SB 826 (transcript)

Today’s post is on Senate Bill 826 from the 2018 legislative session concerning California’s new mandate on women on publicly traded corporate boards.

https://soundcloud.com/capimpactca/sb-826

Governor Brown signed SB 826 by State Senator Hannah Beth Jackson on September 30th. It was Chapter 954. It adds two new sections to California’s Corporations Code.

Essentially the new law requires every publicly held corporation whose principal executive offices are located in the state of California to have a specified minimum number of women on its board of directors.

It also requires the California Secretary of State to review and issue reports regarding corporate compliance with the bill’s provisions and authorizes the Secretary of State to impose fines for any violations of that bill.

The Legislature did make some modifications to the bill before they sent it down to the Governor for final action, including the addition of a fine for failure to timely file board member information with the Secretary of State. They modified the dollar amounts of the fines imposed for both the first and subsequent violations of the law.

What the bill essentially states is that no later than March 1, 2020 and annually thereafter, the Secretary of State will publish a report on its website that contains specified information. Again, it authorizes the Secretary of State to impose fines for violations of the bill.

These fines are quite substantial. For failure to timely file board member information the first violation is $100,000. For a second or subsequent violation, the amount goes up to $300,000 per violation.

Section One of the bill, which represents most of the bill’s contents, sets forth numerous legislative findings and decorations. In Section Two of the bill, it adds Section 301.3 to the Corporations Code, which we’ll cover in a moment.

Then it also adds Section 211.5.5 to the Corporations Code that essentially sets forth the requirements that will cover apply to a foreign corporation ‑‑ that is a publicly held corporation ‑‑ to the exclusion of the law, the jurisdiction in which that foreign corporation is incorporated.

What this new section of the Corporations Code says is that no later than the close of the 2019 calendar year, every domestic general corporation or foreign corporation that is publicly held, and whose principle executive office according to the corporation’s SEC 10K form is located in California, must have a minimum of one female on its board of directors.

Thereafter, the bill specifies that no later than the end of the 2021 calendar year, the required minimum number must be two female directors if the corporation has five directors or three female directors if the corporation has six or more directors.

This bill has gotten a lot of press attention and numerous legal scholars have questioned its constitutionality. We’ll have to wait and see once it’s implemented at the end of 2019 whether or not a publicly traded corporation undoubtedly incorporated out of state challenges this new statute.

 

Challenges to Lawmaking in California’s Legislative Process (transcript)

Today’s post is on the challenges to lawmaking in California’s legislative process.

https://soundcloud.com/capimpactca/challenges-to-lawmaking-in-californias-legislative-process

Individuals and groups engaging in California’s lawmaking process may find several challenges in their legislative endeavors. There are certainly institutional challenges as well as political challenges that complicate the legislative process. These challenges must be overcome to achieve a successful outcome in enacting state legislation.

An initial, structural, challenge is California’s bicameral legislature and three separate branches of government. Naturally, in our form of government these separate branches are intended to provide a system of checks and balances on the other branches. In other words, our system of government combined with the two houses and 120 legislators that comprise the legislative branch of government means that there’s a natural, and intentional, tension in the lawmaking process.

In addition there are other institutional issues that can cause gridlock and create challenges in the lawmaking process. Two of the most commonly cited factors are term limits and the lack of bipartisanship. In the case of term limits, those who are newly elected and those who are in their final term of office are undoubtedly going to view each other’s role differently. Further, more seasoned legislators often are committee chairs, leaders, or otherwise in more influential positions to effect the outcome of pending legislation. One additional institutional factor that makes lawmaking is the sheer volume of legislation – roughly 2,500 bills per year.

Legislative rules can also create hurdles for achieving lawmaking success. For example, our state’s constitution requires a supermajority vote for passing tax increases in each house of the Legislature. The burden of achieving a higher vote threshold often increases the likelihood of failure with certain pieces of legislation.

In addition to these institutional factors we’ve covered there are also political reasons that can make the legislative process in the state of California evermore challenging. One such factor is the electoral process. In California, Assembly Members run for office every two years while Senators run for office every four years. As a result, these legislators are continually in a campaign mode and raising funds for their political races. Now, as a practical matter this can mean soliciting interest groups for campaign contributions – including those who regularly appear before legislators. Some of these legislators find it difficult to vote against their friends, especially those who might be helpful in their reelection efforts.

