Legislative Weekly 
August 9, 2001 
Issue 31, Volume 3 

A weekly publication from the 
California Manufacturers & Technology Association 
detailing legislative and regulatory developments in Sacramento

ENERGY CASUALTY REPORT 

CMTA's new Energy Casualty Report describes the impact of the massive electricity rate increase imposed on California business customers of PG&E and SCE.  The rate increase went into effect June 1, and some customers are now receiving bills over 100% higher than the same time last year.  This has led many to question their ability to continue doing business in California.  Layoffs, canceled expansion plans, increased product prices and plant closures are already occurring.  CMTA plans to issue the report on at least a monthly basis until further notice. 

The Energy Casualty Report is available online at www.cmta.net. To include your story for future issues, contact Gino DiCaro at 916-441-5420. 
  

ENVIRONMENTAL DISPATCH CONCEPT FOR BACKUP GENERATORS GETS TRACTION 

In an effort to reduce the likelihood of blackouts, Assemblymember Dennis Hollingsworth (R-Murrieta) has introduced a measure, ABx2 60, to establish a voluntary program in which stationary and portable backup generators would be called upon to relieve load from the grid. 

Under provisions of the bill, a customer voluntarily would register a stationary or portable backup generator for the program.  The California Energy Resources Conservation and Development Commission (CEC), in cooperation with the investor-owned utilities, municipal utility districts and air districts would evaluate and rank these generators by level of oxides of nitrogen (NOx) and particulate matter (PM) emitted.  The type of fuel on which the generator operates also would be considered in the following order: natural gas, liquefied petroleum gas, gasoline and diesel. 

Participating operators would enter into agreements with investor-owned utilities or municipal utilities to provide energy to that utility when the Independent System Operator (ISO) determines that a blackout is imminent. 

Upon such determination, utilities would contact participants, starting with the cleanest units first.  Participants would be paid 20 cents per kilowatt hour regardless of whether the electricity produced was used to offset the electricity demands of the facility at which the generator is operated, or used to generate additional power for the utility. 

ABX2 60 was heard by the Assembly Energy Costs and Availability Committee on July 16.  At that hearing, a member of the committee expressed concern that the measure would unnecessarily increase air pollution.  The author responded that the bill would have the opposite effect by targeting the cleanest burning generators to help prevent blackouts.  He further stated that when a blackout does occur, all forms of backup generators are allowed to run, which could have a far more detrimental impact on air quality than dispatching cleaner-burning generators just prior to a blackout. 

This measure is similar to the San Diego Gas and Electric Rolling Blackout Reduction Program, recently approved by the California Public Utilities Commission (PUC).  Under the PUC order, backup generators may be called into service based on their fuel type during a Stage III alert. 

Despite the virtual absence of blackouts during May, June and the first half of July, ABX2 60 passed the Assembly Energy Costs and Availability Committee (17-0).  CMTA agrees that environmental dispatch is a reasonable short-term policy given the tenuous balance between energy supply and demand.  The bill will be heard in the Assembly Appropriations Committee when the Legislature reconvenes from its Summer Recess. 
  

WORKERS' COMPENSATION BENEFITS BILL SET FOR HEARING 

CMTA and other employer representatives attended a scheduled meeting with Legislative staffers representing the Assembly Insurance committee, Senate Labor and Industrial Relations committee and Senate President Pro Tempore, John Burton on August 2 to discuss SB 71 (Burton D-San Francisco), the so-called Workers' Compensation benefits bill.  The purpose of the meeting was to provide employers with a verbal briefing on amendments to SB 71. 

The meeting with employers was the last of several meetings held by staff with insurers, organized labor, applicant attorneys, medical providers, and others. No language was provided for the briefing and language is expected to be in print by the end of this week.  The bill as amended is set to be heard in Assembly Insurance Committee on August 22 and a long and contentious hearing is expected. The main changes discussed in the meeting were: 

