Governor Appoints Members to Advise and Oversee Wildfire Safety and Catastrophe Response
Governor Gavin Newsom announced the appointment of members of the California Wildfire Safety Advisory Board, as outlined in AB 1054, and the California Catastrophe Response Council, established by AB 111, both signed into law in July.
The legislation created the California Wildfire Safety Advisory Board, a board of independent expert advisors, to advise a new Wildfire Safety Division within the California Public Utilities Commission on wildfire safety measures, including plans written by utilities, so the CPUC can more effectively regulate the safety of investor-owned utilities.
Newsom appointed five of the safety board's six members:
Jessica Block, a Democrat, is the associate director of UC San Diego's WIFIRE Lab. She has conducted wildfire-related research in Australia, which has similar geographic and meteorological conditions to California and has also experienced catastrophic fires.
Marcie Edwards, a Republican, is a principal at MLE Consulting. She was previously general manager of the Los Angeles Department of Water and Power, along with holding other roles at LADWP, the city of Anaheim and the California Independent System Operator.
Diane Fellman, a Democrat, was most recently a regulatory specialist at the PUC. She was previously the top lobbyist for NRG Energy's western region, along with holding other roles at NextEra Energy Resources, the PUC and the California Energy Commission.
John Mader, a Democrat, is an electrical distribution engineer at Pacific Gas & Electric. He is also president of labor union Engineers and Scientists of California Local 20.
Alexandra Syphard, a Democrat, is chief scientist at Sage Insurance Holdings. She previously held various research roles for several academic institutions and the Wisconsin Department of Forest and Wildlife Ecology.
Senate President Pro Tempore Toni Atkins appointed Ralph Armstrong to the board. He is a senior official with PG&E's main labor union, International Brotherhood of Electrical Workers Local 1245, and previously worked at the Western Area Power Administration and Florida Power & Light.
Newsom appointed three of the Catastrophe Resource Council's nine members:
Catherine Bando, a Democrat, is executive director of the California Statewide Communities Development Authority and is also a principal at Bando Public Finance. She previously held positions at Citigroup Global Markets and Greencoast Capital Partners, among other firms.
Paul Rosenstiel, a Democrat, is a special adviser to Newsom and previously served as a board member for the California State Teachers' Retirement System. He previously held positions at the Alameda County Treasurer's Office and the investment bank Stifel, among other firms.
Rhoda Rossman, a Democrat, is an independent trustee of Matthews Asia Funds, and previously held positions at Cypress Wealth Advisors, PMI Mortgage Insurance, Montgomery Asset Management, and Wells Fargo Bank Investment Management, among other firms.
AB 1054 also mandated that utilities tie executive compensation to safety performance, invest $5 billion in safety improvements without profit, and go through a new yearly wildfire safety review and certification process. It also requires new inspections of utility electrical equipment. Under the law, utilities must create a wildfire safety committee in their corporate board, and provide direct board-level safety reporting to the CPUC.
State Leaders Put Added Pressure on PG&E
Governor Gavin Newsom earlier this month redoubled his call for fundamental change to PG&E and laid out a path going forward to ensure the overly broad application of Public Safety Power Shutoffs (PSPS) will never happen again.
After spending eight days on the road talking to Californians during the blackouts and wildfires and deploying state resources to help those impacted, the Governor outlined the state’s efforts to fight wildfires, protect vulnerable Californians and ensure that going forward, Californians have safe, affordable, reliable, and clean power.
“California is leading the world in wildfire prevention and response, PG&E presented the opposite portrait. Long and widespread blackouts highlighted their culture of ineptitude – a behemoth that was slow to act and resistant to change,” Governor Newsom stated. “Their lack of safety investments left PG&E – and nearly half of Californians – with an antiquated electrical system… lack of preparation and a failure to lead and be accountable to their customers and communities led PG&E to today’s overreliance on and botched implementation of power shutoffs.”
To address what he views as overuse of PSPS, Governor Newsom last week launched the $75 million Local Government PSPS Resiliency Program to support state and local government efforts to mitigate the impact of power shutoffs by supporting continuity of operations and efforts to protect public health, safety, and commerce in affected communities. Additionally, the Governor wrote to executives of the state’s three investor-owned utilities (IOUs) demanding they adhere to previously-agreed protocols for PSPS decisions, and to coordinate with state and local officials to protect public safety and limit the impact of these events. Of PG&E CEO William Johnson, Newsom further demanded the utility do more to provide information for customers, reduce the number of customers impacted, and provide affected customers an automatic credit or rebate of $100 per residential customer and $250 per small business as some compensation for their hardships.
