BILL ANALYSIS
Bill No: AB
846
SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
Senator Roderick D. Wright, Chair
2009-2010 Regular Session
Staff Analysis
AB 846 Author: Torrico
As Amended: July 1, 2009
Hearing Date: July 8, 2009
Consultant: Chris Lindstrom
SUBJECT
State agencies: civil and administrative penalties.
DESCRIPTION
AB 846 requires specified agencies administering
environmental, health, and workplace safety laws to update
the 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, the 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
update, by February 15, 2010, and on January 1, annually
thereafter, adjust the minimum and maximum amounts of
specified civil and administrative penalties for
inflation using the Consumer Price Index (CPI), as
provided, and specifies a method for rounding the
penalties to multiples of 10 or 100. Provides that the
inflation updates shall be exempt from the Administrative
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Page 2
Procedures Act (APA).
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, 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
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.
BACKGROUND
Purpose of the bill. This bill requires the DTSC, ARB,
DIR, and SWRCB to update the minimum and maximum amounts of
specified civil and administrative penalties 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
AB 846 (Torrico) continued
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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
$1,000. (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
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increase penalty assessments to deter unlawful conduct and
to prevent violators from profiting from their misconduct.
Exemptions from the Administrative Procedures Act (APA).
The policy behind the requirements established by the APA
(and review by the Office of Administrative Law (OAL)) are:
Meaningful public participation in state agency
rulemaking (which is why an agency has to provide
"necessity"- i.e. state the rationale for picking that
particular path, not "what" the regulation does, but
rather "why" the agency is doing it in that particular
way as opposed to some other way);
Complete records of rulemaking (including a summary
and response to all public comments to make sure the
agency read the comments and made some effort to
assess what the commenters were saying);
Legally valid (i.e. consistent with all applicable
statutes), understandable regulations, based in
reason; and,
Public access to all regulations issued/used by
state agencies.
When legislation in enacted to exempt the requirements in a
bill from the APA, it is bypassing those protections. In
some instances, an agency or interest group may want a
policy change to go into effect as soon as possible and
seeks an exemption from the formal rulemaking process
because the process takes time and effort. In other
instances, arguably, as in the case of AB 846, an exemption
makes sense.
AB 846 is designed to specify a method by which specified
departments and agencies are obligated to update its civil
and administrative penalties on an annual basis. If a
statute requires a department or agency to update penalties
according to a specific formula, and the statute
establishes that formula in such a way that there is no
discretion being exercised by the department or agency when
making the annual calculation, then the change to the
regulation would be a change without regulatory effect.
Staff comment. Suggested amendment - Updated Penalties
should be filed with the Secretary of State and published
in the California Code of Regulations. Other bills
authorizing exemptions from the APA still require the
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respective department or agency to make the information
available to the public by publishing it in the code or
some other specified manner. The author may wish to
consider language that would require the updated penalties
to be filed with the Secretary of State and published in
the California Code of Regulations. The language (on page
3, lines 11-14; on page 4, lines 25-28; on page 5, lines
37-40; and, on page 7, lines 11-14) would read:
(3) Inflation adjustments made pursuant to this
subdivision shall be exempt from the requirements
of Chapter 3.5 (commencing with Section 11340) of
Part 1 of Division 3 of Title 2 of the Government
Code. The updated civil and administrative
penalties pursuant to the inflation adjustment
shall be filed with the Secretary of State and
published in the California Code of Regulations.
SUPPORT : As of July 6, 2009:
National Resources Defense Council (sponsor)
Breathe California
California Association of Environmental Health
Administrators
California Labor Federation
California League of Conservation Voters
Clean Water Action
Community Water Center
Green California
Heal the Bay
Natural Resources Defense Council
Planning and Conservation League
San Francisco Baykeeper
Sierra Club California
OPPOSE : As of July 6, 2009:
California Chamber of Commerce
American Council of Engineering Companies of California
Apartment Association of Greater Los Angeles
Associated General Contractors of California
California Association of Joint Powers Authorities
California Apartment Association
California Business Properties Association
California Building Industry Association
California Chapter of the American Fence Contractors'
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Association
California Construction and Industrial Materials
Association
California Fence Contractors' Association
California Grocers Association
California Hotel and Lodging Association
California Independent Grocers Association
California Independent Oil Marketers Association
California Manufacturers and Technology Association
California Professional Association of Specialty
Contractors
California Restaurant Association
California Retailers Association
Engineering Contractors' Association
Flasher/Barricade Association
Independent Waste Oil Collectors and Transporters
Marin Builders' Association
Santa Barbara Rental Property Association
Santa Barbara Technology and Industry Association
Western Electrical Contractors Association
Western Growers
FISCAL COMMITTEE : Senate Appropriations Committee
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