BILL ANALYSIS Ó SB 469 Page 1 Date of Hearing: July 7, 2015 ASSEMBLY COMMITTEE ON BUSINESS AND PROFESSIONS Susan Bonilla, Chair SB 469(Hill) - As Amended June 1, 2015 NOTE: This bill was double referred, having been previously heard by the Assembly Committee on Arts, Entertainment, Sports, Tourism, and Internet Media on June 30, 2015, and approved on a 6-0 vote. SENATE VOTE: 40-0 SUBJECT: State Athletic Commission. SUMMARY: Extends the operation of the California State Athletic Commission (CSAC) until January 1, 2020 and implements the CSAC's sunset review oversight hearing recommendations, including authority for drug testing and fines, the authority to recover arbitration costs, and other technical and clarifying changes. EXISTING LAW: 1)Establishes, until January 1, 2016, the California State Athletic Commission (CSAC) within the Department of Consumer Affairs (DCA) to license and regulate boxers, kickboxers, martial arts athletes, and events held in California. SB 469 Page 2 (Business and Professions Code (BPC) § 18600 - 18887) 2)Establishes an Advisory Committee on Medical and Safety Standards within CSAC as follows: (BPC § 18645) a) The committee consists of six licensed physicians and surgeons appointed by the CSAC; b) The CSAC may call meetings of the committee at times and places as it deems appropriate for the purpose of studying and recommending medical and safety standards for the conduct of boxing, wrestling, and martial arts contests; and, c) Appointing a person to the committee requires a majority vote of the CSAC. Each appointment is at the pleasure of the CSAC for a term not to exceed four years. 3)Authorizes the CSAC, its executive officer, or the executive officer's duly authorized representative to assess fines not to exceed two thousand five hundred dollars ($2,500) for each violation of any of the provisions of the Boxing Act or any of the CSAC's rules and regulations. Fines may be assessed without advance hearing, but the licensee may apply to the CSAC for a hearing on the matter if the fine should be modified or set aside. The application for a hearing must be in writing and must be received by the CSAC within 30 days after service of notice of the fine. Upon receipt of the written request, the CSAC must set the matter for hearing within 30 days. (BPC § 18843) 4)Provides that the administration or use of any drugs, alcohol, or stimulants, or injections in any part of the body, either before or during a match, to or by any boxer is prohibited. (Title 4, California Code of Regulations (CCR) § 303) THIS BILL: SB 469 Page 3 5)Extends the operation of the CSAC until January 1, 2020. 6)Provides that a majority of the appointed members of the CSAC Advisory Committee constitutes a quorum for the purposes of meeting. 7)Prohibits the administration or use of any drugs, alcohol, stimulants, or injections in any part of the body or the use of any prohibited substance specified in the Prohibited List of the World Anti-Doping Code, as adopted by the World Anti-Doping Agency, by a professional or amateur boxer or martial arts fighter licensed by the CSAC. 8)Authorizes the CSAC, in its discretion and pursuant to regulations adopted pursuant to the Administrative Procedure Act (Chapter 3.5 (commencing with § 11340) of Part 1 of Division 3 of Title 2 of the Government Code), to determine the necessity of exemptions to the use of a prohibited substance for licensees. 9)Authorizes the CSAC to conduct testing at any time during the period of licensure for a professional or amateur boxer or martial arts fighter licensed by the CSAC. 10) Authorizes the CSAC to collect blood and urine specimens from a professional or amateur boxer or martial arts fighter licensed by the CSAC to detect the presence of any prohibited substances. Collection of specimens must be done in the presence of authorized CSAC personnel. 11) SB 469 Page 4 Provides that a professional or amateur boxer or martial arts fighter licensed by the CSAC, for which the presence of a prohibited substance is detected through testing by the CASC, is subject to penalties under the Boxing Act. 12) Authorizes the CSAC to additionally assess a fine equal to 40 percent of the total purse for a violation of related to the use of prohibited substances. 13) Requires the CSAC to recognize and enforce contracts between boxers or martial arts fighters and managers and between boxers or martial arts fighters and licensed clubs. Contracts must be executed on printed forms approved by the commission. The CSAC may recognize or enforce a contract not on its printed form if entered into in another jurisdiction. No other contract or agreement may be recognized or enforced by the CSAC. All disputes between the parties to the contract, including the validity of the contract, must be arbitrated by the CSAC pursuant to the provisions of the contract. Subject to 4 CCR § 227, a person who seeks arbitration of a contract must send a written request to the CSAC's headquarters and to the office of the Attorney General. The CSAC may seek cost recovery related to arbitration proceedings from the parties to the proceedings. 14) Makes other technical and non-substantive changes. 15) Provides that no reimbursement is required by this bill pursuant to § 6 of Article XIII B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred SB 469 Page 5 because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalt16) y for a crime or infraction, within the meaning of § 17556 of the Government Code, or changes the definition of a crime within the meaning of § 6 of Article XIII B of the California Constitution. FISCAL EFFECT: According to the Senate Appropriations Committee analysis dated May 28, 2015, this bill has projected expenditures of approximately $1.6 million annually, supporting 10.7 PY, until January 1, 2020, fully offset by annual fee revenues of approximately $1.7 million. It will have costs of approximately $115,000 in 2016-17 and $107,000 annually ongoing for .5 PY of staff time and expenses related to additional drug tests. There are also estimated one-time costs of up to $50,000 in 2015-16 to develop and adopt regulations providing for exceptions to drug testing requirements. This bill will also generate unknown increases in fine revenues for violations