Beverly Hills City Council
March 15, 2022

AGENDA REPORT
Meeting Date: March 15, 2022
Item Number:

To: Honorable Mayor and City Council
From: Cynthia Owens, Policy and Management Analyst
Subject: APPROVAL OF THE BEVERLY HILLS CITY COUNCIL LEGISLATIVE / LOBBY COMMITTEE RECOMMENDATIONS TO SUPPORT,

SUPORT IF AMENDED, SUPPORT SEEK AMENDMENTS, AND/OR

OPPOSE VARIOUS STATE LEGISLATIVE BILLS
Attachments: 1. Bill Summaries

2. Notice of Proposed Action – Insurance Commissioner Ricardo Lara - Mitigation in Rating Plans and Wildfire Risk Models

RECOMMENDATION
The Beverly Hills City Council Legislative/Lobby Committee (Councilmember Mirisch and Councilmember Gold) recommends the City Council:
 Support:
o Assembly Bill 1847 (Valladares) - Criminal Procedure: Victims’ Rights o Assembly Bill 2336 (Friedman) - Vehicles: Speed Safety System Pilot Program
o Assembly Bill 2386 (Bloom) - Planning and Zoning: Tenancy in Common Subject to an Exclusive Occupancy Agreement
o Senate Bill 1328 (McGuire) - Prohibited Investments and Contracts: Russia and Belarus
 Support if Amended:
o Assembly Bill 2264 (Bloom) – Pedestrian Crossing Signals o Assembly Bill 1690 (Rivas, Luz) - Tobacco Products: Single-Use Components  Support Seek Amendments:
o Senate Bill 1472 (Stern) - Vehicular Manslaughter: Speeding and Reckless Driving
 Oppose:
o Assembly Bill 1445 (Levine) - Planning and Zoning: Regional Housing Need Allocation: Climate Change Impacts
Additionally, the Beverly Hills City Council Legislative / Lobby Committee (“Committee”) provided direction for staff to draft a letter for the Mayor to sign in order to provide written F-7
Meeting Date: March 15, 2022
public comment on the mitigation in rating plans and wildfire risk models proposed by California Insurance Commissioner Ricardo Lara (Attachment 2).

INTRODUCTION
This item seeks City Council approval of Committee recommendations for positions of support, support if amended, and/or oppose various state legislative bills not addressed in the City's adopted 2022 Legislative Platform. Should the City Council concur with the recommendations of the Committee, then staff will draft letters for the Mayor to sign.

DISCUSSION
Each year, the City establishes a Legislative Platform (“Platform”) which embodies key legislative themes and priorities for the upcoming year. The Platform provides direction for our legislative advocates and City staff as they work to secure clear and strategic initiatives locally as well as in Sacramento, California and Washington, D.C. In February 2022, the City Council adopted the current Legislative Platform.

The objective of the Platform is to outline the City’s position on legislative matters and serve as the foundation for the City to support or oppose various local, state and federal legislation. The Platform seeks to not only secure critical resources for our City, but also outlines policy statements that allow City staff and the City’s legislative lobbyists to more effectively respond to and influence legislation at the local, state and federal level.

On March 8, 2022, the Committee met to discuss a variety of federal and state legislative bills. A summary of the legislation reviewed by the Committee is listed below.

Summary of Legislation
A brief summary of each bill discussed by the Committee on March 8, 2022, is listed below. More details may be found in Attachment 1 to this report.  Ballot Initiative – Constitutional Amendment – Limits State and Local Governments’ Ability to Raise Revenues for Government Services - 21- 0042A1. This ballot initiative proposes to limit the voters’ input on taxes; adopts new and stricter rules for raising taxes and fees; and makes it more difficult to hold state and local law violators accountable. Additionally, it would subject new fees and charges for a product or service provided by a local government to a new “actual cost” test.
 AB 682 - Currently, Density Bonus Law requires a city or county to provide a developer that proposes a housing development within the city or county with a density bonus and other incentives or concessions if the developer agrees to construct, among other options, specified percentages of units for moderateincome, lower income, or very low income households and meets other requirements. This bill would additionally require a density bonus be provided under these provisions to a developer who agrees to construct a housing development that is a cohousing building that meets specified requirements and will contain either 10 percent of the total square footage for lower income households or 5 percent of the total square footage for very low income households.
 AB 916 – Would prohibit a city or county legislative body from adopting or enforcing an ordinance requiring a public hearing as a condition of adding space for additional bedrooms or reconfiguring existing space to increase the bedroom Meeting Date: March 15, 2022
count within an existing house, condominium, apartment, or dwelling. The bill would include findings that ensuring adequate housing is a matter of statewide concern and is not a municipal affair, and that the provision applies to all cities, including charter cities. This bill contains other related provisions and other existing laws
 AB 1445 - Commencing January 1, 2025, requires a council of governments, a delegate sub-region, or the Department of Housing and Community Development, as applicable, additionally consider among these factors emergency evacuation route capacity, wildfire risk, sea level rise, and other impacts caused by climate change to the list of factors used to develop the methodology for regional housing needs.
 AB 1551 - Density Bonus Law requires a city or county to provide a developer that proposes a housing development within the city or county with a density bonus and other incentives or concessions if the developer agrees to construct specified percentages of units for lower income, very low income, or senior citizen housing, among other things, and meets other requirements. Previously existing law, until January 1, 2022, required a city, county, or city and county to grant a commercial developer a development bonus when an applicant for approval of a commercial development had entered into an agreement for partnered housing with an affordable housing developer to contribute affordable housing through a joint project or two separate projects encompassing affordable housing. This bill would reenact the above-described provisions regarding the granting of development bonuses to certain projects.
 AB 1690 – Would prohibit a person or entity from selling, giving, or furnishing to another person of any age in this state a cigarette utilizing a single-use filter made of any material, an attachable and single-use plastic device meant to facilitate manual manipulation or filtration of a tobacco product, or a single-use electronic cigarette or vaporizer device. The bill would prohibit that selling, giving, or furnishing, whether conducted directly or indirectly through an in-person transaction, or by means of any public or private method of shipment or delivery to an address in this state.
 AB 1847 - Existing law authorizes a court, under specified circumstances, to resentence a defendant convicted of a felony offense. Under existing law, resentencing can be granted without a hearing upon stipulation of the parties.

This bill would require a hearing if requested by a victim of the crime.  AB 2147 – Would prohibit a peace officer from stopping a pedestrian for specified traffic infractions unless a reasonably careful person would realize there is an immediate danger of collision with a moving vehicle or other device moving exclusively by human power.
 AB 2264 - Would require the Department of Transportation and local authorities to update all pedestrian control signals to give a pedestrian a head start between 3 to 7 seconds to enter an intersection with a corresponding circular green signal.  AB 2336 - Would authorize, until January 1, 2028, the Cities of Los Angeles, Oakland, San Jose, two yet to be determined cities, and the City and County of San Francisco, to establish the Speed Safety System Pilot Program. This bill would require participating local governments to engage in a public information campaign at least 30 days before implementation of the program, including information relating to when the systems would begin detecting violations and where the systems would be utilized. The bill would require the participating local Meeting Date: March 15, 2022
governments to issue warning notices rather than notices of violations for violations detected within the first 30 calendar days of the program.  AB 2386 - Would specify that regulation, by ordinance, of the design and improvement of any multifamily property held under a tenancy in common subject to an exclusive occupancy agreement is vested in the legislative body of the local agency.
 SB 1328 - Would prohibit the boards of specified state and local public retirement systems from investing public employee retirement funds in a company with business operations in Russia or Belarus or a company that supplies military equipment to Russia or Belarus.
 SB 1472 - Would create and define the new crimes of vehicular manslaughter while driving and speeding and vehicular manslaughter while driving in a reckless manner as the unlawful killing of a human being without malice aforethought, where the driving was either a violation of the prohibition against driving a vehicle at a speed greater than 100 miles per hour. By creating new crimes, the bill would impose a state-mandated local program
 Mitigation in Rating Plans and Wildfire Risk Models – Insurance Commissioner Ricardo Lara is holding a public hearing on April 13, 2022, to receive public comment on his proposed insurance regulations. The regulations would require insurance companies to factor consumers’ and businesses’ wildfire safety actions into their pricing of residential and commercial coverage. The new regulations also will provide consumers with transparency about their “wildfire risk score” that insurance companies assign to properties.

Legislative/Lobby Committee Recommendations
On March 8, 2022, the Committee provided direction on various state legislative bills and the proposal by Insurance Commissioner Lara. The Committee recommended the following positions for bills not addressed by the City’s Legislative Platform:
 Support:
o Assembly Bill 1847 (Valladares) - Criminal Procedure: Victims’ Rights o Assembly Bill 2336 (Friedman) - Vehicles: Speed Safety System Pilot Program
o Assembly Bill 2386 (Bloom) - Planning and Zoning: Tenancy in Common Subject to an Exclusive Occupancy Agreement
o Senate Bill 1328 (McGuire) - Prohibited Investments and Contracts: Russia and Belarus
o Proposal by Insurance Commissioner Lara to require insurance companies to factor consumers’ and businesses’ wildfire safety actions into their pricing of residential and commercial coverage
 Support if Amended:
o Assembly Bill 2264 (Bloom) – Pedestrian Crossing Signals  The Committee recommends this bill be amended to remove the mandate for all traffic signals
o Assembly Bill 1690 (Rivas, Luz) - Tobacco Products: Single-Use Components  The Committee recommends this bill amended to prohibit smoking statewide
Meeting Date: March 15, 2022
 Support Seek Amendments:
o Senate Bill 1472 (Stern) - Vehicular Manslaughter: Speeding and Reckless Driving
 The Committee recommends the City seek amendments to lower the threshold and increase the penalties for vehicular manslaughter related to speeding and reckless driving
 Oppose:
o Assembly Bill 1445 (Levine) - Planning and Zoning: Regional Housing Need Allocation: Climate Change Impacts
As the legislative matters contained in the bills listed above are not addressed in the City’s Platform, staff is seeking City Council concurrence on the recommendations of the Committee.

The City’s state lobbyist presented four other bills to the Committee, two of which the City Council had adopted official positions on. The table below shows each bill and the common statements from the Legislative Platform which apply to them:

Legislative Bill Committee
Recommendation
Legislative Platform Statement
Assembly Bill 682 (Bloom) -
Planning and Zoning:

Density Bonuses:

Cohousing
Oppose
o Oppose state legislation that
supersedes a jurisdiction’s
adopted zoning ordinances.
o Oppose preemption of the City
of Beverly Hills’ local authority
whether by state or federal
legislation or ballot propositions
Assembly Bill 916 (Salas) -
Zoning: Accessory Dwelling
Units: Bedroom Addition
Oppose
The Committee’s recommendation on these two bills was consistent with the City’s Platform; therefore, no concurrence of the Committee’s recommendations is required by the City Council. Letters have been signed by the Mayor and sent to the appropriate state elected officials and committees.

