BILL ANALYSIS �
AB 874
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Date of Hearing: April 24, 2013
ASSEMBLY COMMITTEE ON LABOR AND EMPLOYMENT
Roger Hern�ndez, Chair
AB 874 (Williams) - As Amended: March 21, 2013
SUBJECT : Public Utilities: Unionization.
SUMMARY : Prohibits an Investor Owned Utilities (IOUs) company
from using utility rates to pay for expenses incurred in
assisting or deterring union organizing. Specifically, this
bill :
1)Prohibits a public utility from recovering in the utility
rates charged to customers, either directly or indirectly,
expenses incurred in assisting or deterring union organizing.
2)Requires expenses incurred in assisting or deterring union
organizing to be exclusively paid by the public utility's
shareholders.
3)Defines "expenses incurred in assisting or deterring union
organizing" as cost incurred in communicating with employees,
or employees of the utility's contractors, in an effort to
persuade them to join or support, or to not join or support, a
labor organization.
EXISTING FEDERAL LAW :
1)Provides, under the National Labor Relations Act, the
expressing of any views, argument, or opinion, or the
dissemination thereof, whether in written, printed, graphic,
or visual form, shall not constitute or be evidence of an
unfair labor practice under any of the provisions of the law,
if such expression contains no threat of reprisal or force or
promise of benefit. (29 U.S.C.A. � 158(c)).
2)Provides, under the Public Utility Regulatory Policies Act,
that no electric utility may recover from any person other
than the shareholders (or other owners) of such utility any
direct or indirect expenditure by such utility for political
advertising. (16 U.S.C.A. � 2623(b)(5)).
3)Defines, under the Public Utility Regulatory Policies Act,
"political advertising" as advertising for the purpose of
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influencing public opinion with respect to legislative,
administrative, or electoral matters, or with respect to any
controversial issue of public importance. (16 U.S.C.A. �
2625(h)(1)(b)).
EXISTING STATE LAW :
1)Provides that any expense resulting from a bonus paid to an
executive officer of an IOU that has ceased to pay its debts
in the ordinary course of business shall not be recoverable
either directly or indirectly in rates and shall be borne
exclusively by the shareholders of the public utility. (Public
Utilities Code 451.5(a)
2)Authorizes the California Public Utilities Commission (PUC) to
disallow expenses for whenever an IOU fails to prepare or
maintain records sufficient to enable the PUC to completely
evaluate any relevant or potentially relevant issue related to
the reasonableness and prudence of any expense relating to the
planning, construction, or operation of the corporation's
plant. (Public Utilities Code 463(b))
3)Requires the PUC to initiate a rulemaking by March 1, 2012 to
adopt, among other things, rules to govern the conduct of
electrical corporations that ensure that an electrical
corporation does not market against a community choice
aggregation program, except through an independent marketing
division that is funded exclusively by the electrical
corporation's shareholders and that is functionally and
physically separate from the electrical corporation's
ratepayer-funded divisions. (Public Utilities Code 707)
FISCAL EFFECT : Unknown
COMMENTS : The author states that this bill ensures any expense
incurred by a public utility in assisting or deterring union
organizing shall not be recoverable in the utilities rates, but
rather must be borne exclusively from the shareholders of the
public utility. Since employer conduct related to free speech
about union organizing is regulated under the National Labor
Relations Act, this bill warrants discussion about federal
preemption.
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Federal Preemption: The National Labor Relations Act and
Regulating Union Organizing Speech
Under the National Labor Relation Act (NLRA), states are
implicitly preempted from regulating conduct that Congress
intended to be left unregulated and controlled by the free play
of economic forces. Essentially, this type of preemption is
based on the notion that in selecting which forms of economic
pressure should be prohibited under the NLRA, Congress has
struck a balance between the uncontrolled power of management
and labor to further their respective interests. This
preemption reflects the NLRA's broader purpose of restoring
equal bargaining power between labor and management. The
underlying presumption is that Congress has struck a balance of
protection and prohibition in respect to union organization,
collective bargaining, and labor disputes.
Prior Legislation and Federal Preemption: AB 1889
In 2000, California passed AB 1889 (Cedillo). AB 1889
prohibited employers that received state grants and state funds
from using these funds "to assist, promote, or deter union
organizing." Cal. Govt. Code Ann. � 16645.2(a), 16645.7(a).
This included any attempt by any employer to influence the
decision of its employees on whether to support or oppose a
labor organization and whether to become a member of any labor
organization. �16645(a). After AB 1889's enactment, multiple
business organizations challenged that AB 1889 was federally
preempted because the provisions impermissibly "regulated
employer speech about union organizing under specified
circumstances, even though Congress intended 'free debate.'"
On appeal, the United States Supreme Court held that AB 1889 was
federally preempted because California attempted to regulate
within a zone protected and reserved for market freedom.
According to the Court, California's policy judgment that
partisan employer speech interferes with an employee's choice
about whether to join or to be represented by a labor union was
the same one Congress had renounced in enacting the Labor
Management Relations Act.