Other factors include the initiative process and voter approved ballot measures that constrain state spending and limit the ability of legislators to address public policy issues as well as competing funding priorities that are established by initiative for the state. These provisions of state law make it more difficult for legislators to craft solutions to public policy solutions facing the state because they often find their hands are tied by these constitutional or budgetary restrictions imposed by the voters.

In the end, there’s not a single factor that makes lawmaking in California difficult. Instead it’s a combination of factors that impact the resolution of public policy issues by the Legislature and that often result in gridlock and lack of success in lawmaking. The result can increase the partisanship in the Legislature, which then in turn creates hurdles, as both sides of the political spectrum engage in sometimes rigid ideology that in turn can create a lack of desire or need to compromise.

Over the weekend Professor Leslie Gielow Jacobs – Director, Capital Center for Law & Policy – appeared on KCRA 3 News to discuss the latest legal challenge to the Affordable Care Act. Her comments from the story are below.

On what to expect from the Appeals Court hearing the decision holding the Affordable Care Act unconstitutional:

It is my prediction that the Appeals Court will reverse his ruling and we’ll be right back where we are.”

On judging legislative intent:

What the judge was supposed to do was look at the intent of Congress and say – Well, without the individual mandate did Congress intend for the rest of the statute to stay there? – and it seems quite clear that in 2017 Congress did intend the statute to stay there because it didn’t abolish the statute itself.”

On the next step, appealing the ruling:

It’s hard for me to imagine that we won’t get a stay that puts this on hold because this is a momentous decision, it affects a lot of people, and the reason to give a stay is so the Court of Appeals has enough time to consider the matter.”

You can find the complete story by KCRA’s Max Resnik here.

 

Publishing Letters to the Journal (transcript)

Today’s post is on publishing letters to the Journal for determining legislative intent.

https://soundcloud.com/capimpactca/publishing-letters-to-the-journal

Sometimes in order to explain the intent behind a specific piece of legislation, one or both houses of the Legislature will utilize a process by which a legislator publishes a letter stating his or her intent to explain the piece of legislation. For Assembly Members, this is published in the Assembly Daily Journal, and for Senators this is published in the Senate Daily Journal.

Generally this letter from the legislator is used to explain perhaps an ambiguity in the bill, or explain the purpose of a particular change in the law or for some other reason. Again, in both the State Assembly and the State Senate such a letter to the Journal is a rather formal process. For example, the letter must be on the legislator’s letterhead and signed by that particular legislator.

The general custom and practice of the two houses of California’s Legislature is to have the respective leadership staff – meaning both the majority Democrat and minority Republican parties – review the contents of that letter from the legislator and determine whether or not either party has any objections to the contents found in the letter. Now, the consultants to the majority and minority parties may request revisions to that letter to the Journal, otherwise they’ll give their consent.

Now, if approval is not received by both sides of the aisle – and this is a rare occurrence – then the legislator can request that the letter be printed in the respective Daily Journal with a majority vote.

The general practice is that the Assembly letters are authored by the individual Assembly Member and they’re addressed to the Chief Clerk of the Assembly. Senate letters are written by the individual Senator, of course on his or her letterhead, and are addressed to the Secretary of the Senate.

Joe Mathews, who spoke at our Belote Lecture on Journalism in the Era of Fake News in January, does an annual “California Office Pool” on Fox & Hounds. He gives the background on it here, where you can also find the questions and his picks for what is now the 10th Fox & Hounds California Office Pool.

Joe says to “clip n’ save (or bookmark and save)” you picks, but I think it would be more fun to post my predictions here. That way if I get all of them right, no one can accuse me of changing my answers. I won’t repost Joe’s questions, you can go to his post on Fox & Hounds to see those, just my answers to them.  Feel free to leave your picks in the comments section below.

  1. 1 trip to California
  2. Donald Trump will still be President
  3. Gavin Newsom’s ambitious but rocky governorship
  4. Kamala Harris; B. Eric Garcetti; C. Tom Steyer; D. Eric Swalwell; and G. Michael Avenatti
  5. Huge new investment in early childhood education
  6. True, PG&E will file for bankruptcy in 2019.
  7. False, Uber will remain private.
  8. True, Apple will still be the biggest company to call California home
  9. Senator Kamala Harris will be in the top three in the Iowa polls and considered a major contender
  10. A Star is Born will win Best Picture (this is pure guesswork, I have a 1 ½ year child at home and have not gone out to see a movie since Lady Bird)
  11. 2-3
  12. status quo with high-speed rail
  13. Still stuck in court
  14. The L.A. Rams will win the Super Bowl (and Aaron Donald will win the MVP)
  15. False
  16. 2-9 lawsuits

 

Rules of Statutory Construction (transcript)

Today’s post is on rules of statutory construction primarily for the non-lawyer.

https://soundcloud.com/capimpactca/rules-of-statutory-construction

For those working in and around the California State Capitol, it’s important to understand general rules of statutory construction whether you’re a lawyer or a non-lawyer.

