BILL ANALYSIS                                                                                                                                                                                                    






                             SENATE JUDICIARY COMMITTEE
                             Senator Noreen Evans, Chair
                              2013-2014 Regular Session


          AB 976 (Atkins)
          As Amended May 28, 2013
          Hearing Date: July 2, 2013
          Fiscal: Yes
          Urgency: No
          BCP


                                        SUBJECT
                                           
           Coastal Resources: California Coastal Act of 1976: Enforcement  
                                      Penalties

                                      DESCRIPTION  

          This bill would authorize the California Coastal Commission to  
          impose an administrative civil penalty that may not exceed 75  
          percent of the amount the court could impose for the same  
          violation of the California Coastal Act.

          This bill would additionally require the Commission to take  
          specified factors into account when determining the amount of  
          the penalty, and allow the Commission to record a lien if the  
          penalty is not paid. 

                                      BACKGROUND  

          The California Coastal Commission (Commission), initially  
          created by voter initiative and permanently established by the  
          California Coastal Act of 1976 (Act), seeks to protect the  
          state's natural and scenic resources along the California coast.  
           The Commission's primary responsibility is to implement the  
          provisions of the Act, including regulation of development in  
          the coastal zone.  The commission's core program activities  
          include issuing and enforcing permits for coastal development.

          This bill seeks to implement several recommendations made by the  
          Legislative Analyst's Office (LAO) in its analysis of the  
          2008-09 Budget Bill relating to the Coastal Commission.  That  
          LAO report stated:

                                                                (more)



          AB 976 (Atkins)
          Page 2 of ?



            Currently, in order for the commission to issue a fine or  
            penalty, the commission must file a case in the superior  
            court.  This process is cumbersome and results in few fines  
            and penalties issued by the commission due to the high cost  
            of pursuing enforcement through the courts.  This, in turn,  
            is reflected in the commission's budget where enforcement  
            fines and penalty revenues remain stable at $150,000, with  
            no change from the current year.  By contrast, based on our  
            review of other state and local regulatory agencies in the  
            resources area, those which administratively assess  
            fines/penalties tend to have this as a growing source of  
            support for their enforcement activities. . . .

            We further recommend the enactment of legislation enabling  
            the commission to issue fines and penalties directly for  
            enforcement actions, rather than through the court process,  
            as an additional means to stabilize funds available to the  
            commission. . . .

          Accordingly, this bill would allow the Commission to impose an  
          administrative civil penalty in an amount not to exceed 75  
          percent of the amount that the court may impose for the same  
          violation.  This bill is substantially similar to SB 588 (Evans,  
          2011), which was not set for hearing in this Committee, and AB  
          226 (Ruskin, 2009), which was approved by this Committee but  
          later gut-and-amended on the Senate Floor.

                                CHANGES TO EXISTING LAW
           
           Existing law  , the California Coastal Act of 1976, authorizes the  
          California Coastal Commission (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.  (Pub. Res. Code  
          Sec. 30810.)

           Existing law  permits a superior court to impose civil liability  
          of up to $30,000 on any person or local government who performs  
          or undertakes development that is in violation of the Act or  
          inconsistent with a coastal development permit, local coastal  
          program, or certified port master plan, as specified.   
          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  
          deemed intentional and knowing.  (Pub. Res. Code Sec. 30820.)

                                                                      



          AB 976 (Atkins)
          Page 3 of ?



           Existing law  provides that funds received from the payment of a  
          penalty are to be deposited into the Violation Remediation  
          Account of the Coastal Conservancy Fund, until appropriated by  
          the Legislature, for purposes of carrying out the Act.  (Pub.  
          Res. Code Sec. 30823.)

           This bill  would additionally allow the Commission to impose an  
          administrative civil penalty not to exceed 75 percent of the  
          amount of the maximum penalty that may be imposed by a court,  
          for each violation of the Act.  Those penalties must be imposed  
          by a majority vote of the commissioners present in a duly  
          noticed public hearing, as specified.

