Assembly Standing Committee on Judiciary

Good morning. Welcome to the Judiciary Committee. We, needless to say, have a long and full agenda today, so we need to be efficient with our time. As a reminder, each side will be allowed two witnesses, two minutes each. Additional witnesses should state their name and organization only. This allows all authors a fair chance to present their bills and all Members of the public in equal chance to have their position reflected in the record.

As we proceed with our Bill hearing, I want to make sure everyone understands our Committee rules to ensure we maintain order and we run a fair and efficient meeting. In order to facilitate the goal of hearing from as many Members of the public within the limits of our time, we will not permit conduct that disrupts, disturbs, or otherwise impedes the orderly conduct of business. We will not accept disruptive behavior or behavior that incites or threatens violence, even veiled threats.

Rules of conduct by Members of the public include no talking or loud noises from the audience. Public comment may be provided only at the designated time and must be limited to your name, organization, and support or opposition of a Bill. No engaging in conduct that disrupts, disturbs, or otherwise impedes the orderly conduct of this hearing. No engaging in personal attacks. And Members of the Committee, authors or staff, please be aware that violation of these rules may subject you to removal or other enforcement processes.

We will start as a Subcommitee, and we need an author. Welcome to the Committee. You ready to roll? Okay. Great.

Thank you, Mr. Haney, for stepping up. We will start with item number two, AB 24, and you may proceed.

Thank you, Mr. Chair and Members, AB 24 will require gas stations, libraries, bars, and residential hotels to have opioid blocker nasal sprays or Narcan on site to prevent deaths from opioid overdoses. It would only apply to counties that the California Department of Public Health has determined to be in an opioid overdose crisis and would be provided by the Department to these facilities in those counties. Opioid blocker sprays work by binding the same receptors in the brain that are activated when consuming opioids.

After the spray is administered, the overdose can be completely reversed in 30 seconds and a life is saved. The difference between life and death when someone overdoses is how quickly the opioid blocker can be accessed. For an opioid blocker to be effective and save a life, it requires someone near the person overdosing to have access to the medication.

Because opioid users who are in the midst of an overdose cannot self administer the medication once they become unconscious, it's also easy to use and has no dangerous side effects. I say this because I have personally administered Narcan after someone had overdosed on the sidewalk in front of my apartment in San Francisco's Tenderloin. The opioid crisis is hurting our sons, daughters, mothers, and fathers in every county and Assembly District in our state.

We must get fentanyl off of our streets and out of our communities, and we must dramatically expand access to treatment and recovery. But there's also no excuse not to make sure this life saving intervention is available when someone overdoses, just like a first aid kit or a fire extinguisher, we hope we never have to use it. But the risk is great enough that it should be there in the rare case that we do.

As noted in the analysis, we worked on a number of amendments with the Committee on Liability and Immunity Language. These amendments will align the Bill with existing law and should address most of the concern raised by some of the local government groups. I will continue to work with the Health Department to determine the most effective way to administer these kits. And with me today is Tara Gamboa-Eastman, senior advocate from the Steinberg Institute.

Thank you.

Good morning. Great. Good morning. Chair and Members, Tara Gamboa Eastman with the Steinberg Institute, really proud to support AB 24, which would expand access to life saving opioid blockers. Drug overdose is now the leading cause of death for Californians 15 to 44 years old. The rate of overdose deaths among teenagers has increased by 370% since 2017. Fentanyl is involved in at least 55% of all fatal overdoses, and there are now 11 times as many fentanyl deaths as there were five years ago.

The good news is that overdoses can be completely reversed using the first aid treatment called an opioid blocker. There are no dangerous side effects and they are completely safe to use, even if the person who received the medication is not having an opioid overdose. However, opioid users who are in the midst of an overdose can't self administer naloxone once they become unconscious. Making sure the most effective tool to stop overdoses is always available is critical to stopping deaths.

As the Assembly Member pointed out, while other public health interventions, like first aid kits and fire extinguishers, are required to be kept in public locations, opioid blockers are not. That's what this Bill seeks to do, make critical public health interventions more readily available. And that's why the Steinberg Institute is thrilled to support AB 24. Thank you. And we'd be happy to answer any questions.

Okay. We don't have a quorum quite yet, but once we do. Other witnesses in support? Seeing none. Witnesses in opposition? Seeing none. Questions or comments from the Committee? Seeing none. Mr. Haney, you may close.

Thank you.

I would like to move the Bill.

Thank you. And thank you again, Mr. Chair and the Committee for your support on some of the liability and Immunity language. This is one of the many things that we have to do to confront the most deadly epidemic facing our state at the moment, which is fentanyl and overdose epidemic. This is the most effective tool to ensure we can save lives. And I respectfully ask for your ivone.

Thank you. And we do have a quorum now, so I'd ask the Clerk to call the roll.

[Roll Call]

Okay, so we do have a quorum. Ms. Papan makes the motion. Do we have a second, Mr. Connolly, seconds. Thank you for this Bill. I think it's a good Bill. Pleased to support it. And I'd ask the Clerk to please call the roll. Do you pass as amended to approach? Is the motion.

[Roll Call]

Your Bill is out. Thank you. Next, we have a special order of business. Mr. Holden, AB 1228.

As my witnesses are joining. Mr. Chair, let me thank you and the Committee for the Opportunity to present Assembly Bill 1228, a Bill that will require that fast food restaurant franchiseors share with its fast food restaurant franchisees all civil legal responsibility and civil liability for the franchisees labor violations. As many of you know, California's fast food industry employs over 556,000 Californians, the highest number of any state in the country. Of those fast food workers, nearly 70% are people of color.

We have heard fast food workers experiences of wage theft, violence at work, sexual harassment and insult, denial of earned sick days, intense heat, poor workplace safety practices, and retaliation for speaking out. While this does not imply that all fast food franchisees mistreat their workers, it is clear that we must ensure that our fast food workers are able to thrive in their workplace and in their communities.

Last year I had the opportunity to listen to fast food workers, franchisees, franchiseors and even Members of the Legislature regarding joint liability. During our discussion, there was a common theme that was voiced. There needs to be an opportunity for franchiseors to address labor violations before there is joint liability. That is what this Bill does, AB 1228 states that no civil action shall commence against a fast food franchiseor prior to 30 days after receiving a written notice of the alleged violation.

The time period is extended to 60 days if a franchiseor makes a written request to the noticing person for additional time to complete the investigation. The Bill further states that the franchiseor would not be liable in a civil action if the franchiseor cures the alleged violation within the acceptable time period. Finally, the Bill would provide that a waiver of this Bill provision, or any agreement by a franchisee to indemnify its franchiseor for liability is contrary to public policy and is void and unenforceable.

With me to testify this morning is Rami Cruz, Wendy worker from Oakland and Brian Kalachi, chief economist, Open Markets Institute. I respectfully ask for your aye vote.

Thank you. First witness two minutes.

[Spanish]

[Spanish]

Thank you.

I am going to translate. "Good morning, my name is Romalda Cruz. I work at Wendy's in Oakland. I want to tell you what happened at my job and the entire fast food industry. On one occasion a customer tried to ask one of my coworkers for an extra sauce packet, telling him that if he wanted to leave he would give him more sauce. A few months ago another worker was shot in the face with a bb gun for no reason. Thank God she is okay and afraid to go to work every day. I told the management about my fears and concerns, but they tell me that the owner said it's too expensive and they don't have the money to pay to improving the security at the store.

I think how fast food corporations have control over everything from the look of their stores, to the color of our uniforms, and the names of the sandwiches we serve. If they can control that they can also control and ensure that all their stores are safe and that their workers aren't living in fear. That's why AB 1228 is so important for the more than half a million fast food workers in California. It's urgent that corporations take responsibility for the safety of their workers.

Our lives are worth far more than a sauce packet. Please support AB 1228. Thank you".

Thank you. Second witness, two minutes.

Sure. So thank you Mr. Chair and Committee for the opportunity to testify. My name is Brian Callaci. I'm chief economist at the Open Markets Institute, which is, well, we're a DC based think tank focused on economic policy. So, studying this industry, if it's one thing economists know about the low wage labor market, it's that fast food jobs tend to be bad jobs. The average California fast food worker earns just $16.21 an hour compared to $19.15 for other retail workers. And so why are wages so low?

Well, when we study the industry, we find that a major factor is the franchise business model. Research has shown that franchise fast food restaurants pay lower wages than non franchised equivalents and that workers at franchise establishments have fewer opportunities for promotion and advancement. In addition, franchise fast food establishments violate minimum wage and overtime laws at a much higher rate than non franchised fast food establishments. Now, why is this?

It's not because local franchisees want to pay workers less or treat them worse, or ignore their safety any more than their corporate franchisers do. It's because the corporate franchiseors leave franchisees little choice but to offer bad jobs with poor working conditions. Corporate franchisers exercise considerable control over wages and working conditions at franchise restaurants. And they do it by controlling every other variable in the franchisee's profit choice set except wages and working conditions.

So franchise contracts create a business environment where franchisees have to focus on pushing down labor costs as virtually the only way to make a profit. So this allows franchiseors to enjoy the benefits of controlling their businesses without incurring the legal responsibilities as employees of the people who work there. My research over the past several years with coauthors, other research shows the manifold ways this is unfair to both the franchisees who actually operate the restaurants and the frontline workers who are employed by them.

So I support, and we support Assembly Bill 1228 because it will hold franchises jointly responsible for labor violations at franchise restaurants. And it's necessary to close this major loophole and correct a long standing injustice in the franchising business model. Thank you.

Thank you. Okay, witnesses in support. And I'm going to remind people that we have a lot of witnesses here today. It's name and organization only.

Thank you, Mr. Chair Members. Mitch Steiger with the California Labor Federation in support.

Jonathan Harris. I'm an associate Professor of Law here in California, and I support.

Okay. Any other witnesses in support of the Bill? The sergeant's calling in more. Right in front of the microphone and if you just say your name. And if you're from an organization, you can say that. Or just your name only, please. Go ahead.

My name is Maricella Lopez. I'm working on Little Caesar's.

Okay.

I lived on the Oakland.

Just name an organization only.

[Spanish]

Thank you.

Hello, my name is Sara Linda, and I work in Domino's. And I'm here to support the AB 1228.

[Spanish]

Perfect.

Good morning everyone. My name is Olivia Garcia, I work for Dominos in San Jose, California. I support 1228.

[Spanish]

[Spanish]

[Spanish]

Good morning. My name is David Garcia and I am in strong support of AB 1228.

Good morning. My name is Sandra Jauregi. I'm here for our support of 1228. I'm working Jack in a Box.

Hello, everyone. My name is Ben Master. I'm one of the campaign coordinators with the Fast Food campaign with Service Employees International Union. And I respectfully request on behalf of the 500,000 fast food workers in California, your aye vote on 1228. Thank you.

Good morning. Mariko Yoshihara, on behalf of the California Employment Lawyers Association here in support. Thank you.

Hi, I'm Fatima Iqbal-Zubair with California Environmental Voters in support.

Thank you. Any other witnesses in support? Give the sergeant one last time to check outside. We're good?

Okay, so seeing no further witnesses in support, we will go to the main witnesses in opposition, please. You can come up here, main witnesses in opposition. Welcome, and you may proceed.

Thank you, Chair and Vice Chair. Thank you for having me. My name is Marisol Sanchez, and as a proud local restaurant owner with franchise restaurants in both the Chairman and Mr. Holden's district. I come to speak in strong opposition to AB 1228. Before owning a local restaurant, my parents worked as educators in East Los Angeles. As a child of immigrants, my father didn't have access to capital or cash to open a traditional business.

But he dreamed of working towards something that could create generational opportunity for his children. In 1982, my parents had a life changing opportunity to own and operate a Mcdonald's restaurant in East LA. My siblings and I helped out around the restaurants on weekends and after school. Since then, our family has leveraged that first restaurant into a family business that prides itself on giving back to our communities and being employers of choice.

AB 1228 would fundamentally destroy this pipeline of opportunity and business ownership for women and people of color like me. AB 1228 would force national fast food corporations to exert significantly more control over my local business by making them legally liable for employment decisions at my restaurants. The author of this bill makes the misguided claim that this bill will improve workplace safety for employees. But AB 1228 does no such thing. It would eliminate my ability to care for my employees and to run my restaurants at the local level.

We provide our employees with more than just a paycheck. We've helped dozens of our crew members pursue citizenship, become homeowners, and apply for and graduate college. Many of our employees have worked at our restaurants for over 30 years, and we consider them family. It's unimaginable why anyone would want to take decisions out of my hands and instead put them in out of state corporations in charge of my crew members. Please, vote no on AB 1228. Thank you.

Thank you. Next witness, please.

Thank you. Good morning. Thank you for having me today. My name is Joy Rosenquist. I'm an attorney practicing labor and employment law here in Sacramento. I represent dozens of franchisees from different brands, and I'm here today on their behalf. I want to first point out that the wage claims in the quick service restaurant industry are actually very low.

According to data taken from the Labor Commissioner's Office, wage claims filed in California in 2022 from franchised quick service restaurants represented less than 1% of all claims filed statewide. This is significant because the share of the workforce represented by quick service restaurants is more than double that. Second, AB 1228 would append the fast food franchise model in California, stripping local restaurant owners of the rights to manage and operate their own businesses.

And third, while the author points to a cure provision, this is, unfortunately, a hollow remedy. AB 1228 mandates that the franchiseor abate each and every violation alleged and that any fast food restaurant workers against whom a violation was committed are made whole. So if an employee makes an allegation on behalf of a single employee, or dozens of employees, or even hundreds, the only way to make them whole and avoid a lawsuit is to pay them whatever they are demanding.

AB 1228 language does not allow for a reduced payment or no payment at all in the event an investigation finds there was no violation. In other words, a franchisor either pays in full or must litigate, and that litigation brings in not only the franchisor, but also the franchisee. To those who believe this bill helps franchisees by pushing liability to the franchisors, that is wrong. AB 1228 forces franchisors to take control away from the franchisee and assume their day to day operations. This is not what franchisees want, and it will result in thousands of new lawsuits. This is not good policy for California employees, franchisees, or franchisors. Thank you.

Thank you. Other witnesses in opposition?

Okay, so we obviously have quite a few witnesses here on this. So let me just remind you, name and organization only. Thank you.

Joe Johal, Wendy's franchisee in Northern California, and I strongly oppose 1228. Thank you.

Thank you.

CC Yin, local franchises owner in Northern California. I strongly oppose AB 1228.

