BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON ENVIRONMENTAL QUALITY
                              Senator Wieckowski, Chair
                                2015 - 2016  Regular 
           
          Bill No:            AB 2748
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          |Author:    |Gatto                                                |
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          |Version:   |6/2/2016               |Hearing      | 6/29/2016      |
          |           |                       |Date:        |                |
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          |Urgency:   |No                     |Fiscal:      |No              |
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          |Consultant:|Rachel Machi Wagoner                                 |
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          SUBJECT:  Environmental disaster:  release of claims:  statute of  
          limitations:  attorneys' fees.

            ANALYSIS:
          
          1) Existing law provides that an obligation is extinguished by a  
             release given to the debtor by the creditor, upon a new  
             consideration, or in writing, with or without new  
             consideration. A general release does not extend to claims the  
             creditor does not know or suspect to exist in his or her favor  
             at the time of executing the release, which if known by him or  
             her must have materially affected his or her settlement with  
             the debtor.


          2) Under this bill, a partial or interim payment or  
             reimbursement, made in connection with an environmental  
             disaster by the responsible polluter or any agent or entity  
             related to the responsible polluter to any recipient, does not  
             release the polluter from liability to the recipient for any  
             claim related to the environmental disaster or for any future  
             claim by the recipient against the polluter, or for both  
             current and future claims. 


          3) This bill prohibits any such partial or interim payment or  
             reimbursement from being conditioned upon the recipient's  
             agreement to release the polluter from liability for any  
             current or future claim. 








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          4) This bill would allow such a payment or reimbursement to any  
             recipient to be credited against the liability of the  
             polluter, agent, or entity to the recipient for any current or  
             future claim that is related to the environmental disaster.


          5) Under this bill, a temporary or final settlement of any kind  
             made in connection with an environmental disaster by the  
             responsible polluter or any agent or entity related to the  
             responsible polluter, to any claimant, would release the  
             responsible polluter, agent, or entity from liability to the  
             claimant only for acts, omissions, or injuries that are  
             believed by the claimant to have occurred prior to the date of  
             the settlement, and would not release any claim that is  
             unknown to the claimant at the time of the settlement, occurs  
             subsequent to the settlement, or that is unrelated to the  
             environmental disaster.


          6) The bill makes any agreement in violation of those  
             prohibitions that is entered into on or after February 1,  
             2017, void as a matter of law and against public policy.


          7)  Existing law establishes statutes of limitations for civil  
             actions for injury or illness or wrongful death based upon  
             exposure to a hazardous material or toxic substance other than  
             asbestos, as specified. For injury or illness, the statute of  
             limitations is 2 years from the date of injury, or 2 years  
             after the plaintiff becomes aware of, or reasonably should  
             have become aware of, an injury, the physical cause of the  
             injury, and sufficient facts to put a reasonable person on  
             inquiry notice that the injury was caused or contributed to by  
             the wrongful act of another, whichever occurs later. For  
             wrongful death, the statute of limitations is no later than  
             either 2 years from the date of the death of the plaintiff's  
             decedent, or 2 years from the first date on which the  
             plaintiff is aware of, or reasonably should have become aware  
             of, the physical cause of the death and sufficient facts to  
             put a reasonable person on inquiry notice that the death was  
             caused or contributed to by the wrongful act of another,  
             whichever occurs later.









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          8) This bill, notwithstanding the above provision, establishes a  
             statute of limitations of 3 years for specified civil actions  
             for injury, illness, or wrongful death based upon exposure to  
             a hazardous material or toxic substance other than asbestos.


          9) Under existing law, except as attorneys' fees are specifically  
             provided for by statute, the measure and mode of compensation  
             of attorneys is left to the agreement of the parties.


          10)This bill authorizes the courts, in any action for private  
             nuisance against an environmental polluter defendant arising  
             out of an environmental disaster for which the defendant has  
             been adjudged civilly liable, upon motion, to award reasonable  
             attorneys' fees to a prevailing plaintiff against the  
             defendant.


          11)This bill would limit the application of its provisions to the  
             Porter Ranch area, as defined, or contamination surrounding  
             the Exide Technologies facility in the City of Vernon.


