Gov. Brown Extends Ban on Price-Gouging to Six Months October 25

Item 6,a.(1) CALIFORNIA APARTMENT ASSOCIATION

Gov. Brown extends ban on price-gouging to six months October 25. 2017 Of RENT INCREASES LIMITED TO 10 PERCENT

Under an executive order by Gov. Jerry Brown, protections against price-gouging in the wake of the North Bay fires — including rent increases over 10 percent — will be in effect until at least April of next year.

The ban on price gouging, which originally had a 30-day time limit, is now in effect until April 18, 2018. ONLINE RESOURCES

• CAA Wildfire Resource Center » • New! Industry Insight: Anti-Price Gouging Laws - States of Emergency • Attorney General’s Office:FAQs on Price Gouging

The state’s anti-price gouging law went into effect earlier this month after the president and governor issued a state of emergency in California.

These protections prohibit raising the price of many consumer goods and services, including that of rental housing, by more than 10 percent after an emergency has been declared.

Protections under California’s anti-price-gouging law are not restricted to the city or county where the disaster occurred. The aim is to prevent price gouging anywhere in the state with an increased consumer demand resulting from the declared emergency. State or local officials can extend disaster declarations for additional 30-day periods after the initial declaration expires. Because the price-gouging law does not set clear parameters for determining where the price controls apply, rent increases exceeding 10 percent — anywhere in California — may constitute price gouging while the declaration is in effect. Members who are unsure whether the price CALIFORNIA APARTMENT ASSOCIATION controls apply to their property should seek the advice of an attorney before implementing any increase of more than 10 percent. The California Apartment Association has asked members to refrain from raising rents at all during this state of emergency.

Anyone convicted of violating the statewide anti-price-gouging law can face a year in county jail, a fine of up to $10,000, or both, as well as civil penalties. Local ordinances may impose additional penalties. LOCAL GOVERNMENTS ALSO TAKE ON PRICE GOUGING : On Tuesday, the city of Santa Rosa passed an anti-price gouging ordinance which is more restrictive than the state’s own ban on the practice.

This ordinance bases the 10 percent price cap on the amount charged for each particular housing unit immediately prior to the city’s Oct. 9 declaration of emergency.

The ordinance also bars landlords from charging an incoming tenant rent higher than that charged immediately prior to Oct. 9 if the previous tenant of the unit was evicted, regardless of the reason for the eviction.

The ordinance does make an exception to these prohibitions when the amount of an increase is directly attributable to additional costs for labor and materials. CAA recommends consulting with an attorney prior to making such a rent increase. All rental units in the city of Santa Rosa, including single-family homes and new construction, are subject to the ordinance.

The Sonoma County Board of Supervisors considered a similar ordinance but tabled the matter after the district attorney expressed concerns that the ordinance might interfere with her ability to prosecute violators under state law.

In Lake County, the Board of Supervisors passed an ordinance barring landlords from evicting tenants to raise rent on particular unit to a higher rate than that charged immediately before Oct. 9. This ordinance applies to all rental units in the unincorporated areas of the county. Related content: Sonoma County and Santa Rosa approve measures to improve housing availability (Santa Rosa Press Democrat, Oct. 24) Fines in effect for rent gouging (Record-Bee, Oct. 23) With 5% of its housing destroyed by fire. Santa Rosa faces wrenching questions about its future(Los Angeles Times, Oct. 24) They survived the California fires. Now, the crisis is finding housing (CNN, Oct. 21) Got housing? How you can help fire refugees in the North Bay (San Jose Mercury News, Oct. 21) hag ~ Click to staff; on Twitter (Opena in-few window)! . Click to email this to a friend (Opens in new windowl 11/13/2017 https://leginfo.legislature.ca.gov/faces/printCodeSectionWindow.xhtml?lawCode=PEN§ionNum=396.'&op_statues=2016&op_chapter=671... Distributed at the meeting PENAL CODE- PEN

PART 1. OF CRIMES AND PUNISHMENTS [25 - 680] ( Part 1 enacted 1872. ) TITLE 10. OF CRIMES AGAINST THE PUBLIC HEALTH AND SAFETY [369a - 402c] ( Title 10 enacted 1872. )

