Cal. Code Regs. Tit. 11, § 3204 - Additional Settlement Payments
(a) Additional Settlement Payments should not
be included in any Settlement that is not subject to judicial approval and
ongoing judicial oversight.
(b) The
Attorney General will consider settling parties' adherence to the following
guidelines in determining whether to object to any Additional Settlement
Payments in a proposed in-court settlement:
(1) The total amount of Additional Settlement
Payment(s) should not exceed the amount of any noncontingent civil penalty to
be deposited pursuant to Health and Safety Code section
25249.12(c)(1).
A "noncontingent" civil penalty is the civil penalty that must be paid pursuant
to a settlement, regardless of future events or actions of the
defendant.
(2) The activities
funded by Additional Settlement Payments should have a clear and substantial
nexus to the violation alleged, i.e., the activities should
address the same public harm as that allegedly caused by the defendant(s) in
the particular case. For the purposes of this paragraph, a "clear and
substantial nexus" requires that the funded activity be designed to have a
direct and primary effect within the State of California.
(3) The recipient should be an entity that is
accountable, i.e., is able to demonstrate how the funds will
be spent and can assure that the funds are being spent only for the proper,
designated purposes described in the settlement. A statement supporting the
recipient entity's accountability should be included in the settlement or in
its supporting papers.
(4) The
settlement should describe with specificity the activities to be funded and the
amount of funding for each activity. It is not sufficient simply to state
broadly that the Additional Settlement Payments will be used for future
Proposition 65 enforcement, or to reduce exposure to toxic chemicals.
(5) The settlement should require the
plaintiff to obtain and maintain adequate records to document that the funds
paid as an Additional Settlement Payment, whether to the plaintiff or to a
third party, are spent on the activities described in the settlement. The
settlement should require the plaintiff to provide to the Attorney General,
within thirty days of any request, copies of all documentation demonstrating
how such funds have been spent.
(6)
To enable the Attorney General and the Court to evaluate settlements that
provide for Additional Settlement Payments, and to promote transparency in how
such payments will be spent, any settlements providing for Additional
Settlement Payments, or their supporting papers, should provide the following
information:
(A) The identity of the entity
receiving the payments, including whether it is a tax-exempt organization
operating under section
501(c)(3) of the
Internal Revenue Code.
(B) A
disclosure of any economic interest that a party to the settlement or its
counsel, or a spouse or dependent child thereof (collectively, "Disclosers"),
has in any individual or entity, besides itself, that is designated in the
Settlement to receive all or part of any Additional Settlement Payment
("Recipient Individual or Entity"). For purposes of this subparagraph, a
Discloser has an economic interest in a Recipient Individual or Entity if (i)
the Discloser has received income in the prior 12 months or expects to receive
income in the next 12 months from the Recipient Individual or Entity, or (ii) a
Discloser is a director, officer, partner, trustee, employee, or holds any
position of management of or for the Recipient Individual or Entity, or (iii) a
Discloser has received or has been promised a gift or gifts amounting to a
total of at least $460 in the prior 12 months from the Recipient Individual or
Entity. If no Discloser has an economic interest in any Recipient Individual or
Entity, then the settlement or the supporting papers shall expressly state that
no party to the settlement or counsel of record, or spouse or dependent child
thereof, has an economic interest in any individual or entity, besides itself,
that is designated in the Settlement to receive all or part of an Additional
Settlement Payment.
(C) The
mechanism by which the plaintiff will track any expenditures of Additional
Settlement Payments to ensure that the money is spent consistent with the
requirements of the settlement.
(D)
If the settlement provides that the recipient entity will in turn make grants
of funds to other entities to carry out the funded activities, the method of
selection of the grantee. This may be set forth in the settlement or in a
separate public document referenced in the settlement. The grantee selection
procedure may vary depending on the facts of the particular case, but should
give significant weight to a prospective grantee's ability to perform the
funded activities in an accountable manner.
Notes
2. Renumbering of former section 3204 to section 3205 and new section 3204 filed 8-30-2016; operative 10-1-2016 (Register 2016, No. 36).
Note: Authority cited: Sections 25249.7(f)(4) and 25249.7(f)(5), Health and Safety Code. Reference: Sections 25249.7(b)(2), 25249.7(f)(4) and 25249.7(f)(5), Health and Safety Code.
2. Renumbering of former section 3204 to section 3205 and new section 3204 filed 8-30-2016; operative
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