related to the use of prohibited substances. COMMENTS: Purpose. This bill is author sponsored. According to the author, "[this bill] in particular is necessary to extend the sunset date of the Commission in order to ensure the protection, health, welfare and safety of the athletes and fighters licensed by the Commission who participate in sports and events the Commission oversees. Federal Law, the Muhammad Ali Boxing Reform Act prohibits events from taking place in a state without a regulatory commission unless the fight is regulated by either another state's commission or on sovereign tribal land. Regulated events result in higher levels of protection for fighters than unauthorized or illegal events, in addition to added revenue for the state and a boon to the local economy where events take place. While the Commission has faced some administrative and front office challenges in the past, the real work that they do, and do really well, is on the ground level at the events. From the medical walk-through to checking the ring SB 469 Page 6 or cage to ensuring the fighter immediately undergoes a medical exam to staff ensuring that a fighter gets paid on the spot; this is where the Commission excels and it is important for regulation of events to continue to ensure the highest degree of safety for the many individuals participating in these sports." Background. In March of this year, the Assembly Business and Professions Committee and the Senate Business, Professions and Economic Development Committee (Committees) conducted joint oversight hearings to review 12 regulatory entities: California Accountancy Board; California Architects Board and Landscape Architects Committee; California State Athletic Commission; Board of Barbering and Cosmetology; Cemetery and Funeral Bureau; Contractors State License Board; Dental Board of California; Board for Professional Engineers, Land Surveyors and Geologists; Board of Registered Nursing; Bureau of Security and Investigative Services and; Board of Vocational Nursing and Psychiatric Technicians. This bill is one of several sunset bills that are intended to implement the legislative changes recommended by Committee staff. The recommendations are reflected in the background papers prepared by Committee staff for each agency and program reviewed. Medical Advisory Committee Quorum. It is currently unclear how many Medical Advisory Committee members must be present for a quorum. A quorum is required for governing bodies to meet and conduct official business or take official action such as voting on agenda items. Therefore, this bill clarifies that a majority of the appointed members of the committee constitutes a quorum. Use of Performance Enhancing Substances and Drug Testing Costs. The CSAC's current fines ($2,500) may not be high enough to deter the use of prohibited substances by professional fighters SB 469 Page 7 receiving high salaries. The CSAC has also struggled to establish consistency in its citation and fine program, sometimes assigning small fines to certain fighters for some violations and large fines to others for similar violations. Some athletes receive over six figures to participate in bouts, and a $2,500 fine for use of a prohibited substance may not feel like a penalty. The CSAC reports that having this option will provide a greater level of deterrence for highly paid athletes. Other states like Nevada take between three and 40 percent of a fighter's purse for the event where the violation occurs. Therefore, this bill codifies the CSAC's authority to conduct drug testing. It also provides that the CSAC can provide exemptions for the use of prohibited substances (arising out of the issue of therapeutic exemptions for the medically necessary use of a prohibited substance). To ensure proper deterrence and the ability to recoup expenses for drug testing, this bill also allows the commission to take 40 percent of a fighter's purse if the fighter is caught using a banned substance. Arbitration Cost Recovery. The CSAC is responsible for arbitration between licensees and managers or promoters when contract disputes arise. The CSAC absorbs costs related to arbitration for contract disputes that it oversees that may impede its ability to maintain a healthy fund balance. The CSAC utilizes the services of the Attorney General (AG) to conduct arbitration proceedings, but is then billed for the services at a rate that is not feasible for the CSAC to pay on an ongoing basis. The CSAC has exceeded its allotted AG expenditure authority but is still required to assist fighters through the process. The question was raised as to whether parties involved should absorb certain costs, ensuring that any payment for arbitration does not serve as a deterrent to SB 469 Page 8 licensees seeing arbitration. As a result, this bill codifies the CSAC's existing authority to recognize and enforce contracts between boxers and managers and between boxers and licensed clubs and extends those provisions to include martial arts fighters. This bill also clarifies that all disputes between the parties to the contract, including the validity of the contract, must be arbitrated by the Commission pursuant to the provisions of the contract and authorizes the Commission to seek cost recovery related to arbitration proceedings. Sunset Extension. While the CSAC has struggled with basic operational and administrative functions in the past, the current membership and management have shown a commitment to improving the CSAC's efficiency and effectiveness and are working cooperatively with the Legislature and the Committees to bring about necessary changes. As a result, this bill extends the operation of the CSAC until January 1, 2020. Prior Related Legislation. SB 309 (Lieu), Chapter 370, Statutes of 2013, extended the sunset date for the CSAC to January 1, 2016 and addressed issues raised during sunset review. AMENDMENT: To ensure the CSAC is able to use the new penalty for using a prohibited substance up to 40 percent, the author should make the following technical amendment: Page 6, line 14, strike: "equal" and insert: up SB 469 Page 9 REGISTERED SUPPORT: Ultimate Fighting Championship REGISTERED OPPOSITION: None on file. Analysis Prepared by:Vincent Chee / B. & P. / (916) 319-3301