(a) The Legislature hereby finds that during a state of emergency or local emergency, including, but not limited to, an earthquake, flood, fire, riot, storm, drought, plant or animal infestation or disease, or other natural or manmade disaster, some 396. merchants have taken unfair advantage of consumers by greatly increasing prices for essential consumer goods and services. While the pricing of consumer goods and services is generally best left to the marketplace under ordinary conditions, when a declared state of emergency or local emergency results in abnormal disruptions of the market, the public interest requires that excessive and unjustified increases in the prices of essential consumer goods and services be prohibited. It is the intent of the Legislature in enacting this act to protect citizens from excessive and unjustified increases in the prices charged during or shortly after a declared state of emergency or local emergency for goods and services that are vital and necessary for the health, safety, and welfare of consumers. Further, it is the intent of the Legislature that this section be liberally construed so that its beneficial purposes may be served. (b) Upon the proclamation of a state of emergency declared by the President of the United States or the Governor, or upon the declaration of a local emergency by an official, board, or other governing body vested with authority to make such a declaration in any county, city, or city and county, and for a period of 30 days following that proclamation or declaration, it is unlawful for a person, contractor, business, or other entity to sell or offer to sell any consumer food items or goods, goods or services used for emergency cleanup, emergency supplies, medical supplies, home heating oil, building materials, housing, transportation, freight, and storage services, or gasoline or other motor fuels for a price of more than 10 percent above the price charged by that person for those goods or services immediately prior to the proclamation or declaration of emergency. However, a greater price increase is not unlawful if that person can prove that the increase in price was directly attributable to additional costs imposed on it by the supplier of the goods, or directly attributable to additional costs for labor or materials used to provide the services, provided that in those situations where the increase in price is attributable to additional costs imposed by the seller’s supplier or additional costs of providing the good or service during the state of emergency or local emergency, the price represents no more than 10 percent above the total of the cost to the seller plus the markup customarily applied by the seller for that good or service in the usual course of business immediately prior to the onset of the state of emergency or local emergency. (c) Upon the proclamation of a state of emergency declared by the President of the United States or the Governor, or upon the declaration of a local emergency by an official, board, Or other governing body vested with authority to make such a declaration in any county, city, or city and county, and for a period of 180 days following that proclamation or declaration, it is unlawful for a contractor to sell or offer to sell any repair or reconstruction services or any services used in emergency cleanup for a price of more than 10 percent above the price charged by that person for those services immediately prior to the proclamation or declaration of emergency. However, a greater price increase is not unlawful if that person can prove that the increase in price was directly attributable to additional costs imposed on it by the supplier of the goods, or directly attributable to additional costs for labor or materials used to provide the services, provided that in those situations where the increase in price is attributable to the additional costs imposed by the contractor’s supplier or additional costs of providing the service during the state of emergency or local emergency, the price represents no more than 10 percent above the total of the cost to the contractor plus the markup customarily applied by the contractor for that good or service in the usual course of business immediately prior to the onset of the state of emergency or local emergency. (d) Upon the proclamation of a state of emergency declared by the President of the United States or the Governor, or upon the declaration of a local emergency by an official, board, or other governing body vested with authority to make such a declaration in any county, city, or city and county, and for a period of 30 days following that proclamation or declaration, it is unlawful for an owner or operator of a hotel or motel to increase the hotel or motel’s regular rates, as advertised immediately prior to the proclamation or declaration of emergency, by more than 10 percent. However, a greater price increase is not unlawful if the owner or https://leginfo.legislature.ca.gov/faces/printCodeSectionWindow.xhtml?lawCode=PEN§ionNum=396.&op_statues=2016&op_chapter=671&op_sec... 1/2 n/13/2Ui l mtps://leginto.legislature.ca.gov/faces/printCodeSectionWindow.xhtrnl?lawCode=PEN§ionNum=396.&op_statues=2016&op_chapter=671... operator can prove that the increase in price is directly attributable to additional costs imposed on it for goods or labor used in its business, to seasonal adjustments in rates that are regularly scheduled, or to previously contracted rates.

(e) The provisions of this section may be extended for additional 30-day periods, as needed, by a local legislative body, local official, the Governor, or the California Legislature, if deemed necessary to protect the lives, property, or welfare of the citizens.

(f) A violation of this section is a misdemeanor punishable by imprisonment in a county jail for a period not exceeding one year, or by a fine of not more than ten thousand dollars ($10,000), or by both that fine and imprisonment. (g) A violation of this section shall constitute an unlawful business practice and an act of unfair competition within the meaning of Section 17200 of the Business and Professions Code. The remedies and penalties provided by this section are cumulative to each other, the remedies under Section 17200 of the Business and Professions Code, and the remedies or penalties available under all other laws of this state.

(h) For the purposes of this section, the following tenns have the following meanings:

(1) “State of emergency” means a natural or manmade emergency resulting from an earthquake, flood, fire, riot, storm, drought, plant or animal infestation or disease, or other natural or mamnade disaster for which a state of emergency has been declared by the President of the United States or the Governor of California.

