Bill gutted and amended a week before adjournment; adds CPRA exemption to conceal secret settlements

In the final days of this year’s session, the Legislature gutted, amended and passed AB 1284, which seeks to regulate the controversial lending program Property Assessed Clean Energy (PACE), includes a new exemption to the California Public Records Act to protect settlements reached by investigators and violators from public scrutiny.

Increasingly, PACE loans, which provide financing for residential green energy projects and attach to property taxes, have been criticized for their lack of consumer protections, a concern that was at the forefront of the Senate Insurance, Banking and Financial Institutions committee’s lengthy discussion Friday evening. While senators passed the bill to the floor with a 10-0 vote, they did so with assurances from the bill’s author that more legislation would follow to address opposition expressed by CNPA and concerns of consumer lobbyists, who had not been privy to stakeholder meetings that resulted in the legislation.

AB 1284 by Assemblymember Matt Dababneh was introduced on Aug. 24, and would provide a first-of-its-kind framework for oversight and regulation of the PACE program to protect consumers.

While the goals of the bill are largely laudable, the process in which it was developed was less than ideal. The 74-page measure did not have its first policy committee hearing until 5:30 p.m. on the final day of this year’s session, and its first hearing in the Assembly occurred after midnight. The bill’s final provisions were not in print until Sept. 12.

CNPA objected [CNPA Letter of Opposition] to this process, which prevented the public from testifying on the bill, and prevented groups like CNPA and the California Consumer Federation from influencing the language. Due to the 72-hour rule, in effect for the first time this year, the bill could not be amended to address CNPA’s concerns or to incorporate clean-up language suggested by the Senate Banking committee. As a result, the author committed to passing an urgency clean-up measure in January to address the myriad outstanding issues.

CNPA’s main concern with the bill centered on the new limitation on public access, which would allow the Department of Business Oversight to secretly settle “for cause” complaints levied against PACE solicitors, administrators and their agents, so long as the parties “reach a mutually agreeable resolution.” Moreover, the bill takes an existing discretionary exemption in the CPRA for routine examinations and applies it to a new type of investigation for which the discretionary exemption was not intended, and makes confidentiality mandatory.

The bill passed both the Senate and Assembly without any “no” votes, but with the promise that follow-up legislation was imminent. At CNPA’s urging, the author also submitted a letter to the Journal to indicate his commitment to specifically address CNPA’s transparency concerns by addressing the mandatory confidentiality provision in the bill and providing public access to information about settlements between the government and PACE participants.

AB 1284 now heads to the governor, who has indicated strong support for the regulation and will likely sign the bill.