BILL ANALYSIS                                                                                                                                                                                                    




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          |SENATE RULES COMMITTEE            |                       SB 1161|
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                                   THIRD READING 


          Bill No:  SB 1161
          Author:   Allen (D), et al.
          Amended:  5/10/16  
          Vote:     21 

           SENATE ENVIRONMENTAL QUALITY COMMITTEE:  5-2, 4/20/16
           AYES:  Wieckowski, Hill, Jackson, Leno, Pavley
           NOES:  Gaines, Bates

           SENATE JUDICIARY COMMITTEE:  4-2, 5/3/16
           AYES:  Jackson, Leno, Monning, Wieckowski
           NOES:  Moorlach, Anderson
           NO VOTE RECORDED:  Hertzberg

           SUBJECT:   Statutes of limitation:  California Climate Science  
                     Truth and Accountability Act of 2016


          SOURCE:    Author


          DIGEST:  This bill, for actions brought by the Attorney General  
          or a district attorney, revives an action for unfair competition  
          with respect to scientific evidence regarding the existence,  
          extent, or current or future impacts of  anthropogenic-induced  
          climate change that is time barred as of January 1, 2017, and  
          authorizes the action to be brought within four years of that  
          date.


          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.








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          Existing state 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: (a) an unlawful business act  
             or practice; (b) an unfair business act or practice; (c) a  
             fraudulent business act or practice; (d) unfair, deceptive,  
             untrue or misleading advertising; or (e) 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.


          4) Requires an action alleging unfair competition, as defined,  
             to be commenced within four 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.








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          This bill:


          1) Enacts the California Climate Science Truth and  
             Accountability Act.


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


          3) Revives, for actions brought by the Attorney General or a  
             district attorney, an action for unfair competition with  
             respect to scientific evidence regarding the existence,  
             extent, or current or future impacts of anthropogenic-induced  
             climate change that is time barred as of January 1, 2017, and  
             authorizes the action to be brought within four years of that  
             date.




          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."  


            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.  In Raladam,  
            the Court held that an FTC Act Section 5 violation must show  








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            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. 


             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).









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          1)Protecting consumers from unfair business practices


            California's UCL, has protected California consumers from  
            "unlawful, unfair or fraudulent business act[s] or  
            practice[s]" for over 70 years.  (Bus. & Prof. Code 17200.)   
            It renders an individual liable for any unlawful, unfair, or  
            fraudulent business act or practice and any unfair, deceptive,  
            untrue, or misleading advertising.  In describing the UCL's  
            broad scope, the California Supreme Court explained: "it does  
            not proscribe specific practices.  Rather . . . it defines  
            unfair competition to include any unlawful, unfair or  
            fraudulent business act or practice.  Its coverage is  
            sweeping, embracing anything that can properly be called a  
            business practice and that at the same time is forbidden by  
            law."  (Cel-Tech Communications, Inc. v. Los Angeles Cellular  
            Telephone Co. (1999) 20 Cal.4th 163, 180 (internal quotation  
            marks and citations omitted).)


          2)The Oil Industry and Climate Change Research


            Recent news articles from the Los Angeles Times and the Energy  
            and Environmental Reporting Project at Columbia University's  
            Graduate School of Journalism have revealed a striking  
            disconnect between the public positions taken by oil companies  
            over the past few decades, and the internal planning and  
            research conducted by those same companies, regarding  
            human-induced climate change.  According to the Times:


               Before most Americans were even aware of global warming,  
               Exxon was investing in high-quality research on the  
               subject.  According to reports . . . the oil company's  
               scientists concluded in the 1970s, '80s and '90s that  
               climate change was real, would transform the Earth's  
               landscape and was driven by human activity - especially the  
               burning of fossil fuels.










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               As the debate over climate change began in earnest,  
               however, Exxon didn't use its wealth of scientific findings  
               to issue an alarm to the world, or even to add a  
               supportive, attention-grabbing voice to those of the  
               climatologists who were trying to convince policymakers and  
               the public.  Instead, company officials publicly cast doubt  
               on the very existence of global warming, arguing that the  
               science was just too murky to draw a conclusion.   
               (Editorial Board, Exxon's Damaging Denial on Climate  
               Change, Los Angeles Times, Oct. 15, 2015)


            Exxon was not the only oil company seemingly experiencing this  
            disconnect.  According to another Times article:


               A few weeks before seminal climate change talks in Kyoto  
               back in 1997, Mobil Oil took out a bluntly worded  
               advertisement in the New York Times and Washington Post.   
               "Let's face it: The science of climate change is too  
               uncertain to mandate a plan of action that could plunge  
               economies into turmoil," the ad said.  "Scientists cannot  
               predict with certainty if temperatures will increase, by  
               how much and where changes will occur."