For the remaining two bills, the Committee recommended the following:
 Assembly Bill 1551 (Santiago) - Planning and Zoning: Development Bonuses:

Mixed-Use
o The Committee asked questions of the City’s state lobbyist which require more research. The answers to those questions will be brought back at a future meeting
 Assembly Bill 2147 (Ting) – Pedestrians
o The Committee recommended the City oppose unless amended to correct the definitions within the legislation related to jay walking. Staff will return to the Committee for consensus on the definitions at a future meeting.

Finally, the Committee recommended the City Council adopt a resolution opposing a ballot initiative which would place a state Constitutional Amendment on the November 2022 ballot, limiting the ability of the state and local governments’ ability to raise revenues for government services. This resolution will be on the City Council consent calendar for the formal meeting on April 12, 2022.

Meeting Date: March 15, 2022

FISCAL IMPACT
The fiscal impact to the City for each piece of legislation under consideration for a position by the City Council is listed in the table below.

Legislative Bill Anticipated Fiscal Impact
Assembly Bill 1445 (Levine) - Planning
and Zoning: Regional Housing Need
Allocation: Climate Change Impacts
Unknown
Assembly Bill 1690 (Rivas, Luz) -
Tobacco Products: Single-Use
Components
No anticipated fiscal impact
Assembly Bill 1847 (Valladares) -
Criminal Procedure: Victims’ Rights
No anticipated fiscal impact
Assembly Bill 2264 (Bloom) –
Pedestrian Crossing Signals
The City is currently installing this technology
at pedestrian crossing signals; however, as
written, it mandates the installation of leading
pedestrian intervals for all signalized
intersections, which will have an impact on the
City’s capital improvement budget.

Assembly Bill 2336 (Friedman) -
Vehicles: Speed Safety System Pilot
Program
Unknown. If the City is chosen as a pilot city,
then there would be a cost to install, monitor,
maintain, and replace speed safety systems
which may or may not be offset by the fines
assessed by the systems for drivers who are
speeding. There is no fiscal impact if the City
is not chosen as a pilot city.

Assembly Bill 2386 (Bloom) -
Planning and Zoning: Tenancy in
Common Subject to an Exclusive
Occupancy Agreement
Unknown.

Senate Bill 1328 (McGuire) - Prohibited
Investments and Contracts: Russia
and Belarus
CalPERS has begun to divest $725 million of
stock in Russia’s largest companies. The
impact to the CalPERS portfolio short term
and long term of this divestment is unknown ;
however, less than one percent of its $473.6
billion portfolio is in Russian-linked assets
Senate Bill 1472 (Stern) - Vehicular
Manslaughter: Speeding and Reckless
Driving
No anticipated fiscal impact.

Mitigation in Rating Plans and Wildfire
Risk – Letter to Commissioner Lara
Potential insurance savings to residents
located in wildfire prone areas should they
implement mitigation measures.

Gabriella Yap,
Deputy City Manager
Approved By
Attachment 1
Date: February 28, 2022
To: Cindy Owens, City of Beverly Hills
From: Andrew K. Antwih, Partner, Shaw Yoder Antwih Schmelzer & Lange Priscilla Quiroz, Legislative Advocate, Shaw Yoder Antwih Schmelzer & Lange Re: AB 1445 (Levine) Regional Housing Need Allocation: Climate Change Version
As amended in the State Assembly on January 3, 2022
Summary
Requires, beginning January 1, 2025, a council of governments (COG), its delegate subregion, or the Department of Housing and Community Development (HCD) additionally consider the impacts of climate change, including wildfire risk, sea level rise, emergency evacuation route capacity and other impacts in its methodology to determine the allocation of regional housing needs.

Background and Existing Law
Current law, known as the State Housing Element law, sets forth a process to determine each community’s fair share of housing through the regional housing needs allocation (RHNA) process, which is composed of three main stages:
(a) the Department of Finance and the HCD develop regional housing needs estimates. (b) COGs allocate housing within each region based on these estimates (where a COG does not exist, HCD makes the determinations); and
(c) cities and counties incorporate their allocations into their housing elements.

The RHNA process requires cities and counties to produce a housing element to help fulfill the state’s housing goals. These housing elements must be submitted to HCD for review and certification. In metropolitan areas, these housing elements are required every eight years. Each housing element must contain the following specific elements:
 An assessment of housing needs and an inventory of resources and constraints relevant to meeting those needs;
 A statement of the community’s goals, quantified objectives, and policies relative to the maintenance, preservation, improvement, and development of housing;  An implementation plan that identifies any programs or strategies to meet their goals and objectives, including their RHNA target.
2  An inventory of land suitable and available for residential development, including vacant sites and sites having realistic and demonstrated potential for redevelopment during the planning period; and
 Where the inventory of sites does not identify adequate sites to accommodate the need for groups of all household income levels, plans for rezoning of those sites by a specified deadline.

Current law lays out the process for distribution of projected regional housing need to cities and counties for areas outside of COGs. The distribution of regional housing need must consider several factors, including market demand for housing, assumed growth and distribution of housing within the county, employment and commuting patterns, suitable sites for development, area homelessness, local agreements for growth in incorporated cities, and other considerations at the request of the local jurisdictions.

Local jurisdictions must submit plans that include consideration of suitable housing sites or land suitable for urban development. The plans must include scenarios involving current zoning ordinances and alternate scenarios that involve increased residential development under zoning ordinances and land use restrictions. The determination of available land suitable for urban development may exclude lands where the Federal Emergency Management Agency (FEMA) or the Department of Water Resources has determined that the flood management infrastructure designed to protect that land is not adequate to avoid the risk of flooding.

According to the author, “Climate disasters and the impacts of climate change on our state have made more and more places risky to live. In 2020, California experienced another devastating and recordbreaking wildfire season; 4,257,863 acres burned, thirty-three lives lost and 10,488 structures damaged or destroyed. The August Complex fire burned more than one million acres, crossing seven counties – spanning an area larger than the state of Rhode Island – becoming California’s largest recorded wildfire. In addition to fires, severe drought and periods of record-breaking heat, science has shown that climate change will result in a gradual and permanent rise in global sea levels.

Assemblymember Levine states further that “AB 1445 requires a council of governments, a delegate subregion or HCD to, starting on January 1, 2025, additionally consider among other required factors, emergency evacuation route capacity, wildfire risk, seal level rise and other impacts of climate change. This bill will ensure local governments are considering the impending impacts of climate change and disasters on risk to residents when planning for housing in their communities.” The state plans for housing through the RHNA and housing element process, which occurs on an eight-year cycle (except for the state’s most rural areas, where it occurs every five years). Currently, the state is in a transitional period where jurisdictions are either wrapping up the fifth eight-year cycle or beginning their sixth cycle. In between cycles the Legislature frequently adjusts the statutory requirements to the RHNA process, influencing the number of units allocated as well as where those units are allocated across the state.

SB 375 (Steinberg) adopted in 2008 represents the land use component of the state’s wider strategy to address climate change. The law requires California’s MPOs (which are often also COGs) to create a Sustainable Communities Strategy (SCS) as a part of their federally mandated Regional Transportation Plan (RTP). The SCS demonstrates how the region will meet its GHG emissions reduction targets through land use, housing, and transportation strategies. SB 375 also aligned the RHNA cycle with the RTP and SCS planning cycle.
3 A recent working paper by the UC Berkeley Terner Center for Housing Innovation found that, after SB 375, RHNA targeted more housing development with high job proximity in most MPOs. In addition to aligning planning processes, SB 375 also provided limited CEQA exemptions designed to further infill development that is consistent with a regions SCS. More recent revisions to the RHNA process will increase the housing units that COGs must distribute to their jurisdictions in a manner that furthers the regions SCS, which should lead to more infill development in jobs rich areas.

In the period between the 5th and 6th revisions of the housing element, the Legislature modified the RHNA process and methodology to ensure that housing needs reflected not just current demand, but unmet demand as well. As such, throughout the state, many cities and counties must plan for more growth than before.

For example, in the 5th RHNA cycle the Southern California Association of Governments (SCAG) received a RHNA of 409,000 – 438,000. By contrast, in the 6th RHNA Cycle, SCAG received a RHNA of 1,341,827. The goal is for the state to have identified land sufficiently zoned to accommodate its current housing needs.

Status of Legislation
AB 1445 (Levine) was approved on the Assembly Floor on January 31, 2022. Fifty-seven members of the State Assembly voted Aye. Sixteen Assembly members voted No and three members of the Assembly Abstained or were absent.

Support
League of Women Voters of California
Sierra Club California
Opposition
None listed at this time.

March 1, 2022
To: Cindy Owens, City of Beverly Hills
From: Andrew K. Antwih, Partner, Shaw Yoder Antwih Schmelzer & Lange Priscilla Quiroz, Legislative Advocate, Shaw Yoder Antwih Schmelzer & Lange Re: AB 1690 (L. Rivas) Tobacco products: single-use components.

Introduction and Background
On January 24, Assemblymember Luz Rivas introduced AB 1690, the Smoking Waste Pollution Prevention Act, which would prohibit the sale of single-use vapes and tobacco filters found in cigarettes and cigars. According to the author, “in 1964, the Surgeon General declared cigarette filters useless in reducing harm to the average smoker. Currently, 98 percent of cigarette filters are made of non-biodegradable cellulose acetate, which are plastic fibers that can take a decade or more for the sun’s ultraviolet rays to break down into microplastics, which can be ingested. Additionally, vapes can contain heavy metals, battery acid, nicotine, and other harmful chemicals. Microplastics and hazardous chemicals accumulate in the food chain and affect whole ecosystems, including the health of soils used to grow our food.”
This bill is joint authored by Assemblymembers Mark Stone and Cottie Petrie-Norris and co-authored by Assemblymembers Phil Ting, Cristina Garcia, Rebecca Bauer-Kahan, Marc Berman, Tasha Boerner Horvath, Laura Friedman, Alex Lee, Adrin Nazarian, Bill Quirk, and Buffy Wicks, as well as Senators Ben Allen, Josh Becker, Monique Limón, Josh Newman, Anthony Portantino, and Scott Wiener.

Specifically, this bill would:
 Prohibit a person or entity from selling, giving, or furnishing to another person of any age in this state a cigarette utilizing a single-use filter made of any material, an attachable and single-use plastic device meant to facilitate manual manipulation or filtration of a tobacco product, or a single-use electronic cigarette or vaporizer device.  Authorizes a city attorney, county counsel, or district attorney to assess a $500 civil fine against each person determined to have violated those prohibitions in a proceeding conducted pursuant to the procedures of the enforcing agency, as specified.

Status of Legislation
AB 1690 (L. Rivas) was introduced in the Assembly on January 24, 2022. The bill has been referred to Assembly Health and Judiciary Committees. The hearing dates for these committee hearings are yet to be set.

Support
National Stewardship Action Council
Action on Smoking and Health (ASH)
Association of California Healthcare District
Breathe Southern California
2 Californians Against Waste
California Product Stewardship Council
Cigarette Butt Pollution Project
Families Advocating for Chemical and Toxics, Safety (FACTS) Heal the Bay
Northern California Recycling Association
Oceana
Ocean Conservancy
Plastic Oceans International
Plastic Pollution Coalition
Recology
Republic Services
Save Our Shores
Seventh Generation Advisors
Surfrider
The 5 Gyres Institute
The Center for Oceanic Awareness Research, and Education (COARE) Upstream
Wishtoyo Chumash Foundation
Zero Waste USA.

