Section 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.Cal. Code Regs. Tit. 11, § 3204
1. New section filed 1-17-2003; operative 1-17-2003 pursuant to Government Code section 11343.4 (Register 2003, No. 3).
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.
1. New section filed 1-17-2003; operative 1-17-2003 pursuant to Government Code section 11343.4(Register 2003, No. 3).
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).