BILL ANALYSIS                                                                                                                                                                                                    



                                                             AB 976
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          Date of Hearing:  April 16, 2013

                           ASSEMBLY COMMITTEE ON JUDICIARY
                                Bob Wieckowski, Chair
                     AB 976 (Atkins) - As Amended: April 4, 2013
           
          SUBJECT  :  ENFORCEMENT PENALTIES: CALIFORNIA COASTAL COMMISSION  
          ACT 

           KEY ISSUE  :  SHOULD, AS THE LEGISLATIVE ANALYST OFFICE  
          RECOMMENDS, THE COASTAL COMMISSION HAVE SIMILAR DISCRETIONARY  
          AUTHORITY, AS OTHER STATE ENVIRONMENTAL PROTECTION AGENCIES  
          POSSESS, TO IMPOSE ADMINISTRATIVE CIVIL PENALTIES FOR COASTAL  
          ACT VIOLATIONS TO ENHANCE ENVIRONMENTAL PROTECTION EFFORTS?

           FISCAL EFFECT  :  As currently in print this bill is keyed fiscal.
                                          
                                      SYNOPSIS

          This bill would give the Coastal Commission (Commission) the  
          same authority as various other state environmental protection  
          agencies possess to impose administrative penalties on people  
          found to be violating the Coastal Act after a public hearing  
          before the Commission.  Surprisingly, currently the Commission  
          is quite unique among many similar regulatory agencies in its  
          inability to utilize administrative civil penalties to improve  
          enforcement efforts.  Other agencies that have such enforcement  
          tools, including the Bay Conservation and Development Commission  
          (BCDC), State Lands Commission, California Energy Commission,  
          California Air Resources Board, Regional Air Pollution Control  
          Districts, Oil Spill Response Administrator, State Water  
          Resources Control Board, Regional Water Quality Control Boards,  
          and the Integrated Waste Management Board.  

          In support of this proposed new enforcement tool is the Planning  
          and Conservation League, on behalf of several California  
          environmental organizations, including, but not limited to the  
          California Coastkeeper Alliance, Sierra Club California, The  
          Wildlands Conservancy and the Environmental Defense Center.   

          The opposition, consisting of business, construction,  
          manufacturing, and real estate companies, argues that the status  
          quo ensures adequate environmental protection and that this  
          measure will only create a "bounty hunter" dynamic between the  
          Commission and violators (notwithstanding the fact that so many  








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          regulatory agencies already possess such enforcement tools and  
          there has been no evidence provided of broad abuse of these  
          enforcement tools by other similarly situated environmental  
          enforcement bodies).  This measure was recently passed on April  
          3, 2013, by the Natural Resources Committee.

           SUMMARY  :  Seeks to grant the Commission the same authority many  
          other similarly situated environmental protection and other  
          state agencies possess to impose civil penalties for Coastal Act  
          violations.  Specifically,  this bill  :

          1)Authorizes the Commission, by a majority vote of the  
            commissioners, to impose civil penalties when appropriate for  
            Coastal Act violations, in an amount not to exceed 75 percent  
            of the amount of the maximum civil penalty that may be imposed  
            in the superior court, as specified. (i.e. no more than  
            $22,500.)

          2)Requires the Commission to take into account the following  
            factors when determining the amount of civil liability to be  
            imposed:

             a)   The nature, circumstance, extent, and gravity of the  
               violation.
             b)   Whether the violation is susceptible to restoration or  
               other remedial measures.
             c)   The sensitivity of the resource affected by the  
               violation.
             d)   The cost to the state of bringing the action.
             e)   With respect to the violator, any voluntary restoration  
               or remedial measures undertaken, any prior history of  
               violations, the degree of culpability, economic profits, if  
               any, resulting from, or expected to result as a consequence  
               of, the violation, and such other matters as justice may  
               require.