Opposition
None identified at this time.

March 1, 2022
To: Cindy Owens, City of Beverly Hills
From: Andrew K. Antwih, Partner, Shaw Yoder Antwih Schmelzer & Lange Priscilla Quiroz, Legislative Advocate, Shaw Yoder Antwih Schmelzer & Lange Re: AB 1847 (Valladares) Criminal procedure: victims’ rights.

Introduction and Background
Existing law authorizes a court, under specified circumstances, to resentence a defendant convicted of a felony offense. Under existing law, resentencing can be granted without a hearing upon stipulation of the parties. AB 1847, by Assemblymember Suzette Martinez Valladares, would require a hearing if requested by a victim of the crime.

Additionally, AB 1847 would limit the amount of notice that the Department of Corrections and Rehabilitation may require from any of these persons to no more than ten (10) days for in-person attendance or participation, and no more than 5 days for hearings held by videoconference. The bill would also, subject to specified conditions, prohibit the department from denying in-person attendance to these parties at any hearing in which the inmate or inmate’s counsel attends in person.

Status of Legislation
AB 1847 (Valladares) was introduced in the Assembly on February 8, 2022. The bill will be heard on March 15 in Assembly Public Safety Committee.

Support
None identified at this time.

Opposition
None identified at this time.

Date: February 28, 2022
To: Cindy Owens, City of Beverly Hills
From: Andrew K. Antwih, Partner, Shaw Yoder Antwih Schmelzer & Lange Priscilla Quiroz, Legislative Advocate, Shaw Yoder Antwih Schmelzer & Lange Re: AB 2264 (Bloom) Pedestrian Crossing Signals
Summary
Requires the Department of Transportation (Caltrans) and local authorities to update all pedestrian control signals to be timed to provide pedestrians with a three to seven-second head start to enter an intersection with a corresponding circular green signal in the same direction of travel.

The bill also specifies that, if the Commission on State Mandates determines that the bill contains costs mandated by the state, reimbursement for those costs shall be made pursuant to current law.

Background and Existing Law
Existing law allows a pedestrian who is facing a pedestrian control signal showing a “WALK” or a “Walking Person” symbol, to proceed across the roadway in the direction of the signal but requires the pedestrian to yield the right-of-way to vehicles lawfully within the intersection at the time the signal begins to flash.

Under existing law, a pedestrian control signal showing a “WALK” or approved “Walking Person” symbol means a pedestrian may proceed across the roadway in the direction of the signal. Under existing law, a pedestrian facing a flashing “DON’T WALK” or “WAIT” or approved “Upraised Hand” symbol with a “countdown” signal, as specified, means a pedestrian may start crossing the roadway in the direction of the signal but requires the pedestrian to finish crossing prior to the display of the steady “DON’T WALK” or “WAIT” or approved “Upraised Hand” symbol.

Caltrans is required to adopt rules and regulations prescribing uniform standards for traffic control devices in the state. Caltrans established the California Traffic Control Devices Committee (CTCDC) to fulfill this mandate. The CTCDC reviews rules and regulations and makes recommendations to the Caltrans director, who adopts and publishes them in the California Manual of Uniform Traffic Control Devices (MUTCD). The CTCDC has representation from Caltrans, the California Highway Patrol (CHP), and local governments, and consults with technical advisors.

In October 2021, the City of Beverly Hills joined key federal transportation agencies to celebrate National Pedestrian Safety Month. The City of Beverly Hills has initiated numerous projects aimed at improving the pedestrian safety, including:
 Installing additional “Leading Pedestrian Interval” (LPI) timing throughout City traffic lights which allow for pedestrians to get a four-second head start to begin crossing before drivers receive a green light, increasing visibility and prioritizing pedestrians in the crosswalk, like the provisions of AB 2264 (Bloom).
2  Designing pedestrian crossing enhancements with curb extensions and flashing beacons throughout the city (construction to begin in 2022).
 Implementing the “Complete Streets Plan” and Metro’s “First and Last Mile Plans” to improve pedestrian access and wayfinding to the future D (Purple) Line Stations.  Continuing the City’s “Neighborhood Slow Streets Program” which identifies neighborhoods throughout the city in which the entire street width can be utilized for walking, cycling and other modes of non-motorized transportation.  Adding additional bike parking corrals which free up sidewalk space for improved pedestrian travel (the city has already added five new on-street bike parking corrals on South Beverly Drive).

In 2022, the city will also participate in its very first CicLAvia in Beverly Hills which will open a segment of North Santa Monica Boulevard for walking, cycling and other modes of non-motorized transportation.

Status of Legislation
Assemblyman Bloom introduced AB 2264 on February 16, 2022. This measure will be eligible for its first hearing in an Assembly policy Committee on or after March 19, 2022. The bill has not been referred to a policy committee yet.

Support
None identified at this time.

Opposition
None identified at this time.

March 1, 2022
To: Cindy Owens, City of Beverly Hills
From: Andrew K. Antwih, Partner, Shaw Yoder Antwih Schmelzer & Lange Priscilla Quiroz, Legislative Advocate, Shaw Yoder Antwih Schmelzer & Lange Re: AB 2336 (Friedman and Ting) Vehicles: Speed Safety System Pilot Program Introduction and Background
On February 16, Assemblymembers Laura Friedman and Phil Ting introduced AB 2336, the Speed Safety Cameras Pilot Program, which creates a five-year pilot program authorizing the cities of Los Angeles, San Francisco, San Jose, Oakland and two unspecified cities to use speed cameras to enforce speed limits on their highest injury streets, in school zones, and on streets with a history of speed contests and motor vehicle exhibitions of speed.

Specifically, this bill:
1) Authorizes, until January 1, 2028, the Cities of Los Angeles, Oakland, San Jose, two unspecified cities, and the City and County of San Francisco, to establish the Speed Safety System Pilot Program.
2) Require the participating cities or city and county to adopt a Speed Safety System Use Policy and a Speed Safety System Impact Report before implementing the program, and would require the city or city and county to engage in a public information campaign at least 30 days before implementation of the program, including information relating to when the systems would begin detecting violations and where the systems would be utilized. 3) Require the participating cities or city and county to issue warning notices rather than notices of violations for violations detected within the first 30 calendar days of the program. 4) The bill would designate all photographic, video, or other visual or administrative records made by a system as confidential and would only authorize public agencies to use and allow access to these records for specified purposes.
5) Specifies that any violation of a speed law recorded by a speed safety system authorized by these provisions would be subject only to the provided civil penalties. 6) Sets fines of $50, $100, $200 or $500 for breaking speed limit by 11 mph, 16 mph, 26 mph, or going over 100 mph. Requires cities to reduce fines for those under the poverty line by 80% or offer community service, and requires cities to reduce fines by 50% for individuals 200% above the poverty level.
7) Requires revenues generated by the tickets to spent on administering the program and pay for traffic-calming measures.

Status of Legislation
AB 2336 (Friedman and Ting) was introduced in the Assembly on February 16, 2022. The bill has not been referred to a policy committee yet.
2 Support
None identified at this time.

Opposition
None identified at this time.

February 28, 2022
To: Cindy Owens, City of Beverly Hills
From: Andrew K. Antwih, Partner, Shaw Yoder Antwih Schmelzer & Lange Priscilla Quiroz, Legislative Advocate, Shaw Yoder Antwih Schmelzer & Lange Re: AB 2386 (Bloom) Planning and Zoning Tenancy in Common: Exclusive Occupancy Summary
Specifies that the legislative body of a local agency shall be authorized to adopt ordinances to regulate the design and improvement of any multifamily property held under a tenancy in common subject to an exclusive occupancy agreement, as defined.

Establishes a definition for the term “tenancy in common subject to an exclusive occupancy agreement,” as a development in which an undivided interest in land is coupled with the right of exclusive occupancy of any portion located thereon.

Background and Existing Law
Existing law grants cities and counties the power to make and enforce within their limits all local, police, sanitary, and other ordinances and regulations not in conflict with general laws. Cities and counties are authorized to adopt ordinances that regulate the use of buildings, structures, and land use between businesses, residences, open space, agriculture, recreation, natural resources, and other purposes.

Under current law, local jurisdictions are authorized to regulate the location, height, bulk, number of stories, and size of buildings and structures and the size and use of lots, yards, courts, and other open spaces. Local ordinances also govern the percentage of a lot that may be occupied by a building or structure as well as the intensity of land use. Further, local jurisdictions establish building setback lines and set requirements for off-street parking and loading. Local ordinances also govern the creation of civic districts, public parks, public buildings, or public grounds and other similar matters.

Using this police power, many cities and counties have adopted ordinances, commonly called "inclusionary zoning" or "inclusionary housing" ordinances, which require developers to ensure that a certain percentage of housing units in a new development be affordable to lower-income households. These ordinances vary widely with respect to the percentage or depth of affordability required, and the options through which a developer may choose to comply. Most, if not all, of such ordinances apply to both rental and ownership housing.

A tenancy in common is a form of co-ownership in which an interest is owned by several persons, not in joint ownership or partnership. A tenancy in common is considered the default by courts, rather than joint tenancy. Tenants in common are permitted to own varying shares of the property, but all co-owners have an equal right to enjoy the entire property. When a co-owner dies, his or her interest may be transferred through probate or other proceeding as the right of survivorship does not apply to a tenancy in common. Additionally, tenants in common may transfer their interest at any time 2 without severing the tenancy in common or even affecting the ownership interests of the other coowners.

Status of Legislation
AB 2386 (Bloom) was introduced in the Assembly on February 14, 2022 and may be heard in an Assembly policy committee on or after March 20, 2022. The bill is still awaiting referral to a policy committee.

Support
None identified at this time.

Opposition
None identified at this time.

March 1, 2022
To: Cindy Owens, City of Beverly Hills
From: Andrew K. Antwih, Partner, Shaw Yoder Antwih Schmelzer & Lange Priscilla Quiroz, Legislative Advocate, Shaw Yoder Antwih Schmelzer & Lange Re: SB 1472 (Stern) Vehicular manslaughter: speeding and reckless driving.