               One year earlier, though, engineers at Mobil Oil were  
               concerned enough about climate change to design and build a  
               collection of exploration and production facilities along  
               the Nova Scotia coast that made structural allowances for  
               rising temperatures and sea levels.  (Amy Lieberman and  
               Susanne Rust, Big Oil Braced for Global Warming While it  
               Fought Regulations, Los Angeles Times, Dec. 31, 2015.)


            Through an examination of "oil industry records and interviews  
            with current and former executives," the Times and the Energy  
            and Environmental Reporting Project discovered that this  
            "two-pronged strategy was widespread within the industry  
            during the 1990s and early 2000s," finding that "[a]s many of  
            the world's major oil companies - including Exxon, Mobil and  
            Shell - joined a multimillion-dollar industry effort to stave  








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            off new regulations to address climate change, they were  
            quietly safeguarding billion-dollar infrastructure projects  
            from rising sea levels, warming temperatures and increasing  
            storm severity." 


            This bill explicitly authorizes district attorneys and the  
            Attorney General to pursue UCL claims alleging that a business  
            or organization has directly or indirectly engaged in unfair  
            competition with respect to scientific evidence regarding the  
            existence, extent, or current or future impacts of  
            anthropogenic induced climate change.


          3)Purpose of this bill


            According to the author:


               Recent research has shown that nearly two-thirds of all  
               industrial carbon dioxide and methane released into the  
               atmosphere since the dawn of the industrial revolution can  
               be traced to just 90 entities.  The top five investor-owned  
               companies on the list- Chevron, ExxonMobil, British  
               Petroleum, Shell, and ConocoPhillips-are responsible for  
               one-eighth of all emissions.


               New discoveries by Inside Climate News, the Los Angeles  
               Times, and a Union of Concerned Scientists' report, The  
               Climate Deception Dossiers, show 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.  In fact,  
               many companies engaged in their own climate change research  
               and shared some of this research with others in the  
               industry.  Exxon's own climate scientists, for example,  
               conducted cutting-edge climate change research in the late  
               1970s and early 1980s.  There is also evidence that  
               companies began factoring projected climate change into  
               their own business decisions and operations.








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               State law provides a broad right of action to challenge  
               "unfair" business practices.  Generally, the law  
               establishes a statute of limitations of four years, though  
               case law indicates that if the legislature finds sufficient  
               cause, it has the ability to retroactively extend the  
               statute of limitations.  Given the environmental, health,  
               and economic impacts that Californians are already paying  
               for as a result of the fossil fuel industry's many years of  
               public deception, it is important to hold the industry  
               responsible.  Keeping the statute limited to only four  
               years may undermine the state's ability to hold fossil fuel  
               companies responsible for their practices that extend back  
               well beyond four years, as well as the damages and risks  
               that Californians and everyone else must face for centuries  
               to come.  By extending the statute of limitations,  
               California has the opportunity to hold these companies  
               fully accountable for their actions.


               SB 1161 seeks to provide recourse under the Unfair  
               Competition Law for deceptive behavior relating to  
               scientific evidence of climate change."




          FISCAL EFFECT:   Appropriation:    No          Fiscal  
          Com.:NoLocal:    No


          SUPPORT:   (Verified5/11/16)


          Amazon Watch
          As You Sow
          Asian Pacific Environmental Network
          Azul
          California Coastal Protection Network
          California League of Conservation Voters
          Center for Biological Diversity








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          Center for Environmental Health
          Center for International Environmental Law
          Climate Hawks Vote
          Climate Resolve
          Coalition for Clean Air
          Consumer Attorneys of California
          Environment California
          Fossil Free California
          Global Exchange
          Interfaith Power & Light
          Media Alliance
          Natural Resources Defense Council
          Rainforest Action Network
          Sierra Club California
          Stand
          Zevin Asset Management, LLC


          OPPOSITION:   (Verified5/11/16)


          American Chemistry Council
          American Insurance Association
          Association of California Insurance Companies
          California Business Roundtable
          California Business Properties Association
          California Building Industry Association
          California Chamber of Commerce
          California Independent Oil Marketers Association
          California Independent Petroleum Association
          California Manufacturers and Technology Association
          California Retailers Association
          Civil Justice Association of California
          National Federation of Independent Business
          Valley Industry and Commerce Association


          Prepared by:Rachel Wagoner / E.Q. / (916) 651-4108
          5/11/16 15:52:44


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