BILL ANALYSIS Ó AB 2820 Page 1 Date of Hearing: May 4, 2016 ASSEMBLY COMMITTEE ON APPROPRIATIONS Lorena Gonzalez, Chair AB 2820 (Chiu) - As Amended March 15, 2016 ----------------------------------------------------------------- |Policy |Public Safety |Vote:|7 - 0 | |Committee: | | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | | | | | | | | | | | | | | | ----------------------------------------------------------------- Urgency: No State Mandated Local Program: YesReimbursable: No SUMMARY: This bill revises the definition of state of emergency and local emergency for purposes of criminal price gouging to include various other natural and manmade disasters. It specifies that criminal price gouging includes rental of any housing with an initial lease of up to one year for purposes of criminal price gouging. And it includes the transportation of persons and towing services in the criminal price gouging during a declared AB 2820 Page 2 emergency. FISCAL EFFECT: As violation of the above is a misdemeanor, minor nonreimbursable costs for incarceration, offset to a degree by fine revenue. COMMENTS: 1)Background. Current law provides that upon the declaration of a local emergency resulting from an earthquake, flood, fire, riot, storm, or natural or manmade disaster by the executive officer of any county, city, or city and county, and for a period of 30 days following that declaration, it is unlawful for a person, or entity to sell or offer to sell any consumer food items or goods, goods or services used for emergency cleanup, emergency supplies, medical supplies, home heating oil, building materials, housing (month to month), transportation, freight, and storage services, or gasoline or other motor fuels for a price of more than 10 percent above the price charged by that person for those goods or services immediately prior to the proclamation of emergency. However, the increase in price may be allowable if the providers can demonstrate their cost was also increased as result of the circumstances. Violation of current law is a misdemeanor and is punishable by up to one year in county jail and/or a fine of up to $10,000. 2)Purpose. According to the author, "Following the devastating Aliso Canyon gas leak, unscrupulous individuals took advantage of a tragic loophole in current law and raised the prices of AB 2820 Page 3 housing and services. AB 2820 updates current law to ensure that whether the disaster prompting the declaration of a state of emergency is natural or manmade, familiar or totally unprecedented, consumers across the state will be protected from excessive price increases. Disaster victims should not be victimized twice." The existing statute has different definitions of what constitutes a triggering emergency depending on the type of goods or services being sold. For example, the prohibition against increasing hotel or motel prices more than 10% does not apply if the emergency is a result of a manmade disaster. In contrast, the prohibition on price increases for goods such as food, medical supplies, housing, or gasoline includes both natural and manmade disasters. This bill provides a consistent definition of emergency throughout the statute, including both natural and manmade disasters. AB 2820 bill applies the definitions consistently within the existing statute prohibiting price gouging during a declared emergency. 3)Support. According to The Consumer Attorneys of California, "The need for this bill is highlighted by the aftermath of the Aliso Canyon gas leak. Following the devastating leak, unscrupulous individuals took advantage of a traffic loophole in current law and raised the prices of short-term rentals. Current law protects those with month-to-month leases, but does not apply if the initial lease is longer than 30 days. It also does not apply to hotel and motel operators if the disaster is man-made rather than natural, leaving families vulnerable to exploitation. Analysis Prepared by:Pedro Reyes / APPR. / (916) 319-2081 AB 2820 Page 4