I'm Regina Yin, county employee, 20 years, now franchisee of McDonald's in Solano County. I oppose AB 1228.

Liviu Vizitiu, franchise owner in Rancho Cordova, California, and I strongly oppose 1228.

Reagan Collier, Chick-fil-A franchisee in Redwood City, California, and I oppose 1228.

Mr. Chair, my colleague Ashley Hoffman from the California Chamber of Commerce asked me to express their opposition. Thank you.

Douglas Hsia, owner of Good Earth Investment, and I oppose to the AB 1228.

Su Ying Plaskett, I'm from Vinh Phat Supermarket. I'm an owner of it. I oppose.

CR May, franchise owner in Los Angeles, oppose 1228.

Nathan Carter, McDonald's franchisee in LA County, and I strongly oppose.

Corwin Johnson. I'm a franchise owner in San Diego, and I strongly oppose AB 1228.

Good morning. Randy Powell on behalf of the California Restaurant Association and the International Franchise Association and their 10,000 franchisees in opposition.

My name is Richard Shalhoub. I'm a franchisee in the Coachella Valley, the cities of Temecula, Redlands, and Riverside, and I strongly oppose 1228.

Good morning. My name is Kerri Harper-Howie. I'm a franchise owner in Southern California, a second generation franchise owner, and I strongly oppose AB 1228.

Hello, my name is Dan Cassidy. I'm a McDonald's franchisee in Placer County, and I oppose 1228. Thank you.

Good morning. My name is Ken Ristuben. I'm a 40 year franchisee for McDonald's in the greater Sacramento area, and I strongly oppose 1228. Thank you.

Good morning. Steve Josué, franchise director of operations, and I strongly oppose 1228.

Hello. Joseph Wong, McDonald's franchisee, son of immigrant parents, in opposition of AB 1228.

Hello. Richard Tieu, franchisee for McDonald's in San Jose. I strongly oppose 1228.

Good morning. My name is Aladdin Sammakieh. I'm a franchise owner in Solano, Contra Costa, and Alameda County. And I strongly oppose AB 1228.

Good morning. My name is Iretto Vasquez. I work for McDonald's, and I strongly oppose.

Dorothy Stingley. I am the Chairwoman of the National Alliance of McDonald's Franchisees, and we stand together with California operators in opposing bill 1228.

Good morning. My name is Tila Banuelos Guerrero, and I have been an operator for 20, 33 years. I strongly oppose AB 1228 with my fellow women and minorities.

Good morning. Eric Mason, operate a local Chick-fil-A franchise in Sacramento, and I oppose 1228.

Hi, I'm Jan Peat, and I own 18 franchise restaurants in California, and I'm opposed.

Good morning. I'm Steve Peat and I, along with Jan, own McDonald's restaurants, and we are in opposition of AB 1228, strongly.

Good morning. Howard Goldblatt. I've been a Mcdonalds franchisee for 55 years. Very proud of that. And I strongly oppose 1228. Thank you.

Mr. Chairman, Members. Paul Gladfelty on behalf of Mcdonalds franchisees statewide, and we are also strongly opposed to the bill.

Hi, my name is Anne Liu. I'm a local Sacramento small business owner, and I oppose this bill.

Good morning, and thank you all for your time. Jason Dyer, local Chick-fil-A franchisee, and I stand in opposition of 1228.

Dennis Graspointner, franchise operator in Stanislaus County, and I oppose the bill. Thank you.

Good morning. My name is Carli Schrader. On behalf of all women operators in San Joaquin Valley, we oppose this bill.

Good morning. My name is Corey, third generation McDonalds operator out of Sacramento, in opposition of the bill.

Good morning. My name is Jay Hazari, McDonalds franchisee here in Sacramento, and a former crew person.

Hello. My name is Raymond Costa. I'm an operator in Monterey County and San Benito County, and I oppose AB 1228.

Hello. My name is Jesse Klair, operator in Sacramento. I strongly oppose 1228.

My name is Juliana Kendrick. My family owns franchised restaurants, and I strongly oppose AB 1228.

My name is Josh Kendrick. My family owns restaurants in Sacramento, Placer County, and I strongly oppose this bill.

Hello. My name is Tamuri Richardson, President and CEO of the Solano County Black Chamber of Commerce, supporting small businesses as well as franchise owners, and we strongly oppose 1228.

Hello. Joel Gonzalez, McDonalds employee, first and only job currently. And I strongly oppose 1228.

Hello. My name is Happy Desi. I'm a franchisee from Northern California. I strongly oppose 1228.

Hi. My name is Mary Yin Liu. I'm a franchisee in Northern California, Solano, Yolo County, and Sacramento County. I am one of 18,000 franchise operators in the state of California. 85% and over are women and minorities and immigrants, and I strongly oppose 1228.

Good morning. My name is Sergey Ivannikov. I'm representing Council for Cross Cultural Affairs, organizer of International Kids Festival that bringing more than 10,000 people for event and supported by local restaurants. And I opposed AB 1228.

Good morning. My name is Alisa Yurchenko, Russian American Media. I oppose AB 1228.

Mr. Chairman and Members, John Latimer on behalf of Yum Brands, it's Pizza Hut, Taco Bell, KFC, and The Habit, in opposition. In addition, the California Retailers Association in opposition. Thank you.

Good morning. My name is Tony Chan, and I strongly oppose 1228.

Hello. My name is Mike Agostini. I'm proud third generation McDonalds owner operator with restaurants in Fresno and Madera County, and I strongly oppose 1228.

Hello. I strongly oppose 1228, along with my women, minority, and family owned franchisees in Antelope Valley, Lancaster, Palmdale, and Los Angeles.

Hi. My name is Leslie Laddaran, and I oppose 1228.

Hello. My name is Julie Pernecky. I'm a franchisee from Alhambra, California, and along with other women in minority franchisees, I strongly oppose 1228.

Hi. Good morning. My name is Patricia Yoon. I am a first generation immigrant and also a first generation owner operator for McDonalds in Los Angeles, Norwalk, South Gate. I'm missing one more. Sorry. Santa Fe Springs. And I strongly oppose 1228. Thank you.

Good morning. Ti Chang, a McDonalds crew person 52 years ago, now a franchisee in LA and Ventura counties. I oppose this bill because it takes away my rights as an individual business person. Thank you.

Good morning. My name is Dean Sanchez. I'm a second generation McDonalds franchisee in Los Angeles, and I oppose AB 1228.

My name is Peter Ou. I 'm a franchisee in San Francisco as well as Vallejo, and I strongly oppose AB 1228.

Good morning. My name is Rosa Louis. I am an area supervisor for a franchisee in San Francisco, and I strongly oppose. AB 1228.

Good morning. Jay Kinsey. I work for McDonalds. I strongly oppose AB 1228.

Jack Yanos on behalf of the California Fuels and Convenience Alliance and respectful opposition.

Good morning. My name is Lian Duan. I'm registered a professional civil engineer in state of California. I strongly oppose AB 1228. Thank you.

Good morning. Taneicia Herring on behalf of the California Hawaii NAACP. We respectfully oppose.

Good morning, Chair and Committee Members. My name is Tyler Gerlach with the California Asian Pacific Chamber of Commerce, representing over 746,000 AAPI businesses throughout the state, in respectful opposition. Thank you.

Hello. My name is Victor Jimenez. I work for many years at Jack in the Box and McDonalds, and I like this job. It's great place to work. I oppose.

[Spanish]

You guys choose the wrong translator. I'm so sorry.

We didn't want to say anything. Just to make it simple. Go ahead, sir. You say your name and organization, your position on the bill, and then, ma'am, if you would just translate his name and organization, position.

[Spanish]

His name is Pablo. He work here in Sacramento. He oppose AB1228.

I'm sorry for that. My name is...

No problem at all.

My name is Miria and I work for a franchise owner operator, Harris and Mary Liu, and I'm opposed AB 1228.

Thank you.

Hi. My name is Eduardo. I work for a franchise owner, Harris and Mary Liu, and I opposed to AB 1228.

Hello. Good morning. My name is Guadalupe, and I work for, I'm an employee of franchise owner operator Harris and Mary Liu, and I opposed to AB 1228.

Good morning. My name is Magdalena Lemos, and I work for the organization Harris and Mary Liu, and I'm opposed to the AB 1228.

Hello. My name is Amer and I've worked with McDonalds for 13 years with the Harris and Mary Liu organization. I opposed to 1228.

Hello. My name is Jennifer Freeman, and I've worked for Golden Arch Enterprises in Northern California for 13 years, and I oppose this bill.

Hi, my name is Leticia Granados. I work for Jay Hazari organization McDonalds. I've been with McDonalds for 22 years, and I love my job, and I love my franchisee owner. So, please, I'm opposed.

Hi, my name is Momina Ali. I work for McDonalds with Jay Hazari organization. And I oppose.

Good morning. Harris Liu, McDonalds franchisee of 23 years here in Sacramento. I oppose 1228.

Good morning. My name is Scott Roderick. I'm a McDonalds franchisee of 30 years. I operate in San Francisco and San Mateo, and I'm strongly opposed to AB 1228. Thank you.

Good morning. My name is Jason Goldblatt. I'm a second generation franchisee in Contra Costa in Alameda counties, and I strongly oppose 1228.

I'm Phyllis Goldblatt, and I'm an operator, owner operator over 50 years, and I have my family in the business, and I oppose this bill very much. Thank you.

Good morning. My name is Brad Goldblatt, owner operator, Alameda and Contra Costa County. Been in the business for over 30 years, second generation, and I strongly oppose AB 1228. Thank you.

Good morning. Faith Borges, on behalf of the Family Business Association of California, respectfully opposed.

Top of the morning to everyone. James Williams, McDonalds franchisee, small business person, also a veteran, and I strongly oppose AB 1228. Thank you.

Hello, my name is Ka Yang. I'm a small business owner, and I oppose AB 1228. Thank you.

Hello. My name is Kevin Sanders with Harman Management Corporation, and I strongly oppose AB 1228. Thank you.

Good morning. Tim Lynch, on behalf of the Diversified Restaurant Group, a Taco Bell franchisee up and down the state, and we're opposed to the bill.

Hello. My name is Brenda Schmidt, and I'm from San Diego. And I'm from a family business, a McDonald's franchise for over 45 years, and I strongly oppose AB 1228. Thank you.

Good morning. Brooks Hoven. I'm the Director of Human Resources, and our employees strongly oppose AB 1228. Thank you.

Good morning, Mr. Chairman. Manny Diaz representing the California Hispanic Chambers of Commerce in opposition to AB 1228.

Good morning, Mr. Chair. John Moffatt on behalf of Arby's, Baskin-Robbins, Buffalo Wild Wings, Dunkin', Sonic, and Jimmy John's, in opposition.

Good afternoon, or good morning, Chair and Members. Kate Bell on behalf of Chick-fil-A, also in opposition. Thank you.

Good morning. My name is Frank Sanchez. I'm a McDonald's franchisee in Southern California, and we strongly oppose this legislation.

Okay, we did it. Thank you all very much. Seeing no further witnesses in opposition, I will turn it over to the Committee. Ms. Sanchez, did you have your hand up? Okay, Ms. Sanchez.

PAGA only allows for certain types of labor code violations to be cured. How do the cure provisions in PAGA and AB 1228 work together when a plaintiff has brought a PAGA claim against a franchise owner?

The bill is designed to give the franchisor and franchisee a time frame to be able to cure before there is a move to have the joint liability exercise. So there is a cure period, which we believe is consistent and does give the parties an opportunity to respond to the complaint and then to be able to cure the complaint within a stated period of time.

Okay. Any other questions or... Mr. Essayli.

Thank you, Mr. Chair. Just a couple of questions. Sir, I think you said you're an attorney?

No, I'm an economist.

You're an economist? Even better. You mentioned that wage violations were substantially higher in the fast food industry than other industries. What are you basing that on?

There's a number of studies. I'm sorry. First of all, there's just the federal government collects data called the Quarterly Census of Employment and Wages. So you can just compare the fast food industry, which is the industry known as limited service restaurants, to retail, which is what I did in my remarks. There's a number of other studies, one by the late Alan Krueger.

Hold on a second. I want to understand what you're saying. What you're referring to is that people in retail are getting paid more than people in fast food. I'm talking about wage violations. So are they violating California law?

Right. So that's a different study which is by an economist who used to run the wage and hour division at the Department of Labor named David Weil. I put a footnote to that study in my written testimony. I'd be happy to provide a copy of it in any other format. But, yeah, the violations of wage and hour laws are much higher at franchised fast food establishments relative to non-franchised fast food establishments.

And you're saying that's based on a study by Mr. David Lyle?

Yeah. And Xi. I forget the first name.

Okay. What about, I believe the opposition testified that based on the DLSE's own data, that wage claims in this industry represents less than 1% of the claims.

So that's looking at the claims that come in. Claims tend to come from higher wage, more educated, fluent in English workers rather than... So if you're looking for just where the claims come in, you're not going to get, it's called selection bias. So you're only getting the people who are aware that the rights are being violated. The Xi and Weil study looks at actual violations found of federal labor law. It's a nationwide study.

Okay, we'll take a look at the nationwide study, but this law is specific to California. And then I just will ask the author, the witness, whoever, because I wasn't here when AB 257 was passed. And my understanding is this was originally in the bill, but it was removed as part of a negotiation with the Governor's Office. So my question is, what's changed or what happened to take it out and why is it back this year?

Well, the negotiations was not with the Governor's Office. The negotiations was with the opposition. That, as we were going through a process similar to this, we were hearing and getting feedback.

And as we were looking at the totality of that bill, which was putting in place a council to have equal parity amongst the workers as well as the franchisee franchisor to address the issue of workplace violations and issues of safety, that we were able to discuss how we might make the bill more acceptable to the opposition. So we removed that provision, among other provisions, as part of that ongoing discussion as we made our way between the Assembly and the Senate. And so when it made its way to the Governor's Office, that element had already been taken out.

Okay. And so are we back because now they've done the referendum?

We're back because the issue should not have, I mean, it was something of value that we took out of a bill.

Okay.

And so we're focusing on the value of that provision solely as part of what this conversation is targeted about.

Well, I appreciate your answers, I appreciate the author, and I think your intent is to protect frontline workers. And I understand that. I heard the testimony, by the way, I sympathize with those frontline workers. I think we've all seen videos on social media of people behaving terribly at fast food restaurants and other places. But I don't think it's the fault of the small business owners. And franchisees are small business owners. My family, who are immigrants, also have a franchise, and it's their independent business.

