Keene, it is already subject to its requirements unless
exempted. Assuming the Committee concurs with the author that
WCI, Inc., should indeed be subject to Bagley-Keene, then it
would be appear to make the most sense to simply delete the
exemption, rather than take the more circuitous route of
exempting it from the requirements with one hand and then
effectively imposing those requirements with the other. This
analysis analyzes the measure with this result in mind - simply
deleting the exemption from Bagley-Keene currently enjoyed by
WCI, Inc.
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Making WCI, Inc. Subject to the Public Records Act : Unlike the
broader meaning of "state body" in Bagley-Keene, the California
Public Records Act more narrowly applies to state and local
public entities that maintain public records, as rather
conventionally defined. There does not appear to be any
provision in the Public Records Act that could be construed as
applying to a private corporation. Thus, WCI, Inc. would not be
covered by the California Public Records Act. In recognition of
this difference between the Bagley-Keene and the Public Records
Acts, this bill, as proposed to be amended by the Committee,
would require WCI, Inc., to adopt corporate bylaws that make its
records open to public investigation in the same manner that the
Public Records Act makes records maintained by state and local
governmental agencies open to public inspection.
Presumably, under these bylaws, the general rule of granting
public access to those records would be subject to the same
reasonable exemptions that are afforded under the Public Records
Act. The analysis suggests that this approach meets the
author's stated goal of making the conduct and actions of WCI,
Inc., more open and transparent. This goal is also consistent
with this Committee's historically strong commitment to
transparency in public affairs.
The Bill's Audit Provision : The bill would also provide that
WCI, Inc. is subject to any audit requested or required by the
California State Auditor. It may be that this provision is
superfluous if the State Auditor already has authority to
request an audit. Conversely, if the State Auditor does not
have such authority, then this provision may be inconsistent
with existing law.
Recommended Committee Action to Delete Provision Prohibiting
Payment - This Provision Is Problematic and Potentially
Unconstitutional : As currently in print, this bill would also
prohibit the ARB from making any payment pursuant to any
agreement or contract that the ARB enters into with WCI, Inc.,
after January 1, 2014, unless the ARB "makes a finding" that
WCI, Inc. complied with the requirements created by this bill.
This prohibition raises two potentially serious questions.
First, while the ARB may have the power to make findings about
compliance with its own regulations, it is not entirely clear
that the ARB would have the authority to make a finding on
whether or not WCI, Inc. had complied with Bagley-Keene or the
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Public Records Act.
Second, the bill in print judiciously limits its prohibition on
making payments to WCI, Inc., if it fails to comply with this
bill, only to contracts entered into after January 1, 2014.
However, it is not at all clear that this could be done without
potentially violating the "contracts clause," which in both the
state and federal constitutions prohibits the passing of any law
that impairs the obligation of a contract. For example, the
bill does not prohibit ARB from making contracts with WCI, Inc.;
it prohibits ARB from making payments pursuant to a contract
already entered into if WCI, Inc. fails to comply.
Unfortunately, applying this provision prospectively does not
likely cure this constitutional problem, for the ARB may still
enter into a contract after January 1, 2014, and WCI, Inc. may
fail to comply after the contract has been entered into.
Thus under this bill's current version, ARB might find itself in
a situation where it is not permitted to make a payment that it
was already contractually obligated to make. Thus this analysis
of the measure assumes the Committee will wish to remove this
provision of the bill given the potentially questionable
authority of the ARB to make findings on those particular
questions of law and the potentially unconstitutional impairment
of the obligations of a contract.
Moreover, existing law already provides remedies for failing to
comply with Bagley-Keene and failure of a corporation to comply
with its own bylaws.
PROPOSED COMMITTEE AMENDMENTS : In order for this measure to
proceed, this analysis thus recommends adopting the amendments
suggested by the prior Committee in slightly modified form.
First, as noted above, the analysis proposes the Committee
delete the existing law provision that exempts WCI, Inc., from
Bagley-Keene.
Second, the analysis proposes an amendment that would require
WCI, Inc. to adopt bylaws that comply with the Public Records
Act.
Finally, the analysis proposes deleting the current provision
prohibiting ARB from making a payment that it may have
contractually agreed to make.
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In sum, the Committee proposes the following amendments :
- Beginning on page 3, line 29, delete the amendments made
to paragraph (2) of subdivision (a) of Section 12894, and
instead delete paragraph (2) from the original statute in
its entirety (thereby removing the exemption from
Bagley-Keene in existing law).
- On page 5, between lines 21 and 22 insert a new
subdivision (i) which reads:
The Western Climate Initiative, Incorporated, shall adopt in its
corporate bylaws provisions that make its corporate records open
to public inspection in the same manner that records maintained
by state and local government agencies must be open to public
inspection under the California Public Records Act.
- On page 5, delete lines 22 through 36. (Deleting the
prohibition on ARB payments.)
ARGUMENTS IN SUPPORT (to the current version of the bill) : The
Western States Petroleum Association, the California League of
Food Processors, and the California Manufacturers & Technology
Association support this bill because it will "increase
transparency and accountability of the Western Climate
Initiative, Incorporated." The supporters contend that
California businesses and industries are being forced to pay
hundreds of millions of dollars to meet AB 32 obligations, "and
some of these funds will be used by the WCI, Inc. to fund its
administrative and technical support in developing and
maintaining systems for emissions trading programs." By
subjecting WCI, Inc., to the Bagley-Keene and Public Records
acts, the supporters believe, "the state will ensure that the
funds are subject to accounting and public review."
REGISTERED SUPPORT / OPPOSITION :
Support
California League of Food Processors
California Manufacturers & Technology Association
Western States Petroleum Association
Opposition
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None on file
Analysis Prepared by : Thomas Clark / JUD. / (916) 319-2334