            Background
          
          Two sites of significant environmental contamination have  
          featured repeatedly in the media this year: the release of  
          natural gas from an underground storage facility in Porter Ranch,  
          and the environmental impacts related to decades-long operation  
          of a battery recycling facility in Vernon.  The leak at Porter  
          Ranch, first detected on October 23, 2015, came from one of 115  
          wells connected to the fifth largest underground natural gas  
          storage facility in the United States.  Southern California Gas  
          Company, who owns the facility, made several attempts to stop the  
          leak, but was unsuccessful in its efforts until February 18,  
          2016, by which time almost 100,000 tonnes of methane had escaped  
          into the atmosphere.  Concerns over the health impacts from the  
          release led to the evacuation of 11,000 residents and a  
          declaration of a state of emergency by Governor Brown.  According  
          to the BBC, "[a]t its peak, the flow doubled the rate of methane  
          emissions from the entire Los Angeles basin," and the "impact on  
          the climate is said to be the equivalent of the annual emissions  








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          of half a million cars."  The scale of the leak makes it the  
          largest in U.S. history, and, according to researchers, "had a  
          far bigger warming effect than the BP oil spill in the Gulf of  
          Mexico in 2010."  

          The contamination resulting from smelter operations in the City  
          of Vernon by Exide Technologies, by contrast, continued over a  
          significantly longer period of time.  Exide melts down more than  
          22 million batteries each year, to recycle and reuse the lead in  
          them.  It's run the Vernon facility since 2000, but one company  
          or another has been doing the same work there for more than 90  
          years.  For nearly three decades, the Department of Toxic  
          Substances Control allowed the plant to operate on interim permit  
          status.  The South Coast Air Quality Management District has  
          cited the plant at least 41 times since 2003, often for excessive  
          lead emissions, and the District reported in March of 2013 that  
          "arsenic emissions from the plant created an elevated risk of  
          cancer in an area stretching from Boyle Heights to Huntington  
          Park.  

          More recently, as reported by the Los Angeles Times, "[as]  
          demands to close the plant mounted from community groups and  
          elected officials, the company revealed in 2014 it was under  
          federal criminal investigation," and in March of 2015, "the  
          company signed an agreement with the U.S. attorney's office to  
          close [the site] permanently."  Under the terms of that  
          agreement, "Exide and its employees [will] avoid prosecution for  
          years of environmental crimes, including illegal storage,  
          disposal and shipment of hazardous waste, while agreeing to pay  
          $50 million to demolish and clean the plant and surrounding  
          communities, including $9 million set aside for removing lead  
          from homes."  

          This bill would enact specified procedural changes that allow  
          individuals harmed by these two environmental catastrophes to  
          seek awards of attorney fees, as well as additional time to bring  
          civil actions.  This bill would also limit the ability of  
          responsible polluters to limit their civil liability by offering  
          litigants certain payments in advance of litigation or through  
          settlement agreements.

            Comments
          
          1) Purpose of Bill.  The author states:








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            Between the devastating Exide battery plant lead contamination  
            disaster in Boyle Heights and the natural gas leak at the Aliso  
            Canyon storage field, the last year has shed light on the lack  
            of sufficient legal remedies to help victims deal with the  
            ramifications of environmental disasters.  In the case of the  
            Aliso Canyon gas well leak, according to the Environmental  
            Defense Fund, 96,000 metric tons of methane, a powerful climate  
            pollutant, is estimated to have been released into the  
            atmosphere as a result of the leak, having the same 20-year  
            climate impact as burning nearly one billion gallons of  
            gasoline.  In the months following detection of the leak,  
            thousands of residents were relocated to temporary housing.   
            Many reported health issues such as headaches, nausea,  
            nosebleeds and dizziness.

            At this point, it is difficult to know what the long-term  
            effects of the nearly six-month leak on the local environment  
            and population will be.  Researchers at USC intend to study the  
            long-term health effects of the gas leak on area residents, but  
            given the fact that the long- term effects of the chemical  
            exposure are largely unknown, residents of Porter Ranch may not  
            know for years how and if they have been injured by the gas  
            leak.  Other types of environmental disasters likely bear  
            similar threat to communities and therefore deserve the same  
            relief.

            AB 2748 endeavors to provide victims of environmental disasters  
            better access to remedies available to them through our  
            judicial system.  This legislation has taken the lessons  
            learned as a result of these most recent environmental crises  
            in the state, to provide legal relief to not only those who  
            have already suffered, but also future victims of serious,  
            catastrophic pollution. . . . The bill offers three provisions  
            to provide key protections to those who suffered from the  
            environmental catastrophes in the Porter Ranch area and  
            surrounding the Exide Technologies facility in the City of  
            Vernon:
                 first, the proposed legislation will ensure that any  
               temporary or final settlement made in connection with an  
               environmental disaster shall not release any claim that is  
               unknown to the claimant at the time of the settlement,  
               occurs subsequent to the settlement, or that is unrelated to  
               the environmental disaster;








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                 second, the bill will extend the current statute of  
               limitations for civil actions for injury or illness or  
               wrongful death based upon exposure to a hazardous material  
               or toxic substance to three years; and
                 third, it will authorize the court to award reasonable  
               attorneys' fees to a prevailing plaintiff against the  
               defendant for residents who bring private actions.

