September 20, 2013

Job KillersThirty-seven of 38 “job killer” bills identified by the California Chamber of Commerce this year failed to move out of the Legislature.

The stalled or defeated proposals included one establishing double penalties, which was created just a week before the close of the legislative year through the controversial “gut and amend” technique.

Stopped

That bill, 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.

AB 1330 was placed on the Senate Floor inactive file on September 12.

Also stopped in the final week of the session were:

• SB 365 (Wolk; D-Davis), which would have imposed an arbitrary maximum 10-year sunset on all future tax credits. The bill was gutted and amended on September 11 to deal with another subject. The CalChamber removed its opposition and the “job killer” designation for SB 365 and has no position on the bill.

 

• SB 691 (Hancock; D-Berkeley), which would have dramatically increased penalties for a single-day violation triggered by a release of an air toxic contaminant. SB 691 was placed on the Assembly Floor inactive file on September 12.

Minimum Wage

The one “job killer” sent to the Governor was AB 10 (Alejo; D-Salinas), which increases the minimum wage in California by $2 over the next three years—from the current $8 an hour to $9 an hour on July 1, 2014, and $10 an hour on January 1, 2016. The federal minimum wage is $7.25 an hour.

The Governor expressed strong support for AB 10 in a joint press release with legislative leaders.

Green Zone Trust Fund

AB 1330 sought to establish the Green Zone Trust Fund, 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 had serious unintended consequences for the very communities it sought to help by discouraging private investment in those communities through use of geographically targeted penalties.

The CalChamber and a large coalition expressed their concerns over this very significant measure and told the bill’s author there was no compelling event or circumstance that required 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 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 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 affected 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.

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.

SB 691 would have 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.