          3)Prohibits a person from being subject to both administrative  
            civil liability imposed by the Commission and monetary civil  
            liability imposed by a superior court for the same act or  
            failure to act, unless the person fails to pay the  
            administrative penalty, fails to comply with a restoration or  
            cease and desist order issued by the Commission in connection  
            with the penalty action, or challenges any of these actions by  
            the Commission in a court of law.  









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          4)Authorizes the Commission to file a lien on the property of a  
            violator in the amount of the penalty assessed by the  
            Commission if the violator fails to pay the penalty imposed by  
            the Commission.

          5)Declares it is not the intent of the Legislature that  
            unintentional, minor violations that only cause de minimis  
            harm should lead to civil penalties, if the violator has acted  
            expeditiously to correct the violation consistent with the  
            Coastal Commission Act.

          6)Provides, for purposes of this section, that "person" does not  
            include a local government, a special district, or an agency  
            thereof when acting in a legislative or adjudicative capacity.  
             

          7)Provides that $1,500,000 of the funds annually derived from  
            penalties associated with a violation of the Coastal Act to be  
            deposited in the Violation Remediation Account of the State  
            Coastal Conservancy Fund, as adjusted, and that any additional  
            funds be deposited in the Coastal Act Services Fund, until  
            appropriated by the Legislature, for the purposes of carrying  
            out the Coastal Commission Act.  

           EXISTING LAW  : 

          1)Authorizes the Commission, after a public hearing, to issue a  
            cease and desist order if it determines that someone is  
            undertaking or threatening to undertake any activity that  
            requires a Coastal Development Permit or that may be  
            inconsistent with a previously issued permit.  (Public  
            Resources Code Section 30810.  All further statutory  
            references are to the Public Resources Code unless otherwise  
            indicated.)

          2)Provides that a superior court can impose civil penalties of  
            up to $30,000 on any person or local government who violates  
            the provisions of the Coastal Act, of a certified Local Costal  
            Program or of a coastal development permit.  Additional  
            penalties of not less than $1,000 a day, but not more than  
            $15,000 per day, may be imposed for violations that are  
            determined to be intentional and knowing.  (Section 30820.)

          3)Provides that the Commission may maintain an action for  
            exemplary damages and may recover an award, the size of which  








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            is left to the discretion of the court.  In exercising its  
            discretion, the court shall consider the amount of liability  
            necessary to deter further violations.  (Section 30822.) 

          4)Provides that funds deposited into the Violation Remediation  
            Account of the Coastal Conservancy Fund are subject to  
            appropriation by the Legislature to carry out the provisions  
            of the Coastal Act.  (Section 30620.1.)   

          5)Authorizes the Bay Conservation and Development Commission  
            (BCDC) to impose administrative civil penalties not to exceed  
            more than two thousand dollars ($2,000), for each day in which  
            that violation occurs or persists, or more than thirty  
            thousand dollars ($30,000) for a single violation.   
            (Government Code Section 66641.5(e).)

          6)Authorizes the State Lands Commission to impose administrative  
            civil penalties not to exceed more than twenty-seven thousand  
            five hundred dollars ($27,500) per violation.  (Public  
            Resources Code Section 71216.)

          7)Authorizes the  administrator for oil spill response  to impose  
            administrative civil liability not to exceed one hundred  
            thousand dollars ($100,000) for each violation, and each day  
            or partial day that a violation occurs in a separate  
            violation.  (Government Code Section 8670.67.)

           COMMENTS  :  This bill grants similar discretionary authority to  
          the Coastal Commission (Commission) to impose potential civil  
          penalties where appropriate for violations of the Coastal Act  
          that several other state environmental protection agencies  
          possess, though in many cases the potential civil penalties  
          being authorized are much lower than those authorized for other  
          environmental protection agencies.

          Numerous other state and local agencies already have similar  
          authority to impose administrative civil penalties for  
          violations of applicable environmental and resource protection  
          laws, including but not limited to the Bay Conservation and  
          Development Commission (BCDC), State Lands Commission,  
          California Energy Commission, California Air Resources Board,  
          Regional Air Pollution Control Districts, Oil Spill Response  
          Administrator, State Water Resources Control Board, Regional  
          Water Quality Control Boards, and the Integrated Waste  
          Management Board.  This bill similarly brings the Coastal  








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          Commission within this environmental protection enforcement  
          tradition.