          1) Good for some but not all?  The author has outlined the  
             devastation and havoc that the above environmental disasters  
             have caused for the communities around the sites and is  
             proposing the changes to law in this bill to protect these  
             communities into the future.  But if this is good public  
             protection policy for the communities in these two areas,  
             shouldn't the Legislature provide the same protections for  
             other communities that may be similarly affected by future  
             environmental disasters?  It is unclear why this bill is  
             limited to Porter Ranch and Exide.  The committee may wish to  
             amend the bill to make it statewide policy.
            
          Related/Prior Legislation
           
          Related Pending Legislation  :

          SB 887 (Pavley, 2016) would provide a framework for reforming  
          oversight of natural gas storage facilities by, among other  
          things, mandating minimum standards for gas storage well  
          inspections, monitoring, and testing; training of personnel; leak  
          monitoring, planning for emergency response; developing and  
          incorporating best practices into regulations; and an assessment  
          of risk to determine setback distances for gas storage wells.   
          This bill is pending in the Assembly Committee on Natural  
          Resources.

          SB 1304 (Huff, 2016) authorizes the board of supervisors of a  
          county to provide for reassessment of property destroyed or  
          damaged by a major misfortune or calamity in an area or region  
          subsequently proclaimed by the Governor to be in a state of  
          emergency, and specifies that "damage" includes a diminution in  
          the value of property as a result of environmental contamination.  
           This bill is pending in the Assembly Committee on Revenue and  
          Taxation.

          AB 1902 (Wilk, 2016) would establish a 3 year statute of  








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          limitations for commencing a civil action for injury, illness, or  
          wrongful death based on exposure to methane, benzene, mercaptan,  
          or any other hazardous material or toxic substance resulting from  
          the Southern California Gas Company Aliso Canyon SS-25 gas leak,  
          as specified.  This bill is pending in the Assembly Judiciary  
          Committee.

          AB 1903 (Wilk, 2016) would require the Public Utilities  
          Commission to authorize a study by the Office of Environmental  
          Health Hazard Assessment of the long-term health impacts of the  
          significant natural gas leak from the Aliso Canyon natural gas  
          storage facility located in the County of Los Angeles that  
          started on approximately October 23, 2015, as specified.  This  
          bill is pending in the Senate Appropriations Committee.

          AB 1904 (Wilk, 2016) would require the Office of Environmental  
          Health Hazard Assessment to submit a report to the Legislature,  
          on or before January 1, 2019, that includes an assessment of the  
          danger of odorants currently used in natural gas storage  
          facilities in the state to public health and safety and the  
          environment, and that identifies alternative odorants for  
          possible use in natural gas storage facilities, as specified.   
          This bill is pending in the Senate Committee on Rules.

          AB 1905 (Wilk, 2016) would require the Secretary of the Natural  
          Resources Agency, on or before July 1, 2017, to commission an  
          independent scientific study on natural gas injection and storage  
          practices and facilities.  This bill was held under submission by  
          the Assembly Committee on Appropriations.

          AB 2153 (C. Garcia, 2016) would, among other things, require a  
          manufacturer of lead-acid batteries to remit to the State Board  
          of Equalization a manufacturer battery fee of $1 for each  
          lead-acid battery it sells for deposit into the Lead-Acid Battery  
          Cleanup Fund, as specified, and would provide for certain credits  
          against liability for a person who remits manufacturer battery  
          fees if that person is held responsible by any court, regional  
          board, agency, or any other authority for certain hazardous  
          substance violations.  This bill is pending in the Senate  
          Committee on Environmental Quality.

           Prior Legislation  :

          SB 93 (de León, Chapter 9, Statutes of 2015) requires the  








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          Director of Finance to transfer up to $176,600,000 as a loan from  
          the General Fund to the Toxic Substances Control Account for the  
          Department of Toxic Substances Control to use for activities  
          related to the lead contamination in the communities surrounding  
          the Exide Technologies facility in the City of Vernon.

