BILL ANALYSIS                                                                                                                                                                                                    



          SENATE COMMITTEE ON ENVIRONMENTAL QUALITY
                              Senator Wieckowski, Chair
                                2015 - 2016  Regular 
           
          Bill No:            SB 1161
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          |Author:    |Allen                                                |
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          |Version:   |3/29/2016              |Hearing      |4/20/2016       |
          |           |                       |Date:        |                |
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          |Urgency:   |No                     |Fiscal:      |No              |
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          |Consultant:|Rachel Machi Wagoner                                 |
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          SUBJECT:  Statutes of limitation:  California Climate Science  
          Truth and Accountability Act of 2016

            ANALYSIS:
          
          Existing federal law:  Under the Federal Trade Commission Act  
          Section 5 (FTC Act) (15 USC 45), prohibits "unfair or deceptive  
          acts or practices in or affecting commerce."  The prohibition  
          applies to all persons engaged in commerce.

          Existing law:  Under the Unfair Competition Law (UCL) (Business  
          and Professions Code 17200 et seq.):
               
          1) Confers standing on both private parties and public  
             prosecutors. 

          2) Authorizes the Attorney General, district attorneys, county  
             counsels and city attorneys to file lawsuits on behalf of  
             injured citizens.  Business and Professions Code 17204 et  
             seq.)

          3) Defines unfair competition as: (1) an unlawful business act  
             or practice; (2) an unfair business act or practice; (3) a  
             fraudulent business act or practice; (4) unfair, deceptive,  
             untrue or misleading advertising; or (5) any act prohibited  
             by the Consumers Legal Remedies Act (Business and Professions  
             Code 17500 -17577.5), which applies to any "consumer"  
             transaction involving the "sale or lease of goods or  
             services," and explicitly prohibits 24 separate business acts  
             or practices.







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          4) Requires an action alleging unfair competition, as defined,  
             to be commenced within 4 years after the cause of action  
             accrued.

          5) Allows the court to prevent the use of unfair competition and  
             to restore money or property to victims of unfair competition  
             - allows for both monetary damages and injunctive relief  
             where necessary.  Restitution and disgorgement of profits are  
             used primarily to deter future violations.  Courts use  
             various factors to determine the amount of the penalty,  
             including "the nature and seriousness of the misconduct, the  
             number of violations, the persistence of the misconduct, the  
             length of time over which the misconduct occurred, the  
             willfulness of the defendant's misconduct, and the  
             defendant's assets, liabilities, and net worth."  However,  
             the UCL does not permit punitive damages awards.

          This bill enacts the California Climate Science Truth and  
          Accountability Act:

          1) Makes specified findings regarding the impacts of climate  
             change.

          2) For actions brought by the Attorney General or certain public  
             prosecutors, extend the time period for the commencement of  
             an action for unfair competition with respect to scientific  
             evidence regarding the existence, extent, or current or  
             future impacts of anthropogenic induced climate change to  
             within 30 years of an act giving rise to the cause of action.  
              The bill would revive actions that are time-barred as of  
             January 1, 2017, as specified.

            Background

          1) History of California Unfair Competition laws.

             California Civil Code 3369, enacted in 1872, was  
             California's early unfair competition statute.  It "addressed  
             only the availability of civil remedies for business  
             violations in cases of penalty, forfeiture, and criminal  
             violation."  










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             A 1933 amendment expanded the law to prohibit "any person  
             [from] performing an act of unfair competition."  This  
             amendment did not, however, extend UCL protection to  
             consumers.  This limitation was in response to the U.S.  
             Supreme Court's 1931 decision in FTC v. Raladam.[5] In  
             Raladam, the Court held that an FTC Act Section 5 violation  
             must show actual injury to competition.  This ruling  
             prevented individual consumers from suing under the FTC Act.   
             Following this rationale, California applied the UCL to  
             unfair business practices that affected business competitors,  
             not consumers.


             In 1935, consumers, not just business competitors, were given  
             the opportunity to sue under the UCL.  The Supreme Court of  
             California clarified the statute in American Philatelic Soc.  
             v. Claibourne, stating that "the rules of unfair competition"  
             should protect the public from "fraud and deceit."  


