Environmental Law

By STEPHEN HOLZER

And business thought it couldn?t get any worse in California?

    With an unemployment rate in this State over 12%, one would have thought that the Legislature would have said ?whoa!? (at least for awhile) in Sacramento?s continuing efforts to drive businesses to locate/relocate in Arizona and Nevada.   One would have been wrong. 

   Having passed the Assembly and wending its way through the Senate is Assembly Bill 846 (Assemb. Memb. Torrico, D- 20^th District; Fremont), the ?California Civil Penalties Inflation Supplement and Enforcement Act?.  The Act, if it becomes law, would apply to the Director of Pesticide Regulation, the Department of Toxics Substances Control, the Department of Industrial Relations and the State Water Resources Control Board; they would all be required every four years to update their penalty assessments for environmental violations by the amount of inflation (or deflation) as shown in the Consumer Price Index.

    Additionally, whenever the Director of Pesticide Regulation or one of the above-listed agencies decide to assess less than the maximum penalty allowed for the particular offense at issue, the Director or the agency would in general have to justify such less-than-maximum assessment by showing that the penalty takes account of any economic benefits the business had received from the violation.

    We can of course debate whether, in the abstract, the bill sounds reasonable.  However, while abstract may be good for art, the concept suffers when applied to the climate for business.  Simply put:  the business climate in this State stinks.  As pointed out on the California Chamber of Commerce?s website:

    ?Findings from Lawsuit Climate 2010: Ranking the States were released by the U.S. Chamber Institute for Legal Reform. The survey ranks the worst five states for legal fairness as: California (46th), Alabama (47th), Mississippi (48th), Louisiana (49th) and West Virginia (50th). Two-thirds, or 67 percent of the 1,482 corporate lawyers contacted for the survey say a state?s lawsuit environment is likely to have an impact on important business decisions at their company, such as where to locate or expand their businesses? up 10 percent from just three years ago.?

    Given California?s poor legal and business climate, now is hardly the time for increasing the burden on business contemplated by AB 846. 

    This is true notwithstanding that AB 846 admittedly requires penalties to be adjusted for deflation as well as inflation.  Businesses value economic certainty and flee from economic uncertainty.  AB 846 would create uncertainty by sending a signal to business that penalties would periodically change without any Legislative hearings or other due process.  California cannot afford to drive anymore business away with this type of approach.

Originally published as part of a column I do for the San Fernando Valley, California-based Valley News Group.

Full post as published by Environmental Legal Blogs on June 18, 2010 (boomark / email).