And so it's not their fault. I think it's society's fault what's going on right now. There's just a total lack of respect right now in society, total lack of respect for the rule of law, and there's little to no accountability. And you look at Targets and Walmarts, they have to lock everything up now because of the crime that's going on in there. So if you want to sue somebody, sue us.

Sue the policymakers that have implemented these policies that have reduced accountability and consequences for crime and behavior. And I think as society we need to do better and we need to treat people with respect to each other. I just don't agree that it's their fault and they should be liable. So for that, I respectfully won't be able to support this today. But thank you for answering my questions.

My pleasure.

Ms. Reyes.

Thank you so much. And first, congratulations. I always appreciate those who go into business for themselves. We know small businesses provide employment for so many people, more than any other organization, any other group. That is really important. I also understand that there are issues that affect, not just franchisees, but also the workers, and trying to find a solution that protects the workers, but it appears that the intention is also to protect the franchisees.

I hear the opposition, and I know that there's got to be something more that is happening here. The fact that when a violation is found, there is a period of time that is given to cure it. That's not found in very many bills. If you violate the law, that's it. Then the lawsuit is filed. Whereas here, in this bill, and I appreciate it very much, because now you're giving joint and several liability, then you're giving an opportunity to cure that violation.

I appreciate that that was included in there. It seems that we're hearing from all the good players that you all treat your employees well, but clearly that isn't true of every franchisee. And if the franchisee is not able to take care of that lawsuit, and the franchisors have so much control over what the franchisees do or don't do, then having the franchise or share in that responsibility seems like that would be a good solution. With that, I would move the bill.

Motion from Ms. Reyes. Do we have a second? Second from Mr. Kalra. Any further questions or comments from the Committee? Seeing none. A few comments, Mr. Holden. One is I hope you'll continue to work with the opposition as this goes through the process. There's obviously, I think, some issues that probably during the course of negotiations could be worked out. Appreciate all the people on both sides who came in here today to testify. I do think the cure provisions are significant. I think that's helpful.

It is frustrating. I think a whole lot of good owners are getting caught up with some bad apples. I know in particular there's a few in San Diego that, I eat at the restaurant, and they're great owners. And I recognize them and they're there and say hi, and I think they do a good job, and I think they are getting a little bit caught up in this. That's part of it. So I hope you'll keep working with the opposition here today moving forward. With that, Mr. Holden, you may close.

Well, thank you, Mr. Chair. And look, I've said this every time I've had an opportunity to speak, not only on this bill, but on the previous bills, that I'm a former franchisee myself. So when I look and hear, I'll stipulate that everyone in this room is a good operator, that everyone in this room takes care of their workers. They do the right thing.

They create the right environment. They're like the commercials that say they'll even provide scholarships for college. But there are others who are performing wage theft. There are others that are creating an environment that's not safe. So are we to turn a blind eye to that?

And I think that this bill, because of the cure provision, is trying to also recognize that if someone finds that they've been caught up in it, that they have an opportunity to respond to that and have a procedure in which to cure that. And so with that, I respectfully ask for your aye vote.

Thank you. We have a motion, and we have a second. The motion is do pass to the Appropriations Committee. Ask the Clerk to please call the roll.

[Roll Call]

Your bill is on call. Thank you. And while everybody, a number of people will be exiting the room now. I assume. So, while that's happening--certainly welcome to stay--but I just ask that if you could please exit quietly while we continue to work. I'll ask--this is a good time to ask for a motion on the consent agenda. Motion from Mr. Kalra, second from Ms. Reyes, I think. I'd ask the clerk. The consent agenda is item 10, AB 717, Villapudua; AB 748, Villapudua; AB 950 Maienschein; AB 1210, Kalra; AB 1366, Maienschein; AB 1404, Wendy Carrillo; AB 1597, Alvarez. We have a motion and a second. Ask the Clerk to call the roll.

Maienschein. Aye. Essayli. Aye. Connolly. Dixon. Haney. Kalra. Aye. Pacheco. Aye. Papan. Aye. Reyes. Aye. Rivas. Sanchez. Aye.

That is out. Next, in order. Mr. Hart is here. AB 631.

Thank you Mr. Chair and Members. I'm pleased to present AB 631 to the committee today. I want to start by accepting the committee amendments and thank the chair and the staff for their very hard work. AB 631 ensures California has 21st century enforcement tools to protect communities from oil operators that violate the law, endanger public health and threaten the environment.

Specifically, this bill empowers the California Geologic Energy Management Division, known as CalGEM, to seek injunctive relief from a Superior Court when urgent compliance is needed to protect public health and the environment. AB 631 also allows civil enforcement cases to be referred to partner agencies and modernizes civil and criminal penalties consistent with other state agency authority. CalGEM currently lacks some of the basic statutory enforcement authorities that most environmental regulatory agencies rely upon, like the California Air Resources Board and the California Department of Fish and Wildlife.

In my district, CalGEM responded to over 400 leaks at an oil facility operated by one company. Numerous wells were approaching a highly dangerous, potentially explosive situation while the company ignored orders to fix the issues. CalGEM was unable to seek a cease and desist order or even step in to secure the site. This action inaction threatened public health and could have been prevented if CalGEM had the authority that other state agencies currently have to enforce compliance.

AB 631 also authorizes CalGEM to refer civil enforcement cases to a city attorney, district attorney, or the attorney general. Referring cases will increase the effectiveness of enforcement and ensure coordination among state and local agencies. Recovered penalties would be used to offset partner agency prosecution costs and to plug and abandon the thousands of orphan wells across the State of California. Finally, this bill modernizes criminal and civil penalties consistent with other state agencies in order to ensure appropriate compliance and effective deterrence.

Between 2018 and 2020, CalGEM issued 66 enforcement orders and only 11 have been complied with. In 2020, CalGEM issued over $190,000 in civil penalties and failed to collect a single dollar. Enforcement data is clear that existing law is not sufficient to deter bad actors. The committee amendments maintain existing law around the types of violations that are considered criminal and better align penalties with the authority of other state environmental regulatory agencies.

In conclusion, AB 631 is an important step to ensure the state has necessary enforcement authority to hold violators accountable and protect communities from environmental and public health hazards posed by oil operations. Speaking in support of the bill with me today is Ann Alexander with the Natural Resources Defense Council and Dan Ress on behalf of the Center on Race, Poverty and the Environment.

Thank you. First witness.

Good morning, Mr. Chair and Members. My name is Ann Alexander. I'm a senior attorney with the Natural Resources Defense Council and I'm here in support of AB 631. For multiple reasons, AB 631 is the right solution at the right time. First, the penalty provisions available to CalGEM are woefully outdated. Just by way of example, the criminal provisions were last updated in 1983. But second, these provisions have not been working.

CalGEM has been seriously hamstrung in its efforts to pursue violators by low fines, limited injunctive relief authority and inability to seek relief in court. Assembly Member Hart has already mentioned the damning ProPublica report statistics, in particular CalGEM reporting that it issued $191 in civil penalties but collected zero in 2020.

It's important to point out, in addition to that, last year dozens of idle wells were found to be leaking dangerous levels of methane and hazardous air pollutants in the Bakersfield area, near homes and a daycare center, among other things. When CalGEM didn't get immediate compliance, it was unable to go to court to secure that compliance. Third, the lack of adequate enforcement authority is a threat to public safety. For the reasons I just mentioned, we're dealing with hazardous public situations.

A legal system that doesn't allow CalGEM to immediately abate these conditions is not working. And fourth, everything being proposed in AB 631 is in line with similar types of provisions in federal and state law. The order of magnitude of the penalties being proposed and the means of calculating the penalty and the heightened penalties for repeat violations are all standard fare in both state and federal environmental statutes.

And finally, to put it all in perspective, let's recall that the oil industry has been raking in record profits of late. Take, for instance, Exxon, which reported $19.7 billion of profit in just the third quarter of last year. By my calculation, the $70,000 maximum daily penalty being proposed here would amount to roughly of order, 30 seconds of that profit. The oil industry-

I need you to wrap up.

Okay. Oil industry should not be heard to complain of the unfairness of that. For all of these reasons, we respectfully urge your aye vote.

Thank you. Next witness.

Good morning. My name is Dan Ress, here representing the Center on Race, Poverty, and the Environment. CRP is committed to environmental justice and uplifting underrepresented communities in the San Joaquin Valley. I'm also representing California Environmental Voters today, who stand in strong support of AB 631. At CRPE, we work closely with impacted communities to advocate for their needs and public health.

Our communities are low-income communities of color with neighborhoods often in close proximity to oil and gas wells, and they depend on CalGEM to protect them. AB 631 gives CalGEM the tools necessary to adequately enforce health and safety regulations, a task at which the agency has been failing for its entire history under existing law. Many of our community members suffer a range of harms from living near oil and gas wells, including asthma, chronic headaches, cancer and more.

While California's oil and gas regulations lag behind the rest of the nation in many respects, we do have some important protections in place, with others, including statewide setbacks likely coming soon. Yet however strong our regulations may be or become, they fail to protect communities when they are unenforced, as is the status quo. As a result, human health suffers, our communities suffer.

CalGEM must be able to protect our communities from leaks and other harms, from both active wells and the over 37,000 idle oil wells, and their ability to safeguard the health of these communities is only as strong as their ability to enforce regulations. Unfortunately, CalGEM has been unable to enforce against oil operators even when they have wells leaking carcinogens and other pollutants in our communities, including near schools, houses, and churches. AB 631 provides enforcement tools to CalGEM, such as injunctive relief, coordinated civil enforcement and increased fines.

These enforcement mechanisms will allow CalGEM to hold oil well operators accountable and better keep communities safe, especially as the tens of thousands of idle wells continue to age and grow in ranks and as the risks of toxic leaks get higher. As such, our organization supports AB 631 to ensure CalGEM can enforce crucial oil well regulations and protect our communities. I urge you to vote yes on AB 631. Thank you.

Thank you. Any other witnesses in support of the bill? Name and organization only.

Hi, Erin Woolley on behalf of Sierra Club California in support.

Thank you.

Fatima Iqbal-Zubair with California Environmental Voters in support.

Thank you. Any other witnesses in support? Seeing none. Witnesses in opposition? Yeah, you can ask the people at the table to please move so the other two individuals can sit.

Mr. Chair and Members Paul Deiro representing The Western States Petroleum Association. We have a strong oppose on the Bill as it singles out owners and operators of oil wells and production facilities for extreme civil and criminal penalties. Really without providing a rational basis for imposing such outsized penalty increases.

Worse, the Bill would raise a specter of strict liability for massive fines and criminal liability for violations of even the most insignificant portions of law, without any requirement to show actual harm or any culpable intent by the violator. In some cases, the proposed criminal and civil penalties are far in excess of those prescribed under existing California law for similar violations. The Bill contains penalty fines, including imprisonment, that go far beyond what is currently in statute for similar penalty provisions.

We are going to sit down with the author's office and we haven't had a chance to do that, but we remain opposed to the Bill.

Thank you. Next witness.

Chair and Members, Sean Wallentine from the California Independent Petroleum Association, representing 350 oil and natural gas producers in California service and supply companies, as well as royalty owners in opposition to the Bill. Just to put it very plain, CIPA's oil producers are extremely compliant with all of California's laws, the myriad of them, air, soil, and water laws. We are very cognizant that any problems with an oil well are immediately dealt with by CalGEM.

They don't do a bad job of enforcement, actually. They actually are quite good at enforcement. What they're not good at is issuing permits. We still have 1500 permits still sitting there years old, and only one permit has been issued this year. So we're continuing to comply. We do take umbrage, respectfully so, to the idea that we are renegades out there, operating oil wells, lacking compliance, and being scofflaws. That is just simply untrue. That is not even true at all.

We do comply, and legal counsel might help here, but the state oil and gas supervisor already has the authority to shut down any hazardous well in the State of California and every one of our oil producer members knows that. The very last thing that an oil producer in California wants to do is spill one drop of oil or leak one microgram of a hazardous substance. And so we're happy to sit down with the author as well, and we hope we can do that.

At this time, we remain opposed to the Bill.

Thank you. Any other witnesses in opposition? Seeing none. Questions or comments from the Committee? Seeing none. Do we have a motion? Mr. Kalra moves. Ms. Papan seconds. Seeing no further questions or comments from the Committee. Mr. Hart, you may close.

I just respectfully, urgently vote. Thank you.

Thank you. We have a motion and a second. Do pass as amended to the Appropriations Committee. Ask the Clerk to call the roll.

[Roll call].

Your Bill is out. Thank you. Ms. Carillo. Ms. Carillo is presenting AB 1317.

Good morning, Mr. Chair and Members. I'm here to present AB 1317, which would require property owners of new multifamily properties across 10 counties to lease parking as a separate and optional expense, commonly referred to as unbundling parking. The Bill is sponsored by Streets For All and supported by numerous public transportation and housing advocates. Building owners often provide free parking as part of a lease. Unfortunately, doing so obscures parking costs and passes them on to tenants regardless of whether they need or want the parking.

AB 1317 would require residential property owners to unbundle parking from the price of rent through a rental agreement amendment or separate rental agreement. Unbundling parking separates housing costs from parking costs, allowing residents to only pay for the number of parking spots they need. AB 1317 will provide a powerful incentive to tenants to use alternative modes of transportation as they no longer need to pay for parking to rent an apartment.

Additionally, this Bill will encourage developers and property owners, where parking demand is low, to build fewer parking spaces, freeing up land for other uses such as housing. Unbundling parking is already policy in Santa Monica and San Francisco. In fact, in certain places in Los Angeles, it's already in existence, but not through policy. Just as a form of policy within the apartment complex, California should look to further expand this policy.

Given how the majority of California renters are rent burdened and that California's transportation sector accounts for about 50% of the state's greenhouse gas emissions. This Bill is well tailored and cost-effective approach to alleviating the state's dual housing and climate crisis, all while giving tenants greater flexibility and promoting equity. This Bill applies to new construction of 16 units or more in the counties of Alameda, Fresno, Los Angeles, Riverside, Sacramento, San Bernardino, San Joaquin, Santa Clara, Shasta, and Ventura.

To testify in support of AB 1317 is Mark Vukcevich, Co-Director of State Policy for Streets for All, and Michael Lane, State Policy Director for SPUR.

Thank you. First witness.