             In 1962, a California appellate court reiterated this rule by  
             stating that the UCL extended "equitable relief to situations  
             beyond the scope of purely business competition."  In 1977,  
             the Legislature moved UCL to the California Business and  
             Professions Code 17200.


             In November 2004, California voters enacted Proposition 64 to  
             amend the UCL.  Proposition 64:


                 a)       Specified that, to have standing to pursue a  
                   lawsuit under the UCL, a private plaintiff must have  
                   "suffered injury in fact and . . . lost money or  
                   property as a result of " the alleged wrongdoing,

                 b)       Specified that a private party "may pursue  
                   representative claims or relief on behalf of others  
                   only if the claimant" both "meets the standing  
                   requirements" added by Proposition 64 "and complies  
                   with Section  382  of the Code of Civil Procedure," which  
                   sets forth California's requirements for maintaining a  
                   class action. 









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                 c)       Deleted language that formerly authorized the  
                   prosecution of actions by private parties purportedly  
                   "acting for the interests of . . . the general public."  
                    Id. 3 (amending Cal. Bus. & Prof. Code 17204).

          1) Examples of UCL and Environmental Prosecution.
           
              In a 2011 article titled, Public Prosecutorial Enforcement of  
             the Unfair Competition Law Following the Passage of  
             Proposition 64, former Marin County Deputy District Attorney  
             Bob Nichols states, "The principal role of a public  
             prosecutor is to seek justice.  Restitution and recovery of  
             losses for injured consumers is always a prosecutorial  
             concern, but this function is ancillary to the greater public  
             need of ceasing the unlawful conduct, punishment, and  
             deterrence.  This is not unlike the traditional prosecutorial  
             role in criminal cases.  In fulfilling this obligation,  
             consumer prosecutors do not seek damages but rather  
             injunctive relief, restitution, and civil penalties."


             Business and Professions Code 17200 is routinely used today  
             in the prosecution of environmental cases under these  
             principles.  


             In 2007 prosecutors pursued a UCL case against Home Depot for  
             illegal hazardous waste storage and transportation violations  
             found during a three- year investigation.  A  
             multi-jurisdictional, statewide prosecution team in 28  
             counties tracked hazardous waste management practices and the  
             state's fire code at California's Home Depot stores  
             statewide.  The case resulted in a $9.9 million dollar  
             settlement.


             In 2009 the state filed suit against Kmart for disposal of  
             toxic substances in landfills.  The state forged an $8.65  
             million settlement with Kmart and required the company to  
             stop disposing of toxic substances in landfills. 


             In 2010, the Attorney General and 20 district attorneys filed  








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             a statewide suit, pursuing a UCL action against Wal-Mart for  
             violating California's environmental laws in its handling and  
             disposal of hazardous materials.  Wal-Mart agreed to settle  
             the case for $27.6 million. The settlement includes $20  
             million to be split among prosecutors in 20 jurisdictions and  
             32 environmental health agencies throughout the state; $1.6  
             million in costs for the investigation; $3 million to a fund  
             for other environmental investigations; and $3 million toward  
             keeping stores in compliance.



             In 2011 the Target Corporation agreed to pay $22.5 million to  
             settle a UCL case wherein prosecutors accused the retailer of  
             the "willful disregard for California's hazardous waste laws"  
             for such violations as pouring chemicals returned by  
             customers down the drain and dumping incompatible,  
             combustible liquids like ammonia and bleach into trash bins. 

             In 2013 Attorney General Kamala D. Harris was joined by eight  
             District Attorneys in filing a UCL lawsuit against BP West  
             Coast Products, BP Products North America, Inc. and Atlantic  
             Richfield Company (ARCO) for allegedly violating state laws  
             governing hazardous materials and hazardous waste by failing  
             to properly inspect and maintain underground tanks used to  
             store gasoline for retail sale at more than 780 gas stations  
             in California.  In 2002, similarly, Attorney General Bill  
             Lockyer settled a UCL case with BP-ARCO for $45.8 million,  
             "the largest penalty in the nation for alleged widespread  
             underground tank violations at ARCO stations in California."   



