BILL ANALYSIS
AB 226
PageA
ASSEMBLY THIRD READING
AB 226 (Ruskin)
As Amended May 6, 2009
Majority vote
NATURAL RESOURCES 6-3 JUDICIARY 7-3
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|Ayes:|Skinner, Brownley, |Ayes:|Feuer, Brownley, Evans, |
| |Chesbro, | |Jones, Krekorian, Lieu, |
| |De Leon, Hill, Huffman | |Monning |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Gilmore, Knight, Logue |Nays:|Tran, Knight, Nielsen |
| | | | |
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APPROPRIATIONS 10-4
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|Ayes:|De Leon, Ammiano, Davis, | | |
| |Fuentes, Hall, John A. | | |
| |Perez, Price, Skinner, | | |
| |Solorio, Torlakson | | |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Nielsen, Duvall, Harkey, | | |
| |Audra Strickland | | |
| | | | |
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SUMMARY : Authorizes the California Coastal Commission
(Commission) to administratively impose civil penalties in an
enforcement case against anyone in violation of the Coastal Act
of 1976 (Coastal Act). Specifically, this bill :
1)Authorizes the Commission, at a duly noticed public hearing,
to administratively impose civil penalties in an enforcement
case against anyone in violation of the Coastal Act in an
amount not less than $5,000 and not to exceed $50,000 for each
violation.
2)In determining the amount of civil liability, requires the
Commission to consider:
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a) The nature, circumstance, extent, and gravity of the
violation;
b) Whether the violation is susceptible to restoration or
other remedial measures;
c) The sensitivity of the resource affected by the
violation;
d) The cost to the state of bringing the action; and,
e) With respect to the violator, any voluntary restoration
or remedial measures undertaken, any prior history of
violations, the degree of culpability, economic profits, if
any, resulting from, or expected to result as a consequence
of, the violation, and such other matters as justice may
require.
3)Provides that a person shall not be subject to both monetary
civil liability imposed under this section and monetary civil
liability imposed by the superior court for the same act or
failure to act.
4)Authorizes the Commission to maintain an action or otherwise
engage in judicial proceedings to enforce a penalty or order
in the event that a person fails to pay an administrative
penalty, otherwise fails to comply with a restoration or cease
and desist order, or challenges any of these actions in court.
Provides that a court may impose any additional civil
penalties it deems appropriate.
5)Authorizes the Commission to file a lien on the subject
property if a violator fails to pay the penalties.
6)Deposits all penalties into the Coastal Act Services Fund
(Fund), the monies of which, upon appropriation by the
Legislature, can be used to enforce the Coastal Act and
provide services to local government, permit applicants, and
the public.
EXISTING LAW :
1)Requires, pursuant to the Coastal Act, any person wishing to
perform any development in the coastal zone to first obtain a
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coastal development permit (CDP).
2)Authorizes the Commission, after a public hearing, to issue a
cease and desist order if it determines that someone is
undertaking or threatening to undertake any activity that
requires a CDP or that may be inconsistent with a previously
issued permit.
3)Authorizes the Commission, a local government, or port, after
a public hearing, to issue a restoration order if it finds
that development has occurred without a CDP and the
development is causing continuing resource damage.
4)Authorizes a superior court to impose civil penalties on any
person in violation of the Coastal Act between $500 and
$30,000 per violation; additional penalties between $1,000 and
$15,000 per day for each day in which a violation persists may
be imposed when anyone knowingly and intentionally violates
the Coastal Act.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, potential penalty revenues to the Commission, in the
range of $500,000 to $2 million a year; minor savings, less than
$150,000 a year, to the Commission in avoided enforcement
expenses; potential minor savings to the Attorney General (AG)
from representing the Commission before court; and loss of
annual penalty revenue, potentially in the hundreds of thousands
of dollars, to the Coastal Conservancy (Conservancy).
COMMENTS : According to the author's office, "[p]enalties are a
critical component of environmental statutes and are the main
means used to persuade would-be violators to comply with the
law. A credible threat of penalties to prevent violations in
the first place can greatly increase the ability of an
environmental agency to obtain voluntary compliance, and
significantly increase protection of the environment. The
deterrent component of any regulatory scheme is important,
particularly for environmental laws where restoration of
violations often is difficult or impossible, and cannot make the
resource whole."