Good morning, Committee. My name is Mark Vukcevich from Streets For All. We're the proud sponsors of AB 1317. We believe that we have an affordability crisis here in California with our state ranking 47th out of 50 for cost of living, and that's largely driven by the high cost of housing and the increasingly high cost of owning a car.

We believe that a person shouldn't have to pay for parking if they don't use it. And this sits close to home for my own life, where my partner and I have decided to be a one-car household due to the substantial savings we get from not owning, maintaining, filling up, insurance payments, and paying for a second parking spot at our apartment complex.

I estimate from my own personal budgeting that we save almost $9,000 a year on not having a second car, even after the occasional bus or Uber. Streets For All believes that it is also imperative to lower greenhouse gas emissions and vehicle miles traveled. Research shows that bundled parking households drive 3,800 more miles. Those are miles that pollute 40% more than bundled households and are miles that are adding to our worsening traffic congestion.

Lastly, we are very concerned with the state of our transit agencies, which are facing falling ridership in the wake of the pandemic. This is a policy outside of the state budget that will slowly bring back consistent ridership to transit. A paper on this topic out of UCLA states quote, bundled parking is negatively correlated to transit use. Households with unbundled parking are significantly more likely to be frequent transit users.

Policymakers concerned with climate change as well as falling transit ridership must consider the consequences of parking policy has on travel behavior. The company park aid estimates that about 50% of new housing is already unbundled voluntarily. The cities of San Diego, San Francisco, and Santa Monica have already adopted this locally. Let's expand this policy further by passing this Bill. Thank you.

Thank you. Next witness.

Mr. Chairman, Members Michael Lane with SPUR, a public policy think tank in the San Francisco Bay Area. There's a growing recognition that over many decades, arbitrary one-off off-street parking requirements on a building-by-building basis using static formulas has led to a cumulative excess of costly parking. A 2020 analysis by the City of Berkeley found that nearly 50% of off-street parking spots for residential buildings in the jurisdiction sat empty.

A recent Santa Clara University study found that the invisible cost of parking adds 17% to the cost of rent. Off-street parking is an amenity valued highly by some and not needed by others. Unbundling of parking has become a best practice for new apartments and is the best way to allocate a finite and expensive commodity. Those tenants who are carved for your car light should not, through the cost of their rent, subsidize the cost to provide two parking spaces for others.

Parking is never free, and we must remove the assumption and perception that it is, and we respectfully request an Aye vote.

Thank you. Any other witnesses in support? Name and organization only, please.

Good morning, Mr. Chair and Members. Karen Lange on behalf of the City of Santa Monica in support.

Good morning, Chair and Members of the Committee. Jordan Panana Carbajal, on behalf of California YIMBY, in support. Thank you.

Any other witnesses in support? Seeing none. Witnesses in opposition.

Good morning, Mr. Chair and Members. Karim Drissi on behalf of the California Association of Realtors. CAR has removed its opposition to the Bill as amended on April 17, 2023, and wish to sincerely thank the author and the Committee and the sponsor for their tremendous work on this Bill and for addressing our concerns. Thank you so much.

Good morning, Mr. Chairman and Members. Debra Carlton with the California Apartment Association. We want to say we appreciate the direction that the author is going. New construction makes sense. It's much easier to unbundle as we go forward. I think we're going to continue to work with the author to make sure we find some plausible amendments that help. For example, we would always prefer that this be a statewide approach, or at least at a minimum in areas where you had robust public transportation.

We'll argue Shasta does not, but San Francisco does. So we would appreciate at least looking at those areas that have robust parking. So thank you.

Thank you. Any other witnesses in opposition? Seeing none. Any questions or comments from the Committee? Ms. Pacheco?

So I do have some concerns about this Bill. First, why doesn't it apply to the whole state? Because I did notice San Francisco was omitted.

We took an approach as a pilot project to ensure that we were looking at counties that have robust transportation in working with the Committee Chair and the Committee consultants to find pathways so that we can move forward while also taking into the consideration of the opposition for new construction. Sorry for new construction. Initially, we didn't have a maximum or a minimum on the number of units, so we moved towards 16 units or more, new construction, no sunset date allowing for developers the opportunity to plan.

And so again, this is an initial start to a pilot project for these counties with the hope that if it works, we can expand to others.

So my concern is L.A County is so densely populated, there's already issues with street parking. I was on City Council in Downey, and that was one of the big issues. So one of the big issues was a lot of residents felt like nearby tenants were parking in the streets, and it was just not enough parking. So what ended up happening is there are several streets in Downey that have preferential parking.

So what that means is only the homeowners can park there, and then what are the tenants supposed to do? What if parking isn't being provided for? Where are they supposed to park? So I'm curious, why L.A. County, and yet again, it's not affecting San Francisco. And I feel like both of them are dealing with street issues or parking issues.

L.A. County, out of the 58 counties, is the largest county with the most population and the most land across the state. San Francisco is not. San Francisco, it's much more compacted. And in fact, San Francisco is currently going through their own city ordinance for a lot of their vacant homes. So it's not necessarily a place where new construction for new units 16 and above is happening. So that would be more than welcome to have our witnesses also continue.

In addition, the concerns about L.A. County, I hear you on them. But the goal of transportation, in which the L.A. County delegation is also pushing for, is to increase transportation within L.A. County, to increase ridership, to make it more feasible and safe for folks to use public transportation, which we see currently in a lot of the hubs and the more urban areas of L.A. County. Not necessarily. L.A. County is huge, right? Downey is very different than downtown Los Angeles and the San Fernando Valley.

So the goal and hope is to allow developers to have an opportunity to find locations where there is high transit areas to apply this policy towards building more housing. But I'm going to defer to our witness as well.

Several years ago, the city and County of San Francisco actually removed any minimum parking requirements for all new residential development. And so developers have already moved to the unbundling kind of an approach. Very broadly, it's become a best practice in much of the Bay Area.

And then adding on that, we're encouraging people to take transportation. But as you know, L.A. County, there's a lot of cities that aren't near great transportation. So I'm curious if you'd be willing to even amend it to only apply to those units that are near transportation hubs to help.

Again, working families who have to travel for work need to go from the suburbs like Downey, Lakewood, Cerritos, and need to get to downtown L.A., because if they try to take public transportation, it's going to take a lot longer to get to downtown L.A. versus driving.

I would say that the onus on the tenant to want to live in an apartment without parking is entirely up to them. This does not take away from apartment complexes already in Downey or Lakewood that offer parking. This is for new construction. With the knowledge that you are renting an apartment, you can have parking. It's unbundling. It doesn't remove parking, it just means you don't have to pay for the parking.

So the developer still can build parking as the minimum for the cities in which they're building. Each city has their own ordinance. L.A. County in general has a different ordinance overall. The City of Downey, the City of Glendale, have their own ordinance for building housing and for parking. This simply unbundles it, which means that the tenant can choose to take the parking or not take the parking.

And I'm curious whether it's been thought, what happens if apartment owners, property management companies, if it's unbundled, what happens if they charge a large amount of money for the parking spaces? My concern is now we're creating a system where it's going to be more expensive than to rent. I don't know if that argument has been thought of.

So I'd say a couple of things. So really, the lowest income among us, especially in L.A. County, are the people who don't have cars. And I think that's even in areas that have low transit ridership or low walkability. And that's something we see here. And so I don't imagine that this is a total sea change in terms of those areas. That being said, this does allow for the market rate cost of parking, according to the landlord.

But I think what we are seeing, and what we've seen in other places is that we don't see this massive rise in the cost of parking and the total cost. Mostly because I would say, of broader market forces, is that if your next-door apartment complex is going to be significantly less money than you because that landlord is charging less parking cost than you, then you're going to try to move there.

And so I understand the concern, but I think because of the broader market forces on this, we're not seeing that impact in the way that you're describing. I hope that makes sense.

That was just one of the concerns I had. But I do appreciate that the author is working with the opposition, I hope there's more conversations. I will be an Aye vote today, because I do want those conversations to happen. And it's already been stated that you've been working with them. So I do appreciate that. I just had some questions and concerns, so thank you very much.

Thank you. Mr. Kalra.

Thank you, Mr. Chair. And thanks to the author for bringing this forward. And I think the market dictates a lot of this. In San Francisco, as mentioned, they already have unbundling because the value. San Francisco is only 49 square miles with 800,000 people. So when they build new construction, you have to pay a premium to have a parking spot, even if you're buying a condo or renting a place there, because the value is.

So a lot of people in San Francisco don't have cars entering into that marketplace knowing that's what the marketplace is like. I think if you go to more, and I'm glad Santa Clara County is included because Santa Clara County, like L.A., does have more suburban-type apartment, although we are building a lot more urban as well.

But that being said, I think that there's an incentive for the apartment owner to want their parking spots to be used. And so that's going to be a disincentive for them to overcharge. Because if they have an empty spot, that makes no sense. And I think ultimately what it's about is that a tenant needs a spot, they pay for a spot. They don't need a spot, they don't pay for a spot.

And a lot of apartment complexes, appropriately so, market the fact they're near transit. That's great. You're near a BART, you're near a bus line, that's fantastic. And they're marketing that for a reason, because people like to be near transit even if, whether they have a car or not. But I think that it increases the likelihood that someone will say, you know what, I'm going to try to go without a car as I sign this new lease.

Or sometimes there's three bedrooms that automatically give two spots for a three-bedroom. Well, maybe they don't need two. Maybe they just have one car with that particular family and they don't need to have two spots. This gives them that option. And so I really like this Bill, appreciate the amendments that have come forward working with Committee and opposition. Would love to be added as a co-author and would move the Bill.

Motion for Mr. Kalra. Second from Ms. Reyes. Ms. Dixon.

Just a quick question. I did miss the early part of the discussion. What would be the situation when a renter pays for an apartment without parking but they have a car and they park on the street? How do you prevent that?

That doesn't apply to this Bill.

Okay.

This is only for new construction of apartment complexes 16 or over in conjunction with local municipality ordinance related to building and to housing. So if a tenant is potentially looking at an apartment where there is parking available, but it's unbundled, meaning you have the option to pay extra for the parking or not pay for it at all. So it doesn't apply to apartments that currently don't have parking.

No, I know, but under the going forward, so someone wants to get a lower cost apartment, that's a reasonable decision. But they do have a car because they need to get to work and they're going to park on the street. Is that the option?

They can either pay for the parking in the building or they can park on the street like traditionally folks already do.

Correct. I mean, just as the councilwoman or the councilwoman, Assemblywoman, former councilwoman, from Downey, parking in some of our communities, I know this Bill does not apply in Orange County, but parking is limited. And I'm just anticipating that may be an issue.

We really need to move toward curb management as well because that also, there's a cost to that in that public right of way where people are parking their cars. And so permit parking, particularly where you do have maybe crowded conditions.

But if you live in the coastal zone, you cannot do that.

Yeah, that's how many cities do it, though.

You can't do it if you're a coastal city.

Right. That's a whole other issue.

Because you have to.

Hold on. We don't have a question. Are you concluded with your comments, Ms. Dixon?

Thank you, yes.

Thank you. Any other question, Ms. Reyes?

I agree with my colleague from Downey. I would love to see this statewide. I know the Inland Empire is included here and I appreciate also, as was mentioned, your discussions with the realtors, and it sounds like the discussions with the apartment owners is also working. So I appreciate that. It's not always easy to bring everybody on board. So thank you.

Any other questions or comments from the Committee? Seeing none. To the author, thank you for all the work that you've done with the Committee on this Bill. This has been a heavy lift. I thank our Committee staff for the work they've done on this with you as well and your amenability to try to work what's a really complicated Bill. I think there's some compromises that have been made that have been positive. This is a pilot program for people who are expressing some concerns about it.

We'll get to see some results and see what works and what doesn't, and that'll be helpful and beneficial as people move forward. Tackling these tough issues, I think it is important to note that a key phrase that's been brought up here is for regions with robust transportation. And that is certainly not all regions in this state. And so if you do not have robust transportation, these issues are a real problem.

So I think this has been a good, effective compromise to balance what the needs are, see what works in regards to this Bill as pilot program, and then that'll educate the legislators moving forward. So with that, Ms. Carrillo, I'll be in support of this, and I'd ask you to please close.

Thank you, Mr. Chair, and appreciate the robust conversation with the Members of this Committee. I also do want to express my sincerest thanks to your Committee staff, as well as to my team and our sponsors for all of the work that's gone into moving this Bill forward. And a special thank you to the Apartment Association and the realtors.

I know it's not always easy to come to the table and come to an agreement, but I think we are all in consensus that, one, we need to build more housing. Second, the State of California is highly investing in infrastructure and public transit development. In fact, the Governor just made a huge announcement on that very particular issue just yesterday.

And so while we align state goals, the very first thing we need to do is really think about the way the people are, their behavior, and how they're moving forward with their own housing and job opportunities, and how they get to one place, to another. So, again, as noted in the Committee analysis, the Bill in print has largely addressed the opposition's arguments. This Bill does not impose any mandates on existing properties, existing leases, or small property owners.

And I look forward to having a continued conversation as this Bill moves forward and address additional concerns. Respectfully request an Aye vote. Thank you.

Thank you very much, Ms. Carrillo. The motion is do pass. We have a motion to second. Ask the Clerk to please call the roll.

[Roll call].

Your Bill is out. We are waiting on authors, which is unfortunate. We have Ms. Bauer-Kahan, Mr. McCarty, Mr. Gabriel, Ms. Wicks, and the Committee would strongly encourage them to come forward. We'll take.

I guess we can make use of our time by doing some add-ons. So we'll start with the consent agenda. Ask the Clerk to call a roll.

[Roll call].

We'll ask the Clerk to lift the call on item one, AB 1228, Holden.

[Roll Call]

That bill is still on call.

Was there another?

We're okay. We'll let you know.

Okay.

Go ahead. Item two, Haney, AB 24. Ask Clerk to call the roll.

[Roll Call]

Item two, Haney, 24.

[Roll Call]

Next is the heart bill, item three, AB 631. Ask the Clerk to call the roll.

[Roll Call]

Okay, we have everybody.

Perfect. Okay. Mr. McCarty.

Yes, sir.

Item number 5, AB 747. You may proceed.

Okay. Hello?

Okay. You may begin, Mr. McCarty. Thank you.

Thank you, Mr. Chair. Yes. Thank you for allowing us to present AB 747. This is a measure which was also heard in the Labor Committee last week. This is, we believe, a win for workers and a win for new business creation across California. This bill is a simple concept that non-competes agreements in California hurt employment and hurt economic development.