Two state lawmakers, Senator Jim Nielsen (R-Tehama) and Assemblymember James Gallagher (R-Yuba City), who represent the Town of Paradise and Camp Fire survivors, announced their intent to introduce legislation that will help prevent future wildfires and PSPS by PG&E. The proposal would temporarily pause the state’s renewable power mandates until infrastructure and vegetation management conditions are improved. The legislation will require that savings from this temporary relief may only be used to harden the grid and reduce forest fuels. PG&E currently spends around $2.4 billion to fulfill this mandate, while only spending $1.5 billion to update its infrastructure. Also during this time, executive compensation at IOUs would be frozen and any proposed bonuses shall be put on hold.
That is only one option on the table. This week, the Governor also held discussions involving state leaders, PG&E executives, city leaders from around the state, and other direct stakeholders to negotiate details for options to lead PG&E out of bankruptcy. San Jose Mayor Sam Liccardo, along with mayors of almost 20 cities, are proposing a public takeover, which PG&E has already rejected. How things shake out is still to be determined, but we do know that the Governor has expressed ongoing consideration of all options.
Split-Roll Initiative Could Face Legal Battle Over Title and Summary
California Attorney General Xavier Becerra last month released his office’s official title and summary for the latest split-roll initiative, which allows proponents to begin collecting signatures. Similar to the version that already qualified for the November 2020 ballot, the initiative seeks to increase property taxes by approximately $12 billion per year by requiring frequent market-value reassessment of business properties (with minor exemptions). However, for this version, the Attorney General did not describe the measure as a tax increase.
On that point, many editorial boards have expressed concern to Becerra’s classification of the initiative. The San Diego Union-Tribune’s editorial board wrote, “Becerra should be ashamed – and his office should be stripped of ballot summary duties in perpetuity. … One of the biggest state tax hikes in history shouldn’t be downplayed as a tax ‘change.’”
The San Francisco Chronicle’s John Diaz noted, “It’s a tax increase for corporations and businesses, plain and simple. Yet Becerra’s office glosses over that to emphasize that it ‘increases funding for public schools, community colleges, and local government services by changing tax assessment of commercial and industrial property.’”
In a letter to the Attorney General, a group backed by real estate and business groups, Californians to Stop Higher Property Taxes, warns that the ballot language is “false,” in large part because of its assumptions about revenue, and amounts to an “opinion” intended to sway voters. The letter concludes that the group will be compelled to take the matter to the courts if Becerra does not amend the title and summary.
Robert Gutierrez, President of the California Taxpayers Association, responded, “State law says the title and summary must state ‘the chief purposes and points of the proposed measure’ – in this case, a large property tax increase…we hope the state will use a fair description, rather than proponents’ talking points, if the measure reaches the ballot.”
Privacy Advocates Push Mactaggart for Stronger Privacy Initiative
Following up on the recently passed California Consumer Privacy Act (CCPA), Alastair Mactaggart is putting forward another initiative to tack on more regulations on consumer data, the California Privacy Rights and Enforcement Act of 2020 (CPREA). In submitting CPREA for circulation, Mactaggart has until November 13 to finalize the language.
Leading up to that deadline, a coalition of 11 consumer advocacy groups urged changes for the final version. All-in-all, they outlined at least 41 proposed changes in a 19-page letter. Most of the changes were requests to delete language in order to make it harder for businesses to exchange information.
The coalition noted more than a dozen new exemptions and caveats of the new initiative they believe would erode the law. Those exemptions, advocates wrote, would give companies new reasons to deny consumers' requests, ranging from the disclosure of trade secrets to security.
Mactaggart has opened the door to input from advocates, academics, businesses, and policymakers — and he has gotten it in spades, saying, “I think they have a lot of good points…I think we’re going to take a lot of the points very seriously.”
A proposal rejected by the State Legislature this year amid an outcry from industry groups, the privacy coalition resurfaced one of their own ideas to give consumers the right to sue over Privacy Act violations. The measure that was rejected by the Legislature was SB 561 by Senator Hannah-Beth Jackson, which died on the Suspense File in the Senate Appropriations Committee.
