BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 1161|
|Office of Senate Floor Analyses | |
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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
**** END ****
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