BILL ANALYSIS Ó
SENATE COMMITTEE ON ENVIRONMENTAL QUALITY
Senator Wieckowski, Chair
2015 - 2016 Regular
Bill No: SB 1161
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|Author: |Allen |
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|Version: |3/29/2016 |Hearing |4/20/2016 |
| | |Date: | |
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|Urgency: |No |Fiscal: |No |
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|Consultant:|Rachel Machi Wagoner |
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SUBJECT: Statutes of limitation: California Climate Science
Truth and Accountability Act of 2016
ANALYSIS:
Existing federal law: Under the Federal Trade Commission Act
Section 5 (FTC Act) (15 USC 45), prohibits "unfair or deceptive
acts or practices in or affecting commerce." The prohibition
applies to all persons engaged in commerce.
Existing law: Under the Unfair Competition Law (UCL) (Business
and Professions Code §17200 et seq.):
1) Confers standing on both private parties and public
prosecutors.
2) Authorizes the Attorney General, district attorneys, county
counsels and city attorneys to file lawsuits on behalf of
injured citizens. Business and Professions Code §17204 et
seq.)
3) Defines unfair competition as: (1) an unlawful business act
or practice; (2) an unfair business act or practice; (3) a
fraudulent business act or practice; (4) unfair, deceptive,
untrue or misleading advertising; or (5) any act prohibited
by the Consumers Legal Remedies Act (Business and Professions
Code §§17500 -17577.5), which applies to any "consumer"
transaction involving the "sale or lease of goods or
services," and explicitly prohibits 24 separate business acts
or practices.
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4) Requires an action alleging unfair competition, as defined,
to be commenced within 4 years after the cause of action
accrued.
5) Allows the court to prevent the use of unfair competition and
to restore money or property to victims of unfair competition
- allows for both monetary damages and injunctive relief
where necessary. Restitution and disgorgement of profits are
used primarily to deter future violations. Courts use
various factors to determine the amount of the penalty,
including "the nature and seriousness of the misconduct, the
number of violations, the persistence of the misconduct, the
length of time over which the misconduct occurred, the
willfulness of the defendant's misconduct, and the
defendant's assets, liabilities, and net worth." However,
the UCL does not permit punitive damages awards.
This bill enacts the California Climate Science Truth and
Accountability Act:
1) Makes specified findings regarding the impacts of climate
change.
2) For actions brought by the Attorney General or certain public
prosecutors, extend the time period for the commencement of
an action for unfair competition with respect to scientific
evidence regarding the existence, extent, or current or
future impacts of anthropogenic induced climate change to
within 30 years of an act giving rise to the cause of action.
The bill would revive actions that are time-barred as of
January 1, 2017, as specified.
Background
1) History of California Unfair Competition laws.
California Civil Code §3369, enacted in 1872, was
California's early unfair competition statute. It "addressed
only the availability of civil remedies for business
violations in cases of penalty, forfeiture, and criminal
violation."
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A 1933 amendment expanded the law to prohibit "any person
[from] performing an act of unfair competition." This
amendment did not, however, extend UCL protection to
consumers. This limitation was in response to the U.S.
Supreme Court's 1931 decision in FTC v. Raladam.[5] In
Raladam, the Court held that an FTC Act Section 5 violation
must show actual injury to competition. This ruling
prevented individual consumers from suing under the FTC Act.
Following this rationale, California applied the UCL to
unfair business practices that affected business competitors,
not consumers.
In 1935, consumers, not just business competitors, were given
the opportunity to sue under the UCL. The Supreme Court of
California clarified the statute in American Philatelic Soc.
v. Claibourne, stating that "the rules of unfair competition"
should protect the public from "fraud and deceit."
In 1962, a California appellate court reiterated this rule by
stating that the UCL extended "equitable relief to situations
beyond the scope of purely business competition." In 1977,
the Legislature moved UCL to the California Business and
Professions Code §17200.
In November 2004, California voters enacted Proposition 64 to
amend the UCL. Proposition 64:
a) Specified that, to have standing to pursue a
lawsuit under the UCL, a private plaintiff must have
"suffered injury in fact and . . . lost money or
property as a result of " the alleged wrongdoing,
b) Specified that a private party "may pursue
representative claims or relief on behalf of others
only if the claimant" both "meets the standing
requirements" added by Proposition 64 "and complies
with Section 382 of the Code of Civil Procedure," which
sets forth California's requirements for maintaining a
class action.
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c) Deleted language that formerly authorized the
prosecution of actions by private parties purportedly
"acting for the interests of . . . the general public."
Id. §3 (amending Cal. Bus. & Prof. Code §17204).
1) Examples of UCL and Environmental Prosecution.