Think about Silicon Valley and all the efforts there and what there would have been had we had these non-competes really enforced throughout California. This really impacts low wage workers and jobs. Knowing especially that these things, while in practice, are not always enforceable--the threat of them has a profound impact. One in five workers is bound by a non-compete clause. Even President Biden, as recent State of the Union Address mentioned, the devastating impacts of these non-compete agreements and de-facto non-competes.

Keep in mind the Federal Trade Commission economists estimate the non-competes lower workers' collective income, their income, by about $250 billion away a year. Doing away with these nationwide will likely lower consumer prices in health care as well, to the tune of $100+ billion a year. This is a measure that creates an enforcement mechanism for these non-compete clauses which employers and council unfortunately continue to use. The state bar is also in agreements that these provisions should not be used.

We are certainly open to working with all parties and do accept the proposed committee amendments before us today as well. With me today, a law professor from Loyola Law School, Professor John Harris, and a representative for the California Nurses Association can talk about the impacts of debt through these clauses. Thank you. Respectfully ask for your aye vote.

First witness. Go ahead.

Hello, Mr. Chair and Members of the Committee. My name is Jonathan Harris and I'm an associate professor of law at LMU Loyola Law School, Los Angeles, and a fellow with the Student Borrower Protection Center. I am testifying today in support of AB 747, which would create an enforcement mechanism to the widespread and exploitative practice that hampers innovation and limits new business creation through both traditional non-competes and de-facto non-competes.

This bill would prohibit the use of all non-compete clauses and functionally equivalent contracts like training repayment agreement provisions, also known as TRAPs. TRAPs require workers who receive on-the-job training to pay back the so-called 'cost' of this training to their employer if they leave their job before a fixed period of time. These terms are often imposed as a mandatory precondition of employment, and the cost of these agreements can be exorbitant in relation to the earnings of workers, making departure impossible.

AB 747 will build on the Biden administration's pro-competition agenda and recognize that businesses have used predatory contracts to work around state level bans on non-competes. This is particularly true for California, where trade groups have openly recommended that employers in our state use TRAPs as workarounds to traditional non-compete agreements, knowing that they will accomplish the same outcome but through a mechanism that will face far less scrutiny than a traditional non-compete.

AB 747 will keep employers from blocking workers from pursuing higher wages or better working conditions with the threat of debt and establish a clear enforcement mechanism for California's existing prohibition on enforcement of non-compete agreements, so that workers can enjoy the protections they're entitled to. I respectfully request your aye vote on this critical legislation.

Thank you. Next witness.

Thank you, Chair and committee members. My name is John Pasha. I've been a cardiovascular ICU nurse for over 12 years. Many hospitals trap nurses in unsafe and unfair jobs through debt. In 2018, I accepted a job at a hospital with the promise of training and a $10,000 sign on bonus, but the hospital required I work for two years or else pay them back. Now, before the two years ended, the pandemic began.

Conditions were dangerous for nurses and patients, and as you know, the hospitals failed to provide PPE. We were severely short staffed. Nurses were missing breaks and threatened with layoffs when we complained. Luckily, we fought back together with our union. As an experienced nurse, I could have gone to another hospital with better conditions, but I felt trapped because of the bonus. I never received the promised training, and the bonus felt like a loan, not a gift.

I also work with new grads who are required to sign contracts for a training program, and if they quit or are terminated for any reason before the two years, they are forced to repay thousands of dollars for alleged costs of training. My hospital entices new grads into this debt with the promise of training. But it's a bait and switch.

Instead of getting six months of training that's required of any new hire on specialty units like mine to safely care for deathly sick patients, these new grads are given full responsibility for patients just after six to eight weeks. The new grads are scared of losing their licenses because they are so unprepared and patient care conditions are so unsafe. But the hospital uses the threat of repayment to force them to keep working.

These debt contracts handcuff us to employers that exploit our calling as nurses to care for others. With the threat of debt hanging over us, we're silenced from speaking out about unsafe working conditions and unsafe patient care. We urge you to pass AB 747 so that the employers cannot trap nurses and other workers in jobs under the weight of a debt. Thank you very much.

Thank you. Witnesses in support. Name and organization only, please.

Thank you. Mariko Yoshihara on behalf of the California Employment Lawyers Association in support. Thank you.

Megan Abell on behalf of TechEquity Collaborative in support. Thank you.

Brian Callaci, Open Markets Institute in strong support.

Mitch Steiger with the California Labor Federation also in support.

Witnesses--okay--seeing no further witnesses in support. Witnesses in opposition?

Mr. Chair, good morning. Chris McKayley on behalf of the Hollywood Chamber and also on behalf of my colleague Ashley Hoffman at Cal Chamber, who's unfortunately stuck across the way in Senate Judiciary. My apologies to having my back to Members and Mr. Speaker designate. We have three main issues in opposition to AB 747. The first, actually, is non-competes have been generally unenforceable in the State of California for years. And so we have really no issue or dispute with that, and it should be codified.

The main issue that we have is the enforcement mechanism on page seven in Section 5 of the bill. It imposes a $5,000 per employee penalty, which is mandatory. There's no discretion provided to a judge. It's applicable to all types of businesses across the board. So it's basically a minimum statutory penalty for violation of this new provision. In addition, you have new labor code Section 925, which is on page nine in Section 7 of the bill. And here there are two items.

First, it provides a new private right of action. And secondarily, because it's in addition to the labor code, it is subject to enforcement through the Private Attorneys General Act, PAGA. We think that those three items are excessive, and those strong enforcement penalties, I think, are particularly problematic for small employers in the State of California. The third and final piece is on the debt piece of this bill. There are two main provisions, of course.

The second debt piece is to the extent that employer and employer mandates training for employees. Labor code Section 2802 already requires payment or reimbursement by the employer in doing so. Your Committee analysis on page eight, I think, says that the bill would have the unintended consequences of applying to voluntary benefits such as hiring bonuses or educational tuition assistance. And we think that, unfortunately, this provision will have the opposite effect.

That is, employers will be provided a disincentive to provide these types of payments or reimbursements to their employees. And so for those reasons, we are in respectful opposition to AB 747. Thank you, Mr. Chair for the additional moments.

Thank you. Any other witnesses in opposition?

Thank you, Mr. Chair. Eduardo Martinez on behalf of Ultimate Health Services. We are in opposed unless amended position. We offer a number of programs, voluntary programs, to our employees, to essentially up-skill. These programs are not compulsory or required as a condition of employment.

For example, we allow a medical assistant to become LVN and then to become an RN. Many of our employees can't afford to pay these costs upfront, and so we found a reimbursement type approach doesn't necessarily work for our employees. So we're happy to keep working with the author and sponsors on a solution. Thank you.

Thank you. Any other witnesses in opposition? Name and organization only, please.

Sabrina Lockhart on behalf of the California Attractions and Parks Association in opposition. Thank you.

Dean Talley with the California Manufacturers and Technology Association, respectfully opposed.

Good morning. Good morning. Nick Chappie on behalf of the California Trucking Association in opposition. Thank you.

Ben Ebbink on behalf of the California League of Food Producers in opposition. Thank you.

Margaret Gladstein on behalf of the California Retailers Association in opposition.

Any other witnesses in opposition? Seeing none. Questions or comments from the Committee? Mr. Kalra?

Thank you, Mr. Chair. I want to thank the author for bringing this forward. Of course, we did hear this on Labor Committee as well, and I think this is long overdue. I know that the nurses in particular have been frustrated when there's been trainings that have been mandatory or costs that when particular employees try to leave, they get saddled with without that foreknowledge that they'll be held to pay back, especially if it's retraining.

But regardless of what it's for, if it's for a bonus, what have you, the reality is that a lot of workers are enticed into employment with those types of benefits. And then what you don't want to have happen is someone trapped in a position of employment for who knows how long because they have to repay what were never kind of put forward as debts. As stated appropriately in the analysis, if it's a loan, that's something different.

If it's upfront, "Hey, we're going to front you some money for you to go to school as a loan, pay us back." "Hey, fantastic, this is going to help me get my degree, help me advance in my career, whether I stay here or go somewhere else." The acknowledgment is there that it's being treated as such, but I think it's the other types of enticements that are used that end up trapping employees in these positions and that's got to end. And for those reasons, I support the bill. Be happy to move the bill. Would love to be added on as a co-author.

We have a motion from Mr. Kalra. Do we have a second? Second from Ms. Reyes. Ms. Pacheco.

So I actually have some concerns about this bill. So my mom is a nurse. She worked at LAC USC Medical Center, and there was an incentive for her to continue with her education. It was because of, they allowed her to continue with her education and because the county was willing to pay for education, she was able to go to Cal State LA.

So she was able to obtain her bachelor's and eventually obtained her master's. And if it wasn't for this incentive, she wouldn't have been able to get her master's in nursing administration. So my concern is there wouldn't be an incentive for hospitals or employers to provide these types of programs. So that's my big concern because, again, it was because of that she obtained her master's. And I don't know if the author has anything to say about that.

Go ahead.

Just to contextualize this, too, employers often took on the cost of job training. On the job training. It's just the cost of doing business. At my own law school, loyal to law school for many, many decades, employers would send their own employees part time to our law school and pay for it with no trap attached, no repayment obligation. So this is not something that hasn't happened before. I will also say specifically, Member Pacheco, to your question, my understanding is a little different. And then with the debt and some of the other issues, I think this hypothetical will allow us to dig into that issue right here.

Yeah, and maybe I can just address that--maybe just a blanket to the other issues. So with that, that may be a hypothetical that our professor can address that's not exactly what we're looking at here. But the big picture issues as far as the enforcement and the $5,000 per employee per incident, we took the committee amendment, which makes that not an automatic. But the judge may warrant that based upon the actual situation. And then with the debt and some of the other issues, I think this hypothetical will allow us to dig into that issue right here.

Just to contextualize this, too, employers often took on the cost of job training on the job training. It's just the cost of doing business. At my own law school, Loyola Law School, for many, many decades--employers would send their own employees part time to our law school and pay for it with no TRAP attached, no repayment obligation. So this is not something that hasn't happened before. I will also say specifically, Member Pacheco, to your question, my understanding is a little different.

What you're describing in the sense that it's a loan forgiveness program, is a way of forgiving loans, sort of like public service loan forgiveness. TRAPs, on the other hand, create debt. So loan forgiveness forgives debt. TRAPs create debt on the front end. And that's, I think, what this bill is really aiming at trying to get to.

Mr. Essayli's next and then Ms. Dixon.

Thank you, Mr. Chair. So just so I understand--and when I started a law firm, they did something similar. They gave us an upfront bonus, let's say $10,000. And if you work there at least a year, then you don't have to pay it back. But if you leave before the year, you have to pay it back. So would that be illegal under this bill?

So you're talking about like a signing bonus?

Yes.

Or a relocation bonus, things like that?

Yeah, it's a bonus. It's a way to attract employers. High quality employees in the very difficult job market, it's very hard to get good talent and to keep them. So if an employer wants to incentivize: "Come work for me. Here's a $10,000 upfront bonus, but you got to at least stay here a year so I can recoup the money. And if not, then you have to pay it back." So would that be illegal?

Yeah. So let me, again, just contextualize this by saying this is about employers shifting costs onto workers that hadn't normally happened in the past. So whether it's--we're talking about problems here that we've seen on the ground. We've had our nurse here testify to what's happening, ways in which these TRAPs are used to keep workers locked in their jobs.

Sir, we have limited time. I apologize for cutting you off, but can you just answer my question? Would that scenario be illegal under the statute? Would an employer be able-

So what you're explaining, again, it's a situation of forgiveness of a loan versus repayment of a debt. And the problem here is that this is about keeping workers from being unable to afford to leave. The description you're describing, if you're working in a law firm, you can probably afford to have a new law firm that you work for cover that repayment. That is not what we're talking about here-

Thank you. The answer is yes, it's illegal. So I have a problem with that because I think employers should be able to incentivize good talent. And, sir, you're talking about nurses. I've talked to a lot of hospitals. My sister works at a hospitals. There are nurses abusing the system right now because they can go become a travel nurse and get paid triple than what a regular nurse. And it's destroying morale at the hospitals. It's totally destabilizing. I have Loma Linda Hospital in my region.

They're on the verge of--there's a lot of hospitals on the verge of bankruptcy, and a lot of it comes to labor costs, and they have to be able to attract and keep good talent and not go bankrupt. And so I worry about that. So for that, respectfully, I can't support this.

But if you could work out a way to allow maybe just really clear disclosures so that way nobody unwillingly or unknowingly gets into this. But there's clear disclosure. I think limits, like, I think a year is a reasonable limit for a bonus to keep it. So I agree with reasonable restrictions. Just I'm against a complete bar. Thank you, Mr. Chair.

Thank you. Ms. Dixon.

Thank you, Chair. Let me clarify. That's in the legal world. In the business world, oftentimes companies do the same type of thing. There's a competitive job market. You want the best people, and so you'll pay a retaining bonus to have someone come on. And that's simply a bonus. And usually there's a contract involved that the employee, under all these terms of employment, one of the lines, the terms will be that you've receiving this bonus and you will commit to working x number of months or years.

Also, there's certain training opportunities that the company is investing in these new employees. So the cost of doing business, training employees, and that should be another term of the hiring process that an employee agrees that the company is going to invest $10,000 or $25,000 in helping the employee, the new employee, develop skills to advance their career.

And the term is that this is a gift to the employee, it's a benefit to the employee, provided you commit to working for the company, for this employer, whatever the term of the agreement is. So if the new employee accepts that term of working employment, gets the retention bonus or the training bonus and leaves before.

So I'm trying to clarify: is that what you say would be illegal? If they leave before the agreed upon term of their service to have created value for their training and for the employer? You're saying that's illegal?

Yeah, under this bill, that would be illegal. And again, it's about not keeping workers feeling like they cannot afford to leave. Employers are starting to use these kinds of arrangements to get around our state's un-enforcement of traditional non-compete agreements. We've seen examples of that, of openly publicizing to trade groups, to their members on how to use things like TRAPs to avoid California's refusal to enforce non-compete agreements. So this is one of many ways that we're seeing of ways to get around this. And I think that's the spirit of why this bill is before you.

Okay, thank you.

Hold on. There's no question, Penny. Do we have any other questions or comments? Ms. Papan.

I just have a question, and I apologize if this came up. Have you considered only making this prospective as opposed to invalidating retroactively all contracts that exist out there? That's number one. Got an answer to that?