          SB 380 (Pavley, Chapter 14, Statutes of 2016) among other things,  
          continues a moratorium on injection of natural gas at the Aliso  
          Canyon gas storage facility until specified criteria are met,  
          requires the feasibility of the storage facility to be addressed  
          and requires the California Public Utilities Commission, with  
          input from others, to determine the amount of gas necessary at  
          the facility for safety, regional reliability and to ensure just  
          and reasonable rates.

          AB 118 (Santiago, Chapter 10, Statutes of 2016) appropriates  
          $176,600,000 from the Toxic Substances Control Account in the  
          General Fund to the Department of Toxic Substances Control for  
          activities related to the cleanup and investigation of  
          lead-contaminated properties in the communities surrounding the  
          Exide Technologies facility in the City of Vernon, including job  
          training activities, and actions taken to pursue all available  
          remedies against potentially responsible parties.
          
          DOUBLE REFERRAL:  

            This measure was heard in Senate Judiciary Committee on June 21,  
          2016.  It passed out of committee with a vote of 4-2.

          SOURCE:                    Author  

           SUPPORT:               

          California Coastal Protection Network
          California Labor Federation
          California League of Conservation Voters
          Clean Water Action
          Coalition for Clean Air
          Consumer Attorneys of California
          Courage Campaign
          Environmental Justice Coalition for Water
          Environmental Working Group
          Food and Water Watch
          Natural Resources Defense Council








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          Sierra Club California
          State Building and Construction Trades Council, AFL-CIO
          Trust for Public Land
          Wholly H2O 
           
           OPPOSITION:    

          American Chemistry Council
          American Insurance Association
          California Chamber of Commerce
          California Independent Petroleum Association
          California League of Food Processors
          California Manufacturers and Technology Association
          California Metals Coalition
          California Railroad Industry
          Chemical Industry Council of California
          Civil Justice Association of California
          National Federation of Independent Business
          Western Plant Health Association
          Western Plastics Association
          Western States Petroleum Association
            
          ARGUMENTS IN  
          SUPPORT:  A coalition of environmental groups, writing in  
          support, states:

            [c]urrently, polluters that cause environmental disasters can  
            condition any sort of aid on a waiver of liability for their  
            harms.  This limits the relief of those who have been wronged  
            at their most desperate hour.  When a person is forced out of  
            their home and has nowhere to turn, it is unconscionable to  
            condition an offering of shelter by a guilty polluter on a  
            waiver of the right to sue.  This bill does not, however, limit  
            the ability for parties to reach a final settlement once a  
            claim is actually brought to court and is consistent with a  
            preference for settlements being reached where justice is best  
            served.

            Another issue is that final settlements can lead to a waiver of  
            any future claims that arise from the disaster.  Families  
            should not surrender future claims for unforeseen harms that  
            arise later when settling current claims.  Settling for a harm  
            to personal property today should not be contingent on waiving  
            a future claim for health problems a family may discover later  








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            on.  This is not reopening claims that have already been  
            settled, but rather it is not allowing polluters to escape  
            liability because citizens seek a settlement today, not  
            contemplating the horrific problems that may arise later.
           
           ARGUMENTS IN OPPOSITION:   
          A coalition of business groups, writing in opposition, states:

            Release clauses are one of the primary incentives for  
            defendants to settle disputes and avoid prolonged, expensive  
            litigation.  Indeed, California law and case law both recognize  
            the ability for parties to contract to extinguish claims (See,  
            e.g., Civil Code §1541).  The Civil Code also states that a  
            general release does not extend to claims which the person  
            granting the release does not know or suspect to exist in his  
            or her favor at the time of executing the release (Civil Code  
            §1542).  Notwithstanding this provision, parties to a dispute  
            are permitted to agree to waive the protections of Civil Code  
            Section 1542, which must be accompanied by evidence that the  
            releasing party intended to release unknown claims.  (McCray v.  
            Casual Comer, Inc. (C.D. Cal. 1992) 812 F.Supp. 1046).  It is  
            critical to preserve litigants' ability to waive Section 1542  
            to maximize the potential to settle potential litigation.   
            Indeed, when a business settles a claim with a party, the  
            business should have certainty that the same party will not sue  
            the business the day after a settlement is reached regarding a  
            claim that could have been raised at the time of settlement.   
            Yet, AB 2748 would essentially assure such an outcome, thereby  
            eliminating the incentive to settle. . . . Parties should be  
            permitted to enter into a mutually agreeable settlement to  
            avoid prolonged litigation and thus promote the long-held  
            California policy to encourage settlement over litigation;  
            however, AB 2748 attempts to dictate contractual provisions  
            and, in doing so, will guarantee an influx of litigation.
                                           
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