BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 2820|
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THIRD READING
Bill No: AB 2820
Author: Chiu (D)
Amended: 3/15/16 in Assembly
Vote: 21
SENATE PUBLIC SAFETY COMMITTEE: 6-0, 6/14/16
AYES: Hancock, Anderson, Glazer, Leno, Liu, Monning
NO VOTE RECORDED: Stone
SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8
ASSEMBLY FLOOR: 68-10, 5/9/16 - See last page for vote
SUBJECT: Crimes: price gouging: states of emergency
SOURCE: Author
DIGEST: This bill revises the definition of state of emergency
and local emergency for purposes of criminal price gouging,
specifying that criminal price gouging during a declared
emergency includes the rental of any housing with an initial
lease of up to one year and also the transportation of persons
and towing services.
ANALYSIS:
Existing law:
1) Finds that during emergencies and major disasters,
including, but not limited to, earthquakes, fires, floods, or
civil disturbances, some merchants have taken unfair
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advantage of consumers by greatly increasing prices for
essential consumer goods and services. (Penal Code § 396,
subd. (a).)
2) States that it is the intent of the Legislature to protect
citizens from excessive and unjustified increases in the
prices charged during or shortly after a declared state of
emergency for goods and services that are vital and necessary
for the health, safety, and welfare of consumers. (Penal Code
§ 396, subd. (a).)
3) Provides that upon the declaration of a state of emergency
resulting from an earthquake, flood, fire, riot, storm, or
natural or manmade disaster declared by the President of the
United States or the Governor, or 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, contractor, business, or other 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, 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. (Penal Code § 396, subd. (b).)
4) States that upon the declaration of a state of emergency
resulting from an earthquake, flood, fire, riot, or storm
declared by the President of the United States or the
Governor, or upon the declaration of a local emergency
resulting from an earthquake, flood, fire, riot, or storm by
the executive officer of any county, city, or city and
county, and for a period of 180 days following that
declaration, it is unlawful for a contractor to sell or offer
to sell any repair or reconstruction services or any services
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used in emergency cleanup for a price of more than 10 percent
above the price charged by that person for those services
immediately prior to the proclamation of emergency. (Penal
Code § 396, subd. (c).)
5) Specifies that upon the proclamation of a state of emergency
resulting from an earthquake, flood, fire, riot, storm, or
other natural disaster declared by the President of the
United States or the Governor, or upon the declaration of a
local emergency resulting from an earthquake, flood, fire,
riot, storm, or other natural disaster by the executive
officer of any county, city, or city and county, and for a
period of 30 days following that proclamation or declaration,
it is unlawful for an owner or operator of a hotel or motel
to increase the hotel or motel's regular rates, as advertised
immediately prior to the proclamation or declaration of
emergency, by more than 10 percent. (Penal Code § 396, subd.
(d).)
6) Specifies that a greater price increase for the goods and
services, mentioned above, is not unlawful if that person can
prove that the increase in price was directly attributable to
additional costs imposed by specified circumstances. (Penal
Code § 396, subd. (a)-(c).)
7) Provides that time frame prohibiting specified price
increases may be extended for additional 30-day periods by a
local legislative body or the California Legislature, if
deemed necessary to protect the lives, property, or welfare
of the citizens. (Penal Code § 396, subd. (e).)
8) States that the conduct described above is a misdemeanor
punishable by imprisonment in a county jail for a period not
exceeding one year, or by a fine of not more than $10,000, or
by both that fine and imprisonment. (Penal Code § 396 subd.
(f).)
9) Specifies that the conduct described above shall constitute
an unlawful business practice and an act of unfair
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competition. (Penal Code § 396 subd. (g).)
10)Defines "state of emergency" as "a natural or manmade
disaster or emergency resulting from an earthquake, flood,
fire, riot, or storm for which a state of emergency has been
declared by the President of the United States or the
Governor of California." (Penal Code § 396, subd. (g)(1).)
11)Defines "Local emergency" as "a natural or manmade disaster
or emergency resulting from an earthquake, flood, fire, riot,
or storm for which a local emergency has been declared by the
executive officer or governing body of any city or county in
California." (Penal Code § 396, subd. (g)(2).)
12)Defines "housing" as "any rental housing leased on a
month-to-month term" for purposes of criminal price gouging.
(Penal Code § 396, subd. (g)(2).)
13)States that except as specified, in all leases of lands from
week to week, month to month, or other period less than a
month, the landlord may, upon giving notice in writing to the
tenant, in the appropriate manner, change the terms of the
lease to take effect, as to tenancies for less than one
month, upon the expiration of a period at least as long as
the term of the hiring itself, and, as to tenancies from
month to month, to take effect at the expiration of not less
than 30 days, but if that change takes effect within a rental
term, the rent accruing from the first day of the term to the
date of that change shall be computed at the rental rate
obtained immediately prior to that change. (Civil Code § 827,
subd. (a).)
14)Specifies that the notice, when served upon the tenant,
shall in and of itself operate and be effectual to create and
establish, as a part of the lease, the terms, rents, and
conditions specified in the notice, if the tenant shall
continue to hold the premises after the notice takes effect.
