CMTA | Legislative Weekly

Legislative Weekly

All press calls on Leg Weekly information should be
directed toward Gino DiCaro at 916-498-3347

February 8, 2001

EXTRA EXTRAORDINARY SESSION ON ENERGY

Utility Financial Crisis
Last week's marathon sessions resulted in passage of ABX1 1 (Keeley D-Boulder Creek & Migden D- San Francisco), the bonding authority for the Department of Water Resources to enter into long term contracts for the "net short" position of the utilities. The next big job is to address the utility debt, through some combination of utility asset sales or stock warrants as in exchange for state financial aid. Senator Burton, D-San Francisco, (SBX1 33) favors a sale of utility transmission assets because transmission ownership would give the state more control over critical infrastructure development and a stronger hand in dealing with the Federal Energy Regulatory Commission over energy policies. Utilities are now negotiating with administration and legislative leaders, while on February 12 a federal court is scheduled to rule on whether customers are ultimately responsible for payment of the entire wholesale power cost undercollection, estimated to be up to $12 billion. Ultimate resolution may hinge on utilities agreeing to abandon their suits and passage of legislation to implement terms of the asset transfer agreement.

Supply and Demand Outlook
Increased attention is being paid to the critical supply shortfall we will face this summer. Supply is so short that older plants may not be able to go offline this spring for repowering and installation of pollution controls, further exacerbating the shortfall where repowering would have increased output and allowable run-times under existing air quality rules. Generators are asking for more flexibility this summer, arguing that emergency generators running during blackouts may pose a larger air quality threat than increased hours from these plants. In addition, in the northwest the snowpack season has managed to accumulate only 35% of a normal year's peak amount. Only 1977 was worse, with 27% accumulated by February 1, and that year topped out at 58% of a normal peak. There is only four to six weeks of possible build-up time remaining, and there will have to be well-above average accumulations during that time to avoid an overall near record low snowpack year.

Legislative Initiatives
This morning, February 8, Assembly Speaker Hertzberg (D-Van Nuys) announced a package of supply and demand-side bills to increase supply and reduce demand in the short and long term. Included are bills supporting distributed generation, renewable power, and expedited power plant siting (including increasing from 50 MW to 100 MW the size of projects subject to siting by the Energy Commission, and commitments to serve Californians as a condition to receiving permits for plant construction). Introduced earlier this week, ABX1 31 (Roderick Wright D-So. Central Los Angeles) would create a program to pay demand-metered customers for electricity they agree not to consume during scheduled during summer peak periods.

There is a growing consensus that California must take immediate and concerted steps to avoid catastrophic energy emergencies this summer. For more information, contact Dorothy Rothrock at 916-498-3319

ASSEMBLYMEMBER JOE SIMITIAN'S REASONABLE ALTERNATIVE TO TRIAL LAWYER CORPORATE DISCLOSURE BILL

The trial lawyer (aka Consumer Attorneys of California) sponsored bills, AB 36 (Steinberg D-Sacramento) and SB 11 (Escutia D-Montebello) which seek to repeal existing protective order law and replace it with law designed to expose proprietary business records to the entire world, including business competitors, soon will have competition in the form of legislation authored by Assemblymember Simitian (D-Palo Alto).

The new legislation is anticipated to be focused narrowly on records which tend to prove the existence of a defective design, a bad faith insurance practice, financial fraud directed toward consumers or an environmental discharge: in other words, "smoking gun" documents. Private restrictions against disclosure of the documents to governing regulatory authorities would be void: thus, bad actors in the business community potentially would be open to swifter scrutiny on public safety concerns and the official channels for alerting citizens would be stronger. On the other hand, the business community would not be subjected to blackmail litigation tactics which the existing legislation makes possible. CMTA hopes that the authors of AB 36 and SB 11 will refocus their bills in the same spirit.

ELECTRONIC CONFIDENTIALITY NOTICE INTRODUCED AGAIN

Senator Debra Bowen (D-Marina del Rey) has introduced SB 147 that is very similar to her SB 1822 that was vetoed by the governor last year. The bill would require employers to prepare and distribute by hard copy or electronically, company monitoring policies and practices notice to each employee, to collect and verify their understanding of the notice, and file and maintain each employee's signed notice indefinitely. The electronic confidentiality notice bill has been vetoed by the governor twice. There's no reason to believe he will change his mind this time around.