           This bill  would provide that in determining the amount of civil  
          liability, the commission shall take into account the following  
          factors:  (1) the nature, circumstance, extent, and gravity of  
          the situation; (2) whether the violation is susceptible to  
          restoration or other remedial measures; (3) the sensitivity of  
          the resource affected by the violation; and (4) the cost to the  
          state of bringing an action.

           This bill  would provide that a person shall not be subject to  
          both monetary civil liability under the provisions added by this  
          bill and monetary civil liability imposed by a superior court  
          for the same act or failure to act.  This bill would further  
          provide that if a person who is assessed a penalty under this  
          bill fails to pay the administrative penalty, otherwise fails to  
          comply with a restoration or cease and desist order issued in  
          connection with the penalty action, or challenges any of these  
          actions by the commission in a court of law, the commission may  
          maintain an action or otherwise engage in judicial proceedings  
          to enforce those requirements and the court may order relief, as  
          specified.

           This bill  would provide that if a person fails to pay a penalty  
          imposed by the Commission, the Commission may record a lien on  
          the property in the amount of the penalty assessed by the  
          Commission.  That lien shall have the force, effect, and  
          priority of a judgment lien.

           This bill  would define "person" as not including local  
          governments, special districts, or agencies thereof when acting  
          in their legislative or adjudicative capacities.

           This bill  would further codify that it is the intent of the  
          Legislature to ensure that unintentional, minor violations of  
                                                                      



          AB 976 (Atkins)
          Page 4 of ?



          the Act that only cause de minimus harm will not lead to the  
          imposition of civil penalties if the violator has acted  
          expeditiously to correct the violation.

           This bill  would sunset on January 1, 2017.

                                        COMMENT
           
          1.   Stated need for the bill  

          According to the author:

            It is a fundamental principle that preventing a law from  
            being broken is preferable to needing to enforce a law after  
            it has been broken.  For public agencies with enforcement  
            responsibilities, having the ability to deter violations of  
            the laws they must uphold is a cornerstone of the regulatory  
            framework. For environmental enforcement agencies,  
            deterrence is especially imperative because fully restoring  
            a damaged natural resource can be extremely difficult or  
            even impossible in many cases.

            The most common mechanism among public enforcement agencies  
            to discourage violations of the law is their authority to  
            impose monetary penalties administratively - otherwise known  
            as Administrative Civil Liability (ACL) authority.  The  
            rationale behind ACL is that an adequate monetary penalty  
            will remove any significant economic benefit which results  
            from failing or refusing to comply with the law.

            The Coastal Commission is a rare exception among state and  
            local enforcement agencies in California.  Despite its  
            tremendous responsibility to implement and enforce the  
            Coastal Act which protects California's 1,100 miles of  
            coast, the Coastal Commission wholly lacks administrative  
            penalty authority.

            The consequences of the Commission's inability to deter  
            violations of the Coastal Act are clear and present.  At  
            Commission meetings, dissatisfaction is regularly expressed  
            by members of the public about the persistence of  
            acknowledged violations that have not been resolved by the  
            Commission.  Indeed, these complaints are validated by the  
            Commission's current backlog of over 1,800 open enforcement  
            cases.  

                                                                      



          AB 976 (Atkins)
          Page 5 of ?



            At the current rate of resolution, it would take more than  
            100 years to address the existing cases assuming that no new  
            cases were reported.  However, new enforcement cases are  
            opened faster than the Commission can close its existing  
            cases because the Commission lacks the necessary enforcement  
            mechanism to deter violations.
            . . .
            AB 976 allows the California Coastal Commission the ability  
            to enforce against intentional violations of the coastal  
            act.  AB 976 accomplishes this goal by granting the  
            Commission the ability to administratively impose fines upon  
            serious and intentional violators of the California Coastal  
            Act.

