BILL ANALYSIS
AB 846
Page 1
Date of Hearing: April 21, 2009
ASSEMBLY COMMITTEE ON JUDICIARY
Mike Feuer, Chair
AB 846 (Torrico) - As Amended: April 13, 2009
SUBJECT : STATE AGENCIES: CIVIL AND ADMINISTRATIVE PENALTIES
KEY ISSUES :
1)SHOULD SPECIFIED STATE AGENCIES ADMINISTERING ENVIRONMENTAL,
HEALTH, AND WORKPLACE SAFETY LAWS BE REQUIRED TO ADJUST THE
MAXIMUM AMOUNTS OF SPECIFIED CIVIL AND ADMINISTRATIVE
PENALTIES TO ACCOUNT FOR ANNUAL INFLATION, AS PROVIDED?
2)IN SEEKING ANY PENALTY BELOW THESE MAXIMUM AMOUNTS, AS
PROVIDED, SHOULD THE ENFORCING AGENCY BE REQUIRED TO ASSESS A
PENALTY THAT, AT MINUMUM, WILL RECOVER ANY ECONOMIC BENEFITS
DERIVED BY THE VIOLATOR, WITH CERTAIN EXCEPTIONS?
FISCAL EFFECT : As currently in print this bill is keyed fiscal.
SYNOPSIS
This bill, sponsored by the National Resources Defense Council
(NRDC), seeks to require specified agencies administering
environmental, health, and workplace safety laws to adjust
maximum civil and administrative penalties to account for annual
inflation. In addition, these agencies must assess a penalty
that, if less than the maximum penalty prescribed by law, is
still sufficient to recover any economic benefits derived by the
violator from his or her misconduct. The sponsor contends that
this penalty assessment policy will deter unlawful conduct and
prevent violators from profiting from their misconduct when the
modest existing penalty provides an improper incentive to commit
a violation. There is no known opposition to this bill.
SUMMARY : Seeks to require specified agencies administering
environmental, health, and workplace safety laws to adjust
maximum civil and administrative penalties to account for annual
inflation, and then, upon enforcement of those penalties,
require the department or agency to assess a penalty that, if
below the applicable maximum amount, is sufficient to recover
any economic benefits derived by the violator, with specified
exceptions. Specifically, this bill :
AB 846
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1)Modifies practices for the assessment of civil and
administrative penalties by four departments and agencies,
namely the Department of Toxic Substances Control, the State
Air Resources Board, the Department of Industrial Relations,
and the State Water Resources Control Board.
2)Requires each of these departments and agencies to adjust the
maximum amounts of specified civil and administrative
penalties to account for annual inflation using the Consumer
Price Index, as provided, and specifies a method for rounding
the adjusted penalties to multiples of ten or one hundred.
3)Requires each department or agency, in cases where it seeks to
impose a penalty below these maximum amounts, to calculate and
make express findings concerning any economic benefits derived
by the violator from the acts that constitute the violation.
Further requires the department or agency to assess liability
at a level that recovers those economic benefits from the
violator, if any, unless the department or agency expressly
finds that: (a) good faith efforts to comply or inability to
pay justify a reduction, and (b) the liability assessed will
maintain the deterrent effect of the penalty.
4)Requires each department or agency to report to the
Legislature on the implementation of these provisions.
5)Provides that, if the Commission on State Mandates determines
this bill contains costs mandated by the state, reimbursement
for those costs shall be made pursuant to these statutory
provisions.
EXISTING LAW , the Administrative Procedures Act, contains
provisions governing the conduct of administrative adjudication
for state agencies. Various chapters of California law also
create countless civil and administrative penalties for
specified statutory violations, and typically authorize
appropriate state departments and agencies to assess and collect
these penalties as provided.
COMMENTS : This bill would require the Department of Toxic
Substances Control, the State Air Resources Board, the
Department of Industrial Relations, and the State Water
Resources Control Board to adjust the maximum amounts of
specified civil and administrative penalties to account for
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annual inflation. The bill also requires these entities, if
seeking a penalty below the applicable maximum amount, to assess
liability sufficient to recover any economic benefits derived by
the violator, with specified exceptions.
The sponsor of the bill, the National Resources Defense Council
(NRDC), believes this bill is needed to "level the playing field
for law-abiding businesses", who otherwise face a competitive
disadvantage from complying with the state's environmental,
health, and workplace safety laws. The NRDC writes in support:
A 2008 NRDC report showed widespread noncompliance
with environmental, health, and workplace safety
laws suggesting that current penalty assessments are
inadequate to deter unlawful conduct. Many state
penalty caps are significantly lower than the
parallel federal penalty caps for the same kinds of
violations, and unlike federal penalties, are not
updated for inflation.
Even when environmental laws have penalty caps that
are high enough, enforcement agencies are not
consistently using their authority to impose
penalties sufficient to strip violators of the
economic benefits of their misconduct. Polluters do
not have an incentive to comply with the law if the
penalties for noncompliance are less than the
economic benefits the polluter derives from the
violation of the law or if the penalties do not
reflect current economic values.
Empirical Data Illustrate Problems with Enforcement and
Deterrence : Data from the 2008 NRDC report appears to show, for
example, that there were 3,799 facilities in violation of
existing water pollution regulations, yet nearly 23% of the
violating facilities went without enforcement by the appropriate
authorities. (An Uneven Shield: The Record of Enforcement and
Violations Under California's Environmental, Health, and
Workplace Safety Laws, NRDC, p. 12.) Maximum federal
administrative penalties for drinking water violations range
from $6,000 to $27,500, while maximum state administrative
penalties for similar misconduct are generally capped at $200 to
$1000. (NRDC Report, p. 15.) The report's authors concluded
that some Water Boards appear to be assessing only the mandatory
minimum penalty-or assessing no penalty at all-even for serious
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violations. (NRDC Report, p. 15.)
According to the sponsor, this bill represents a legislative
effort to implement at least one important recommendation by the
report's authors, in this particular case to increase penalty
assessments to deter unlawful conduct and to prevent violators
from profiting from their misconduct. The bill appears
reasonably crafted to accomplish these objectives, and there is
no opposition to the bill.
REGISTERED SUPPORT / OPPOSITION :
Support
National Resources Defense Council (sponsor)
Opposition
None on file
Analysis Prepared by : Anthony Lew / JUD. / (916) 319-2334