(2) “Local emergency” means a natural or manmade emergency resulting from an earthquake, flood, fire, riot, storm, drought, plant or animal infestation or disease, or other natural or manmade disaster for which a local emergency has been declared by an official, board, or other governing body vested with authority to make such a declaration in any county, city, or city and county in California.

(3) “Consumer food item” means any article that is used or intended for use for food, drink, confection, or condiment by a person or animal. (4) “Repair or reconstruction services” means services perfonned by any person who is required to be licensed under the Contractors’ State License Law (Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code), for repairs to residential or commercial property of any type that is damaged as a result of a disaster.

(5) “Emergency supplies” includes, but is not limited to, water, flashlights, radios, batteries, candles, blankets, soaps, diapers, temporary shelters, tape, toiletries, plywood, nails, and hammers. (6) “Medical supplies” includes, but is not limited to, prescription and nonprescription medications, bandages, gauze, isopropyl alcohol, and antibacterial products.

(7) “Building materials” means lumber, construction tools, windows, and anything else used in the building or rebuilding of property. (8) “Gasoline” means any fuel used to power any motor vehicle or power tool. (9) “Transportation, freight, and storage services” means any service that is performed by any company that contracts to move, store, or transport personal or business property or that rents equipment for those purposes, including towing services. (10) “Housing” means any rental housing with an initial lease term of no longer than one year.

(11) “Goods” has the same meaning as defined in subdivision (c) of Section 1689.5 of the Civil Code.

(i) Nothing in this section shall preempt any local ordinance prohibiting the same or similar conduct or imposing a more severe penalty for the same conduct prohibited by this section.

(j) A business offering an item for sale at a reduced price immediately prior to the proclamation or declaration of the emergency may use the price at which it usually sells the item to calculate the price pursuant to subdivision (b) or (c).

(Amended by Stats. 2016, Ch. 671, Sec. 1. Effective January 1, 2017.)

https://leginfo.legislature.ca. gov/faces/printCodeSectionWindow.xhtml?lawCode=PEN§ionNum=396.&op_statues=2016&op_chapter=671&op_sec... 2/2 FAQs on Price Gouging | State of California - Department of Justice - Office of the Attor... Page 1 of 9

State o/Califomia Department ofjustice * ATTO Xavier Becerra imjiS X Si SgHfej Attorney General 1

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FAQs on Price Gouging

Links to topics below

FAQs about Price Gouging in California [for consumers] FAQs on Price Gouging [for local officials]

FAQs about Price Gouging in California [for consumers]

What is price gouging?

Is price gouging illegal in California?

When does California's anti-price gouging statute apply?

Who is subject to the statute?

What goods and services are covered by the statute?

How long do the restrictions of the statute apply?

What if I experienced price increases outside of the city or county where the emergency or disaster is occurring or occurred?

What if a seller increased the price of a good or service because the seller's costs of providing the good or service increased?

What are the consequences of violating the statute?

Can the Attorney General's office assist me with a claim against someone who price gouged me?

Should I report price gouging to the Attorney General's office?

What is price gouging?

Price gouging refers to sellers trying to take unfair advantage of consumers during an emergency or disaster by greatly increasing prices for essential consumer goods and services.

Is price gouging illegal in California?

Yes, in certain circumstances. California's anti-price gouging statute, Penal Code Section 396, prohibits raising the price of many consumer

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goods and services by more than 10% after an emergency has been declared.

Local laws may also contain their own prohibitions on price gouging.

When does California's anti-price gouging statute apply?

The statute applies immediately after the President of the United States, the Governor of California, or city or county executive officer declares a state of emergency resulting from any natural or manmade disaster, such as an earthquake, flood, fire, riot, or storm.

Who is subject to the statute?

Individuals, businesses, and other entities must comply with the statute.

What goods and services are covered by the statute?

The statute applies to the following major necessities: lodging (including rental housing, hotels and motels); food and drink (including food and drink for animals); emergency supplies such as water, flashlights, radios, batteries, candles, blankets, soaps, diapers, temporary shelters, tape, toiletries, plywood, nails, and hammers; and medical supplies such as prescription and nonprescription medications, bandages, gauze, isopropyl alcohol, and antibacterial products.

It also applies to other goods and services including: home heating oil; building materials, including lumber, construction tools, and windows; transportation; freight; storage services; gasoline and other motor fuels; and repair and reconstruction services.

How long do the restrictions of the statute apply?

The statute generally applies for 30 days after a declaration of emergency, although for reconstruction services and emergency cleanup services, it applies for 180 days after a declaration of emergency. The state legislature and local officials may extend the effective period of the statute beyond these timeframes.

What if I experienced price increases outside of the city or county where the emergency or disaster is occurring or occurred?