Initiative Would Shield App-Based Workers as Independent Contractors
A tech industry coalition, led by Uber, Lyft, and DoorDash, formally unveiled a California ballot initiative to shield gig companies such as Uber and Lyft from having to reclassify app-based workers as employees. The three companies have already committed $90 million toward supporting the initiative effort.
This ballot effort is a response to this year’s AB 5 as app-based companies attempt to alleviate the burden of a 2018 California Supreme Court decision on Dynamex Operations West, Inc. v. Superior Court of Los Angeles that made it tougher for businesses to treat their workers as independent contractors. AB 5 codified that decision while providing an exemption for many non-app-based independent contractors, making the focus of the bill primarily gig workers like Uber or Lyft drivers.
The language of the initiative explicitly states that an “app-based driver remains” an independent contractor if the company meets conditions, like hourly flexibility, that apply to the tech companies behind the push. Such conditions include drivers getting a guaranteed minimum wage and health care subsidies from the companies.
Unlike prior proposals from gig companies, the proposal would not open a path for drivers to organize or join unions. Governor Gavin Newsom has advocated for creating a path for gig workers to collectively bargain.
While leading the fight against AB 5, Uber, Lyft, and DoorDash were unsuccessful in pushing for a deal that would have offered workers some of those rights while shielding the firms from a costly mandate to classify them as employees.
As many others have done recently, this ballot effort could put pressure on lawmakers to forge a compromise to avert an expensive campaign leading up to the deadline to remove the initiative if it qualifies for the November 2020 ballot.
Governor Newsom had continued to push for a deal but has, so far, been unsuccessful in facilitating talks between tech and labor. Getting to an agreement would require buy-in from unions, who have significant clout in a Democratic-run Legislature and remain profoundly skeptical of the tech industry. The California Labor Federation assailed this initiative as “another brazen attempt by some of the richest corporations in California to avoid playing by the same rules as all other law-abiding companies in our state.”
In being compelled to treat drivers as employees, companies warn of the potential to upend their business models. Additionally, some drivers fear that a traditional employer-employee relationship is too rigid and erases the convenience of a flexible work environment.
California Insurance Company Put into Conservation
The continuing saga of Applied Underwriters/California Insurance Company took yet another contentious turn earlier this week when the California Department of Insurance obtained an order from the Superior Court in San Mateo County to place California Insurance Company under conservation. Per the Department’s press release, the order was sought, “…in response to the company’s willful violation of state law and established pattern of continually flouting California’s regulatory processes.”
The steps leading up to this action have been well-documented in the press across the country, but there are numerous questions that need to be answered, not the least of which is what the status is of in-force policies for exiting insureds. It should be noted this is not an issue of solvency, but rather the failure of Applied Underwriters to obtain California’s approval of its President, Steve Menzies, acquiring Applied from Berkshire Hathaway and the subsequent failure to obtain approval for the merger of its subsidiary, California Insurance Company – a California domiciled insurer – into California Insurance Company II – a New Mexico domiciled insurer.
Also important to note, Labor Code Sec. 3700 states that an employer may secure its obligations under the workers’ compensation laws by self-insuring or, “By being insured against liability to pay compensation by one or more insurers duly authorized to write compensation insurance in this state.” [Labor Code Sec. 3700(a)]
Labor Code Sec. 3700.5(a) states: “The failure to secure the payment of compensation as required by this article by one who knew, or because of his or her knowledge or experience should be reasonably expected to have known, of the obligation to secure the payment of compensation, is a misdemeanor punishable by imprisonment in the county jail for up to one year, or by a fine of up to double the amount of premium, as determined by the court, that would otherwise have been due to secure the payment of compensation during the time compensation was not secured, but not less than ten thousand dollars ($10,000), or by both that imprisonment and fine.”
Year-End Report Now Available!
As part of our member benefits, IIABCal will publish an annual year-end report to review the important issues and topics that were considered over the previous legislative year. We have be providing an electronic version shortly.
In the IIABCal Legislative Update, we will also be publishing sections of the report throughout the remainder of the year. Here are the “Animals and Agriculture” and “Banking” sections.