          2.    Administrative penalties   

          Under existing law, the California Coastal Commission  
          (Commission) has authority to, among other things, seek civil  
          penalties of up to $30,000, a daily penalty between $1,000 and  
          $15,000 for intentional and knowing violations, and exemplary  
          damages.  Those penalties must be imposed by a court, which,  
          according to the author, results in expensive litigation, and  
          requires the Commission to retain the Attorney General to  
          litigate cases on its behalf as well as defend the Commission in  
          court.

          This bill would additionally allow the Commission to impose an  
          administrative civil penalty in an amount not to exceed 75  
          percent of the amount that may currently be imposed by a court.   
          Regarding the need for that authority, the Commission asserts  
          that "[b]ecause neither the Commission nor the Attorney General  
          has the necessary resources to litigate the more than 1,800  
          backlogged enforcement cases currently pending, the Commission's  
          preferred method of resolution is through the issuing of Cease  
          and Desist Orders.  While staff can sometimes negotiate the  
          payment of voluntary settlements through 'consent orders,'  
          violators that refuse to work cooperatively with the Commission  
          cannot be assessed any penalties.  This creates a reverse  
          incentive for voluntary resolution, and no deterrence at all for  
          violating the Coastal Act.  As a result, new cases are reported  
          faster than the Commission can resolve them, and the backlog  
          continues to grow."  The author further notes that state courts  
          have been overburdened and underfunded, and that, as a result,  
          "[c]ases frequently take a year or more to come to trial.  For  
          violations of the Coastal Act, this delay can mean that damage  
          to environmentally sensitive habitats persists without repair,  
                                                                      



          AB 976 (Atkins)
          Page 6 of ?



          and access to free public spaces continues to be denied."     

          A coalition of business, manufacturing, and real estate  
          associations, in opposition, assert that "allowing the  
          Commission to impose administrative civil penalties [] is  
          unnecessary, is bad public policy, and would create an  
          unacceptable dynamic whereby the Commissioners and Commission's  
          staff would be incentivized to impose fines and penalties, at  
          the expense of due process and rights for the accused, rather  
          than pursuing those fines and penalties through the judicial  
          branch where that function properly belongs."  The opposition  
          further contends that "it is difficult to believe that there are  
          ongoing egregious violations and harm to the environment that  
          the Coastal Commission has failed to pursue, or lacks the  
          authority to pursue," and that the current practice of pursuing  
          enforcement penalties in court is not costly to the Commission  
          because the Attorney General's services are paid for through the  
          Attorney General's budget.  In response, the author notes that  
          there are currently 1,800 open enforcement cases, and that  
          "[t]he Attorney General has very limited resources to bring the  
          Commission's cases to court.  In the last 10 years, the  
          Commission has initiated litigation in only four (4) exceptional  
          cases.  And in those rare circumstances when the Commission can  
          elevate enforcement cases to court, it is not even guaranteed  
          that a judgment can be collected when the Attorney General  
          prevails on behalf of the Commission."  

          Staff notes that when this Committee heard AB 226 (Ruskin,  
          2009), the author of that bill accepted suggested amendments  
          (included in this bill) to clarify that the proposed  
          administrative penalties would be imposed in the context of a  
          duly noticed public hearing.  That clarification was important  
          to ensure that the procedure for assessing those penalties  
          complied with procedural due process (generally requiring notice  
          and a meaningful opportunity to be heard), and was consistent  
          with the penalty authority of other state agencies.  The  
          Commission describes the proposed process as follows:

            The penalties imposed pursuant to this new section would be  
            imposed in the context of a hearing on issuance of a cease  
            and desist order (pursuant to [Public Resources Code]  
            section 30810), a hearing on issuance of a restoration order  
            (pursuant to [Public Resources Code] section 30811), or a  
            hearing to determine whether a violation has occurred so  
            that a notice of violation can be recorded against the  
            property (pursuant to [Public Resources Code] 30812).  The  
                                                                      



          AB 976 (Atkins)
          Page 7 of ?



            existing statutes and the regulations for each of these  
            types of hearings already provides for multiple types of  
            notice.  Therefore, the imposition of administrative  
            penalties would simply be a component of a duly noticed  
            public hearing that would be noticed and conducted  
            consistent with existing law and regulations.  
          It should also be noted that the present bill is based upon a  
          recommendation by the Legislative Analyst's Office to "[enact]  
          legislation enabling the commission to issue fines and penalties  
          directly for enforcement actions, rather than through the court  
          process . . . ."  