Introduction and Background
On February 18, Senator Henry Stern introduced SB 1472, which would create new crimes of vehicular manslaughter when an individual is speeding and driving recklessly. According to the author, the United States Department of Transportation’s National Highway Traffic Safety Administration issued findings that showed while Americans drove less in 2020 due to the pandemic, an estimated 39,000 people died in motor vehicle traffic crashes, which is the largest number of fatalities since 2007, and represents an increase of about 7.2 percent compared to the 36,096 fatalities reported in 2019. Additionally, in 2021, traffic collisions killed 294 individuals in the City of Los Angeles, a 24-percent increase from 2020 Specifically, this bill:
1) Creates and defines the new crimes of vehicular manslaughter while driving and speeding and vehicular manslaughter while driving in a reckless manner as the unlawful killing of a human being without malice aforethought, where the driving was either a violation of the prohibition against driving a vehicle at a speed greater than 100 miles per hour that occurred within a 3-year period of one or more prior convictions of that crime, or a violation of driving in a reckless manner that occurred within a 3-year period of 2 or more prior convictions of that crime, respectively, and the killing was either the proximate result of the commission of an unlawful act, not amounting to a felony, but without gross negligence, or the proximate result of the commission of a lawful act that might produce death, in an unlawful manner, but without gross negligence. 2) Prescribes penalties for a violation of those crimes to be imprisonment in the county jail for not more than one year or by imprisonment in the state prison for 16 months, or 2 or 4 years and a fine of up to $10,000.
3) Specifies that if probation is granted to a person convicted of the crime, that person shall be punished by imprisonment in the county jail for not less than 60 days, a probationary term of not less than 24 months, and a fine of not less than $500 nor more than $1,000, and would require the court to also suspend the privilege of the person to operate a motor vehicle for a period of 6 months.
4) Requires the court to provide an advisement to a person upon their conviction of driving a vehicle upon a highway at a speed greater than 100 miles per hour or in a reckless manner that they could be charged with vehicular manslaughter.

Existing Law
Prohibits a person from driving a vehicle upon a highway at a speed greater than 100 miles per hour and provides that upon a subsequent conviction of that offense within a certain number of 2 years, the person shall be punished by a fine and the Department of Motor Vehicles shall suspend their privilege to operate a vehicle. Under existing law, a person who drives a vehicle upon a highway or in an off-street parking facility in willful or wanton disregard for the safety of persons or property is guilty of reckless driving, which is punishable by imprisonment in the county jail or by the payment of a fine, or both imprisonment and a fine.

Additionally, existing law defines the crime of vehicular manslaughter as the unlawful killing of a human being without malice while driving a vehicle under specified circumstances, including in the commission of an unlawful act, not amounting to felony, with or without gross negligence, and provides that vehicular manslaughter is punishable as a misdemeanor or a felony.

Status of Legislation
SB 1472 (Stern) was introduced in the Senate on February 18, 2022. The bill has not been referred to a policy committee yet.

Support
None identified at this time.

Opposition
None identified at this time.

AMENDED IN SENATE MARCH 3, 2022
SENATE BILL No. 1328
Introduced by Senator Senators McGuire and Cortese
(Principal coauthor: Senator Dodd)
(Principal coauthors: Assembly Members Gabriel and Cristina Garcia) (Coauthors: Senators Becker, Borgeas, Caballero, Eggman, Hertzberg, Hurtado, Leyva, Min, Newman, Ochoa Bogh, Portantino, Rubio, Stern, Umberg, and Wiener)
(Coauthors: Assembly Members Aguiar-Curry, Arambula, Bennett, Berman, Bloom, Boerner Horvath, Bryan, Carrillo, Cunningham, Megan Dahle, Daly, Davies, Gallagher, Jones-Sawyer, Lackey, Lee, Levine, Low, Maienschein, Mayes, McCarty, Mullin, Muratsuchi, Nguyen, Patterson, Petrie-Norris, Quirk-Silva, Luz Rivas, Blanca Rubio, Santiago, Ting, Valladares, Voepel, Waldron, Akilah Weber, Wicks, and Wood)
February 18, 2022
An act to add and repeal Sections 7513.73 and 12414 of, and to add and repeal Chapter 8 (commencing with Section 16649.100) of Part 2 of Division 4 of Title 2 of, the Government Code, and to add and repeal Article 14 (commencing with Section 10495) of Chapter 2 of Part 2 of Division 2 of the Public Contract Code, relating to agriculture. government, and declaring the urgency thereof, to take effect immediately.
legislative counsel’s digest
SB 1328, as amended, McGuire. Agriculture. Prohibited investments and contracts: Russia and Belarus.
(1)  The California Constitution grants the retirement board of a public employee retirement system plenary authority and fiduciary

98 responsibility for investment of moneys and administration of the retirement fund and system. These provisions qualify this grant of powers by reserving to the Legislature the authority to prohibit investments if it is in the public interest and the prohibition satisfies standards of fiduciary care and loyalty required of a retirement board.

Existing law prohibits the boards of administration of the Public Employees’ Retirement System and the State Teachers’ Retirement System from making investments in certain countries and in thermal coal companies, as specified, subject to the boards’ plenary authority and fiduciary responsibility for investment of moneys and administration of the systems.

This bill would prohibit the boards of specified state and local public retirement systems from investing public employee retirement funds in a company with business operations in Russia or Belarus or a company that supplies military equipment to Russia or Belarus, as defined. The bill would require those boards to contract with a research firm or firms to determine those companies with business operations in those countries, and to conduct their own review of companies with business operations in those countries, as specified. The bill would require the boards to determine whether a company has business operations in Russia or Belarus or supplies military equipment to Russia or Belarus.

The bill, except as specified, would require the board to notify companies determined to have business operations with those countries, and request the company to take substantial action, as defined and specified. If the company fails to complete substantial action, the bill would prohibit the board from making additional or new investments in that company, and to liquidate the investments of the board in that company, as specified. The bill would also require the board, on or before January 1, 2023, and every year thereafter, to file a specified report with the Legislature. The bill would repeal these provisions on specified triggering events. By requiring the boards of local public retirement systems to take specified actions, this bill would impose a state-mandated local program.
(2)  Existing law specifies the duties of the Controller, which include superintending the fiscal concerns of the state and auditing all claims against the state.

This bill, except as specified, would prohibit the Controller from making additional or new investments or renewing existing investments of state moneys in any investment vehicle in the government of Russia that meets certain conditions, or in or from a Russian financial 98 SB 1328 — 2 —
institution currently under sanctions imposed by the United States, as defined and specified. The bill would repeal these provisions on specified triggering events.
(3)  Existing law specifies how money received into the treasury must be credited and how those state funds are to be used. Existing law prohibits state funds from being used to reimburse a state contractor for costs incurred to assist, promote, or deter union organizing, as defined and specified. Existing law also prohibits state trust moneys from being used to make additional or new investments or to renew existing investments in business firms that engage in discriminatory practices in further of or in compliance with the Arab League’s economic boycott of Israel, as defined and specified.

This bill, except as specified, would prohibit a state agency, as defined, from making additional or new investments or renewing existing investments of state moneys in any investment vehicle in the government of Russia that meets certain conditions, or in or from Russian financial institutions currently under sanctions imposed by the United States, and would require a state agency to liquidate those investments. The bill would also require a state agency to file a specified report with the Legislature and the Governor. The bill would urge companies operating in California and the Regents of the University of California to divest and separate themselves from the government of Russia, Russian financial institutions, and Russian businesses, and would request companies doing business in California to report their investments in and contracts with the government of Russia, Russian financial institutions, and Russian businesses, as specified. The bill would repeal these provisions on specified triggering events.
(4)  Existing law authorizes state agencies to contract for goods, information technology, or services with certain suppliers, as specified.

Existing law also makes companies in Sudan involved in certain activities ineligible to bid or submit a proposal for, and forbids them from bidding on or submitting a proposal for, a contract with a state agency for goods or services, as specified.

This bill, except as specified, would make a company that conducts business with the government of Russia ineligible to bid or submit a proposal for, and would forbid that company from bidding on or submitting a proposal for, a contract with a state agency for goods or services, as defined and specified. The bill would require a state agency to require a company that submits a bid or proposal with respect to a contract for goods or services to certify that the company is not a 98 — 3 — SB 1328
scrutinized company, as prescribed. The bill would, among other things, make a company that submits a false certification under these provisions liable for a civil penalty, and would require the Department of General Services to report the company to the Attorney General, who would be required to determine whether to bring a civil action against the company, as specified. The bill would repeal these provisions on specified triggering events.
(5)  The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state.

Statutory provisions establish procedures for making that reimbursement.

This bill would provide that, if the Commission on State Mandates determines that the bill contains costs mandated by the state, reimbursement for those costs shall be made pursuant to the statutory provisions noted above.
(6)  This bill would declare that it is to take effect immediately as an urgency statute.

Existing law specifies the state’s general powers and authority over agriculture and establishes, among other things, the state and local agencies and commissions with authority or responsibilities over agriculture, the various projects, programs, requirements, and standards regarding livestock, poultry, sheep, swine, and other farm animals, dogs and cats, fruits, nuts, vegetables, cotton, industrial hemp, and other crops, milk and milk products, pest control operations, food labeling, distribution and use of agricultural chemicals, the content, handling, and sale of commercial feeds, bee management and honey production, the marketing, processing, storing, and dealing of agricultural products, and the various sources of funding or fee structures supporting these efforts.

This bill would state the intent of the Legislature to enact subsequent legislation relating to agriculture.

Vote: majority 2⁄3. Appropriation: no. Fiscal committee: no yes.

State-mandated local program: no yes.

