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SB-1457 Small businesses: reduction or waiver of civil penalties for violation of regulations or statutes.(2019-2020)



Current Version: 08/10/20 - Amended Assembly

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SB1457:v97#DOCUMENT

Amended  IN  Assembly  August 10, 2020
Amended  IN  Senate  June 18, 2020

CALIFORNIA LEGISLATURE— 2019–2020 REGULAR SESSION

Senate Bill
No. 1457

Introduced by Senator Borgeas
(Principal coauthor: Assembly Member Obernolte)
(Coauthors: Senators Chang, Jones, and Morrell)
(Coauthors: Assembly Members Choi, Cunningham, Quirk-Silva, and Ramos)

February 21, 2020

An act to add Chapter 3.7 (commencing with Section 11367) to Part 1 of Division 3 of Title 2 of the Government Code, relating to small business.


LEGISLATIVE COUNSEL'S DIGEST


SB 1457, as amended, Borgeas. State regulatory action: Small businesses: reduction or waiver of civil penalties. penalties for violation of regulations or statutes.

Existing law, the Administrative Procedure Act, in relevant part, governs the procedures for the adoption, amendment, or repeal of regulations by state agencies and requires, among other things, that a state agency make available to the public facts, evidence, documents, testimony, or other evidence on which the state agency relies to support the agency’s determination that the proposed action will not have a significant adverse economic impact on business.

Existing law establishes the Office of Small Business Advocate, within the Governor’s Office of Business and Economic Development, and establishes the duties and functions of the Director of the Office of Small Business Advocate including, among other duties, representing the views and interests of small businesses before other state agencies whose policies and activities may affect small businesses. Existing law requires each state agency that significantly regulates small business or that significantly impacts small business to designate at least one person who is required to serve as a small business liaison.
This bill would, with certain exceptions, require a state agency to assist a small business, as defined, in complying with all statutes and regulations administered by the state agency and in any enforcement action by the state agency. The bill would require a state agency to establish a policy, by January 1, 2022, that provides for the reduction or waiver of civil penalties for violations of a violation of a regulatory or statutory requirements by a small business under appropriate circumstances. requirement by a small business if the violation did not involve willful or criminal conduct and did not pose a serious health, safety, or environmental threat. The bill would require the policy to include various factors the state agency would be required to consider when making a determination as to whether to reduce or waive the civil penalty. The bill would authorize the state agency to update the policy to reflect current issues and conditions affecting small businesses and the state agency.
This bill would require the state agency to post a current copy of the policy on the state agency’s internet website and to annually post a utilization report that contains specified information about enforcement actions and penalty reductions and waivers. The bill would require a state agency to notify the Office of Small Business Advocate of certain events relating to its policy and annual report.
This bill would make the bill’s provisions operative only upon the Legislature making an appropriation to implement these provisions.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

The people of the State of California do enact as follows:


SECTION 1.

 This act shall be known, and may be cited, as the California Small Business Regulatory Fairness Act.

SEC. 2.

 Chapter 3.7 (commencing with Section 11367) is added to Part 1 of Division 3 of Title 2 of the Government Code, to read:
CHAPTER  3.7. California Small Business Regulatory Fairness Act

11367.
 The following terms shall have the following meanings for purposes of this chapter:
(a) “Small business” means a business that is all of the following:
(1) Independently owned and operated.
(2) Not dominant in its field of operation.
(3) Has fewer than 100 employees.
(4) Has average annual gross receipts of fifteen million dollars ($15,000,000) or less over the previous three years.
(b) “State agency” means any state agency, department, board, or commission that has significant rulemaking authority over small businesses, except the Franchise Tax Board, the California Department of Tax and Fee Administration, or the State Board of Equalization.

11367.1.

(a)A state agency shall do all of the following:

(1)Assist a small business in achieving compliance with statutes and regulations administered by the state agency. This requirement may be met through the implementation of the requirements in Section 11148.5.

(2)Assist a small business during an enforcement action by the state agency.

(3)(A)By

11367.1.
 (a) By January 1, 2022, a state agency shall establish a policy to provide for the reduction or waiver of civil penalties for violations of regulatory or statutory requirements by a small business under appropriate certain circumstances. This section is limited to civil penalties for which a state agency has discretion as to the amount, type, or imposition of the penalty.

(B)

(b) The policy shall exclusively be applied to a violation by a small businesses business that meet all of meets the following criteria:

(i)

(1) The violation by the small business did not involve willful or criminal conduct.

(ii)

(2) The violation by the small business did not pose an imminent a serious health, safety, or environmental threat.

(iii)The small business has a low degree of culpability when its conduct is judged in light of its size, length of operation, and the sophistication of its owners or managers.

(C)

(c) The policy shall include the factors that shall be considered when the agency determines if, the state agency shall use to determine if, and to what extent, the civil penalties shall be reduced or waived. The policy shall be designed to result in a waiver or a range of reductions, based upon all of the following factors, which factors that include, but are not limited to:

(i)

(1) The degree to which the small business cooperated during any investigation by the state agency.

(ii)

(2) The degree to which the small business engaged in subsequent action to correct the violation, as appropriate.

(iii)

(3) The prior history of the small business in meeting regulatory requirements of the agency.

(iv)

(4) The degree to which the level of the penalty would impede the small business from continuing to conduct business.
(5) The degree to which the small “‘business’” actions were negligent.
(d) The state agency may apply conditions to the reduction or waiver of penalties, including, but not limited to, requiring the small business to take corrective action or attend training.
(e) The state agency may adopt regulations or other administrative documents appropriate to implement this chapter.

(b)

(f) The state agency may update the policy from time to time to reflect current issues and conditions affecting small businesses and the state agency.

(c)(1)The

(g) The state agency shall post a current copy of the policy on the state agency’s internet website within 30 days of adoption or amendment of the policy.

(2)

(h) The state agency shall annually post information on the state agency’s a utilization report on its internet website as to that includes the aggregate number and category of enforcement actions that were reviewed pursuant to this section, the total number of small businesses and actions that qualified for civil penalty reductions or waivers in the report period, and the total dollar amount of reductions and waivers issued.

(d)The notice shall include a link to where the policy and annual utilization report pursuant to paragraph (2) of subdivision (c) is posted on the state agency’s internet website. The

(i) (1) The state agency shall notify the Office of Small Business Advocate within 15 working days of any the following situations occurring:

(1)

(A) The policy is adopted or amended.

(2)

(B) The annual utilization report is posted.

(3)

(C) The policy or the annual utilization report is relocated from the state agency’s internet website. The notice shall include a link to the new internet website location.

(4)

(D) The policy or the annual utilization report is removed from the state agency’s internet website. The notice shall include an explanation as to why the information was removed.
(2) The notice shall include a link to the policy and utilization report specified in subdivision (h).

11367.2.
 This chapter shall become operative only upon the Legislature making an appropriation to implement the provisions of this chapter.