In a 2011 article titled, Public Prosecutorial Enforcement of
the Unfair Competition Law Following the Passage of
Proposition 64, former Marin County Deputy District Attorney
Bob Nichols states, "The principal role of a public
prosecutor is to seek justice. Restitution and recovery of
losses for injured consumers is always a prosecutorial
concern, but this function is ancillary to the greater public
need of ceasing the unlawful conduct, punishment, and
deterrence. This is not unlike the traditional prosecutorial
role in criminal cases. In fulfilling this obligation,
consumer prosecutors do not seek damages but rather
injunctive relief, restitution, and civil penalties."
Business and Professions Code §17200 is routinely used today
in the prosecution of environmental cases under these
principles.
In 2007 prosecutors pursued a UCL case against Home Depot for
illegal hazardous waste storage and transportation violations
found during a three- year investigation. A
multi-jurisdictional, statewide prosecution team in 28
counties tracked hazardous waste management practices and the
state's fire code at California's Home Depot stores
statewide. The case resulted in a $9.9 million dollar
settlement.
In 2009 the state filed suit against Kmart for disposal of
toxic substances in landfills. The state forged an $8.65
million settlement with Kmart and required the company to
stop disposing of toxic substances in landfills.
In 2010, the Attorney General and 20 district attorneys filed
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a statewide suit, pursuing a UCL action against Wal-Mart for
violating California's environmental laws in its handling and
disposal of hazardous materials. Wal-Mart agreed to settle
the case for $27.6 million. The settlement includes $20
million to be split among prosecutors in 20 jurisdictions and
32 environmental health agencies throughout the state; $1.6
million in costs for the investigation; $3 million to a fund
for other environmental investigations; and $3 million toward
keeping stores in compliance.
In 2011 the Target Corporation agreed to pay $22.5 million to
settle a UCL case wherein prosecutors accused the retailer of
the "willful disregard for California's hazardous waste laws"
for such violations as pouring chemicals returned by
customers down the drain and dumping incompatible,
combustible liquids like ammonia and bleach into trash bins.
In 2013 Attorney General Kamala D. Harris was joined by eight
District Attorneys in filing a UCL lawsuit against BP West
Coast Products, BP Products North America, Inc. and Atlantic
Richfield Company (ARCO) for allegedly violating state laws
governing hazardous materials and hazardous waste by failing
to properly inspect and maintain underground tanks used to
store gasoline for retail sale at more than 780 gas stations
in California. In 2002, similarly, Attorney General Bill
Lockyer settled a UCL case with BP-ARCO for $45.8 million,
"the largest penalty in the nation for alleged widespread
underground tank violations at ARCO stations in California."
2) Broad Impacts of Climate Change in California and Worldwide.
There is broad scientific consensus that the climate is
warming and that much of this warming is due to human
activities, with serious implications for California.
The 5th assessment report from the Intergovernmental Panel on
Climate Change (IPCC) notes that atmospheric concentrations
of global warming pollutants have risen to levels unseen in
the past 800,000 years. Carbon dioxide concentrations have
increased by 40% since pre-industrial times. Over time,
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these increases have led to a rise of global average surface
temperatures of approximately 1.4?F since 1900, with much of
this increase occurring after 1970. Per the latest report by
the National Oceanic and Atmospheric Administration (NOAA),
2014 was the 38th consecutive year that the global
temperature increased.
Research indicates that an increase in the global average
temperature of 3.6?F above pre-industrial levels, which is
only 1.1?C (2.0?F) above present levels, poses severe risks
to natural systems and human health and well-being.
According to the U.S. Environmental Protection Agency, for
every 2?F increase in global average temperature, we can
expect to see 5-15% reductions in crop yields, 3-10%
increases in rainfall during heavy precipitation events when
flood risks are already high, and 200-400% increases in areas
burned by wildfires in the western United States.
Higher temperatures globally have already resulted in
diminished snow and sea ice and have caused sea level to rise
by nearly eight inches.
In California, the frequency of extreme events, including
heat waves, wildfires, floods, and droughts, are expected to
increase. Higher temperatures and more frequent and severe
extreme events will have a range of consequences for public
health through impacts to water quality, air quality, and the
spread of infectious diseases.
As the evidence for anthropogenic climate change has mounted
over the last few decades, the state has implemented a broad
climate portfolio to mitigate global warming impacts by
pursuing policies that reduce greenhouse gasses (GHGs).
And although deep and severe cuts in GHG emissions globally
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are still needed to avoid the most severe consequences of a
changing climate, they will not be enough to stave off
climate change and its environmental and public health
impacts. Even if all GHG emissions ceased today, many
impacts of climate change would still be unavoidable because
the climate system has changed over time.
A major report from the University of College London's
Institute for Global Health and the medical journal The
Lancet has called climate change the "biggest global health
threat of the 21st century." Climate change not only brings
about new threats, it is a magnifier of existing natural
hazards. The impacts to health, infrastructure, hazard
response, etc. will come with a financial cost, as well.