Benefit Increases: The benefit increases (about $2.8 billion) in SB 996 (Johnston) that were vetoed last year will be the basis for the benefit increases in SB 71. In addition, there will be an adjustment of the life pension, increasing the benefit from its 1996 levels in an amount equal to the increase in the statewide average weekly wage (SAWW) since 1996, and indexed annually to SAWW increases thereafter. Issues regarding phasing of benefits over time and in regards to system improvements are open for further discussion.
Commission Recommendations: Staff agreed to adopt all substantive recommendations from the Commission on Safety and Health and Workers' Compensation (CSHWC) that were non-controversial verbatim. For details on the recommendations, go to the Commission's web site at <http://www.dir.ca.gov/CHSWC/chswc.html>. In addition, staff indicated that a one-year statute of limitations applicable to provider liens would also be added to the bill.
Medical Cost Control: The focus of medical cost containment will be on the development of treatment guidelines within three years by the Industrial Medical Council.  The guidelines will reference national standards (including best practices) but will likely not have to be based on them. The guidelines will be admissible before the Workers' Compensation Appeals Board (WCAB), but may not be sufficient to rebut the presumption for predesignated physicians.  Obviously this will need further clarification as the process moves forward.  The Health Care Organization (HCO) program will be retained, but additional quality of care reporting and surveillance by a yet to be determined entity will be required.  More training will be required for treating physicians along with a system of tracking quality of care and utilization by treaters.
Treating Physician Presumption:  SB 996 language is included, which retains the presumption for predesignated physicians but repeals the presumption for all other treaters. This is clearly an open issue for many.  It is also not clear whether the medical-legal changes in SB 996 will also be in the amended bill.
Administrative Issues: The court administrator remains in the bill. In addition, there will be language easing the penalty problems associated with checks payable on demand and further facilitating electronic deposit of indemnity checks.

Obviously, many items of interest to employers did not make the list, such as objective medical evaluations, vocational rehabilitation and penalties under LC Sections 4650 and 5814, to name a few. Nor was insurers' desire to eliminate consultation services to insured employers and replace it with a puff safety education program (that CMTA opposes) discussed. And finally, the Director of the Department of Industrial Relations has not talked to the Legislative staffers about their interests in workers' compensation changes, so everyone is waiting for them to weigh in. 

Clearly there are no significant changes proposed in SB 71 that would help offset the cost of increased benefit to employers and streamline the system to make it more efficient.  However, we think issues may be brought up later if other parties of interest are amenable, and may be added to the bill.  In order to coordinate this information with the enrolled version of SB 996; go to <http://www.leginfo.ca.gov/> and look under the year 2000. 
  

CMTA DEFENDS COMMERCIAL LEGAL RIGHTS FOR MANUFACTURERS 

CMTA has formally urged The National Conference of Commissioners on Uniform State Laws (NCCUSL) to reject pending amendments to Uniform Commercial Code (UCC) Articles 1 - General Provisions and 2 - Sales.  NCCUSL will make its decision on August 10.   The proposed changes affect all of our companies but most especially those engaged in e-commerce. 

As is true for the law in most states, California's Commercial Code and much of its Civil Code are based on the UCC and govern the perimeters of almost all commercial transactions conducted between businesses and between businesses and consumers.  If NCCUSL passes the amendments, CMTA would expect to see conforming legislation here next year. 

The purpose of a uniform code is to provide a model for states to adopt as they modernize their laws and to promote uniformity among the states.  Both features are highly desirable; however, the purpose behind many of the proposed changes appears to be abstract experimentation in creating new "consumer" rights and taking away traditional rights enjoyed by sellers.  Moreover, the changes also introduce numerous ambiguities which would engender litigation.  Furthermore, their anti-business slant will prove controversial in state legislatures leading to only partial adoption and conflict among the codes.  Manufacturers, technology companies and others engaged in sales and leases of goods rely on settled contract law and the certainties it provides.  As CMTA has explained to NCCUSAL, commercial laws should facilitate commerce, address "real world" situations, be articulated clearly and be as uniform as possible. 

Among the objectionable revisions are: 

creation of a basis for liability for advertising and other public communications even if the buyer did not purchase from the entity that made the advertisement or communication;
elimination of a seller's right to full compensation for loss where a consumer buyer's breach causes consequential damages to the seller;
elimination of clarifying language that laws governing sales and leases do not apply to computer information transactions/licenses of information;
creation of non-contractual, non-privity obligations based on a remote manufacturer's statements about a product contained in or with the product even if the statements were not part of the contractual bargain and there is no contract privity;
a grant of power to judges to override the effect of any UCC section to any court decision that creates a different rule for consumers; and
arrogation of the right to use choice of law provisions, particularly where the consumer's local law affords greater consumer protection rights.

The foregoing is a short sample.  If the draft is adopted, California businesses will soon be acquainted with the longer list when new conforming legislation is introduced in January 2002. 
  

www.cmta.net <http://www.cmta.net/> 
California Manufacturers & Technology Association 
980 9th Street, Suite 2200 
Sacramento, CA  95814 
(916) 441-5420 phone 
(916) 447-9401 fax