I have not before 3 seconds ago. So we will take that into consideration. That is an approach that potentially could look at. Thank you.

So is there some concern that this might disincentivize employers from providing such benefits because they don't ever really reap a benefit themselves from training an employee?

You know, this is a very influxed job market in California and not to mention where we're at today.

Influxed?

Okay. I just didn't hear you. Sorry.

Yeah.

So employers have to be extremely creative. But enticing people for employment with less than 4% unemployment rate is a key issue, but trapping people there is not something that we think is good for the economy as a whole, keeping people places where they don't necessarily want to be in in employment. But this is certainly something that we'll be looking at and looking at other all options as we move along the legislative process.

What about this idea that they might have--limiting this to the receipt of educational benefits that just don't apply to the job itself? Have you thought about that?

Sure. Again, with things like public service loan forgiveness, that is, forgiveness of loans when the tuition has been paid up front--that is different than the creation of debt like a TRAP.

And so I think that's a different situation that certainly--I mean, I don't want to speak for you, Assembly Member--but you would not want to preclude employers from helping to reimburse workers for training that would help them succeed in their career paths with things like a degree, a bachelor's in nursing or so forth, from an accredited university or something like that. That's not what we're seeing here. And that's not really what this bill is talking about.

Okay. Thank you.

Any other questions or comments from the committee? We have a motion and a second. Mr. McCarty, I think right before I let you close, there's been some--appreciate the dialogue you've had with committee. Certainly been some suggestions, maybe an analysis. I think you're hearing the tone and tenor of some of the questions.

So maybe as you move forward--you can address this in a close--but maybe as you move forward you'll continue to work on some of these issues so it doesn't have some of the unintended consequences that may have arised as sort of being raised here by a group of lawyers. So with that, Mr. McCarty, I'll be supporting the bill, but like to ask you to close.

Yeah. Probably 50 feet away in our Education Committee over here, there are similar issues that we'd focus on. Loan forgiveness for people who work in education, in school districts and early education. There's a loan forgiveness for nurses program as well.

And so we know the concept of these for education, but we also know the flip side, when they focus on not people in law firms, not, frankly, people in public hospitals, extremely low wage workers. And this is what we're trying to protect. But that being said, we think there are ways that we can work with the opposition and clarify. And we had a good suggestion here by our assemblymember from the peninsula, and we will take those going forward and respectfully ask for your aye vote. Is it the peninsula? Did I say it right?

The motion is do pass as amended to the Appropriations Committee. We have a motion and a second. Ask the Clerk, please call the roll.

Maienschein. Aye. Essayli. No. Connolly. Dixon. Haney. Kalra. Aye. Pacheco. Papan. Aye. Reyes. Aye. Rivas. Aye. Sanchez. No.

Your bill is on call. Thank you very much, Mr. Gabriel. Mr. Gabriel is presenting AB 135.

Everybody left.

Hopefully, that's not commentary on your bill, but you may proceed, Mr. Gabriel, or on me personally.

Thank you. Mr. Chair and members. I am pleased today to present AB 1305 which was established first in the nation transparency standards for the voluntary carbon offset industry. In concept, offset credits represent a reduction in carbon emissions through investments in projects that reduce, sequester, or prevent the release of carbon emissions. Unfortunately, this has not always been the case in practice, and recent reports have shown that many offsets fail to achieve the reduction in carbon emissions claimed.

A recent report by the Guardian found that over 90% of offset credits related to rainforest preservation in one of the largest project registries did not represent a meaningful reduction in carbon emissions. Currently, there exists no governmental standards or regulations for voluntary offsets, leaving consumers with little confidence that what they are purchasing is actually legitimate.

AB 135 seeks to address the Wild West and the unregulated marketplace by requiring disclosure of critical information, including where these offset projects are located and the data and methodology used to calculate the amount of carbon that has been offset. For businesses that purchase these credit and makes claims regarding emission reductions, AB 135 would require them to disclose the details regarding the credits purchased and how the claim is achieved.

These disclosures will not only give consumers the ability to compare these credits to decide which are the most impactful but also give our researchers the tools needed to further evaluate these products and see which project types or practices represent legitimate offsetting of carbon reductions. With me today to testify in support of the bill is Barbara Haya, director of the Berkeley Carbon Trading Project. Thank you, and respectfully request an aye vote.

Thank you. First witness.

Hi, I'm Dr. Barbara Haya, director of the Berkeley Carbon trading Project at UC Berkeley. And I've studied carbon offset quality for 20 years. And over the whole two decades that I've been studying these programs, quality has been exceptionally poor. For example, we just came out with a study focused on cookstoves offset projects and estimate that across this pool of projects, they're generating seven times more credits than they should.

That is, only one in seven credits represent real additional emissions reductions, and these levels of overcrediting are not uncommon. The voluntary offset market is created mainly by four private, unregulated carbon offset registries. These registries decide what project types are allowed to participate. They adopt methods for monitoring, calculating, and verifying climate benefits. They issue credits, and they keep track of who owns those credits and who retires them. Offset quality matters because those credits are then bought by companies that make climate claims.

They can claim carbon neutrality, they can claim to sell carbon-neutral products, and they can buy these credits in place of directly reducing their own emissions. Quality is difficult to regulate. These programs work with carbon calculations that are intensely complex and often very uncertain. But it's easy to regulate disclosure. The registries have all of the documents that they need to reproduce and assess the credit calculations. They just don't make them public.

And with disclosure, researchers can study the quality, and buyers can do due diligence on what they buy. And I believe that one of the most important and easy steps the government can take to regulate the voluntary offset market is requiring disclosure that allows buyers to know what they're buying in this most important of markets.

Thank you. Any other witnesses in support? Seeing none. Witnesses in opposition.

Mr. Chairman and Members, Paul Deiro, representing Western States Petroleum Association. We don't have a fundamental opposition to transparency and what the Bill is attempting to do. We understand the problem. We basically believe that a business entity who is interested in developing a project to generate voluntary carbon credits must follow protocols developed by the existing carbon registries such as the American Carbon Registry and the Climate Action Reserve. Protocols developed by these registries ensure that the project is delivering carbon reductions or removal.

Once a project is verified, it is then listed in respective registries website for public view and includes all of the information that AB 1305 is asking for. Again, we have not had a chance to sit down with the author and the sponsor and plan on doing that. We believe there is a solution to this.

Thank you. The motion is do pass to Appropriations Committee. Ask the Clerk to please call the role.

Thank you. Any other witnesses in opposition?

On behalf of Sierra Club California, we're a support in concept and look forward to working with the author to ensure the Bill is as strong as possible.

Great, thank you. Seeing no other witnesses in opposition, any questions or comments from the Committee? Seeing none. Do we have a motion? Ms. Rayes moves. Second, Ms. Pacheco? Mr. Gabriel, you may close.

Yeah. Thank you very much. I just want to say, we obviously look forward to conversations with the opposition. But all of the independent folks who've looked at this, experts like Dr. Haya, investigative journalists, have found that there is really a lot of greenwashing going on in this space. And we think transparency is healthy for anything.

And this is an important first step to make sure that consumers can feel confident in the claims that are being made by businesses about the actions that they're taking on our climate emergency. So with that, would respectfully request an aye vote.

[Roll Call]

Your Bill is on call. Thank you, Ms. Wicks. I think Ms. Bauer-Kahan may be slightly more complicated. Hopefully we can get through Ms. Wicks quickly.

I only do the simple bills.

Yeah, I know. Yeah. As experience tells me that every time you walk up to me you go, I have a simple Bill.

Really easy, just need your aye vote. Don't worry.

Yes.

Thank you, Ms. Wicks.

Okay.

Dear Mr. Chair Members, thank you for taking the time today and thanks for your staff on this Bill. AB 1465 tackles a problem that plagues California neighborhoods with oil refineries in their backyard. At too many of these facilities in recent years, there have been serious declines in compliance with air quality requirements. Coupled with increases in flaring events that release toxic air contaminants into communities. Refinery flaring can result in shelter, in place notifications, school closures, and a surge of visits to healthcare facilities for medical care.

In the Bay Area, refineries remain among the largest sources of air pollution. Specifically in my district, increased flaring events have led to incidents that negatively impact the health of my constituents and schools in the surrounding areas. AB 1465 triples the civil penalty ceiling for air quality violations that occur at refineries if the discharge contains one or more toxic air contaminants. Fines are designed to act as credible deterrence, and most air quality civil penalties across our state are in fact working as intended.

But refineries are large, and their air quality violations are potentially far more dangerous than other facilities. Refineries must be held more accountable when they pollute the air. The consequences for air quality violations must be severe enough to deter a discharge before it occurs. So refineries don't simply treat fines for causing community disruption as an acceptable cost of doing business.

With me here to testify in support is Alan Abs, on behalf of our sponsor, the Bay Area Air Quality Management District, and respectfully ask for an aye vote.

Good morning, Chairman China and Members of the Committee. I'm Alan Abbes, representing the Bay Area Air Quality Management District and sponsor of AB 1465. People that live in refinery communities experience some of the highest cumulative health burdens in California, even in circumstances where refineries are operating within all their permit conditions. Unfortunately, refineries don't always operate within their permit conditions, and AB 1465 provides an appropriate remedy to try to refocus refineries on operating within existing air quality law and being a good neighbor in their community.

For the past five years, we've seen a trend of increasing violations in the Bay Area, and in 2021, the AQMD issued over 250 notices of violation, and for 2022, that total exceeded 300.

This includes flaring events, which have totaled up to 70 individual incidents in recent years, which is one in every five days where you might be told to stay inside, your child, might not be able to go to school, or you might have to seek medical care because of excess emissions of socks, pm, and tax.

Other violations we've seen recently included a failure to accurately report emissions for over a 10 year time period, 10 years failing to tell the community what they might be exposed to, and a thanksgiving night incident that emitted over 10 tons of heavy metal laden dust over a two day event blanketing cars, homes, yards and streets. As the East Bay Times reported

the company reassured residents over Facebook that the sand was non toxic, non hazardous and naturally occurring spent catalyst dust used in the refining process, and it offered free car washes. What they didn't acknowledge is that the spent catalyst contained heavy metals and that people shouldn't have been breathing it in the first place. The County Health Department later had to warn the community about heavy metals in the soil and discouraged people to eat food grown in their gardens. As the Committee analysis acknowledges

and it really is a good analysis. In many cases, refinery violations are likely to be settled under strict liability provisions, and the penalty ceiling was $10,000 in 2000 and is only raised slightly with inflation. With that, I thank you for your time and I respectfully ask for your aye vote.

You picked up on the not so subtle cues on that. Thank you. Any other witnesses in support? Seeing none. Witnesses in opposition.

Good morning, Mr. Chair and Members Zach Leary with The Western States Petroleum Association, which we respectfully have a opposed, unless amended, position on AB 1465. While this Bill is very similar to the one the author carried last year, AB 1897, there are significant differences. AB 1465 unfortunately creates a new precedent in code by treating identical air quality violations simply based on facility type, differently.

We believe that the best approach would be to the current structure and law and should apply, as it does today, to all facilities. In addition, I think last year's Bill, 1897, tripled the penalty of one code section. This bill takes six code sections from existing law that already have progressively increasing levels of penalties and triples, all of them without an event or rationale that would justify the increase in penalties. So we are recommending two amendments.

The first would be to treat all air quality violations equally, regardless of facility type. And then the second would be, that is kind of similar to what was in 1897 last year, that did pass this Committee, which is, in order for the penalties to be tripled, the discharge would have to result in residential displacement, shelter in place, evacuation or destruction of property similar to what was in the bill last year. Without. These amendments were opposed unless amended. Thank you.

Thank you. Any other witnesses in opposition? Seeing none, turn it to the Committee. Questions or comments from the Committee?

Ms. Pacheco had a question. Have both of you had an opportunity to speak? Seems like the opposition has some concerns and some amendments already. Yeah, we've spoke last year, too. This is our second time going around on this, and I think there's a little bit of, I think, a philosophical disagreement. The Bill is targeted specifically to refineries, because they're far and away the ones that are responsible for the majority of the air pollution. I'm happy to keep talking to them. Always have an open door.

But the amendments they're offering, I think are too broad and complicate the Administration of the Bill. And it is different than last year. We made some changes in Natural Resources Committee earlier and we'll continue to have more conversations along the way. Thank you.

Any other questions or comments from the Committee? Seeing none. Do we have a motion? Motion from Ms. Reyes, second from Mr. Reevis. Ms. Wicks, you may close.

Respectfully. Ask for an aye vote.

Thank you. The motion do pass the Appropriations Committee. We have a motion. A second. Ask the Clerk to please call the roll.

[roll call]

Your Bill is out.

Ms. Bauer-Kahan. Item 460. AB 460.

I know. I got comfortable getting a little peace and quiet in here. It was nice. Good morning.

Welcome.

Still morning. Because this committee is running so efficiently. Impressed. Good morning, Mr. Chair and members. I'm here to present AB 460, which will increase the State Water Board's enforcement authority to help better manage our precious water resources. I want to start by thanking the committee and your staff for their incredible work on this bill. We continue to try to improve it and ensure that there is proper due process, and the great work by this Committee helped us get further in that process.

So I want to thank you and happily accept the amendments in the analysis. As you all know, climate change is real and we are seeing it in the way water appears in California this year and in the drought years of the past few years. We know that our future will be filled with drought and we need to be prepared for it.

That means managing our water resources responsibly and diligently, as many of you have probably come to learn at this point, and was illustrated in the analysis. Last year, we had a group of water rights holders in the northern part of the state who decided they didn't like the curtailment orders of the Water Board, so they were just going to violate them and pay the cost of the fines. The cost, $500 a day for eight days was $4,000. The cost of doing business.

They drained the river over those eight days. The Water Board did not have the ability to immediately stop them from taking that precious resource, that is a real problem. As noted in the analysis, we need to be able to take swift action when our water resources are being taken by those who should not take them. This is one example.

But as was discussed in water committee last week, it is only one example of times when our water resources are being used by those who do not have a lawful right to do so. So another example that we see often in this state is illegal marijuana growers who are taking trucking water off of our rivers.

And we don't have the ability to immediately halt that take of water, which is really critical to the protection of this resource to our communities, to our agricultural communities who need the water, and others. So this bill is simple, although the opposition probably doesn't think so. But I'll go with it' simple. It allows for immediate interim relief order to happen at the Water Board. It increases penalties from that $500 a day you heard that was so egregiously ineffective.