In supporting its ruling, the Court traced the historical
reasons why the Labor Management Relations Act of 1947 was
passed. According to the Court, Congress' passed the Labor
Management Relations Act to amend the NLRA because Congress was
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concerned that the NLRA and the National Labor Relations Board
(NLRB) had pushed labor relations too far in favor of unions.
Specifically, the Court cited � 8(c) of the Labor Management
Relations Act, which provides:
"The expressing of any views, argument, or opinion, or
the dissemination thereof, whether in written,
printed, graphic, or visual form, shall not constitute
or be evidence of an unfair labor practice under any
of the provisions of this subchapter, if such
expression contains no threat of reprisal or force or
promise of benefit."
The Court found that this provision, along with others in the
Labor Management Relations Act, explicitly and implicitly showed
that Congress' intended to encourage "free debate" on issues
dividing labor and management. Additionally, the Court believed
Congress' use of its legislative powers to amend the NLRA rather
than leaving it for the courts to work out was indicative of how
important Congress felt the "free debate" in labor relations
was. According to the Court, "Congress' express protection of
free debate forcefully buttresses [its] pre-emption analysis . .
. ."
Next, the Court made clear that the market participant exception
did not apply to California's actions because AB 1889 attempted
to regulate labor policy, namely union organizing. Dismissing
the assertion that California was just exercising its spending
power and not regulating, the Court stated that in NLRA
preemption cases, judicial concern has necessarily focused on
the nature of the activities which the States have sought to
regulate, rather than on the regulatory method adopted. For the
Court, California could not implicitly regulate that which it
cannot do explicitly. In finding California acted as a
regulator when passing AB 1889, the Court stated AB 1889 is
neither "specifically tailored to one particular job" nor a
"legitimate response to state procurement constraints or to
local economic needs," but rather the furtherance of a labor
policy.
The Court also believed AB 1889 favored unions and was
indicative that California was instituting a policy decision and
thus acting as a regulator. Instead of forbidding the use of
state funds for all employer advocacy regarding unionization, AB
1889 permitted the use of state funds for select employer
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advocacy activities that promoted unions. According to the
Court, AB 1889 was effectively removing a party Congress
intended to be present when discussing union organizing, namely
the employers.
Lastly, the Court believed AB 1889 exceeded the scope of
California' sovereignty over controlling the use of its funds
because AB 1889 made it exceedingly difficult for employers to
demonstrate that they did not used state funds to deter or
support union organizing. Among the conditions the Court took
exception to were, requiring employers to maintain separate
records sufficient to prove state funds were not used for
prohibited expenditures, the presumption of violating AB 1889 if
funds were comingled, and that a private litigant had standing
to sue. According to the Court, such "enforcement mechanisms
put considerable pressure on an employer either to forgo his
"free speech right to communicate his views to his employees, or
else to refuse the receipt of any state funds," which
effectively "chills one side of "the robust debate which has
been protected under the NLRA."
This Bill vs. AB 1889 :
Addressing the federal preemption issue, the Author
distinguishes this bill from AB 1889 by stating the following:
"In 2000, AB 1889 by Assemblymember Cedillo was passed by
the legislature which prohibited state funds from being
used to assist or deter union organizing. This law was
challenged in Chamber of Commerce v. Brown and in 2008 the
Supreme Court held that the National Labor Relations Act
preempted California legislation that prohibited recipients
of state funds from using those funds to assist or deter
union organizing. The Court concluded that the private
employers were unfairly burdened by the requirements to
provide detailed accounting of their funds and was unfair
because the law effectively favored pro-union activities by
exempting certain expenditures, and therefore amounted to
an impermissible state regulation of labor relations.
These circumstances DO NOT apply in this bill because
utilities are already required to provide detailed
accounting and segregation of funds to the CPUC, and
therefore no extra burden applies. Moreover, unlike the
previous California statute, this bill does not treat pro
and anti-union organizing activities differently, and
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therefore provides no unfair advantages."
ARGUMENTS IN SUPPORT :
The California State Association of Electrical Workers and the
Coalition of California Utility Employees are co-sponsoring this
bill and state:
"This bill simply illustrates that a public utility may not
use rate payer funds to promote or discourage union
organizing. Federal law establishes that the State may
adopt policies or rules to restrict utilities ability to
use rate payer funds for the purpose of promotional or
political activity. These activities should be held at the
expense of the shareholder and not the rate payer. This
bill seeks to codify this action by including a restriction
on the use of ratepayer funds to include promoting or
deterring union activity. Union representation and
organizing are fundamental standards in California. This
bill ensures that no utility can subject a rate payer to
participate in impeding or enhancing a worker's [right] to
organize."
REGISTERED SUPPORT / OPPOSITION :
Support
California Labor Federation, AFL-CIO
California State Association of Electrical Workers (co-sponsor)
Coalition of California Utility Employees (co-sponsor)
Opposition
None on file.
Analysis Prepared by : Timothy Lepore/ Benjamin Ebbink / L. &
E. / (916) 319-2091