The people of the State of California do enact as follows:
line 1 SECTION 1. Section 7513.73 is added to the Government Code, line 2 to read:
line 3 7513.73. (a)  The Legislature finds and declares all of the line 4 following:
98 SB 1328 — 4 —
line 1 (1)  On February 24, 2022, the President of Russia, Vladimir line 2 Vladimirovich Putin, initiated an unprovoked war against the line 3 sovereign and independent nation of Ukraine in violation of line 4 international law.
line 5 (2)  At his direction, Russian military forces have inflicted death line 6 and destruction on the territory of Ukraine, killing its men, women, line 7 and children in their homes, their places of work, their places of line 8 worship, and anywhere they seek shelter.
line 9 (3)  Through his irrational actions President Putin has line 10 additionally caused hundreds of thousands of Ukrainians and line 11 nationals from all over the world to flee Ukraine and seek refuge line 12 in neighboring countries, disrupting the safety, livelihood, and line 13 economic activity of millions of innocent people. line 14 (4)  President Putin and members of his clique of oligarchs line 15 benefit enormously from economic activity with western economies, line 16 including with trade and economic investment from California, line 17 which facilitates Russian military and political aggression against line 18 Ukraine and against the world’s free and democratic nations. line 19 (5)  The government of Belarus facilitated Russia’s attack on line 20 Ukraine by allowing Russian military units to launch an attack line 21 from Belarus against Ukraine’s capital Kyiv and by preparing to line 22 join in the military attack against Ukraine.
line 23 (6)  The President of Ukraine, Volodymyr Oleksandrovych line 24 Zelenskyy, and the Ukrainian people have demonstrated that line 25 courage and sacrifice in the face of overwhelming aggression can line 26 unite the world against that aggression and stop it in its tracks. line 27 (7)  The purpose of California’s public pension funds is to line 28 provide a secure retirement to the people who have dedicated their line 29 careers and their lives to serving the people of California. That line 30 security, and thus the funds’ purpose, is threatened when an line 31 authoritarian government can, with impunity, eliminate another line 32 sovereign nation and make extreme threats to the international line 33 political and economic order. The founders of our pension systems line 34 understood this as they witnessed two world wars within their line 35 lifetimes.
line 36 (8)  In order to defend the democratic values of the people of line 37 California and ensure their security and the security of the state’s line 38 public pension systems, it is necessary to cut all economic line 39 investment in the aggressor countries and stand with President 98 — 5 — SB 1328
line 1 Zelenskyy, the people of Ukraine, and all people who support line 2 liberal democracy, peace, and freedom.
line 3 (b)  As used in this section, the following definitions apply:
line 4 (1)  “Active business operations” means a company engaged in line 5 business operations that provide revenue to the government of line 6 Russia or the government of Belarus.
line 7 (2)  “Aggressor countries” means Russia and Belarus. line 8 (3)  “Belarus” means the Republic of Belarus.
line 9 (4)  “Board” means the board of any public retirement system line 10 subject to Section 7522.02.
line 11 (5)  “Business operations” means maintaining, selling, or leasing line 12 equipment, facilities, personnel, or any other apparatus of business line 13 or commerce in the aggressor countries, including the ownership line 14 or possession of real or personal property located in Russia or line 15 Belarus.
line 16 (6)  “Company” means a sole proprietorship, organization, line 17 association, corporation, partnership, venture, or other entity, its line 18 subsidiary or affiliate that exists for profitmaking purposes, or to line 19 secure economic advantage. “Company” also means a company line 20 owned or controlled, directly or indirectly, by the government of line 21 Russia or Belarus, or by a sanctioned person.
line 22 (7)  “Government of Belarus” means the government of Belarus line 23 or its instrumentalities.
line 24 (8)  “Government of Russia” means the government of Russia line 25 or its instrumentalities.
line 26 (9)  “Invest” or “investment” means the purchase, ownership, line 27 or control of stock of a company, association, or corporation, line 28 bonds issued by the government or a political subdivision of Russia line 29 or by the government or a political subdivision of Belarus, line 30 corporate bonds or other debt instruments issued by a company, line 31 or the commitment of funds or other assets to a company, including line 32 a loan or extension of credit to that company.
line 33 (10)  “Public employee retirement funds” means any funds line 34 controlled by a retirement board subject to Section 7522.02. line 35 (11)  “Research firm” means a reputable, neutral third-party line 36 research firm.
line 37 (12)  “Russia” means the Russian Federation.
line 38 (13)  “Sanctioned person” means any individual or entity subject line 39 to sanctions imposed by the United States government arising out 98 SB 1328 — 6 —
line 1 of Russia’s invasion of Ukraine as initiated on or after February line 2 24, 2022.
line 3 (14)  “Substantial action” means a boycott of the aggressor line 4 countries, curtailing business in those countries until that time line 5 described in subdivision (n), selling company assets, equipment, line 6 or real and personal property located in the aggressor countries, line 7 or undertaking significant humanitarian efforts in Ukraine. line 8 (c)  The board shall not invest public employee retirement funds line 9 in a company with business operations in the aggressor countries line 10 that meets any of the following criteria:
line 11 (1)  The company is engaged in active business operations in line 12 Russia or Belarus.
line 13 (2)  Either of the following apply:
line 14 (A)  The company is engaged in oil-related activities or energy line 15 or power-related operations, or contracts with another company line 16 with business operations in the oil, energy, and power sectors of line 17 Russia or Belarus, and the company failed to take substantial line 18 action related to the aggressor countries’ invasion of Ukraine. line 19 (B)  The company has demonstrated complicity in the Russian line 20 invasion of Ukraine.
line 21 (d)  Notwithstanding subdivision (c), the board shall not invest line 22 public employee retirement funds in a company that supplies line 23 military equipment to Russia or to Belarus.
line 24 (e)  (1)  The board shall contract, without regard to the line 25 provisions regarding competitive bidding, with a research firm or line 26 firms to determine those companies that have business operations line 27 in the aggressor countries. Those research firms shall obtain, in line 28 the aggregate, data on a majority of companies with business line 29 operations in the aggressor countries. Within one month of this line 30 section being chaptered, those research firms shall report any line 31 findings to the board and those research firms shall submit further line 32 findings to the board if there is a change of circumstances in line 33 Ukraine.
line 34 (2)  In addition to the reports described in paragraph (1), the line 35 board shall take all of the following actions no later than one line 36 month after this section is chaptered:
line 37 (A)  Review publicly available information regarding companies line 38 with business operations in the aggressor countries. line 39 (B)  Contact other institutional investors that invest in companies line 40 with business operations in the aggressor countries. 98 — 7 — SB 1328
line 1 (C)  Send written notice to a company with business operations line 2 in the aggressor countries that the company may be subject to this line 3 section.
line 4 (f)  (1)  The board shall determine, by the next applicable board line 5 meeting and based on the information and reports described in line 6 subdivision (e), if a company meets the criteria described in line 7 subdivision (c) or (d). If the board plans to invest or has line 8 investments in a company that meets the criteria described in line 9 subdivision (c) or (d), that planned or existing investment shall be line 10 subject to subdivisions (h) and (i).
line 11 (2)  Any investment of the board in a company that does not meet line 12 the criteria described in subdivision (c) or (d) or does not have line 13 active business operations in Russia or Belarus is not subject to line 14 subdivision (i), provided that the company does not subsequently line 15 meet the criteria described in subdivision (c) or (d) or engage in line 16 active business operations. The board shall identify the reasons line 17 why that company does not satisfy the criteria described in line 18 subdivision (c) or (d) or does not engage in active business line 19 operations in the report to the Legislature described in subdivision line 20 (j).
line 21 (g)  (1)  Notwithstanding subdivision (f), if the board’s investment line 22 in a company described in subdivision (c) or (d) is limited to line 23 investment via an externally and actively managed commingled line 24 fund, the board shall contact that fund manager in writing and line 25 request that the fund manager remove that company from the fund line 26 as described in subdivision (i). Within two months after this section line 27 is chaptered, if the fund or account manager creates a fund or line 28 account devoid of companies described in subdivision (c) or (d), line 29 the transfer of board investments from the prior fund or account line 30 to the fund or account devoid of companies with business line 31 operations in Russia or Belarus shall be deemed to satisfy the line 32 provisions set forth in subdivision (i).
line 33 (2)  If the board’s investment in a company described in line 34 subdivision (c) or (d) is limited to an alternative fund or account, line 35 the alternative fund or account manager creates an actively line 36 managed commingled fund that excludes companies described in line 37 subdivision (c) or (d), and the new fund or account is deemed to line 38 be financially equivalent to the existing fund or account, the line 39 transfer of board investments from the existing fund or account to line 40 the new fund or account shall be deemed to satisfy the provisions 98 SB 1328 — 8 —
line 1 set forth in subdivision (i). If the board determines that the new line 2 fund or account is not financially equivalent to the existing fund, line 3 the board shall include the reasons for that determination in the line 4 report described in subdivision (j).
line 5 (3)  The board shall make a good faith effort to identify any line 6 private equity investments that involve companies described in line 7 subdivision (c) or (d) or are linked to the government of Russia or line 8 Belarus or any sanctioned person. If the board determines that a line 9 private equity investment clearly involves a company described in line 10 subdivision (c) or (d) or is linked to the government of Russia, the line 11 government of Belarus, or a sanctioned person, the board shall line 12 consider, at its discretion, if those private equity investments shall line 13 be subject to subdivision (i). If the board determines that a private line 14 equity investment clearly involves a company described in line 15 subdivision (c) or (d) or is linked to the government of Russia or line 16 Belarus or a sanctioned person and the board does not take action line 17 as described in subdivision (i), the board shall include the reasons line 18 for its decision in the report described in subdivision (j). line 19 (h)  Except as described in subdivision (g) or paragraph (2) of line 20 subdivision (f), the board shall notify, in the board’s capacity of line 21 shareholder or investor, any company described in paragraph (1) line 22 of subdivision (f) that the company is subject to subdivision (i) and line 23 authorize that company to respond to the information and reports line 24 described in subdivision (e). The board shall request that the line 25 company take substantial action no later than 30 days from the line 26 date the board notified the company under this subdivision. If the line 27 board determines that a company has taken substantial action or line 28 has made sufficient progress towards substantial action before line 29 the expiration of that 30-day period, that company shall not be line 30 subject to subdivision (i). The board shall continue to monitor and line 31 review, at intervals not to exceed 30 days, the progress of the line 32 company until that company has taken substantial action. A line 33 company that fails to complete substantial action or continue to line 34 make sufficient progress towards substantial action by the next line 35 time interval shall be subject to subdivision (i). line 36 (i)  If a company described in paragraph (1) of subdivision (f) line 37 fails to complete substantial action by the time described in line 38 subdivision (h), the board shall take the following actions:
line 39 (1)  The board shall not make additional or new investments or line 40 renew existing investments in that company.
98 — 9 — SB 1328
line 1 (2)  The board shall liquidate the investments of the board in line 2 that company no later than six months after this subdivision applies line 3 to that company. The board shall liquidate those investments in a line 4 manner to address the need for companies to take substantial line 5 action in the aggressor countries and consistent with the board’s line 6 fiduciary responsibilities as described in Section 17 of Article XVI line 7 of the California Constitution.
line 8 (j)  On or before January 1, 2023, and every year thereafter, the line 9 board shall file a report with the Legislature. The report shall line 10 describe all of the following:
line 11 (1)  A list of investments the board has in companies with line 12 business operations in Russia or Belarus, including, but not limited line 13 to, the issuer, by name, of the stock, bonds, securities, and other line 14 evidence of indebtedness.
line 15 (2)  A detailed summary of the business operations a company line 16 described in paragraph (1) has in Russia or Belarus and whether line 17 that company satisfies all of the criteria in subdivision (c) or (d). line 18 (3)  Whether the board has reduced its investments in a company line 19 that satisfies the criteria in subdivision (c) or (d). line 20 (4)  If the board has not completely reduced its investments in line 21 a company that satisfies the criteria in subdivision (c) or (d), when line 22 the board anticipates that the board will reduce all investments line 23 in that company or the reasons why a sale or transfer of line 24 investments is inconsistent with the fiduciary responsibilities of line 25 the board as described in Section 17 of Article XVI of the line 26 California Constitution.
line 27 (5)  Any information described in subdivision (f). line 28 (6)  A detailed summary of investments that were transferred to line 29 funds or accounts devoid of companies with business operations line 30 in Russia or Belarus or with a sanctioned person as described in line 31 subdivision (g).