The statute does not restrict its protection to a city or county where the emergency or disaster is located. It is intended to prevent price gouging anywhere in the state where there is increased consumer demand as a result of the declared emergency. For example, if a fire in San Diego County causes residents to evacuate to neighboring Imperial County, hotels in Imperial County may not raise rates by more than 10% to take advantage of the increase in demand for lodging.

What if a seller increased the price of a good or service because the seller's costs of providing the good or service increased?

If the seller can prove that the increased price is directly attributable to increases in the cost of labor or materials needed to provide the good or service, the seller may not be liable under the statue.

What are the consequences of violating the statute?

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Violations of the price gouging statute are subject to criminal prosecution that can result in one-year imprisonment in county jail and/or a fine of up to $10,000. Violations are also subject to civil enforcement actions including civil penalties of up to $5,000 per violation, injunctive relief and mandatory restitution.

The Attorney General, local district attorneys, and private individuals can bring actions for violations of the statute.

Can the Attorney General's office assist me with a claim against someone who price gouged me?

Our office cannot give you legal advice or represent you. If you believe that you might have a claim for price gouging, you might consider

contacting an attorney to explore your options. For referral to a lawyer, you may contact the State Bar at (866) 442-2529 (toll-free in j California) or (415) 538-2250 (from outside California), or through its website at: http://www.calbar.ca.gov. If you cannot afford to pay an attorney, you may consider contacting your local legal aid office. For a referral, visit http://www.lsc.gov and click on the Find Legal , Assistance tab, or go to http://lawhelpca.org. I

Should I report price gouging to the Attorney General's office?

Even though our office cannot represent individuals, the Attorney General may, on behalf of the public, investigate or prosecute someone who has engaged in price gouging. Anyone who has been the victim of price gouging, or who has information regarding potential price gouging, is encouraged to immediately file a complaint with the Attorney General's Office by going to the Attorney General's website or by calling (800) 952-5225.

FAQs on Price Gouging [for local officials]

What is California's anti-price gouging statute?

When does the statute apply?

Who is subject to the statute?

What goods and services are covered by the statute?

How long do the restrictions of the statute apply?

Does the statute apply only in a city or county where the emergency or disaster is occurring or occurred?

What if a seller increased the price of a good or service because the seller's costs of providing the good or service increased?

What are the consequences for violating the statute?

What can local officials do to help protect consumers agajnst price gouging?

What is California's anti-price gouging statute?

California Penal Code section 396 is the state's anti-price gouging statute. The statute prohibits, in specified circumstances, raising the price of many consumer goods and services by more than 10% after an emergency has been declared.

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When does the statute apply?

Who is subject to the statute?

Individuals, businesses, and other entities must comply with the statute.

What goods and services are covered by the statute?

. Hotels and motels • Rental housing • Consumer food and drink, including food and drink for animals, and other consumer goods . Goods and services used for emergency cleanup . Emergency supplies, including water, flashlights, radios, batteries, candles, blankets, soaps, diapers, temporary shelters, tape, toiletries, plywood, nails, and hammers. ' • Medical supplies, including prescription and nonprescription medications, bandages, gauze, isopropyl alcohol, and antibacterial products

• Home heating oil • Building materials, including lumber, construction tools, and windows • Transportation • Freight • Storage services • Gasoline and other motor fuels • Repair and reconstruction services

How long do the restrictions of the statute apply?

Does the statute apply only in a city or county where the emergency or disaster is occurring or occurred?

The statute does not restrict its protection to a city or county where the emergency or disaster is located. It is intended to prevent price gouging in anywhere in the state where there is increased consumer demand as a result of the declared emergency.

What if a seller increased the price of a good or service because the seller's costs of providing the good or service increased?

If the seller can prove that the increased price is directly attributable to increases in the cost of labor or materials needed to provide that good or service, the seller may not be liable under the statue.

f»ttnc//nQn r*'i onv/mncnmprc/nnpprFAnmnfr/inrJnrf/iiotiotprG 11/90/7017 FAQs on Price Gouging | State of California - Department of Justice - Office of the Attor... Page 5 of 9

What are the consequences for violating the statute?

Violations of the price gouging statute are subject to criminal prosecution that can result in one-year imprisonment in county jail and/or a fine of up to $10,000. Violators are also subject to civil enforcement actions including civil penalties of up to $5,000 per violation, injunctive relief and mandatory restitution.

The Attorney General, local district attorneys, and private individuals can bring actions for violations of the statute.

What can local officials do to help protect consumers against price gouging?

Local officials may extend the statute's effective period, 30 to 180 days after a declaration of emergency, by additional 30-day periods if they deem it necessary to protect the lives, property, or welfare of citizens.

Additionally, the statute permits local ordinances to prohibit price gouging on their own terms, including imposing more severe penalties.

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