          3.    Opposition's judiciary-related concerns   

          As noted above, the opposition contends that the imposition of  
          monetary penalties is a judicial function and should remain with  
          the judicial branch.  The opposition further argues that:  
          "Property owners alleged to have violated the Coastal Act would  
          be afforded less due process in the Commission's proceedings  
          than they would otherwise for any other permit or planning  
          matter before the Commission.  Commissioners are allowed under  
          statute to communicate with applicants on any matter before the  
          Commission as long as they disclose the communications.   
          However, Commission staff has advised commissioners not to  
          engage in communications with alleged violators.  Individuals  
          facing potentially significant fines should be afforded at least  
          the same level of communication that any other person with a  
          proceeding before the Commission is provided."

          In response, the Commission notes that it has always been a  
          quasi-judicial agency that takes action on enforcement and other  
          matters, that the Commission's actions are subject to judicial  
          review, and that the Commission's current power to impose permit  
          requirements and issue cease and desist orders are decisions  
          that address matters of much greater financial consequence than  
          the proposed penalties.  The Commission also maintains that  
          other administrative bodies routinely and successfully make  
          similar penalty decisions with higher dollar amounts.  The  
          Coastal Commission further states: 

            Just as plaintiffs or defendants cannot lobby a judge or  
            juror in a court of law, it is not appropriate for an  
            alleged violator to contact Commissioners regarding an  
            enforcement proceeding pending before the Commission.  Both  
            the Commission's Chief Counsel and the Attorney General have  
            advised the Commission not to engage in such ex-parte  
                                                                      



          AB 976 (Atkins)
          Page 8 of ?



            communications regarding enforcement matters precisely  
            because proceedings are quasi-adjudicatory proceedings and  
            ex-parte communications would jeopardize the validity of the  
            public hearing process.

          The Commission additionally notes that all penalties so  
          collected would be deposited into the Violation Remediation  
          Account, which is administered by the State Coastal  
          Conservancy, and is subject to appropriation by the  
          Legislature.

          4.     Exemption for legislative and adjudicative decisions of  
          local agencies   

          This bill would provide that "person" does not include local  
          governments, special districts, or agencies thereof when acting  
          in their legislative or adjudicative capacities.  Staff notes  
          that that exemption is identical to language added to AB 226  
          (Ruskin, 2009) to address the belief of the League of California  
          Cities that ". . . the Commission should [not] have the  
          administrative authority to unilaterally fine local governments  
          for their legislative and adjudicative decisions - especially if  
          those decisions would provide the Commission additional leverage  
          over [an] unrelated zoning code or ordinance as it applies in  
          the coastal zone."

          5.    Ability to record a lien   

          This bill would further provide that the failure to pay the fine  
          imposed by the Commission shall allow the Commission to record a  
          lien on the property in the amount of the assessed penalty.  To  
          clarify that the lien's priority is established based on the  
          time of recordation (and to ensure that it is not a super lien  
          that takes precedence over other liens), the bill states that  
          the lien "shall have the force, effect, and priority of a  
          judgment lien."

          6.  Author's amendments agreed to in previous Committee  

          The author agreed in the Senate Committee on Natural Resources  
          and Water to take two amendments in this Committee due to  
          procedural timing constraints.  Those amendments would:  (1)  
          require the Commission to prepare and submit a report to the  
          Legislature by January 15, 2016; and (2) provide that violators  
          of the Coastal Act who fix certain violations within 30 days of  
          receiving notice of the violation be exempted from the proposed  
                                                                      



          AB 976 (Atkins)
          Page 9 of ?



          administrative civil penalties.  Those amendments ensure that  
          the Legislature has information as to the effectiveness of the  
          penalties prior to the January 1, 2017 sunset date, and,  
          consistent with the language stating the intent to not impose  
          penalties for unintentional, minor violations, allow a property  
          owner to correct a violation within 30 days of notification from  
          the Commission.