The general rule of statutory construction is to effectuate the intent of the Legislature, which basically requires the courts to give the statutory language its usual and ordinary meaning.

The fundamental rule of statutory construction is known as the plain language rule. Basically, this rule provides that when the meaning of a statute is clear and unambiguous, there’s usually no need for a court to apply any of those rules of statutory construction because the plain meaning of the statute can be ascertained without resorting to what we call the use of extrinsic aids to help in understanding the language.

Under this rule, if the statute is clear then the courts presume the Legislature meant what they wrote in the statute and the courts give effect to the plain meaning of that statute.

In order to resort to the general rules of statutory construction, a court must determine that there’s ambiguity in the statutory language and as a result it’s unclear what was intended by the Legislature in enacting the particular statute. The courts have determined that a party demonstrates statutory ambiguity by providing an alternative meaning to the statutory language and, as a result, the statutory language can be given more than one interpretation, then a court generally should consider extrinsic aids to determine the purpose of the statute and the intent of the Legislature.

Among the extrinsic aids are the legislative history of the statute, the public policy surrounding its enactment, the statutory scheme in which the language is found, and other related issues. In this regard, the language of a statute should be construed in light of the rest of the statutory scheme in which the particular statute is found. The goal of the court is to harmonize the parts of the statute by considering the context of the statutory framework in which this particular statute is found.

 

Court Cases Related to California’s Legislative Process (transcript)

Today’s post is an overview of specified court cases related to California’s legislative process.

https://soundcloud.com/capimpactca/court-cases-related-to-californias-legislative-process/s-T7BAt

As you can imagine, there are a number California Appellate Court decisions that related to the legislative process. These cases deal with a number of separate and distinct issues. While I don’t cover all of them, there are some major cases that capitol observers and insiders should be aware of.

The first one is Kaufman & Broad Communities v. Performance Plastering which was a California in Appellate Court decision 2005. The 3rd District Court of Appeal clarified that a determination of the existence of any ambiguity occurs not at the time of a motion for judicial notice but by the panel of judges that hear the appeal. The case has been cited more than 80 times by other appellate courts in California for what documents may be utilized to ascertain legislative intent in interpreting statutes.

Another case you should aware of is Yamaha – Yamaha Corporation of America v. the State Board of Equalization. This case was decided by the California Supreme Court in 1998. The decision says that in general the deference afforded to an agency’s interpretation of a statute by the agency that is charged with enforcing and interpreting that statute will vary based on a legally informed and common sense assessment of the statute’s context.

The next case of interest is Association for Retarded Citizens v. Department of Developmental Services. It was decided in 1985 by the California Supreme Court. The lawsuit alleged that certain spending decisions issued by the Director of the department were void. The Court entered an order granting a preliminary injunction at the lower level and said administrative action that is not authorized by or is inconsistent with acts of the Legislature is void.

This is just a sampling of the cases I go over in today’s podcast.

The California Legislature’s Organizing Session (transcript)

With this year being an even numbered year, the California Legislature’s organizing session will take place next Monday, December 3. Today’s post and podcast is an overview of California’s legislative organizing session.

https://soundcloud.com/capimpactca/the-california-legislatures-organizing-session/s-GJSms

As you may be aware, the California Legislature operates during two-year legislative sessions. At the commencement of the two-year session, the Legislature must organize itself.

In that regard there are several provisions related to organizing the Legislature. The first is found in the California Constitution, and the other provisions in the California Government Code. According to Article IV, Section 3a of the state constitution, “The Legislature shall convene in regular session at noon on the first Monday in December of each even numbered year, and each House shall immediately organize.”

This date falls every two years, roughly three weeks – perhaps four on occasion – after the statewide General Election has taken place. The two houses convene that first session at noon and it generally lasts about two hours.