          2) Broad Impacts of Climate Change in California and Worldwide.

             There is broad scientific consensus that the climate is  
             warming and that much of this warming is due to human  
             activities, with serious implications for California. 

             The 5th assessment report from the Intergovernmental Panel on  
             Climate Change (IPCC) notes that atmospheric concentrations  
             of global warming pollutants have risen to levels unseen in  
             the past 800,000 years.  Carbon dioxide concentrations have  
             increased by 40% since pre-industrial times.  Over time,  








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             these increases have led to a rise of global average surface  
             temperatures of approximately 1.4?F since 1900, with much of  
             this increase occurring after 1970.  Per the latest report by  
             the National Oceanic and Atmospheric Administration (NOAA),  
             2014 was the 38th consecutive year that the global  
             temperature increased.


             Research indicates that an increase in the global average  
             temperature of 3.6?F above pre-industrial levels, which is  
             only 1.1?C (2.0?F) above present levels, poses severe risks  
             to natural systems and human health and well-being.   
             According to the U.S. Environmental Protection Agency, for  
             every 2?F increase in global average temperature, we can  
             expect to see 5-15% reductions in crop yields, 3-10%  
             increases in rainfall during heavy precipitation events when  
             flood risks are already high, and 200-400% increases in areas  
             burned by wildfires in the western United States. 



             Higher temperatures globally have already resulted in  
             diminished snow and sea ice and have caused sea level to rise  
             by nearly eight inches.



             In California, the frequency of extreme events, including  
             heat waves, wildfires, floods, and droughts, are expected to  
             increase.  Higher temperatures and more frequent and severe  
             extreme events will have a range of consequences for public  
             health through impacts to water quality, air quality, and the  
             spread of infectious diseases.



             As the evidence for anthropogenic climate change has mounted  
             over the last few decades, the state has implemented a broad  
             climate portfolio to mitigate global warming impacts by  
             pursuing policies that reduce greenhouse gasses (GHGs).



             And although deep and severe cuts in GHG emissions globally  








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             are still needed to avoid the most severe consequences of a  
             changing climate, they will not be enough to stave off  
             climate change and its environmental and public health  
             impacts.  Even if all GHG emissions ceased today, many  
             impacts of climate change would still be unavoidable because  
             the climate system has changed over time.



             A major report from the University of College London's  
             Institute for Global Health and the medical journal The  
             Lancet has called climate change the "biggest global health  
             threat of the 21st century."  Climate change not only brings  
             about new threats, it is a magnifier of existing natural  
             hazards.  The impacts to health, infrastructure, hazard  
             response, etc. will come with a financial cost, as well.   
             Additionally, the Pacific Institute estimates that $100  
             billion worth of property is at risk of flooding during a  
             100-year flood with 1.4 meters of projected sea level rise,  
             including 55 healthcare facilities, over 330 hazardous waste  
             facilities or sites, 30 coastal power plants, and 28  
             wastewater treatment plants.



             Furthermore, recent extreme climate events revealed that the  
             impacts from climate change are happening now and underscored  
             the significant vulnerability in many human systems to  
             climate variability.























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            Comments
          
          1) Purpose of Bill.  According the author, international  
             industry documents show that many of the world's largest  
             fossil fuel companies have worked to deceive the public about  
             the realities and risks of climate change for decades.  While  
             evidence suggests that such efforts continue today, it is  
             critical for law enforcement to have the opportunity to hold  
             these companies more fully accountable for any laws they have  
             violated during the course of their decades-long public  
             disinformation campaign.  The author asserts that had fossil  
             fuel companies not chosen a strategy of denial and deception  
             on the science of climate change, significant economic,  
             health and environmental impacts of climate change could have  
             been avoided.  The author states that since 1988, a time that  
             fossil fuel companies knew the risks and likely consequences  
             to the climate of processing and burning their products, more  
             than half of industrial carbon emissions have been released.