           Background  :  Currently, only a superior court may impose civil  
          liability for violations of the Coastal Act.  Once collected,  
          these penalties are transferred to the Violation Remediation  
          Account of the Coastal Conservancy Fund. 

          Beginning in 1980, the Commission has had "order" authority to  
          stop violations of the Coastal Act.  This "order" authority  
          takes many forms, such as the ability to issue restoration and  
          cease and desist orders after a public hearing.  

          However, unlike many other state environmental protection  
          agencies, the Commission has not had the ability to impose  
          appropriate and limited penalties for substantial violations of  
          the Coastal Act.  As the Commission validly points out,  
          penalties are a critical component of all environmental  
          statutes, and are almost always the primary means to persuade  
          would-be violators to comply with the law.  The deterrent  
          component of any regulatory scheme is important, particularly  
          for environmental laws.  A credible threat of penalties to  
          prevent violations in the first place can greatly increase the  
          ability of an environmental agency to obtain voluntary  
          compliance, and greatly increase its ability to protect the  
          environment.

          While the Commission has the authority to seek civil penalties  
          in court, the Commission claims that it is infrequently done,  
          citing that, "the process is very slow, expensive, and  
          resource-intensive means to impose penalties."  And this is all  
          the more so in our overly-stressed court system today.  The  
          Commission also uses consent orders, where defendants agree to  
          the order and usually agree to pay a penalty.  A consent order  
          avoids a potentially higher fine for the defendant and the costs  
          and delays of litigation.  However, according to the Commission,  
          these powers create "a perverse incentive for non-cooperation":

               Parties who agree to settle pay penalties, and those  
               who do not settle are rarely pursued for penalties  
               because this requires litigation.  A completely  
               recalcitrant party may often be in a better position  
               than a settling party, if they refuse to comply and  
               take their chances that the state will not pursue them  
               for penalties.  For these parties, by and large,  








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               unless they challenge the administrative order in  
               court and the state files a cross complaint for  
               penalties and pursues it vigorously, they escape all  
               penalties under the Coastal Act.    

           LAO Urges Support for the New Enforcement Tools Provided in the  
          Bill:  In an analysis of the Commission's budget from the 2011-12  
          Budget Bill, the Legislative Analyst Office (LAO) recommended  
          that the Legislature grant the California Coastal Commission the  
          authority to levy administrative civil penalties in order to  
          reduce the costs associated with enforcing compliance with the  
          Commission's regulations and to stabilize the funding for  
          related activities, as this bill proposes.   
           
           Due Process Concerns of Opponents  :  Opponents of the bill argue  
          that the imposition of monetary penalties should remain with the  
          judicial branch because of the relative lack of procedural  
          rights if the Commission could unilaterally impose  
          administrative civil penalties.  Among other things, the  
          opponents believe that "an individual facing potentially  
          significant fines and penalties should be afforded due process  
          through the judicial system where witnesses must be qualified to  
          testify and are sworn in, testimony is taken, witnesses are  
          cross-examined, rebuttal is allowed, and no time restrictions  
          are imposed, all before a judge."

          However, as the Commission correctly points out, all of its  
          actions, including potential imposition of civil penalties were  
          appropriate, are always subject to judicial review, just as with  
          all the other environmental protection agencies that have long  
          had the authority.  According to the Commission, this measure  
          grants authority to impose civil penalties no more complex than  
          the permit and enforcement matters commonly heard by the  
          Commission, such as the underlying facts and law as to whether a  
          violation exists at all.  The opposition's argument also does  
          not address the fact that other administrative bodies routinely  
          and successfully make similar penalty decisions with much higher  
          potential dollar amounts at issue.  