Although the committee amendments today allow for a lower penalty at the Water Board level and a higher penalty in the courts. So lowering a little bit of that authority at the regulatory agency and allows the state Water Board to obtain an inspection warrant to go check and see if this illegal take of water is happening by someone. And it adjusts the water rights violation penalties so they adjust with inflation, which, by the way, I think we should do on all penalties.

I don't understand why they're fixed and we have to revisit them in legislation. But that's an aside. You will hear a lot from the opposition about the Water Board and how this will stop all housing, it will stop all water projects. I don't see that nothing in the bill adds additional law or regulation to any of our water rights users or holders in California. It merely enforces current law. It makes it easier for the Water Board to enforce it immediately. Yes, that's what it does.

But that's really important because water flows fast and in drought years you can do a lot of damage really quickly. And right now it takes 20 days for the Water Board to stop someone from taking water off of our rivers. So I think that I will answer what the opposition has to say, but the committee analysis did an incredible job in saying we're not trying to get rid of judicial review. We believe due process is right here.

I really do appreciate and gladly take the amendments because I think they strengthen due process, but it's something that we are looking for. We just want that immediate relief where it is so necessary. And with me today is Matt Clifford of Trout Unlimited and Kim Delfino on behalf of Cal Trout.

Mr. Chair and members, good morning. I'm Matt Clifford. I'm with Trout Unlimited, and I'm here to speak in support of AB 460. Under California law, the ownership of all water lies with the people of the state. Private parties can obtain the right to use that water at certain times and places and in certain amounts, but that use is subject to the overlying public ownership of the water itself and also the public interest that that water supports, including fish, wildlife, and ecosystems.

Now, in times of water shortage, which are becoming more frequent and severe with climate change, the State Water Board has the unenviable task of managing the conflicts that inevitably arise between these public and private interests, and also among the some 30,000 private water rights that are claimed in this state. Now, while that's a tough situation for any agency to be in, well, I'll just say these conflicts arise in real-time and the stakes are often very high.

When a river is dewatered, endangered fish don't have 20 days to wait for a hearing. When the stream dries up, they die. The board has to have the ability to act fast. Now, this is a tough, challenging situation for an agency to be in, but it's by no means a novel or unique one. There are numerous agencies that are called upon to balance the public interest against vested private rights in urgent situations. Happens all the time.

The law establishes ways to do this consistent with due process principles, things like time-limited orders based on a finding of imminent irreparable injury, subject to prompt judicial review, and yes, coupled with sufficient monetary penalties to ensure that these orders are complied with. This is the basic model that applies to numerous licensing agencies, for example, which must balance public health and safety against individuals' right to earn a living.

It also applies to numerous state and local public health agencies who have to balance the protective public health in the face of similar kinds of private interests. The opponents would have you believe that the sky will fall if the agency responsible for what is perhaps our most precious public resource were to have the same basic tools available to it. We frankly, respectfully disagree with that. We find it indefensible. The board does not already have these tools. And for these reasons, we urge you to support AB 460. And Mr. Chairman, I just need to add, if I may, that I've been authorized by both the Karuk tribe and the Yurok tribe to say that they are on record supporting this bill. I strongly support this bill as well.

Thank you. Next witness, please.

Good morning, Chair and members of the committee. My name is Kim Delfino. I'm here representing Cal Trout in support of AB 460. AB 460 is a product of recommendations by preeminent water rights attorneys to address the fact that the State Board's current enforcement authorities are lacking. In a nutshell, the State Board's current enforcement framework for illegal diversion fundamentally fails to provide any real deterrence. And without sufficient deterrence, there's little reason for anyone to follow the law. It is as simple as that.

Despite claims by the opposition, AB 460 would only affect those who violate existing law. It doesn't give the board any new water laws or policies to enforce. It relies on already existing laws that everyone has had to abide by for decades. While the opposition will say that they think what happened at the shasta is wrong, they've not positioned themselves to solve the problem with suggestions. Instead, they're making sweeping claims that the bill violates constitutional law and result in the abuse of due process.

This is not trying to solve a problem, it's trying to stop a very modest bill that makes change in the Water Board's ability to enforce the laws more expeditiously, quote, when immediate compliance is absolutely necessary to protect against imminent and irreparable harm. As the committee analysis lays out very clearly, the opposition's sweeping assertions are either unfounded or addressed through committee amendments. The issuance of an interim order is subject to judicial review, which means there's no violation of separation powers.

Moreover, the remedy of interim relief is not uncommon. The California APA recognizes interim suspension as a form of emergency relief, and the Legislature has granted such authority to other agencies. For example, Health and Safety Code Section 1569.50 allows the Department of Social Services to temporarily suspend a license of a care facility prior to a hearing when, in the opinion of the director, the action is necessary to protect residents or clients in the facility, and there are numerous examples.

In conclusion, AB 460 is a modest bill that is very clearly necessary to provide tools for the Water Board to act when there is illegal activity providing an important deterrence against illegal diversion of water, which frankly benefits all of us, the public water rights holders who are acting legally and our environment. And for these reasons, we ask for an aye vote.

Thank you. Any other witnesses in support? Name and organization only.

Morning Assembly members. I'm Matthew Baker, policy director for Planning and Conservation League, sponsor of the bill and in strong support. I've also been asked today to offer support on behalf of the Environmental Law Foundation, Climate Action California, Clean Water Action, and the Community Water center. Thank you very much.

Good morning. Erin Wooley, on behalf of Sierra Club California and also on behalf of California Coastkeeper Alliance, in support.

Good morning Daniel Barad on behalf of Union of Concerned Scientists, in support.

Good afternoon. Lea-Ann Tratten with Tratten Price representing Water Foundation, in support. Thank you.

Thank you. Any other witnesses in support? Seeing none. Witnesses in opposition. Yeah, come on up. I'll need two of the witnesses to please move so the opposition can sit there.

You want me to move over?

You're fine, you're fine. Just two chairs right here. First witness, please.

Good morning, Mr. Chairman. My name is. And members of the committee. My name is Brian Poulsen. I am general counsel to El Dorado Irrigation District. First, I'd like to thank the committee for considering the amendments included in today's analysis of AB 460. Notwithstanding these amendments, water rights holders continue to have concerns with this bill. The bill purports to address a gap in existing law, that is, the ability of the State Board to quickly prevent illegal diversions of water.

But the Shasta River case is not evidence of a gap in the law because there were existing legal remedies, namely the ability to seek a temporary restraining order and preliminary injunction which the State Board did not use in that case. To be clear, water agencies do not sanction illegal diversions. It is AB 460's threat to legal diversions, however, that has prompted our opposition.

Under existing law, the State Water Board may obtain interim relief against a diverter if the state Water Board has evidence to demonstrate that the diversion is illegal. But it must go to court to do so. This is because in issuing preliminary injunctive relief, a judge, someone who is trained in jurisprudence, must balance the interests of the parties involved and ensure that the court does not unnecessarily restrict the vested rights of a party without sufficient evidence of wrongdoing.

Fundamentally, AB 460 replaces the role of judges, the independent arbiters, and makes the State Water Resources Control Board the prosecutor, judge, and jury. The State Water Board, along with its staff, is composed of smart and talented individuals with good intentions. But they are not judges, they are not trained in the rules of evidence, they are not bound by precedent, and they are not independent. For these reasons and others, we oppose AB 460 and I'd be happy to take any questions at the appropriate time.

Thank you. Next witness.

Good morning, Mr. Chair and members. I'm Jennifer Pierre, General manager of the state water contractors. Respectfully, in opposition to AB 460, the stated purpose of the bill is to more quickly address illegal diversions. And we concur with the notion that the State Water Board needs strong tools to effectively enforce violations of curtailment orders, including fees that are more likely to deter illegal diversions.

However, this bill would apply to illegal and legal diversions, substantially broadening the State Water Board's authority beyond what is necessary to enforce the water rights system, which would be to the detriment of all water users, all of us, not just the state water contractors of El Dorado. We believe that outside the very real and legitimate due process and legal concerns with AB 460, the practical consequences of the measure would have a real impact on Californians at a time when water agencies must rapidly invest in their water supply portfolios to be climate resilient. A complete dismantling of the water rights system, which is what this bill would result in, will paralyze these agencies from making these urgent and necessary investments.

Water agencies make investments in their infrastructure based on their water rights, which is the foundation to their water supply portfolios. A water agency considering an investment in a groundwater bank or a new reservoir or recycled water facility can't justify the investment if the entire water right they depend on is in question. That's what this bill does for legal diverters.

Likewise, when you have a major disruption in the California water rights structure and system, which leads to these uncertainties and supplies for water managers, the ability for communities to plan and develop housing and other infrastructure to meet long-term needs in California is untenable. Communities need to make the necessary findings under existing law within the Subdivision Map Act, that water is available. How do you do that if it's uncertain if the water right that you're relying on is actually going to be available to you?

We believe this measure poses significant risk to future housing and commercial development. We believe there are a number of recommendations in the PCL report that could be effective at addressing some of the specific concerns that have been raised, and we have supported measures and led legislation consistent with those recommendations. Examples include funding for the State Board staff to update and modernize the water rights information system and improved monitoring. For these reasons, we respectfully oppose AB 460 and request your no vote. Thank you.

Thank you. Any other witnesses in opposition? Name and organization only, please.

Don Gilbert for the San Francisco Public Utilities Commission, serving 2.7 million Bay Areans, in opposition.

Chair and Members, Dean Talley with the California Manufacturers and Technology Association, respectfully opposed.

Chair and Members, Eli Garcia for the International Bottled Water Association, in opposition.

Karen Lange on behalf the San Joaquin County Board of Supervisors, the Stanislaus County Board of Supervisors and the South San Joaquin Irrigation District, in opposition. Thank you.

Kristen Olsen with California Strategies on behalf of San Luis Delta Mendota Water Authority as well as United Water Conservation District, respectfully opposed.

Alex Bearing with the California Farm Bureau, excuse me, respectively approach. Allergy medicine. What can I say? Dry mouth. Opposed. Thank you.

Good morning. Kris Anderson on behalf of the Association of California Water Agencies and the Northern California Water Association, in opposition. Thank you.

Good morning. Brenda Bass with the California Chamber of Commerce, respectfully opposed.

Good morning. Dominic DiMare here, on behalf of the Exchange Contractors on the San Joaquin River, in opposition.

Good morning, Chair and Members. Alfredo Medina here, on behalf of the Imperial Irrigation District, in opposition as well.

Good morning. Andrea Abergel with the California Municipal Utilities Association, in opposition. Thank you.

Good morning. Annalee Akin, on behalf of Mesa Water District, San Gabriel Valley Municipal Water District, and Santa Clarita Valley Water Agency, respectfully opposed.

Good morning. Noelle Cremers with Wine Institute in respectful opposition.

Good morning. Taylor Roschen on behalf of various Ag associations, in opposition. Thank you.

Good morning. Danny Merkley with the Guaco Group, on behalf of the California Association of Wine Grape Growers, Kern County Water Agency, Kings River interests, and Modesto Irrigation District. Thank you.

Chair and Members, Tricia Geringer with Agricultural Council of California, respectfully opposed.

Gail Delihant with Western Growers Association, in opposition.

Jason Ikerd on behalf of the Orange County Water District, also in opposition.

Good morning. Carolyn Jensen, KP Public Affairs, on behalf of Western Municipal Water District, the Mojave Water Agency, in opposition.

Erik Turner on behalf of Turlock Irrigation District and Santa Margarita Water District, in opposition. Thank you.

Cyrus Stevers in the caboose for the Municipal Water District of Orange County, Las Virgenes Municipal Water District, and the Coachella Valley Water District, in opposition.

Thank you. Any other witnesses in opposition? Seeing none. I want to kind of, for the benefit of the Committee, benefit people in the public, narrow down what it is that we're actually doing here today, what this Committee is actually doing here today. So I'm going to go through. Our Committee amendments did a number of things. One required the Water Board to adopt a formal, standardized hearing process for interim order reviews.

So this ensures that all parties will know the process and all parties are treated the same. Secondly, limited the issuance of interim orders to only cases to prevent imminent or irreparable injury to water rights or the environment. Three, to limit all interim orders to 180 days. Four, guaranteeing the right to appeal an interim order to the Superior Court. Five, guaranteeing no interim order could be modified without a formal hearing. And six, clarified the civil penalties. Those are the legal issues.

That's within the jurisdiction of the Committee. We made a lot of significant amendments I think that, author agrees too, that improved the Bill in ways that are important, particularly on due process. What the amendments do not do is change the scope of the water issues that the Water Board can issue an interim order on that's outside of this Committee's jurisdiction. Those issues may or may not be real, may or may not be important to Members of this Committee, but those are separate issues.

So that's what we have done here today with the Committee amendments. Ultimately, that's within the jurisdiction of this Committee and what this Committee is ultimately voting on. So with that to sort of shape that, I now turn it over to the Committee. If there's any questions, comments from anyone on the Committee? Ms. Reyes.

Thank you for that clarification. It always is of great concern when our very own water districts oppose a Bill because they are the ones that are providing the service. But I think that with the amendments that have been taken and the fact that the very water districts that have, if they are stopped, they have an appeals process and it is within 15 days. So that is extremely important.

Whereas before, if there is no way to stop the illegal activity, then it's going to go on for quite some time, as was noted by you. So with that, I would move the Bill.

Motion from Ms. Reyes, do we have a second? Second from Mr. Haney. Mr. Connolly.

Yeah, and I appreciate the author and the witnesses coming forward, and I appreciate the clarification, Chair. It's oftentimes hard to stay in our lane in committees. And what strikes me is the characterization of this as a modest Bill. I think that's being disputed, to say the least. It is recognizing a serious issue, and that is the unlawful diversion of water, particularly in drought situations.

We do need to crack down on that and make sure that the relevant regulators have the tools at their disposal to do that. So I appreciate the spirit with which this is being brought forward. I am concerned about the scope, and we'll save that for another day since this is not the Committee for that. There have been some concerns raised about the reordering of independent judicial review relative to administrative review. The amendments seek to address that issue.

I don't know if the author or witnesses want to kind of weigh in on where things stand with those amendments relative to the charge that this would weaken independent judicial review and all the evidentiary proceedings and rules and independent judgment that goes along with that visa vis throwing this frankly, wide range of water rights at this point more into the administrative realm.