SB 147 goes far beyond giving notice and would set employers up for new litigation and call into question all other notice procedures used in the workplace. It would create a major administrative burden and a new liability for employers by requiring special procedures to be set up to inform employees who use employer's electronic devices. Employers already tell employees in the company handbook how company equipment such as computers, telephones, copiers etc. may be used. Electronic devices should not be treated differently. In addition, there is no special reason why an employee who uses a company computer should have a higher expectation of privacy and receive more attention than other employees using company provided equipment.

This bill would also create other problems for employers because many employees will refuse to sign a document acknowledging that they have been briefed and understand these rules. Most employers address this problem by requiring the employee to sign for the employee handbook that contains the applicable information and directs the employee on who to ask if they don't understand or have questions about a policy or procedure. That option would be lost under this bill. Where an employee refuses to sign the notice, the employer representative who provided the policy information would then have to certify that they presented the information and then provide a signed copy of the statement to the uncooperative employee and place a copy of the statement on file. Thereafter, any employer who doesn't have a signed notice or is unable to show that the notice was provided and acknowledged by the employee, may be subjecting the company to a civil suit for invasion of privacy and a wrongful termination suit in addition to the new misdemeanor created by the bill.

CMTA has indicated that it could support a provision that permitted an employer to satisfy the notice requirement by providing a written procedure in the employee handbook equal to other notices on the care and use of company property or posting an electronic notice on the computer screen such as, "Notice. Users of this electronic equipment are warned that e-mail and other electronic communications are not guaranteed to be private and may be accessed by the company." It remains to be seen if Senator Bowen will take these proposed changes.

CMTA BACKED COALITION TAKING ACTION TO EASE HOUSING CRISIS

In response to growing concerns that California's worsening housing crisis could slow the state's economy, a CMTA backed coalition of businesses, labor, housing and consumer advocates announced a legislative agenda for 2001 to increase housing affordability in California's employment rich areas.

The legislation is intended to remove barriers that thwart housing production in California's job centers. By encouraging housing near major employment centers, the coalition's policies represent "smart" reforms that will help California house its growing population and workforce in a responsible way.

California's housing "sticker shock" is expected to get worse in 2001 - particularly in major employment centers. In the coming weeks CMTA, along with other coalition members, will be working closely with state lawmakers on legislation to do the following:

Set a goal and establish a plan for meeting California's long term housing need; Rebuild local fiscal foundations to support housing close to jobs; Bring affordable town homes and condos back into production by curbing unnecessary lawsuits while protecting homeowners; Eliminate barriers that inhibit needed infill housing projects; and Open up development opportunities in previously abandoned areas in urban centers.

Credible analysis has shown that, in large part, state policies are responsible for housing supply shortages that have sent home prices skyrocketing. While many agree that "smart" growth should include infill developments and high-density housing projects, state policies are preventing exactly this type of growth.

ENVIRONMENTAL INSURANCE FOR BROWNFIELDS
Panacea or Empty Promise?

The Davis Administration is shopping a new legislative proposal intended to incentivize redevelopment of abandoned or underutilized urban properties, commonly referred to as brownfields. It has two primary components -- a state-backed environmental insurance program (Envirosure) and a trust fund to subsidize the insurance premiums offered by Envirosure (Envirotrust). The Governor has earmarked $40 million for both elements. The administration believes that these programs will resolve concerns of private investors and lenders regarding legal liability and the potential for escalating cleanup costs.

Envirosure is designed to cover unanticipated costs in excess of 105% of cleanup cost associated with an approved cleanup plan. Cal-EPA would solicit bids from private insurers for a quasi-group policy that would provide discounted premiums to property owners conducting state-subsidized cleanups (the insurer would have the option of extending the policy to other interested parties). The primary bid selection criterion is that the premiums must be substantially less than the cost of the insurance generally available on the open market. The willingness of insurers to offer such a product remains to be seen, particularly when one considers the difficulty in establishing a "benchmark" brownfield property upon which a group policy can be based. High premiums would seem to be a logical reaction to the broad range of site conditions (and potential response costs) that could be covered under the policy.

More importantly, the state's brownfields initiatives do not address fundamental barriers to achieving a cost-effective cleanup in the first instance (such as disagreements over acceptable cleanup standards). CMTA does not dispute the need for affordable environmental insurance. It is merely viewed as one element of a more comprehensive brownfields initiative, including innocent owner/operator liability relief, new tools to assist in financing site investigations and cleanups and a consistent framework for managing brownfield properties over time to ensure protection of human health, safety and the environment.