BILL ANALYSIS
AB 846
Page 1
ASSEMBLY THIRD READING
AB 846 (Torrico)
As Amended June 1, 2009
Majority vote
JUDICIARY 7-3 APPROPRIATIONS 12-5
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|Ayes:|Feuer, Brownley, Evans, |Ayes:|De Leon, Ammiano, Charles |
| |Jones, Krekorian, Lieu, | |Calderon, Davis, Fuentes, |
| |Monning | |Hall, John A. Perez, Price, |
| | | |Skinner, Solorio, |
| | | |Torlakson, Krekorian |
| | | | |
|-----+--------------------------+-----+----------------------------|
|Nays:|Tran, Knight, Nielsen |Nays:|Nielsen, Duvall, Harkey, |
| | | |Miller, |
| | | |Audra Strickland |
| | | | |
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SUMMARY : Seeks to require specified agencies administering
environmental, health, and workplace safety laws to adjust
minimum and maximum civil and administrative penalties to
account for annual inflation, and then, upon enforcement of
those penalties, require the department or agency to assess
liability that, at a minimum, recovers any economic benefits
derived by the violator, with specified exceptions.
Specifically, this bill :
1)Modifies practices for the assessment of civil and
administrative penalties by four departments and agencies,
namely the Department of Toxic Substances Control (DTSC), the
State Air Resources Board (ARB), the Department of Industrial
Relations (DIR), and the State Water Resources Control Board
(SWRCB).
2)Requires each of these departments and agencies to adjust the
minimum and 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 10 or 100.
3)Requires each department or agency, in cases where it seeks to
impose a penalty below these maximum amounts, to calculate and
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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, at a minimum,
assess liability at a level that recovers those economic
benefits from the violator, 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 civil and administrative penalties for specified
statutory violations, and typically authorize appropriate state
departments and agencies to assess and collect these penalties
as provided.
FISCAL EFFECT : According to the Assembly Appropriations
Committee:
1)DTSC . One-time special fund costs of about $40,000 for a
non-substantive rulemaking, the legislative report and
outreach, and ongoing costs of $115,000 for one analyst
position for the economic analyses.
2)SWRCB . Ongoing special fund costs of $260,000 for two
positions and $300,000 in contracts for the economic analyses.
Additional one-time costs of $65,000 for a rulemaking to
adjust the maximum penalties.
3)ARB . The board settles about 1,800 to 2,200 cases per year.
Based on this workload, the board would probably incur annual
special fund costs in the range of $1 million for additional
staff to conduct the economic analyses.
4)DIR estimates ongoing costs of $1.1 million for six positions
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to provide economic analyses and $1.4 million for 11 positions
to address workload associated with an expected increase in
appeals based on the increased penalty amounts.
5)Revenues/Savings . No departments could estimate the amount of
additional revenues from levying the maximum or higher
penalties, but these would likely be significant and could
more than offset the additional costs detailed above.
COMMENTS : This bill requires the DTSC, ARB, DIR, and SWRCB to
adjust the minimum and maximum amounts of specified civil and
administrative penalties to account for annual inflation. The
bill also requires these entities, if seeking a penalty below
the applicable maximum amount, to assess liability that at a
minimum recovers 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.
Data from the 2008 NRDC report appears to show, for example,
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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
violations. (NRDC Report, p. 15.)
According to the sponsor, this bill represents a legislative
effort to implement at least one important recommendation
contained in the NRDC report, namely, to increase penalty
assessments to deter unlawful conduct and to prevent violators
from profiting from their misconduct.
As recently amended, the bill clarifies that the authorized
departments or agencies shall assess liability at a level that,
at minimum, is sufficient to recover economic benefits derived
by the violator, but are not otherwise precluded from assessing
liability at a level that exceeds this minimum level.
Analysis Prepared by : Anthony Lew / JUD. / (916) 319-2334
FN: 0001262