ANIMALS AND AGRICULTURE
AB 44 (Friedman) Fur products: prohibition
This makes it unlawful to sell, offer for sale, display for sale, trade or otherwise distribute for monetary or nonmonetary consideration a fur product in the state, or to manufacture a fur product in the state for sale. AB 44 includes specific exemptions for furs used for religious purposes, and furs used for traditional tribal, cultural, or spiritual purposes.
Debate on this bill pitted supporters who argued for “cruelty-free fashion innovation” against those who opposed the bill, stating that it will “encourage a black market that will worsen conditions for animals.”
Assembly Vote: 55-18
Senate Vote: 27-8
Status: Approved by the Governor. Chaptered by the Secretary of State - Chapter 764, Statutes of 2019.
AB 273 (Gonzalez) Fur-bearing and nongame mammals: recreational and commercial fur trapping: prohibition
This bill prohibits the trapping and/or sale of any fur-bearing mammal or nongame mammal for purposes of recreation or commerce in fur, eliminates fur dealer and agent licenses, and prohibits the purchase of products made from fur-bearing mammals and nongame mammals.
Assembly Vote: 51-19
Senate Vote: 30-9
Status: Approved by the Governor. Chaptered by the Secretary of State - Chapter 216, Statutes of 2019.
AB 417 (Arambula) Agriculture and Rural Prosperity Act
AB 417 would have created the Agriculture and Rural Prosperity Act and authorizes the secretary of the California Department of Food and Agriculture (CDFA) to consult with other stakeholders to identify opportunities to further rural agricultural economies.
In 2017, California farms and ranches collected over $50 billion in cash receipts for their output, an increase of almost 6 percent compared to the prior year. Exports of agricultural goods amounted to more than $20.5 billion, a slight increase over the year before and almost double the amount 10 years earlier. In total, the industry contributed $54 billion to the state’s economy.
Assembly Vote: 73-0
Senate Vote: 40-0
Status: Vetoed by Governor.
AB 527 (Voepel) Importation, possession, or sale of endangered wildlife
AB 527 would have extended for 10 years the existing provision that permits the commercial importation, possession with intent to sell and sale in California of the dead body, or parts and products from the dead body, of an alligator or crocodile.
In 2006, former Governor of Louisiana Kathleen Blanco sponsored SB 1485 (Hollingsworth), which lifted the ban on importation and sale of alligator and crocodile products in California. The state of Louisiana argued that permitting the sale of alligator products in California would encourage sustainable use management of alligator populations in Louisiana, benefit local communities and economic recovery in that state after Hurricanes Katrina and Rita, and encourage conservation of wetlands. The sunset has twice since been extended as Louisiana’s management program is recognized as a world-wide model for sustainable conservation.
Status: This bill stalled in the Assembly Appropriations Committee where it never had a hearing. Negotiations continued and the legislation was continued with AB 719.
AB 657 (Eggman) Agriculture: commercial feed
This bill extends the sunset date for commercial feed licensure and inspection tonnage tax to January 1, 2025, and increases the maximum rate of the tonnage tax from $0.15 to $0.25 per ton of commercial feed sold.
The Feed Inspection Program (FIP) ensures a clean and wholesome supply of milk, meat, and eggs as well as providing assurance that the product received by the consumer is of the quality and quantity purported by the manufacturer. As part of FIP, the Safe Animal Feed Education Program (SAFE), promotes feed safety and security through outreach and education, and performs Voluntary Feed Quality Assurance Audits.
Assembly Vote: 69-0
Senate Vote: 36-0
Status: Approved by the Governor. Chaptered by the Secretary of State - Chapter 306, Statutes of 2019.
AB 719 (Rubio) Endangered wildlife: crocodiles and alligators
AB 719 was the successor bill to AB 527. This measure would have extended for five years (down from 10 years within AB 527) the existing provision that permits the commercial importation, possession with intent to sell and sale in California of the dead body, or parts and products from the dead body, of an alligator or crocodile.
According to the author the resurgence of the alligator population, since being listed on the Federal Endangered Species list in 1971, is nothing short of an amazing recovery. The species now flourish in the wild in many Southeastern US states, while the illegal trade in alligator skins has essentially been eliminated. That resurgence is due to a coordinated response by federal and state government agencies, environmental and wildlife groups, international organizations and the development of a legitimate, highly regulated alligator farming industry working together.