The ability for an agency to impose administrative civil
penalties is but one tool in an enforcement toolkit and must be
distinguished from civil penalties imposed by a court and
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criminal penalties. According to Rechtschaffen and Markell,
"The essential task for enforcement agencies is to make
penalties high enough and the probability of detection great
enough that it becomes economically irrational for regulated
entities to violate the law."<1> The United States
Environmental Protection Agency's policy on civil penalties
states that the first goal of penalty assessment is deterrence,
which is achieved when the penalty places the violator in a
worse position than those who complied in a timely fashion. At
a minimum, the policy states that the penalty must remove any
significant economic benefits from failure to comply with the
law. If they set high enough, administrative penalties can be
the most cost-effective enforcement tool, obviating the need to
pursue expensive litigation, at taxpayer's expense, in court.
Only a court can impose civil penalties on violators of the
Coastal Act. This is a time-consuming and resource-intensive
process. Since the AG must represent the Commission in court,
the Commission can only pursue a small percentage of all
violators given its limited resources. Since 2003, the
Commission has only pursued four cases in court (though it also
pursues cross-complaints when sued). Considering these
constraints, court-imposed penalties have a limited deterrent
effect on would-be violators who may decide that violating the
Coastal Act is worth the risk especially since they do not have
to pay any fines or even compensate the Commission for the costs
of investigations.
As arguably the state's most significant land use regulator, the
Commission lacks one of the most effective enforcement tools.
Agencies such as the San Francisco Bay Conservation and
Development Commission (BCDC), the State Water Resources Control
---------------------------
<1> C. Rechtschaffen, and D. Markell, 2003. "Reinventing
environmental enforcement and the state/federal relationship
. Environmental Law Institute. Washington, D.C.
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Board (and regional boards), State Lands Commission, Department
of Fish and Game, California Energy Commission, Air Resources
Board, Department of Forestry, Department of Toxic Substances
Control, Integrated Waste Management Board, Department of Health
Services, Department of Food and Agriculture, Structural Pest
Control Board, regional air districts, and local agencies all
have administrative civil penalty authority. BCDC's authority
to regulate development along San Francisco Bay serves as the
best analog to the work of the Commission. Using its civil
penalty authority, BCDC has been successful at discouraging and
resolving the vast majority of violations without resorting to
expensive and time consuming litigation.
Given this anomaly, and the foregoing, it is entirely reasonable
and in the public's interest for the Commission to have the same
authority. The Legislative Analyst Office (LAO) recommended as
much in its 2008-09 analysis of the budget and the Budget
Subcommittee #3 adopted this recommendation. However, this
recommendation was later dropped from the budget.
In order to stop on-going violations, the Commission is
authorized to issue cease and desist orders. Using this
authority, the Commission has been able to resolve some
violations amicably through the use of consent orders, under
which a violator usually agrees to pay a penalty. However, the
violator has to voluntarily agree to pay since the Commission
has no authority to impose such a penalty. According to
Commission staff, a violator usually ends up paying a much
smaller penalty than that which could be imposed by a court.
However, the irony is that those violators who contest an order
usually pay nothing since they are aware that the Commission has
to go to court to pursue penalties. Thus, it pays to be
recalcitrant and roll the dice given that the odds of litigation
are slim. This creates a perverse incentive for
non-cooperation. The Commission's enforcement statistics may,
in part, bolster this claim: there is a current backlog of 1,300
cases; from 1985-2008, the balance of its enforcement account
has averaged only about $134,000.
Among other things, a coalition of opponents argues that this
bill "creates a 'bounty hunter' dynamic whereby the [Commission]
is incentivized to seek large penalties and fees to support its
budget." In response, Commission staff states that the bill
only authorizes penalties in the amount no less than $5,000 and
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no more than $50,000 per violation. Moreover, even if the
Commission desired to bolster its budget, it currently only has
one statewide enforcement staff to pursue a backlog of over
1,300 cases. Since the 2002-03 budget, the Commission has
endured significant cuts to its funding. Its skeleton staff can
no longer process permits in a timely manner, it can no longer
comment on projects at the local level (which can lead to delays
when projects move to the Commission), and amendments to Local
Coastal Plans can languish for two years or more. Furthermore,
any administrative penalty would be subject to judicial review;
the Commission argues that any penalty sought as a "bounty"
would not withstand this review. It is also worth noting that
BCDC received $113,000 in civil penalties last year, hardly a
"bounty" by any definition.
Under existing law, all enforcement revenues are transferred to
the Conservancy to fund its coastal access program. In response
to a LAO recommendation, this bill would delete this transfer
and instead deposit all enforcement revenues in the Fund,
established to carry out the Commission's enforcement program
and to provide services to local government, permit applicants,
and others. This would reduce the Conservancy's coastal access
funding by about $134,000. However, the Conservancy would still
be entitled to about $500,000 annually from the Fund, as
required by existing law.
Analysis Prepared by : Dan Chia / NAT. RES. / (916) 319-2092
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