BILL ANALYSIS Ó AB 976 Page 1 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 AB 976 Page 2 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. AB 976 Page 3 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 AB 976 Page 4 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 AB 976 Page 5 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, AB 976 Page 6 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 AB 976 Page 7 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. AB 976 Page 8 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 AB 976 Page 9 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