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15)States that all leases of a residential dwelling, or of any
interest therein, from week to week, month to month, or other
period less than a month, the landlord may increase the rent
provided in the lease or rental agreement, upon giving
written notice to the tenant, as follows, by either of the
following procedures:
a) By delivering a copy to the tenant personally; or
(Civil Code § 827, subd. (b)(1)(A).)
b) By serving a copy by mail under the procedures as
specified. (Civil Code § 827, subd. (b)(1)(B).)
16)States that for an increase in rent greater than 10%, the
minimum notice period required pursuant to that paragraph
shall be increased by an additional 30 days, but does not
apply to an increase in rent caused by a change in a tenant's
income or family composition as determined by a
recertification required by statute or regulation. (Civil
Code § 827, subd. (b)(3).)
This bill:
1) Revises the definition of a "state of emergency" to mean a
natural or manmade disaster or emergency caused by conditions
such as, but not limited to, air pollution, earthquake, fire,
flood, storm, epidemic, riot, drought, sudden and severe
energy shortage, plant or animal infestation or disease, for
which a state of emergency has been declared by the President
of the United States or the Governor of California.
2) Revises the definition a "local emergency" to mean a natural
or manmade disaster or emergency caused by conditions such as,
but not limited to, air pollution, earthquake, fire, flood,
storm, epidemic, riot, drought, sudden and severe energy
shortage, plant or animal infestation or disease, for which a
local emergency has been declared by an official, board, or
governing body vested with authority to make such a
declaration in any city, county, or city and county in
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California.
3) Applies the definitions above, throughout the criminal price
gouging statute.
4) Includes the transportation of persons and towing services
in the crime of price gouging during a declared emergency.
5) Specifies that criminal price gouging during a declared
emergency includes any rental housing with an initial lease
term of up to one year.
Background
Aliso Canyon Disaster
In October of 2015, a large leak was discovered at the Aliso
Canyon natural gas storage facility. The methane leak forced
more than 4,600 households into temporary housing and took 112
days to plug. [http://thinkprogress.org/climate/
2016/02/12/3749190/aliso-canyon-methane-leak-stopped/] The Los
Angeles Board of Supervisors declared a state of emergency in
December of 2015. Governor Brown declared a state of emergency
in January of 2016.
A news story by KPCC in January of 2016 discussed the extent to
which rental prices increased after the leak was discovered.
KPCC quoted, Allen Brodetsky, president of Boutique Realty in
Tarzana, who stated "Where rental prices would normally go
between $3,000 and $4,000, now landlords are asking six, seven,
eight, nine thousand dollars- double, triple the rent of what it
should be."
[http://www.scpr.org/news/2016/01/07/56700/fears-of-price-gouging
-as-porter-ranch-families-lo/] Brodetsky also said that "The
rental market around Porter Ranch has gotten so hot, that some
home sellers, including a neighbor of his, have taken their
houses off the market and turn them into short-term rentals."
[ibid]
To the extent that the rent increases described above were for
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month-to-month leases and the leases were entered into after the
declaration of a state of emergency, the conduct would be
prohibited under the current price gouging law. However, there
was concern that existing law was not providing sufficient
protection to individuals and families displaced by the Aliso
Canyon disaster when landlords were demanding a year lease in
conjunction with the high monthly rental prices. Current law
does not cover rental contracts entered during a declared
emergency if the rental contracts were for any period longer
than month to month. This bill expands the scope of the leases
that would be covered under criminal price gouging to include
leases with an initial term of up to one year.
What This Bill Does
This bill clarifies the definition of State of Emergency and
Local Emergency. This bill applies the definitions consistently
within the existing statute prohibiting price gouging during a
declared emergency. The existing statute prohibits raising
prices above a specified amount, for a variety of goods and
services, once an emergency has been declared. 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.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: Yes
SUPPORT: (Verified6/27/16)
Office of Attorney General Kamala D. Harris
Consumer Attorneys of California
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OPPOSITION: (Verified6/27/16)
California Public Defenders Association
ASSEMBLY FLOOR: 68-10, 5/9/16
AYES: Achadjian, Alejo, Arambula, Atkins, Baker, Bigelow,
Bloom, Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos,
Chang, Chau, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle, Daly,
Dodd, Eggman, Frazier, Gallagher, Cristina Garcia, Gipson,
Gomez, Gonzalez, Gordon, Gray, Grove, Roger Hernández, Holden,
Irwin, Jones-Sawyer, Kim, Lackey, Levine, Linder, Lopez, Low,
Maienschein, Mathis, McCarty, Medina, Melendez, Mullin,
Nazarian, O'Donnell, Olsen, Patterson, Quirk, Ridley-Thomas,
Rodriguez, Salas, Santiago, Steinorth, Mark Stone, Thurmond,
Ting, Weber, Wilk, Williams, Wood, Rendon
NOES: Travis Allen, Chávez, Gatto, Hadley, Harper, Jones,
Mayes, Obernolte, Wagner, Waldron
NO VOTE RECORDED: Beth Gaines, Eduardo Garcia
Prepared by:Molly Lao / PUB. S. /
6/29/16 15:50:32
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