Status: This bill was held in the Senate Appropriations Committee on the Suspense File, therefore dead.
AB 889 (Maienschein) Animal research
This bill would expand both the number of facilities reporting to the Department of Public Health (DPH) and the information that is required to be reported annually to DPH. All facilities using animals for diagnostic, research, or educational purposes, regardless of existing federal requirements under the Animal Welfare Law (AWA) and the federal Health Research Extension Act of 1985 (HREA), would have to annually report all of the animals used and broadly what the purpose for each animal would be, and they would be required to report the pain and distress of those animals.
Status: The author pulled bill prior to hearing in the Assembly Health Committee. Likely dead in its current form, but may be taken up in January 2020.
AB 1561 (Rubio) Endangered wildlife: crocodiles and alligators
AB 1561 was the successor bill to both AB 719 (which was held in the Senate Appropriations Committee) and AB 527. This measure would only extend for one year (down from five years within AB 719, and 10 years within AB 527) the existing provision that permits the commercial importation, possession with intent to sell and sale in California of the dead body, or parts and products from the dead body, of an alligator or crocodile.
Status: Referred back to the Senate Rules Committee for determination for policy committee assignment. Held without referral. May be taken up in January 2020.
SB 202 (Wilk) Animal blood donors
Established law requires a commercial blood bank for animals, as a condition of licensing, to document how the animal donor was acquired and to have a written protocol for, among other things, ongoing veterinary care for animals held in blood donor facilities. Currently, all records held by the Department of Food and Agriculture pursuant to these provisions from disclosure pursuant to the California Public Records Act are exempt.
SB 202 would have modified the definition of a commercial blood bank for animals to include establishments that collect blood not only from “captive closed-colony” animals that are kept, housed, or maintained for the purpose of collecting blood, but also “community-sourced” animals that are brought by their owners to the commercial blood bank for animals to have their blood collected.
Assembly Vote: 79-0
Senate Vote: 40-0
Status: Vetoed by Governor.
SB 469 (Dodd) Horse racing: health and safety
Santa Anita Park (Santa Anita) is a thoroughbred race track located in Arcadia, California and has been recently plagued with an unusual amount of horse deaths. Following the 19th fatality of the meet on February 25, the owners of Santa Anita announced the suspension of racing and training activities and brought in a third-party racing surface consultant to evaluate the track. A 21st horse suffered a fatal injury on March 5, and the owners once again suspended racing to allow for further investigation of the track. The main track was reopened for light training on March 11. On March 14, the 22nd horse to suffer a fatal injury resulted in the owners suspending training and racing at the track temporarily. To date, at least 34 horses have died at Santa Anita during the race season.
SB 469 authorizes the California Horse Racing Board (CHRB) to immediately suspend a license to conduct a horse racing meeting when necessary to protect the health and safety of horses and riders.
Assembly Vote: 78-0
Senate Vote: 40-0
Status: Approved by the Governor. Chaptered by the Secretary of State. Chapter 22, Statutes of 2019.
SB 580 (Wilk) Animal abuse: probation: treatment
This bill would require a psychiatric or psychological evaluation when a person is convicted and receives probation for specified animal offenses, and require the court to consider whether to order a responsible owner education course when a person receives probation for specified offenses involving animal abuse.
Status: Bill progress stalled in the Assembly Public Safety Committee. May be taken up in January 2020.
BANKING
AB 140 (Cervantes) California Kickstart My Future Loan Forgiveness Program
This bill would have created the California Kickstart My Future Loan Forgiveness Program to cover federal loan payments for recent resident graduates of California universities who participate in a federal income-driven repayment plan, have incomes less than $50,000, and meet other criteria, to extend the six-month grace period of a federal income-driven repayment plan by 24 months.
The author stated that the need for this measure is linked back to a “grace period [that] is generally an insufficient amount of time for many recent graduates,” leading them to “take job opportunities outside of their area of study, hampering their ability to pursue career goals or major life events.” Additionally, a report by The Institute for College Access and Success highlighted by the Assembly Higher Education Committee found that “11.5 percent of borrowers who began repayment October 1, 2013, defaulted by September 30, 2016, up from 11.3 percent the year before,” and “approximately 580,000 defaulted.”