             The author argues that SB 1161would not create any new  
             liabilities in state law.  According to the author, rather it  
             would extend the statute of limitations of California's UCL  
             for deceptive behavior relating to the scientific evidence of  
             climate change.  The author further states that SB 1161 does  
             not presume that any fossil fuel companies or trade  
             associations have broken the law.  Rather by extending the  
             statute of limitations, SB 1161 would merely give law  
             enforcement the opportunity to ensure that justice is served  
             for the full weight of any violations that may have been  
             committed.

          DOUBLE REFERRAL:    

            If this measure is approved by the Senate Environmental Quality  
          Committee, the do pass motion must include the action to  
          re-refer the bill to the Senate Judiciary Committee.  
           
          SOURCE:                    Union of Concerned Scientists  

           SUPPORT:               

          Amazon Watch
          Asian Pacific Environmental Network








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          Azul
          California Coastal Protection Network
          California League of Conservation Voters
          Center for Biological Diversity
          Center for Environmental Health
          Center for International Environmental Law
          Climate Hawks Vote
          Climate Resolve
          Environment California
          Fossil Free California
          Global Exchange
          Media Alliance
          Natural Resources Defense Council
          Rainforest Action Network
          Sierra Club California
          Stand  

           OPPOSITION:    

          California Chamber of Commerce
          Civil Justice Association of California 

           ARGUMENTS IN  
          SUPPORT:    Supporters argue:

           "Recent reporting by the Los Angeles Times, Inside  
           Climate News and a Union of Concerned Scientists  
           report, The Climate Deception Dossiers, indicate that  
           by the 1980s the fossil fuel industry was well aware of  
           the emerging scientific consensus that emissions from  
           the burning of fossil fuels was increasing global  
           temperature.  Unfortunately, despite this knowledge,  
           industry documents show that many fossil fuel companies  
           and their trade groups developed and participated in a  
           concerted campaign to sow public confusion about the  
           science of climate change.  These actions included  
           public statements denying climate change, coordinated  
           public relations campaigns to deceive the public,  
           newspaper advertisements and secretly funding  
           contrarian climate research, among other activities.

           Whether these companies have actually broken the law is  
           something for the courts to decide.  The objective of  
           SB 1161 is to give law enforcement the opportunity to  








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           ensure that justice prevails for the full weight of any  
           violations that may have been committed.  To that end,  
           SB 1161 would extend the statute of limitations under  
           the state's UCL to 30 years for deceptive behavior  
           relating to scientific evidence regarding climate  
           change.




           
           ARGUMENTS IN  
           OPPOSITION:    The opposition argues:

          "Statutes of limitations 'have long been respected as  
          fundamental to a well-ordered judicial system.'  Board  
          of Regents v. Tomanio, 446 U.S. 478.  They serve an  
          important purpose in maintaining the ability of our  
          civil justice system to produce equitable results.  The  
          California Supreme Court succinctly pointed out the  
          value of the statute of limitations.  'The purpose of  
          any limitations statute is to require diligent  
          prosecution of known claims thereby providing necessary  
          finality and predictability in legal affairs, and  
          ensuring that claims will be resolved while the  
          evidence bearing on the issues is reasonably available  
          and fresh."  Kaiser Foundation Hospitals v. Workers'  
          Comp. Appeals Bd., 39 Cal.3d 57 (1985).  The statute of  
          limitations promotes justice by preventing the  
          assertion of claims 'that have been allowed to slumber  
          until evidence has been lost, memories have faded and  
          witnesses have disappeared.'  Order of R.R.  
          Telegraphers v. Ry Express Agency, 321 U.S. 342 (1944).  
           Extending the period for filing these claims and  
          reviving claims up to 30 years old increases the  
          likelihood that witnesses and evidence will be  
          unavailable and that memories will be less reliable.

          Extending the statute of limitations also sets a  
          dangerous precedent.  If the legislature were to adopt  
          a special filing period for this category of lawsuit,  
          that would become the standard for how the body reacts  
          to future current events.  Every accident, natural or  
          man-made disaster, product recall or other source of  








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          multiple claims for damages would be a candidate for a  
          special extension of the time for filing civil  
          actions."  

               
                                          
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