          To assure proper procedural rights, the Commission would be  
          required to follow notice requirements and evidentiary rules  
          already required by existing statutes and regulations for many  
          other enforcement authorities.  Because the imposition of  
          administrative penalties would simply be a component of a duly  
          noticed public hearing, hearing to decide civil penalties would  








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          be appropriately noticed and conducted consistent with existing  
          law and regulations.  For example, the Administrative  
          Adjudication Bill of Rights (Government Code Section 11425.10 et  
          seq.) provides specific due process protections when an agency  
          conducts an adjudicative proceeding, including, but not limited  
          to, notice and the opportunity to be heard, including the  
          opportunity to present and rebut evidence, and a prohibition on  
          ex parte communications. 

           ARGUMENTS IN SUPPORT  :  The Planning and Conservation League, on  
          behalf of several California environmental organizations,  
          including, but not limited to the California Coastkeeper  
          Alliance, Sierra Club California, The Wildlands Conservancy and  
          the Environmental Defense Center, states in strong support of  
          the bill, that the, "lack of administrative penalty authority  
          has been a longstanding deficiency in the Commission's  
          enforcement program, which diminishes the Commission's ability  
          to obtain swift voluntary resolution of outstanding violations.   
          The judicial process is an inefficient and resource-intensive  
          means for imposing penalties, meaning this option is rarely  
          exercised by the Commission.  As a result, with little change of  
          prosecution and no risk of monetary penalty, violating the  
          Coastal Act is a low-risk and cost-effective choice."
           
          ARGUMENTS IN OPPOSITION  :  A coalition of business, construction,  
          manufacturing, and real estate companies writes in opposition to  
          the bill.  The coalition states that this measure is  
          "unnecessary, is bad public policy, and would create an  
          unacceptable dynamic whereby the Commissioners and the  
          Commission's staff would be incentivized to impose fines and  
          penalties, at the expense of due process and rights of the  
          accused, rather than pursuing those fines and penalties through  
          the judicial branch where that function properly belongs."  

          The coalition also claims that the Commission will pursue  
          violators with the zeal of a "bounty hunter":

               AB 976 creates a "bounty hunter" mentality among the  
               Coastal Commission staff, would strip alleged  
               violators of due process afforded by the courts,  
               provide the Coastal Commission sweeping civil penalty  
               authority more appropriately reserved for the courts,  
               and provides a slippery slope to use administrative  
               civil penalties to augment the Coastal Commission  
               budget.








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          Also in opposition, the Mendocino County Cattlemen's Association  
          writes that this bill will have serious negative impacts on the  
          viability of ranching operations in California.  According to  
          the opposition, "in order to continue to productively and  
          sustainably manage our lands, we must be able to operate without  
          the fear of civil penalties as levied by the Coastal  
          Commission."  

           REGISTERED SUPPORT/OPPOSITION:

          Support

           California Coastkeeper Alliance
          California Coastal Commission
          California Coastal Protection Network
          California Native Plant Society
          Environmental Defense Center
          Environmental Water Caucus
          Environmental Action Committee of West Marin
          Heal the Bay
          North County Watch
          Planning and Conservation League
          Sierra Club California
          Surfrider Foundation
          The Wildlands Conservancy
           
          Opposition
           
          American Council of Engineering Companies of California
          California Apartment Association
          California Association of Realtors
          California Aquaculture Association
          California Building Industry Association
          California Business Properties Association
          California Cattlemen's Association
          California Chamber of Commerce
          California Citrus Mutual
          California Construction and Industrial Materials Association
          California Farm Bureau Federation
          California Fisheries and Seafood Institute
          California Independent Petroleum Association
          California Sea Urchin Commission
          California Travel Association
          California Wetfish Producers Association








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          Mendocino County Cattlemen's Association
          Nisei Farmers League
          Ventura County Cattlemen's Association
          Western Agricultural Processors Association
          Western States Petroleum Association
           
          Analysis Prepared by  :  Drew Liebert and Rebecca Kramer / JUD. /  
          (916) 319-2334