Status: This bill was held in the Assembly Appropriations Committee on the Suspense File, therefore dead.
AB 1428 (Calderon) Business practices: prepaid credit cards: refund methods
This bill requires a business that offers a refund to a customer via a prepaid debit card for a purchase initiated by the customer in California, to provide the customer with at least one other method of receiving the refund other than a prepaid debit card.
According to the author, “prepaid debit cards have less regulatory protections than credit cards or gift cards, making them a generally less preferable financial instrument. While there may be some instances where refund via prepaid debit card is preferable – likely for the unbanked consumer – by and large, given the usage restrictions, maintenance fees, and expiration dates, these payment instruments are not favorable to the consumer. Use of a prepaid debit card as a refunding method is likely intentionally designed to create “slippage,” e.g. a purposefully constructed payment resulting in a payout of less than 100% of the money owed to a customer.”
Assembly Vote: 76-0
Senate Vote: 39-0
Status: Approved by the Governor. Chaptered by the Secretary of State - Chapter 130, Statutes of 2019.
SB 187 (Wieckowski) Rosenthal Fair Debt Collection Practices Act
The Rosenthal Fair Debt Collection Practices Act defines “consumer debt” to mean money, property, or their equivalent, due or owing or alleged to be due or owing from a natural person by reason of a consumer credit transaction. The Act further defines “consumer credit transaction” to mean a transaction between a natural person and another person in which property, services, or money is acquired on credit by that natural person from the other person primarily for personal, family, or household purposes.
The bill defines “debt collector” to exclude an attorney or counselor at law, and provides that consumer debt for purposes of the act includes mortgage debt. The bill will remove the exception for an attorney or counselor at law from the definition of debt collector.
Assembly Vote: 74-0
Senate Vote: 38-0
Status: Approved by the Governor. Chaptered by the Secretary of State - Chapter 545, Statutes of 2019.
SB 455 (Bradford) Financial Empowerment Fund: unbanked and underbanked populations
Until 2025, this bill will require the Department of Business Oversight to provide grants of up to $100,000 to specified nonprofits for financial education and financial empowerment programs and services to unbanked and underbanked populations in the state. SB 455 will also authorize the department to award up to $1,000,000 in grant monies per fiscal year, and appropriate the sum of $4,000,000 plus reasonable administrative costs, as estimated by the department, from the State Corporations Fund to the Financial Empowerment Fund, continuously appropriated.
Assembly Vote: 79-0
Senate Vote: 40-0
Status: Approved by the Governor. Chaptered by the Secretary of State - Chapter 478, Statutes of 2019.
SB 482 (Hueso) Consumer loans: restrictions
The California Financing Law (CFL) is administered by the Department of Business Oversight (DBO) and authorizes the licensure of finance lenders, who may make secured and unsecured consumer and commercial loans. The CFL places a range of requirements and restrictions on loans based primarily on the principal amount of the loan. These limitations on loans are most protective for loan amounts up to $2,500 with various, increasingly less stringent rules applying to loans under $5,000 and loans under $10,000. There are few limitations on rates, fees, and other terms for loans of $10,000 or more.
With regard to a loan secured by a lien on a motor vehicle, SB 482 would prohibit the licensee from repossessing the vehicle if the borrower has made a full installment payment within the past 30 calendar days. Additionally, SB 482 would prohibit any prepayment penalty on a consumer loan, other than one secured by real property, and required a specified notice with regard to repaying a loan early to be included on a loan contract for which a prepayment penalty is prohibited.
Status: The author canceled bill hearing in the Senate Judiciary Committee. May be taken up in January 2020.
SB 496 (Moorlach) Financial abuse of elder or dependent adults
This measure will expand the category of mandated reporters of suspected financial abuse to include a broker-dealer and an investment adviser. It will also authorize a broker-dealer or investment adviser who makes a report to notify any trusted contact person who had previously been designated by the elder or dependent adult of any known or suspected financial abuse, and to temporarily delay a requested disbursement or transaction from an account of an elder or dependent adult or an account to which an elder or dependent adult is a beneficiary if specified conditions are met.
Assembly Vote: 76-0
Senate Vote: 39-0
Status: Approved by the Governor. Chaptered by the Secretary of State - Chapter 272, Statutes of 2019.