Additionally, the Pacific Institute estimates that $100
billion worth of property is at risk of flooding during a
100-year flood with 1.4 meters of projected sea level rise,
including 55 healthcare facilities, over 330 hazardous waste
facilities or sites, 30 coastal power plants, and 28
wastewater treatment plants.
Furthermore, recent extreme climate events revealed that the
impacts from climate change are happening now and underscored
the significant vulnerability in many human systems to
climate variability.
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Comments
1) Purpose of Bill. According the author, international
industry documents show that many of the world's largest
fossil fuel companies have worked to deceive the public about
the realities and risks of climate change for decades. While
evidence suggests that such efforts continue today, it is
critical for law enforcement to have the opportunity to hold
these companies more fully accountable for any laws they have
violated during the course of their decades-long public
disinformation campaign. The author asserts that had fossil
fuel companies not chosen a strategy of denial and deception
on the science of climate change, significant economic,
health and environmental impacts of climate change could have
been avoided. The author states that since 1988, a time that
fossil fuel companies knew the risks and likely consequences
to the climate of processing and burning their products, more
than half of industrial carbon emissions have been released.
The author argues that SB 1161would not create any new
liabilities in state law. According to the author, rather it
would extend the statute of limitations of California's UCL
for deceptive behavior relating to the scientific evidence of
climate change. The author further states that SB 1161 does
not presume that any fossil fuel companies or trade
associations have broken the law. Rather by extending the
statute of limitations, SB 1161 would merely give law
enforcement the opportunity to ensure that justice is served
for the full weight of any violations that may have been
committed.
DOUBLE REFERRAL:
If this measure is approved by the Senate Environmental Quality
Committee, the do pass motion must include the action to
re-refer the bill to the Senate Judiciary Committee.
SOURCE: Union of Concerned Scientists
SUPPORT:
Amazon Watch
Asian Pacific Environmental Network
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Azul
California Coastal Protection Network
California League of Conservation Voters
Center for Biological Diversity
Center for Environmental Health
Center for International Environmental Law
Climate Hawks Vote
Climate Resolve
Environment California
Fossil Free California
Global Exchange
Media Alliance
Natural Resources Defense Council
Rainforest Action Network
Sierra Club California
Stand
OPPOSITION:
California Chamber of Commerce
Civil Justice Association of California
ARGUMENTS IN
SUPPORT: Supporters argue:
"Recent reporting by the Los Angeles Times, Inside
Climate News and a Union of Concerned Scientists
report, The Climate Deception Dossiers, indicate that
by the 1980s the fossil fuel industry was well aware of
the emerging scientific consensus that emissions from
the burning of fossil fuels was increasing global
temperature. Unfortunately, despite this knowledge,
industry documents show that many fossil fuel companies
and their trade groups developed and participated in a
concerted campaign to sow public confusion about the
science of climate change. These actions included
public statements denying climate change, coordinated
public relations campaigns to deceive the public,
newspaper advertisements and secretly funding
contrarian climate research, among other activities.
Whether these companies have actually broken the law is
something for the courts to decide. The objective of
SB 1161 is to give law enforcement the opportunity to
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ensure that justice prevails for the full weight of any
violations that may have been committed. To that end,
SB 1161 would extend the statute of limitations under
the state's UCL to 30 years for deceptive behavior
relating to scientific evidence regarding climate
change.
ARGUMENTS IN
OPPOSITION: The opposition argues:
"Statutes of limitations 'have long been respected as
fundamental to a well-ordered judicial system.' Board
of Regents v. Tomanio, 446 U.S. 478. They serve an
important purpose in maintaining the ability of our
civil justice system to produce equitable results. The
California Supreme Court succinctly pointed out the
value of the statute of limitations. 'The purpose of
any limitations statute is to require diligent
prosecution of known claims thereby providing necessary
finality and predictability in legal affairs, and
ensuring that claims will be resolved while the
evidence bearing on the issues is reasonably available
and fresh." Kaiser Foundation Hospitals v. Workers'
Comp. Appeals Bd., 39 Cal.3d 57 (1985). The statute of
limitations promotes justice by preventing the
assertion of claims 'that have been allowed to slumber
until evidence has been lost, memories have faded and
witnesses have disappeared.' Order of R.R.
Telegraphers v. Ry Express Agency, 321 U.S. 342 (1944).
Extending the period for filing these claims and
reviving claims up to 30 years old increases the
likelihood that witnesses and evidence will be
unavailable and that memories will be less reliable.
Extending the statute of limitations also sets a
dangerous precedent. If the legislature were to adopt
a special filing period for this category of lawsuit,
that would become the standard for how the body reacts
to future current events. Every accident, natural or
man-made disaster, product recall or other source of
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multiple claims for damages would be a candidate for a
special extension of the time for filing civil
actions."
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