line 32 (k)  If the board voluntarily sells or transfers all of its investments line 33 in a company with business operations in Russia or Belarus or line 34 with a sanctioned person, this section shall not apply except that line 35 the board shall file a report with the Legislature related to that line 36 company as described in subdivision (j).
line 37 (l)  This section does not require the board to take action as line 38 described in this section unless the board determines, in good line 39 faith, that the action described in this section is consistent with 98 SB 1328 — 10 —
line 1 the fiduciary responsibilities of the board as described in Section line 2 17 of Article XVI of the California Constitution. line 3 (m)  Subdivision (i) shall not apply to any of the following:
line 4 (1)  Investments in a company that is primarily engaged in line 5 supplying goods or services intended to relieve human suffering line 6 in Ukraine.
line 7 (2)  Investments in a company that promotes health, education, line 8 journalistic, or religious activities in or welfare in Ukraine. line 9 (n)  This section shall remain in effect only until one of the line 10 following occurs, and as of the date of that action, is repealed:
line 11 (1)  The aggressor countries halt the invasion and occupation line 12 of Ukraine as determined by the U.S. Department of State. line 13 (2)  The United States revokes all sanctions against the aggressor line 14 countries imposed because of their participation in the February line 15 24, 2022, invasion of Ukraine.
line 16 SEC. 2. Section 12414 is added to the Government Code, to line 17 read:
line 18 12414. (a)  As used in this section, the following definitions line 19 apply:
line 20 (1)  “Government of Russia” means the government of Russia line 21 or its instrumentalities or political subdivisions. line 22 (2)  “Russia” means the Russian Federation.
line 23 (3)  “State moneys” means all money, bonds, and securities in line 24 possession of or collected by the Controller.
line 25 (b)  (1)  The Controller shall not make additional or new line 26 investments or renew existing investments of state moneys in any line 27 investment vehicle in the government of Russia that meets either line 28 of the following criteria:
line 29 (A)  The investment vehicle is issued by the government of Russia. line 30 (B)  The investment vehicle is owned by the government of line 31 Russia.
line 32 (2)  The Controller shall not make additional or new investments line 33 or renew existing investments of state moneys in any investment line 34 vehicle in or from a Russian financial institution currently under line 35 sanctions imposed by the United States.
line 36 (c)  This section does not require the Controller to take action line 37 as described in this section unless the Controller determines in line 38 good faith that the action described in this section is consistent line 39 with the Controller’s fiduciary responsibilities. 98 — 11 — SB 1328
line 1 (d)  This section shall remain in effect only until one of the line 2 following occurs, and as of the date of that action, is repealed:
line 3 (1)  Russia halts the invasion and occupation of Ukraine as line 4 determined by the U.S. Department of State.
line 5 (2)  The United States revokes all sanctions against Russia line 6 imposed because of its participation in the February 24, 2022, line 7 invasion of Ukraine.
line 8 SEC. 3. Chapter 8 (commencing with Section 16649.100) is line 9 added to Part 2 of Division 4 of Title 2 of the Government Code, line 10 to read:
line 11
line 12 Chapter 8. Russia Divestment Act
line 13
line 14 16649.100. (a)  As used in this section, the following definitions line 15 apply:
line 16 (1)  “Government of Russia” means the government of Russia line 17 or its instrumentalities or political subdivisions. line 18 (2)  “Russia” means the Russian Federation.
line 19 (3)  “State agency” means any agency, board, or commission line 20 of state government.
line 21 (4)  “State moneys” means all money, bonds, and securities in line 22 possession of or collected by any state agency. line 23 (b)  (1)  A state agency shall not make an additional or new line 24 investment or renew an existing investment of state moneys in any line 25 investment vehicle in the government of Russia that meets either line 26 of the following criteria:
line 27 (A)  The investment vehicle is issued by the government of Russia. line 28 (B)  The investment vehicle is owned by the government of line 29 Russia.
line 30 (2)  A state agency shall not make an additional or new line 31 investment or renew an existing investment of state moneys in any line 32 investment vehicle in or from a Russian financial institution line 33 currently under sanctions imposed by the United States. line 34 (c)  A state agency shall liquidate any investment described in line 35 subdivision (b) within six months of this section being chaptered. line 36 (d)  Within one year of this section being chaptered, a state line 37 agency shall file a report with the Legislature, in compliance with line 38 Section 9795, and with the Governor, that shall include all of the line 39 following:
98 SB 1328 — 12 —
line 1 (1)  A list of any investment vehicle of which the state agency line 2 has liquidated its investment pursuant to subdivision (c). line 3 (2)  A list of any investment vehicle in the government of Russia line 4 or in or from a Russian financial institution of which the state line 5 agency has not liquidated its investment as a result of a line 6 determination made pursuant to subdivision (e) that a sale or line 7 transfer of that investment is inconsistent with the fiduciary line 8 responsibilities of the state agency.
line 9 (e)  This section does not require a state agency to take action line 10 as described in this section unless the state agency determines in line 11 good faith that the action described in this section is consistent line 12 with the fiduciary responsibilities of the state agency. line 13 (f)  (1)  Before an extension of the operation of this section, the line 14 state agency shall reevaluate, using methods or processes as line 15 determined by the state agency, the merit of continuing the line 16 prescribed divestment action, including, but not limited to, the line 17 financial effects of the divestment action on the fiduciary line 18 responsibilities of the state agency.
line 19 (2)  Within three years of this section being chaptered, the state line 20 agency shall submit a report to the Legislature with the information line 21 described in paragraph (1) on the merit of continuing the line 22 prescribed divestment action.
line 23 (3)  A report submitted pursuant to this subdivision shall be line 24 submitted in compliance with Section 9795.
line 25 (g)  (1)  The Legislature hereby urges any company operating line 26 in California to divest and separate themselves from the line 27 government of Russia, Russian financial institutions, and Russian line 28 businesses.
line 29 (2)  The Legislature hereby requests any company doing business line 30 in California to report their investments in and contracts with the line 31 government of Russia, Russian financial institutions, and Russian line 32 businesses to the Secretary of State within six months of this section line 33 being chaptered.
line 34 (3)  The Legislature hereby urges the Regents of the University line 35 of California to divest and separate themselves and the University line 36 of California from the government of Russia, Russian financial line 37 institutions, and Russian businesses.
line 38 (h)  This chapter shall remain in effect only until one of the line 39 following occurs, and as of the date of that action, is repealed:
98 — 13 — SB 1328
line 1 (1)  Russia halts the invasion and occupation of Ukraine as line 2 determined by the U.S. Department of State.
line 3 (2)  The United States revokes all sanctions against Russia line 4 imposed because of its participation in the February 24, 2022, line 5 invasion of Ukraine.
line 6 SEC. 4. Article 14 (commencing with Section 10495) is added line 7 to Chapter 2 of Part 2 of Division 2 of the Public Contract Code, line 8 to read:
line 9
line 10 Article 14. Russia Contracting Act
line 11
line 12 10495. As used in this article, the following definitions apply:
line 13 (a)  “Government of Russia” means the government of Russia line 14 or its instrumentalities or political subdivisions. line 15 (b)  “Russia” means the Russian Federation.
line 16 (c)  “Scrutinized company” means a company that conducts line 17 business with the government of Russia.
line 18 (d)  “State agency” means any agency, board, or commission line 19 of state government, and includes the California State University line 20 and the California Community Colleges.
line 21 10495.1. (a)  A scrutinized company is ineligible to, and shall line 22 not, bid on or submit a proposal for a contract with a state agency line 23 for goods or services.
line 24 (b)  Notwithstanding subdivision (a), the Director of General line 25 Services may authorize a scrutinized company, on a case-by-case line 26 basis, to bid on or submit a proposal for a contract with a state line 27 agency for goods or services, if it is in the best interests of the state line 28 to permit the scrutinized company to bid on or submit a proposal line 29 for one or more contracts with a state agency for goods or services. line 30 10495.2. (a)  A state agency shall require a company that line 31 submits a bid or proposal with respect to a contract for goods or line 32 services, that currently or within the previous three years has had line 33 business activities or other operations outside of the United States, line 34 to certify that the company is not a scrutinized company. line 35 (b)  A state agency shall not require a company that submits a line 36 bid or proposal with respect to a contract for goods or services, line 37 and that currently or within the previous three years has had line 38 business activities or other operations outside of the United States, line 39 to certify that the company is not a scrutinized company, if the line 40 company has obtained permission to bid on or submit a proposal 98 SB 1328 — 14 —
line 1 for a contract with a state agency for goods or services pursuant line 2 to subdivision (b) of Section 10495.1.
line 3 10495.3. (a)  If the Department of General Services determines line 4 that a company has submitted a false certification under Section line 5 10495.2, the company shall be subject to all of the following:
line 6 (1)  The company is liable for a civil penalty in an amount that line 7 is equal to the greater of two hundred fifty thousand dollars line 8 ($250,000) or twice the amount of the contract for which a bid or line 9 proposal was submitted.
line 10 (2)  The state agency or the Department of General Services line 11 may terminate the contract with the company.
line 12 (3)  The company is ineligible to, and shall not, bid on a state line 13 contract for a period of not less than three years from the date the line 14 state agency determines that the company submitted the false line 15 certification.
line 16 (b)  The Department of General Services shall report to the line 17 Attorney General the name of the company that the Department line 18 of General Services determined had submitted a false certification line 19 under Section 10495.2, together with its information as to the false line 20 certification, and the Attorney General shall determine whether line 21 to bring a civil action against the company. The company shall line 22 pay all costs and fees the plaintiff incurred in a civil action, line 23 including costs incurred by the state agency and the Department line 24 of General Services for investigations that led to the finding of the line 25 false certification and all costs and fees incurred by the Attorney line 26 General.
line 27 10495.4. This article shall remain in effect only until one of line 28 the following occurs, and as of the date of that action, is repealed:
line 29 (a)  Russia halts the invasion and occupation of Ukraine as line 30 determined by the U.S. Department of State.
line 31 (b)  The United States revokes all sanctions against Russia line 32 imposed because of its participation in the February 24, 2022, line 33 invasion of Ukraine.
line 34 SEC. 5. If the Commission on State Mandates determines that line 35 this act contains costs mandated by the state, reimbursement to line 36 local agencies and school districts for those costs shall be made line 37 pursuant to Part 7 (commencing with Section 17500) of Division line 38 4 of Title 2 of the Government Code.
line 39 SEC. 6. This act is an urgency statute necessary for the line 40 immediate preservation of the public peace, health, or safety within 98 — 15 — SB 1328
line 1 the meaning of Article IV of the California Constitution and shall line 2 go into immediate effect. The facts constituting the necessity are:
line 3 (a)  On February 24, 2022, the President of Russia, Vladimir line 4 Vladimirovich Putin, initiated an unprovoked war against the line 5 sovereign and independent nation of Ukraine in violation of line 6 international law. At his direction, Russian military forces have line 7 inflicted death and destruction on the territory of Ukraine, killing line 8 its men, women, and children in their homes, their places of work, line 9 their places of worship, and anywhere they seek shelter. Through line 10 his irrational actions President Putin has caused hundreds of line 11 thousands of Ukrainians and nationals from all over the world to line 12 flee Ukraine and seek refuge in neighboring countries, disrupting line 13 the safety, livelihood, and economic activity of millions of innocent line 14 people. President Putin and members of his clique of oligarchs line 15 benefit enormously from economic activity with western economies, line 16 including with trade and economic investment from California, line 17 which facilitates Russian military and political aggression against line 18 Ukraine and against the world’s free and democratic nations. The line 19 government of Belarus facilitated Russia’s attack on Ukraine by line 20 allowing Russian military units to launch an attack from Belarus line 21 against Ukraine’s capital Kyiv and by preparing to join in the line 22 military attack against Ukraine.
line 23 (b)  The purpose of California’s public pension funds, investment line 24 of state funds by state agencies, and contracts between the state line 25 and companies for goods and services is to promote the peace, line 26 health, and safety of the people of California. Those goals are line 27 threatened when an authoritarian government can, with impunity, line 28 eliminate another sovereign nation and make extreme threats to line 29 the international political and economic order. line 30 (c)  In order to defend the democratic values of the people of line 31 California and ensure their security, and to stand with the line 32 President of Ukraine, Volodymyr Oleksandrovych Zelenskyy , the line 33 people of Ukraine, and all people who support liberal democracy, line 34 peace, and freedom, it is necessary to cut all economic investment line 35 in Russia and Belarus as quickly as possible, and it is therefore line 36 necessary for this act to take effect immediately. line 37 SECTION 1. It is the intent of the Legislature to enact line 38 subsequent legislation relating to agriculture.