I would like to address that question, if I may, Mr. Chairman. Thank you for raising that issue. Assembly Member Connolly. It was unclear to me, based on the amendments, how the amendments to Section 1115, which were clearly set forth in the analysis today, work together with the provisions of Section 1126 in terms of judicial review. The March 30 version of the Bill eliminates independent judgment from existing law. Existing law.

Under existing law, it is independent judgment is the legal standard for reviewing an order adopted by the State Water Resources Control Board. 1115 the amendments in the analysis indicate that change the standard to substantial evidence. But how will that work with Section 1126?

That is a fundamental concern of water rights holders is that we're changing existing law, not just for this Bill, but existing law for judicial review of adopted orders from the State Water Resources Control Board to make the standard for water rights holders much more difficult to obtain since the judge, in this case, would not have an opportunity to independently assess and review the facts under the circumstances.

Yeah. So-called de novo review. So I would like to hear the response.

Yeah. Thank you, Assembly Member. So I just want to say, and it's noted, actually, in the analysis, I think it was March 30, although, I don't know, time is fuzzy, but we did make amendments. So as you may have noted, every single person who's opposed is opposed. Not one of them is opposed unless amended. We are trying really hard to make this better in the absence of any participation by the opposition. And kudos to the Committee for being a partner in that.

We want the due process to be well done, and we're doing so in a vacuum, which is never the way. I don't want to conduct business that way, and I don't think it is great, but it's when folks don't come to the table, it's where you are. I know that the Committee asked for input on that standard of review and was not given one, as noted in the analysis. And so I think it's something I'm open to discussing.

But I think it is really important that we allow for, as noted by our colleague, that you get into court, you get into court quickly. I mean, these are not minor things we're talking about. I agree. I want housing to be built. I want water projects to be built. I want your water agencies to have the right to deliver water to you. None of this should be stopped here. And I think the standard we're setting here, which is imminent irreparable injury, is a high standard.

When you get into court and that is reviewed on any standard, a court is going to look at that and balance the rights, the impact, the ability to wait, just like they would on any standard. And I think that's really critical. We are open to discussions on that. We invite the opposition to please join us and tell us what you think of it, because we put it out there in hopes that we got it right, and then we sit in Committee and hear that they don't like it.

So, I would, I would ask for them to come to the table and help us to get this right.

Respectfully, we're working on amendments, so thank you. Excuse me.

No question pending. Do we have any more questions, Mr. Connolly?

Yes, and I do appreciate that. I think at a minimum, and I'm glad you're recognizing this is a work in progress. I'm not there yet, and perhaps we send this forward with the understanding that significant work will occur, particularly around that due process independent judicial review issue. And I'm happy to hear that you're willing to engage further on that. It does sound like it's an issue at this point.

Any other questions or comments from the committee? Ms. Papan.

So I've had discussions with the author, and I thank you for your generosity of time. I represent one of those communities that invested billions to ensure that we had reliable water. Mr. Haney is part of that area as well. So as I expressed to the author, who was so generous of her time, that that's where I had a lot of concerns. So while we're trying to separate out what we're reviewing with how we're reviewing, I'm not sure we can totally do it.

So as we discussed, the breadth with which this public trust doctrine could be applied makes me uncomfortable. And especially as we talked about, when water gets short, we could probably make that umbrella pretty large. So I get uncomfortable with that. And then when we combine it with the fact that there probably isn't de novo review, if you go into court and you have a water agency who has already decided against you, and we're sort of weighing that likelihood of prevailing, that makes it really tough.

And I appreciate your candor with me that, hey, talk to, let's try to find some amendment that really works, and that you know where my issues were, and I appreciate that you've been receptive to them. So I am going to support the Bill today. This is a very hard vote for me. I hope you understand, but you have been very forthright with me that give me something. Let's work with it. Let's sit down and hammer it out. And I'm a firm believer in that.

So I hope we get there. But I just wanted you to know that, to say, yes, you can go into court, but you go into court with a governmental agency already deciding against you, I mean you've litigated. You know what that's like. That certainly gives you a likelihood of prevailing. You go way up in that world. So, like you with the Senator Connolly de novo might be a little better for me. But in any event, that's where I am, and I thank you for hearing me out.

You've been very generous to kind of understand my heartburn. On three different occasions, we talked about this. So I believe that you are certainly willing to do this. So thank you.

Thank you.

Any other questions or comments from the Committee? Seeing none. Ms. Bauer-Kahan, you may close.

Thank you, Mr. Chair. And again, I just want to thank the Committee for their incredible work to get us further towards due process. I know we don't all agree we're there, but I think the Committee did an incredible job. And what I think is due process, obviously, as mentioned, there are other laws that are available to folks. The writ of mandate, I think, was there before we put it in there, but now it's in there, to be clear.

But I do think that we need to make sure that those illegal water users, that is the benefit of all of us. When people are taking the water illegally, whether it's under a curtailment order or just taking it to grow marijuana illegally, et cetera, that's hurting all of us. The water is a shared resource that each and every one of us needs, and it needs to be managed responsibly, especially in dry years.

And so I truly believe that we can get to a place where the agency has the ability to stop those illegal users that I know. In our last hearing, Ms. Pierre agreed that we share that laudable goal and that we can get to a place where our agencies that work so hard every day to provide us with water and to drink and to live, can feel safe, that they will not be caught up in this. So thank you, and I respectfully ask for your Aye vote.

Thank you. We have a motion and a second. The motion is do pass, as amended, to the Appropriations Committee. Ask the Clerk to please call the roll.

[Roll call].

Your Bill is out.

Thank you.

Thank you. Last bill, Mr. Haney.

Grand finale.

No matter what.

I'll move the Bill.

Thank you. We have a motion and a second motion from Ms. Pappin. A second from Mr. Reevis. With that subtle hint, Mr. Haney.

Thank you, chair and Members, I want to start by thanking the Committee staff for their work and accept the Committee's Technical Amendments. AB 1356 strengthens California's Worker Adjustment and Retraining Notification Act, or WARN act, by expanding protections for workers impacted by mass layoffs. We've seen thousands of people get laid off in the last few months, and that's helped us identify some of the loopholes and shortcomings in our state's WARN act.

One of the biggest loopholes this bill is addressing is that contract workers are not protected by the Warrant act, even though many of these contract workers are doing the same job as directly hired employees. Contract workers can include engineers, janitors, cafeteria workers who get no notice of getting laid off while their directly hire colleagues did. Additionally, the WARN act only requires 60 days of notice, which is not enough time for workers to transition effectively.

Lastly, another loophole this bill aims to fix is that under the WARN Act now, employees can be required to sign away their rights as a requirement to simply receive the pay they're owed under the WARN Act. This is timely legislation. We're seeing more layoffs happen across different industries. This is not going to stop layoffs. Unfortunately, they may still happen, but it just allows workers a bit more time to transition effectively.

We have to protect our workforce, and we shouldn't be unreasonably excluding certain workers because of their status. With me, I have David Krauss, a former contract worker at Google, and Mitch Steiger from the California Labor Federation.

Thank you, first witness.

I'd like to thank the Committee for their Time. My name is David Jones Krauss, and I'm a Member of Alphabet Workers union CWA. Alphabet calls their indirect employees TVCs, which stands for temp vendor contractor. In four years at Google, I've been a T, a V, and a C, along with the vast majority of content managers TVCS was laid off in November without any form of severance. I'm still unemployed today, and every time I speak out against the inequities, TVCs face.

I worry that I prolong my unemployment, my financial uncertainty, but I have the privilege of no debt and a spouse with a stable job. Those blessings would be squandered if I didn't speak out on behalf of those for whom the risks of being outspoken are too great to come here today. Right now, it's cheaper, faster, and less newsworthy to get rid of TVCs who make up the majority of Alphabet's workforce.

Legislation like AB 1356 is a substantive step towards alleviating the worst outcomes of this exploitative system for workers like myself, who have virtually no protections during layoffs. In late August, I noticed an increased vendor delegation was among the stated goals for Q4. As a temp worker, I feared that meant my job would be passed off to a large vendor management firm in mid November. Exactly that occurred. We were laid off en masse, often with as little as two weeks notice.

If Google knew this was the plan in August, why wait till November to tell us? Many of my coworkers are parents suddenly unsure of how to provide for their children, their H1B visa holders up against the clock to find new sponsorship to preserve their status. Statistically, TVCs are more likely to belong to already marginalized communities. With AB 1356, you, our elected representatives, can protect the most vulnerable Members of our constituents of your constituency with impactful protections for the inevitable layoffs in our future.

Layoffs that invariably impact them first, and most significantly, as long as employers lack a legal mandate to provide contract workers with advanced notice of their termination, they'll do so on a timeline that serves their bottom line and shareholders, no matter the often catastrophic impact on those of us they're letting go. Articles call us the shadow workforce. Legislation like AB 1356 that acknowledges our worthiness of the same protections afforded to directly hired employees is vital if we're ever going to make it into the light.

Thank you. Second witness, please.

Thank you, Mr. Chair Members and staff. Mitch Steiger with the California Labor Federation, proud to co sponsor this bill along with a large coalition of other labor organizations and worker rights groups.

For all the reasons stated so well by the author and previous witness, we would just really emphasize the role of this legislation as an update that this is taking legislation that's been in place for over 20 years when the state looked very different, when the workforce looked different, and making it more responsive to the struggles that workers face now in 2023. The example namely, being that workers are much more likely now to not actually be technically employed by the company at which they work.

They're far more likely now to actually work for some sort of contractor, some other company that was not nearly as common back when this bill was, back when the WARN act was first enacted. And so we need to make sure that that change in the economy, that change in the workforce for so many workers is reflected. There's no reason why these workers shouldn't be covered.

The impact to them is just the same as it is for directly hired workers, as well as the impact to their surrounding communities. One of the reasons that the WARN act is there. So that update, we think, is critically important.

Also, going from 60 to 90 days reflects the fact that California used to be a much more affordable place to live, that now, given the skyrocketing cost of everything, it can be much more difficult to find living wage employment that can cover all of the education and health care and retirement security and everything that the workers now struggle to pay for.

And so we think that extra 30 days, that extra extension is something that's very important for workers to be able to stay in California and meet their needs. And then regarding the severance pay and what we've seen, this responds to something that has actually happened where workers have been forced to sign away their legal rights in order to access the benefits to which they are entitled. Under this law, workers should have access to those rights without having to sign away other rights.

And in all of those areas, we think this constitutes a critically important update, and we urge your support.

Thank you. Any other witnesses in support? Name and organization only.

Mr. Chair and Members Leanne Tratton, representing Center for Responsible Lending and support.

Megan Abel, on behalf of tech Equity Collaborative, proud co sponsors and also on behalf of Asian Law Alliance, Equal Rights Advocates and Stronger California Advocates Network. Thank you.

Mr. Chair and Members Michelle Taran Wolfwork with the California Commission on the Status Women and Girls in strong support. Thank you. Good afternoon, chair and Members.

Thank you, Mr. Chair. Members Mariko Yoshihar, on behalf of the California Employment Lawyers Association, proud co sponsor. Urge your support.

Mari Lopez with the California Nurses Association in strong support.

Any other witnesses in support? Seeing none. Witnesses in opposition. Be careful. There's a lot of lawyers here to bring suit. If you do, go ahead.

Thanks, Mr. Chair. Chris McKaley, on behalf of the Hollywood Chamber and also my colleague Ashley Hoffman from Cal Chamber. And I want to note our position in the coalition is opposed unless amended. We appreciate the work of the author and his staff. I know that Ms. Hoffman has shared amendments with the author and his staff for consideration. We have four items. The first is our concern with increasing the WARN act time from 60 to 90 days. We think that that might have an adverse impact.

In other words, employers who are worried about violating the statute will be over inclusive in their warrant act notices. The second on page three in Section one is the definition of covered establishment, changing it from 75 employees at a single establishment to 75 of all facilities. Which means, for example, you could have at one facility, 100 individuals, and then at a second one, one person in that second facility would also have to issue a WARN act notice. The third item is also in the definition there.

In terms of franchisees, we have over 76,000 franchisees in the State of California, and we should not make those individuals responsible for knowing what other franchisees are doing. The last item is on the definition of contractor. Also, page three, section one. We understand that an individual who is doing basically the same work side by side with the employee might be different and appropriately receiving a notice.

However, the language is so broad, we think that somebody who only works perhaps a few hours a week could be subject to the WARN act notice as well. Those are our four concerns. And again, we look forward to working with the author on potential amendments. Thank you, Mr. Chair.

Thank you. Further witnesses in opposition.

Ben Ebbink, on behalf of the California League of Food Producers, also in opposition. Thank you.

Margaret Gladstein, on behalf of California Retailers Association, aligning ourselves with Mr. McKayley's comments.

Thank you very much. Seeing no further witnesses on a position, we have a motion. A second. Any questions, or.

Mr. Connolly, I'll be happy to move. And as discussed with the author, would love to be a principal co.

Absolutely. Thank you, Ms. Pacheco.

So I also have concerns that it may be overly broad. So I like that. Hopefully, there's conversations happening and maybe we could more narrowly define the broadness of it, so that way it's not so broad, but I will be supporting today.

We already had a motion, but we're just very thorough.

So much love.

We have a motion in a second. Mr. Haney, you may close.

Appreciate the support in the Committee and the concerns of the opposition. Definitely will continue to work on those issues, particularly around the definitions of establishments and franchisees, et cetera. And respectfully ask for your aye vote.

The motion is do pass as amended, to the Appropriations Committee. Ask Clerk to please call the roll.

[roll call]

[roll call]

[roll call]

Well done. It is 11:56, meaning we will do add-ons. We have a couple of bills on call. Hold on, we're going to do add-ons and are on call, so we'll start with the consent agenda. Ask the Clerk to please call the roll.

[Roll Call]

Okay, item number one is on call. AB 1228, Holden. Ask the Clerk to call the roll.

[Roll Call]

That bill is out. Item number three, AB 460, Bauer-Kahan. Ask the Clerk to call the roll.

[Roll Call]

Item four, AB 631, Hart.

[Roll Call]

Item number five is on call. AB 747, McCarty. Ask the Clerk to please open the roll.

[Roll Call]

That bill is out. Item number six is also on call. AB 1305, Gabriel. Ask the Clerk to please open the roll.

[Roll Call]

That bill is out. Item number seven, AB 1317, Wendy Carrillo. Ask the Clerk to call the roll.

[Roll Call]

Item number nine, AB 1465, Wicks. Ask the Clerk to please call the roll.

[Roll Call]

Well done, everybody. That concludes today's meeting of the Judiciary Committee. Meeting adjourned.