                Author's amendments:  

            On page 3, strike line 34 and insert:

            (h) Administrative penalties pursuant to subdivision (a) shall  
            not be assessed if the property owner corrects the violation  
            consistent with this division within 30 days of receiving  
            written notification from the commission regarding the  
            notification, and if the alleged violator can correct the  
            violation without undertaking additional development that  
            requires a permit under this division.  This subdivision shall  
            not apply to violations of previous permit conditions.
            (i) The commission shall prepare and submit, pursuant to  
            Section 9795 of the Government Code, a report to the  
            Legislature by January 15, 2016, that includes all of the  
            following:
            (1) The number of new violations reported annually to the  
            commission from January 1, 2014 to December 31, 2015,  
            inclusive.
            (2) The number of violations resolved from January 1, 2014 to  
            December 31, 2015, inclusive.
            (3) The number of administrative penalties issued pursuant to  
            this section, the dollar amount of the penalties, and a  
            description of the violations from January 1, 2014, to  
            December 31, 2015, inclusive.
            (j) This section shall remain in effect only until January 1,  
            2017, and as of that date is repealed, unless a later enacted  
            statute, that is enacted before January 1, 2017, deletes or  
            extends that date.


           Support  :  Advocate Committee for Green Foothills; Azul; Black  
          Surfers Collective; California Coastal Protection Network;  
          California Coastkeeper Alliance; California Native Plant  
          Society; Coastwalk California; Environmental Action Committee of  
          West Marin; Environmental Defense Center; Environmental Defense  
          Fund; Environmental Protection Information Center; Environmental  
          Water Caucus; Friends of Del Norte; Green California; Heal the  
                                                                      



          AB 976 (Atkins)
          Page 10 of ?



          Bay; League for Coastal Protection; National Parks Conservation  
          Association; Natural Resources Defense Council; North County  
          Watch; Northcoast Environmental Center; Ocean Conservancy; Paw  
          PAC; Planning and Conservation League; Save the Park; Sierra  
          Club California; Surfrider Foundation; Terra Foundation, San  
          Luis Obispo; The Wildlands Conservancy; WiLDCOAST

           Opposition  :  Alliance for Local Sustainable Agriculture;  
          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  
          Cotton Ginners and Growers Association; California Farm Bureau  
          Federation; California Fisheries and Seafood Institute;  
          California Independent Petroleum Association; California  
          Manufacturers and Technology Association; California Railroad  
          Industry; California Sea Urchin Commission; California Travel  
          Association; California Wetfish Producers Association; Employers  
           Council of Mendocino County; Mendocino County Cattlemen's  
          Association; Nisei Farmers League; Orange County Board of  
          Supervisors; Orange County Business Council; Southwest  
          California Legislative Council; Ventura County Cattlemen's  
          Association; Western Agricultural Processors Association;  
          Western States Petroleum Association

                                        HISTORY
           
           Source  :  California Coastal Commission

           Related Pending Legislation  :  None Known

           Prior Legislation  :

          SB 588 (Evans, 2011) See Background.

          AB 226 (Ruskin, 2009) See Background.
           Prior Vote  :

          Senate Committee on Natural Resources and Water (Ayes 6, Noes 2)
          Assembly Floor (Ayes 42, Noes 32)
          Assembly Appropriations (Ayes 12, Noes 5)
          Assembly Judiciary (Ayes 6, Noes 2)
          Assembly Natural Resources (Ayes 6, Noes 3)
                                                                      



          AB 976 (Atkins)
          Page 11 of ?




                                   **************