O
98 SB 1328 — 16 —
Attachment 2
1 STATE OF CALIFORNIA

DEPARTMENT OF INSURANCE
300 Capitol Mall, 17th floor
Sacramento, CA 95814

NOTICE OF PROPOSED ACTION AND NOTICE OF PUBLIC HEARING

MITIGATION IN RATING PLANS AND WILDFIRE RISK MODELS
February 25, 2022 REG-2020-00015

SUBJECT OF PROPOSED RULEMAKING
Notice is given that California Insurance Commissioner Ricardo Lara will hold a public hearing to consider amending, and the contemplated addition of, California Code of Regulations, Title 10, Chapter 5, Subchapter 4.8, Article 4, section 2644.9.

PUBLIC HEARING
Public Hearing Date and Location
The Commissioner will hold a public hearing to provide all interested persons an opportunity to present statements or arguments, either orally or in writing, with respect to these regulations, as follows:

Date: April 13, 2022
Time: 1:00 p.m. The public hearing shall continue until all in attendance wishing to provide comments have commented, or 5:00 p.m.

Location: California Department of Insurance
1901 Harrison Street, 3rd Floor - Room #30000
Oakland, California
Link to Register for the Web-based Virtual Format:
https://us06web.zoom.us/webinar/register/WN_MoTcvOKCRdKS e9GAmZE5Hw

ACCESS TO PUBLIC HEARING
The facilities to be used for the public hearing are accessible to persons with mobility impairments. Persons with sight or hearing impairments are requested to notify the contact person(s) for the hearing in order to make special arrangements, if necessary.

To increase public participation and improve the quality of regulations, interested parties are invited to attend virtually or in-person, and offer comment, if they so choose. Please be advised 2 that in-person attendance at the hearing may be limited or curtailed, depending upon any state or local restrictions on public gatherings that may be in effect at the time of the hearing, or due to Covid-19 transmission control precautions implemented by the Department.

The moderated call-in line to be used for the public hearing is accessible to persons with mobility impairment. Persons with sight or hearing impairments are requested to notify the contact person for these hearings (listed below) in order to review available accommodations, if necessary.

Please direct all inquiries regarding these workshops to the contact persons named below.

PRESENTATION OF WRITTEN COMMENTS; CONTACT PERSONS
All persons are invited to submit written comments on the proposed regulations during the public comment period. The public comment period will end on April 13, 2022. Please direct all written comments to the following contact person:

Daniel Wade, Senior Staff Counsel
Rate Enforcement Bureau
1901 Harrison Street, 6th Floor
Oakland, CA 94612
Phone: (415) 538-4158
Email: [email protected]
Questions regarding procedure, comments, or the substance of the proposed action should be addressed to the above contact person. If he is unavailable, inquiries may be addressed to the following backup contact person:

Lisbeth Landsman-Smith, Senior Staff Counsel
Rate Enforcement Bureau
300 Capitol Mall, Suite 1700
Sacramento, CA 95814
Tel: 916-492-3561
Email: [email protected]
Please note that under the California Public Records Act (Government Code Section 6250, et seq.), your written and oral comments, and associated contact information (e.g., your address, phone number, e-mail, etc.) become part of the public record and can be released to the public upon request.

DEADLINE FOR WRITTEN COMMENTS
All written materials must be received by the Insurance Commissioner, addressed to the contact person at the address listed above, by the end of April 13, 2022. Any written materials received after that time may not be considered.
3 COMMENTS TRANSMITTED BY E-MAIL
The Commissioner will accept written comments transmitted by e-mail provided they are sent to the following e-mail address: [email protected].

Comments sent to e-mail addresses other than those designated in this notice will not be accepted. Comments sent by e-mail are subject to the deadline set forth above for written comments.

AUTHORITY AND REFERENCE
The proposed regulations will interpret and make specific the provisions of Insurance Code sections 1858, 1859, 1861.01, 1861.05, and 1861.07, which also provide the rulemaking authority for this action. The Commissioner is authorized to promulgate regulations to implement Proposition 103. 20th Century Ins. Co. v. Garamendi (1994) 8 Cal.4th 216.

INFORMATIVE DIGEST/ POLICY STATEMENT OVERVIEW
Summary of Existing Law
With the passage of Proposition 103 in 1988, California voters enacted numerous new laws related to the regulation of insurance rates in California, including Insurance Code sections 1861.05(a) and (b). California Insurance Code section 1861.05(a) makes it unlawful for a rate to be approved or remain in effect which is excessive, inadequate, or unfairly discriminatory.

California Insurance Code section 1861.05(b) requires an insurer which desires to change any rate to file a complete rate application containing specified information “and such other information as the commissioner may require.” California Code of Regulations Title 10, Chapter 5, Subchapter 4.8, Article 4, sections 2644.1 et seq. provide the rules that insurers must follow to obtain approval of their rate applications.

Proposition 103 sets forth the following findings: (a) “Enormous increases in the cost of insurance have made it both unaffordable and unavailable to millions of Californians.”; (b) “The existing laws inadequately protect consumers and allow insurance companies to charge excessive, unjustified and arbitrary rates.” (Prop. 103, § 1.) The stated purpose of Proposition 103 is “to protect consumers from arbitrary insurance rates and practices, to encourage a competitive insurance marketplace, to provide for an accountable Insurance Commissioner, and to ensure that insurance is fair, available, and affordable for all Californians.” (Prop. 103, § 2.) Proposition 103 provides the Commissioner substantial authority and flexibility in establishing rules and procedures for assessing insurers proposed rates, which necessarily include rating plans. (20th Century Ins. Co. v. Garamendi (1994) 8 Cal.4th 216, 280; Calfarm Ins. Co. v.

Deukmejian (1989) 48 Cal. 3d 805, 824.)
Also, a part of Proposition 103, California Insurance Code section 1861.10 promotes consumer participation by allowing consumers to participate in the ratemaking process and enforce the 4 rating laws. It requires the Commissioner to notify the public after an insurer files a rate application, subject to certain conditions. California Insurance Code section 1861.07 requires all information provided to the Commissioner in the rate application process to be publicly available. Furthermore, California Insurance Code section 1858 permits any person aggrieved by any rate charged, rating plan, rating system or underwriting rule to also challenge the insurer’s action directly before the commissioner.

In addition, advisory organizations that provide rate manuals to insurers must have such manuals approved by the Commissioner prior to their use. (California Insurance Code section 1855.5.) Insurance ratemaking requires an assessment of the risks to be insured. In California, property insurers are permitted to classify (segment) wildfire risks depending on how high or low the assessed wildfire risk is in different areas and localities. Different wildfire risks are assigned different wildfire risk scores, which affect the premium policyholders pay. California Insurance Code sections 929 et seq. requires the Commissioner to collect from insurers data regarding wildfire incurred losses for each insured property, wildfire risk scores assigned to those properties by the insurers and the source of those scores.

Irrespective of scores assigned by insurers, some policyholders take proactive measures to reduce — or “mitigate” — the risk of wildfire on their property and in their neighborhood. For example, someone may clear vegetation near their house, or install fire-resistant building materials. Such measures reduce the wildfire risk at their insured property. Likewise, communities may employ mitigation measures such as firebreaks which can reduce the risk of conflagration.

Numerous laws and national standards provide effective methods for mitigation of wildfire risk.

For example, Chapter 7A of the 2019 California Building Code (24 CCR 701A) addresses building standards for wildfire areas, including fire resistant vents (24 CCR 706A.2). ASTM E108 and UL 790 are standards set by private entities that all manufacturers follow to create a Class-A fire rated roof. California Public Resources Code 4290.1 identifies criteria for a community to be recognized as a Fire Risk Reduction Community. Those criteria include participation in Firewise USA, a nationally recognized program developed by the National Fire Protection Association, a Massachusetts 501(c)(3) corporation. This program is co-sponsored by the United States Department of Agriculture’s Forest Service and the National Association of State Foresters. And, California Public Resources Code section 4291 sets forth requirements for maintaining defensible space in areas at risk for wildfire.

Current law, however, is silent with respect to the manner in which these mitigation measures must be considered by an insurer and reflected in their rating plan. Thus, a reduction in risk resulting from these mitigation measures may not be considered by insurers and the rates and premium may not reflect the mitigation work accomplished.

Similarly, current law does not provide clear direction to insurance companies to disclose to insurance applicants or policyholders the criteria the insurance company relied upon when calculating a particular insurance premium for a particular consumer. Stated another way, existing law does not specify the level of transparency that an insurance company must maintain 5 with the consumer so that both the consumer and the insurance company can validate the accuracy of the rating plan when applied to that consumer’s property.

Effect of Proposed Action
The proposed regulations will require insurers, for the purposes of segmenting rates, creating a risk differential, or surcharging the premium due to wildfire risk, to reflect and take into account specified mitigation factors in their rating plans. The proposed regulations will at the same time provide flexibility to insurers to incorporate additional factors into their rating plans for the purposes of segmenting rates, creating a risk differential, or surcharging the premium due to wildfire risk, provided such factors are substantially related to the risk of wildfire and will not result in rates which are excessive, inadequate, or unfairly discriminatory. The proposed regulations will help to ensure that rates and premiums corresponding to wildfire risk are not excessive, inadequate, or unfairly discriminatory by ensuring the insurer has accurate information upon which the rate or premium is based. For example, the proposed additions will also require insurers to provide certain mitigation and wildfire risk information to applicants and policyholders, and to provide a process by which applicants and policyholders may appeal a wildfire risk score or classification assigned by the insurer.

Policy Statement Overview
Broad Objectives
The regulations are intended to promote careful and systematic consideration of wildfire risk by insurers, and to enhance communications by insurers about their rating of properties with respect to wildfire risk, in order to ensure that rates attributable to wildfire risk are not excessive, inadequate or unfairly discriminatory.

For instance, the proposed regulation requires insurers, in assigning wildfire risk scores or otherwise classifying wildfire risks, to conduct a more granular, and thus more accurate risk assessment. By requiring insurers to include wildfire mitigation measures — and the reduction in risk therefrom in their risk assessment — the proposed regulations make insurers’ rates and premiums less likely to be excessive, inadequate, or unfairly discriminatory due to failure to consider mitigation measures. Ensuring that rates and premiums are not excessive, inadequate, or unfairly discriminatory is a central statutory command of Proposition 103.

