The September 13th CalChamber Alert newsletter reported that strong opposition from the California Chamber of Commerce has defeated three "job killer" bills that had been awaiting action by the legislature: AB 1330, SB 365, and SB 691.
•AB 1330 (J. A. Pérez; D-Los Angeles) would have discouraged investment and expansion in some disadvantaged regions of the state by doubling most fines and penalties issued by the Air Resources Board (ARB), Department of Toxic Substances Control (DTSC) and Air Quality Management Districts (AQMDs) on facilities located there. Placed on the Senate Floor inactive file on September 12, 2013.
•SB 365 (Wolk; D-Davis), which would have imposed an arbitrary maximum 10-year sunset on all future tax credits, has been amended to deal with a different subject. The bill was gutted and amended September 11, 2013 to deal with another subject, so opposition and "job killer" status have been removed. CalChamber has no position.
•SB 691 (Hancock; D-Berkeley) would have dramatically increased penalties for a single-day violation triggered by a release of an air toxic contaminant. Placed on the Assembly Floor inactive file on September 12, 2013.
Green Zone Trust Fund
AB 1330 sought to establish the Green Zone Trust Fund, which would have been funded by civil and criminal fines and penalties exacted on facilities located within communities in the state deemed to be disproportionately impacted by environmental hazards, regardless of any causal relationship between a facility’s conduct and the factors that led to the community’s characterization. While well intended, AB 1330 would have serious unintended consequences for the very communities it seeks to help by discouraging private investment in those communities through use of geographically targeted penalties.
CalChamber and a large coalition had expressed their concerns over this very significant measure and told the bill’s author there was no compelling event or circumstance that requires it to be adopted in 2013. AB 1330 will benefit from greater public input through the 2014 session, allowing stakeholders and legislators adequate time to discuss the policy merits of the measure.
Tax Credit Sunset
Before the September 11 amendments, SB 365 created uncertainty for California employers making long-term investment decisions by requiring that tax incentives end 10 years after their effective date.
The CalChamber supports efforts of the state to consider the effectiveness of tax policies and programmatic expenditures.
SB 365, however, attempted to address this periodic review and good government structure related to tax policy by mandating a maximum 10-year sunset on all future tax credits. This would have the adverse effect of creating uncertainty about the future of the state’s tax structure.
Dramatic Penalty Increase
SB 691 (Hancock; D-Berkeley) would have dramatically increased existing strict-liability penalties for nuisance-based, nonvehicular air-quality violations without adequately defining what types and levels of pollution would trigger those penalties.
Businesses, public agencies, universities, power producers and hospitals were among entities subject to the increased penalties.
SB 691 proposed a tenfold increase in penalties for Title V facilities for a one-day violation from a maximum of $10,000 under current law to a maximum of $100,000.
Although the proponents claimed SB 691 was intended to apply only to "major events," it did not define "major events" or criteria for this enhanced penalty.
As a result, this increase could have affect any Title V facility in California. There are more than 700 Title V facilities in the Bay Area Air Quality Management District, South Coast Air Quality Management District and San Joaquin Air Pollution Control District alone.
Casting a Broad Net
Nuisance penalties are relatively low because "nuisance" is a strict liability offense. This means that someone accused of creating a nuisance can be held liable even if they had no knowledge of the event and no intent to create a nuisance.
An air district simply had to allege that several people had complained about an air emission and the alleged violator would have been subject to enormous liability.
Significant Penalty Increase
SB 691 significantly increased the penalty in an area where air districts already have extraordinary prosecutorial and penalty recovery authority. The air district can determine when a nuisance occurs and then has complete discretion to determine the amount of penalty. SB 691 created an incentive for the air district to levy the highest penalties possible.