At these organizing sessions, both the elected officials and their families and supporters are in attendance. They rarely engage in regular business other than introducing their first bills, which not all legislators do on that first day in session.

They’ll often visit with colleagues and former legislators, and attend and enjoy the pomp and circumstance of that organizing session. Thereafter, in the first week of January when they reconvene, that’s when legislators commence the serious work ahead that will last for the following two years.

Please be sure to listen to today’s podcast which covers the sections of California’s Government Code that dictate the rules for the California Legislature’s organizing session.

 

Methods of Floor Voting (transcript)

Today’s post is on the methods of voting on the floors of the California State Assembly and State Senate.

https://soundcloud.com/capimpactca/methods-of-floor-voting

In the two houses of the California Legislature, there are differences in how voting by legislators is conducted on the floors of the State Assembly and State Senate. The main difference is that the Assembly uses an electronic means of recording votes on the floor while Senators record their votes with a verbal response to an announced roll call. The other major difference is that Assembly Members may change their votes under specified circumstances. Generally, Senators cannot.

We’ll first look at the rules governing voting in the Assembly. Under Assembly Rule 105 the ayes and noes are recorded by the electrical voting system on the final passage of all bills. The names of the Legislators and how they cast their votes are then entered in the Assembly Daily Journal. And pursuant to Assembly Rule 106, when begun, voting may not be interrupted except that before the vote is announced any legislator may have the total pending vote flashed on the visible screen recorder and then any Legislator may move a Call of the Assembly after the completion of the roll before that final vote has been announced.

Now let’s look at the Senate. Pursuant to Senate Rule 44, whenever a roll call is required by the Constitution or the Rules or it is ordered by the Senate or demanded by at least three legislators, every legislator within the Senate without debate answers aye or no when his or her name is called. This Rule requires that the names of legislators be called alphabetically, and a Senator may not vote or change his or her vote after the announcement of the final vote by the presiding officer.

There is an exception for the two party leaders. Under the Senate Rule, on a legislative day when the President Pro Tem or the Minority Floor Leader is in attendance throughout a session but he or she in absence of any objection may instruct the Secretary of the Senate to add his or her vote to any previously announced vote that was taken while he or she was performing a responsibility of their respective office. Here, then, is the limitation: provided that the outcome of the vote is not changed by the addition of their vote. As explained by Senate Rule 44, the intent of this paragraph is to allow the President Pro Tem and the Minority Floor Leader to carry out their unique and special duties that their offices hold without losing the opportunity to vote on matters before the State Senate.

The deadliest fire in California history is still raging, and there still hundreds of people unaccounted for in this ongoing tragedy. In addition to earning that moniker, the Camp Fire is also “the most destructive in California history … 8,817 structures have been destroyed, including 7,600 homes.”

Like the fires in 2017, Pacific Gas & Electric (PG&E) appears to be the focus of the finger pointing. There’s already talk of lawsuits directed at PG&E – should they be the ones found responsible for the Camp Fire. California State Senator Jerry Hill is in the camp of those who believe PG&E is to blame, telling Politico, “The main culprit here is the spark, and what cause the spark. … Here, PG&E reported a break in their line where the Camp Fire started. It looks like there’s a causal relationship there.”

Politico is further reporting that Sen. Hill is “having a number of conversations” about introducing legislation in the 2019-2020 session that would create a statewide publicly owned utility company – a la SMUD here in Sacramento – as an alternative to investor owned utility like PG&E.

Sen. Hill is a well-known antagonist of PG&E, so his stance is not surprising. And it also needs repeating the Cal Fire is still investigating the cause of the Camp Fire, so it could very well mean that PG&E is not responsible this time.

However, if PG&E is found responsible for the Camp Fire, things could get very expensive for the utility very quickly. That’s because SB 901 – last year’s grand compromise on wildfire liability – allows utilities like PG&E to pass on the cost of lawsuits to ratepayers for 2017’s wildfires and for wildfires sparked after Jan. 1, 2019, leaving PG&E shareholders on the hook for the Camp Fire it be determined PG&E was liable. Should that be the case, I would not be surprised if PG&E sponsored legislation in 2019 in an attempt to shift costs of the Camp Fire from shareholders and on to ratepayers.

Looking ahead – between potential lawsuits, the cost of lobbying, and dealing with unbridled rage of Northern Californians who have lost their loved ones, their homes, and their possessions – it is increasingly looking like PG&E will have hell to pay in the near future.