Benefits Anticipated
The proposed additions are expected to: incentivize individual and community mitigation efforts by requiring consideration of property and community-level mitigation against wildfire risk; reduce the risk of loss posed by wildfires; improve accuracy in the classification of wildfire risk and the resulting rates and premiums; increase transparency in, and consumer awareness of, insurers’ rating and/or scoring of wildfire risk; enhance consumer protection by establishing a consumer appeals process; reduce unfair discrimination by enhancing consistency in insurers’ wildfire rating practices and/or risk scoring practices; and potentially improve availability and 6 affordability of property-casualty insurance for communities and properties where wildfire mitigation measures have been implemented.

Compliance with the regulation does not change the job responsibilities of employees in the affected industries in a way that would impact their safety. Thus, the regulation will neither increase nor decrease worker safety.

The Department believes that long-term the regulation will have a beneficial impact on the state’s environment, as increased wildfire risk mitigation may help to slow or stop the spread of some wildfire events. Better watershed health and wildlife protection may result as toxic debris cleanup after fires is reduced, and fewer wells become contaminated.

The regulation is expected to result in a benefit to the welfare of California insurance consumers by ensuring approved property insurance rates are more closely related to the property’s actual risk of loss. Additionally, if the regulation prevents some future wildfire losses, it could lead to better health outcomes for individuals negatively impacted by the poor air quality caused by California’s recent wildfires.

Consistency or Compatibility with Existing State Regulations After conducting an evaluation of applicable law, the Department has found that the proposed regulations are not inconsistent or incompatible with any other existing regulations.

NOT MANDATED BY FEDERAL LAW OR REGULATIONS
These regulations are not mandated by federal law. There are no existing federal regulations or statutes comparable to these proposed regulations as no federal statutes or regulations address wildfire mitigation measures or rating factors.

OTHER STATUTORY REQUIREMENTS
The Department evaluated whether there were other requirements prescribed by statute applicable to these regulations by reviewing statutes and regulations relating to this issue, and determined that there were no such specific requirements.

LOCAL MANDATE
The proposed regulations do not impose any mandate on local agencies or school districts.

FISCAL IMPACT
Fiscal Impact on Other State and Local Government Agencies There are no costs or savings to any other State agencies; however, the Department is expected to incur a fiscal impact, as discussed immediately below under “Fiscal Impact on the Department.” There is no cost to any local agency or school district for which Part 7 7 (commencing with Section 17500) of Division 4 of the Government Code would require reimbursement. There are no other nondiscretionary costs or savings to local agencies, nor do the regulations impose a cost or savings in federal funding to the state.

Fiscal Impact on the Department
The proposed regulation is anticipated to have a fiscal impact on the Department. The Department will incur costs in the administration, review and analysis of all models and rating plans that insurers are required to submit to comply with the proposed regulation. Rate Analysts and Casualty Actuaries are likely to be the primary reviewers of models and rating plans that are likely to be detailed and complex. The Department’s review and approval of rate filings is expected to span multiple state fiscal years at a total cost of $1,047,000.

The proposed regulation is expected to be effective July 2022 and allows 180 days for insurers to file their new rating plan. Therefore, the review of rating plans by the Department is expected to begin in January 2023, or the midpoint of the 2022-23 fiscal year (FY). In a review of rate filings that were completed between January 1, 2019 and September 23, 2020 the Department found the average time to approve a rate filing was 167 days. Given that the average review and approval time is nearly six months and complex filings or initial filings that need modification often take longer to get approved, the Department assumes that 50 percent of the review work will be completed in the first FY (6 months from Jan 2023-June 2023), and the remaining 50 percent will be completed in the second FY (23-24). As a result, the Department expects a fiscal impact of $523,500 in the first year and $523,500 in the second year to review and approve rate filings.

The Department will also likely require support from outside actuaries to verify some of the more complex wildfire models included in insurer submissions. The Department estimates that 6 rate filings will need to be referred to consulting actuaries at an average cost of $15,000 per filing. The outside actuarial reviews are assumed to occur in the first FY, increasing the estimated first-year fiscal impact to $613,500. As a result, the total anticipated fiscal impact on the Department is $1,137,000.

HOUSING COSTS
The proposed regulation is not anticipated to impact housing costs.

SIGNIFICANT STATEWIDE ADVERSE ECONOMIC IMPACT DIRECTLY

AFFECTING BUSINESS, INCLUDING THE ABILITY OF CALIFORNIA BUSINESSES

TO COMPETE
The types of businesses that will be affected are insurers and insurance producers.

In order to comply with the proposed regulations, insurers will need to file rate applications that include compliant rating plans within the timeframe set forth in the proposed regulation. Rate applications are currently required any time an insurer desires a rate change; the proposed regulation builds upon existing required record keeping and administrative process required by current rate regulations. The proposed regulation, however, would require additional actuarial 8 support and analysis to be included in the rate application because compliant rate applications must include rating factors not currently required by existing regulations. As such, additional costs may be acquired by insurers to update existing rating plans with new documentation to be compliant with the portions of the proposed regulation which require the inclusion of the specified mitigation factors.

The portion of the proposed regulation that requires the insurer to provide information to a consumer related to their wildfire risk score or classification is a wholly new requirement that would necessitate insurers to create and maintain records they currently do not, and likewise creates a new administrative process for (1) providing information related to the consumer’s wildfire risk score or classification and (2) providing a process for appealing the wildfire risk score or classification; neither of these processes are currently required under existing rate regulations. This portion of the proposed regulation would also impact insurance producers because the regulation permits a consumer to procure a producer’s assistance in filing the appeal of the consumer’s wildfire risk score or classification.

There will likely be an adverse impact on insurance agents and brokers, who will have to document and forward consumer wildfire risk score appeals. To help insurers validate information, some agents and brokers may also incur costs when conducting in-person inspections of residential or commercial properties. Producers who are independent or captive with their own offices or business locations would likely need to implement their own processes separate from an insurers processes (this would not apply to producers who work for an insurer directly or sell on a direct-basis) for assisting a consumer with the wildfire score/classification appeal process. This would include additional costs, recordkeeping, and staff time.

The Department has made an initial determination that the adoption of the proposed regulations may have a significant, statewide adverse economic impact directly affecting business, including the ability of California businesses to complete with businesses in other states. The Department has considered proposed alternatives that would lessen any adverse economic impact on business and invites you to submit proposals. Submissions may include the following considerations:
• The establishment of differing compliance or reporting requirements or timetables that take into account the resources available to businesses. • Consolidation or simplification of compliance and reporting requirements for businesses. • The use of performance standards rather than prescriptive standards. • Exemption or partial exemption from the regulatory requirements for businesses.

STATEMENT OF RESULTS OF THE ECONOMIC IMPACT ASSESSMENT
The Department is required to assess any impact the proposed adoption may have on the following: the creation or elimination of jobs within the State of California (Government Code § 11346.3(b)(1)(A)); the creation of new businesses or the elimination of existing businesses within the State of California (Government Code § 11346.3(b)(1)(B)); and the expansion of businesses currently doing business within the State of California (Government Code § 11346.3(b)(1)(C)).
9 Below is a summary of the results of the Economic Impact Assessment pursuant to Government Code sections 11346.3(b)(1)(A) through (D).

A. The proposed regulation is estimated to result in the creation of 40 jobs within the State of California. Overall, the impact of jobs created by the proposed regulation is less than one-thousandth of a percent of the total projected civilian employment in California (40 / 19,238,071= 0.0002%).

B. The proposed regulation is estimated to result in the elimination of 131.1 jobs within the State of California. Overall, the impact of jobs lost resulting from the proposed regulation is less than one-thousandth of a percent of the total projected civilian employment in California (131.1 / 19,238,071= 0.0007%)
C. Given that the average direct benefit to an impacted insurer is estimated to be $2,900 ($391,400 / 136 firms), it is not anticipated that the proposed regulation will have a significant impact on the creation of new businesses in California.

D. Given that the initial average direct cost to an impacted insurer is estimated to be $112,500 ($15.3 million / 136 firms), it is not anticipated that the proposed regulation will result in the elimination of existing businesses in California. It is also not expected that the initial average estimated cost of $300 ($562,000 / 1,847) to insurance agents or brokers will result in the elimination of existing businesses in California.

E. It is not anticipated that the proposed regulation will have an impact on the ability of businesses located in California to expand, as most of the costs resulting from the proposed regulation will be incurred by multimillion-dollar businesses. The estimated initial net loss to total output of $32 million suggests that the proposed regulation will have a minimal impact on the multitrillion-dollar California economy as a whole.

F. The proposed regulation is expected to result in a benefit to the health and welfare of California residents, specifically insurance consumers, by ensuring approved property insurance rates are more closely related to the property’s actual risk of loss. Additionally, if the Department’s expectation that the regulation prevents some future wildfire losses is realized, it could benefit the state’s environment and lead to better health outcomes for individuals negatively impacted by the poor air quality caused by California’s wildfires.

The proposed regulation is not expected to affect worker safety.

POTENTIAL COST IMPACTS ON REPRESENTATIVE PERSON OR BUSINESSES The initial average direct cost to an impacted insurer is estimated to be $112,500 ($15.3 million / 136 firms). The initial average estimated cost to insurance agents or brokers is $300 ($562,000 / 1,847). There are no other cost impacts known to the Department that a representative private person or business would necessarily incur in reasonable compliance with the proposed action. 10 BUSINESS REPORT
The Department finds that it is necessary for the health, safety or welfare of the people of the state that the regulation apply to businesses.

IMPACT ON SMALL BUSINESSES
The proposed regulation is projected to have a direct adverse impact on insurers, however by law insurance companies are not considered small businesses (Government Code § 11342.610(b)(2)).

However, there will also likely be an impact on insurance agents and brokers, who will have to document and forward consumer wildfire risk score appeals. To help insurers validate information, some agents and brokers may conduct in-person inspections of residential or commercial properties. The Department assumes that the vast majority of agents and brokers operating in communities that are more likely to experience the effects of wildfire are small businesses. As such, the Department expects that there will be a total adverse impact on small business of $562,000.

In 2020, there were 16,063 business establishments classified as insurance agents and brokers in California. The Department assumes that only the agents and brokers operating in moderate to very high wildfire risk areas are likely to be impacted, because this is where the properties most likely to appeal their wildfire score are located. In the Establishing a Baseline section, the Department calculated that 11.5 percent of all homes in California are in a moderate to very high wildfire risk area. That percentage was also applied to calculate the number of commercial properties in moderate to very high wildfire risk areas, and is used here to estimate that approximately 1,800 (16,063 x 11.5%) insurance agents and brokers operate in moderate to very high wildfire risk areas. As a result, the Department estimates that the initial average adverse impact on an insurance agent or broker operating as a small business in an impacted moderate to very high wildfire risk area is approximately $300 ($562,400 / 1,847). However, the average cost to small businesses is expected to increase to $610 in year 2, and then decline to $400 per business after 6 years.

ALTERNATIVES INFORMATION
The Department must determine that no reasonable alternative considered by the Department, or that has otherwise been identified and brought to the attention of the Department, would be more effective in carrying out the purpose for which this action is proposed; would be as effective and less burdensome to affected private persons than the proposed action; or would be more costeffective to affected private persons and equally effective in implementing the statutory policy