Chamber Efforts Yield Success on Cost Drivers

Weighty Decisions Remain When Legislators Return

A review of legislative actions before the summer break shows that opposition from the California Chamber of Commerce, local chambers of commerce and allied groups produced significant wins for the business community on bills that would worsen the state's affordability crisis.

Cost Driver bills that failed to advance in their original form include the following:

• AB 1979 (Bonta; D-Alameda), which would have banned the use of artificial intelligence tools in health care, was modified to remove its most onerous provisions. With amendments relieving the bill's burdensome oversight requirements and replacing its liability provisions with more reasonable liability/oversight, CalChamber removed its opposition and now is neutral on this former Cost Driver.

• AB 1790 (Connolly; D-San Rafael) would have led to significant tax increases for international businesses and jeopardized relationships with foreign trading partners by requiring companies to report revenues from international affiliates and subjecting income generated in other countries to tax liability. The bill stalled in the Assembly fiscal committee.

• SB 1123 (Wiener; D-San Francisco) would have removed the required in-depth economic analysis from California regulations, removing the obligation for agencies to perform a thorough economic analysis of any regulation that would have more than $50 million in economic effects. The bill would have allowed agencies to skip the analysis if they asserted that the long-term economic or health impacts outweighed the economic costs. The bill failed to meet the Assembly policy committee deadline before legislators began their summer break.

In addition, two of six CalChamber-supported Cost Cutter bills identified this year continue to advance through the Legislature.

Successes to date mean that when legislators reconvene on August 3, CalChamber will be strongly opposing the seven Cost Driver bills that remain alive of the 31 identified this year.

For more information on the status of other bills supported and opposed by CalChamber, see the list inside this edition of Alert.

Cost Drivers

The following are the remaining Cost Driver bills that threaten the affordability of goods and services for California businesses and consumers.

Air Quality

• SB 1075 (Reyes; D-San Bernardino) New Permitting Barriers for Job-Creating Projects in Disadvantaged Communities. Creates new permitting barriers and opportunities for frivolous California Environmental Quality Act (CEQA) litigation for commercial and industrial projects in disadvantaged communities, increasing uncertainty for job-creation and risking tax-base erosion. Awaiting a hearing date in the Assembly Appropriations Committee.

Antitrust

• AB 1776 (Aguiar-Curry; D-Winters) Massive Expansion of Antitrust Law. Would create the largest expansion of antitrust law in world history. Would leave every business of every size in California vulnerable to massive legal liability. Senate Appropriations Committee hearing set for August 3.

Health Care

• AB 2575 (Ortega; D-San Leandro) Discourages Artificial Intelligence in Health Care. Requires unworkable disclosure requirements for using AI tools in a health care setting. Places complete liability for harm of patient on health care entities and developers if using AI-enabled tools. Senate Appropriations hearing, August 3.

Labor and Employment

• SB 947 (McNerney; D-Pleasanton) Restricts Use of Automated Decision Systems in Employment. Imposes impractical requirements on employers of every size related to automated decision systems, which will discourage the use of such tools and subject employers to costly penalties and onerous new compliance procedures. Awaiting a hearing date in Assembly Appropriations.

• SB 951 (Reyes; D-San Bernardino) Discourages Innovation Through Broad AI Layoff Mandates. Significantly expands Cal/WARN type requirements to include impacts on hiring or staffing as a result of technology and includes problematic enforcement provisions that allow uninterested third parties to file claims. Awaiting a hearing date in Assembly Appropriations.

• AB 2646 (Krell; D-Sacramento) Drives Up Agricultural Labor Costs and Threatens California Farm Competitiveness. Threatens the H-2A program, which many agriculture employers rely on to fill labor shortages, by creating a minimum wage of $19.75 for any H-2A worker or worker performing comparable work in that same county. This will drive up agricultural costs at a time when the industry can least afford it. Senate Appropriations hearing, August 3.

Legal Reform and Protection

• AB 2564 (Ward; D-San Diego) Litigation Risks for Offering Discounts. Exposes companies who offer discounts to potential liability for offering basic, consumer-friendly discounts if they fail to fit into the bill's three, limited, allowable forms of discounts. Also infringes on the California Consumer Privacy Act (CCPA) by creating new disclosure obligations that businesses must comply with in order to use personally identifiable information to offer discounts, despite the CCPA already having such standards for rewards programs. Awaiting action by the full Senate.

Cost Cutters

Still alive are the following Cost Cutters. If adopted, they will help reduce costs for businesses and consumers.

California Environmental Quality Act

• AB 1693 (Zbur; D-Hollywood) Accelerated Building Plan Approval. Tenant Improvements. Streamlines permitting for tenant improvements at retail locations, while ensuring compliance with all applicable building, health, and safety requirements. Senate Appropriations hearing, August 3.

Energy

• AB 2124 (Pacheco; D-Downey) Improves How the Legislature Evaluates the Cost of Energy Policy Decisions through Independent Ratepayer Impact Review. Supports more cost-effective policymaking by creating a framework for independent evaluation of proposed legislation that imposes costs on utility customers, helping identify unnecessary or duplicative programs and reducing future rate pressure. Senate Appropriations hearing, August 3.