Environment

Brown's Office Brokers Settlement to Save Birds and Make Altamont Wind Turbines More Efficient

December 6, 2010
Contact: (916) 210-6000, agpressoffice@doj.ca.gov

OAKLAND -- Attorney General Edmund G. Brown Jr. today announced an agreement to upgrade the quarter-century-old wind turbines in Altamont Pass to make them more efficient and less deadly to migratory birds.

“This landmark settlement mandates the replacement of outmoded wind turbines with newer models that are more efficient, generate more power and are less harmful to eagles, falcons and other birds,” Brown said.

The Altamont Pass Wind Resources Area in Alameda and Contra Costa counties is the site of the world’s first wind turbines. These units, constructed more than three decades ago, are now outdated, inefficient and deadly to thousands of birds each year.

Today’s settlement is between environmental groups, the state, and NextEra Energy Resources, the largest turbine operator at the site. Under the agreement, NextEra will upgrade all its older-model turbines. Scientific data shows that newer, larger turbines are more efficient and kill far fewer birds.

A 2004 study commissioned by the California Energy Commission found that the 5,400 older turbines operating at Altamont Pass killed an estimated 1,766 to 4,271 birds annually, including between 881 and 1330 raptors such as golden eagles -- which are protected under federal law -- hawks, falcons and owls. The bird fatalities at Altamont Pass -- an important raptor breeding area that lies on a major migratory route -- are greater than on any other wind farm in the country.

In September 2005, Alameda County renewed permits for the turbines, but several Audubon Society chapters and Californians for Renewable Energy (CARE), a local environmental group, challenged the permits in a lawsuit under the California Environmental Quality Act (CEQA).

After a settlement failed to substantially reduce the large number of bird fatalities, Brown stepped in and brokered today’s agreement.

Under the agreement, NextEra will replace some 2,400 turbines over the next four years and will shut down all its existing turbines no later than 2015. The company also has agreed to erect the new turbines in environmentally friendly locations.

NextEra agreed to pay $2.5 million in mitigation fees, half to the state Energy Commission’s Public Integrated Energy Research Program and half to East Bay Regional Park District and the Livermore Area Regional Park District for raptor habitat creation.

A copy of the agreement is attached.

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PDF icon Altamont Agreement3.59 MB

Electronic Cigarette Maker Agrees to Stop Marketing to Minors

October 29, 2010
Contact: (916) 210-6000, agpressoffice@doj.ca.gov

OAKLAND — Attorney General Edmund G. Brown Jr. today announced a settlement to prevent Smoking Everywhere, one of the country's largest electronic cigarette sellers, from targeting minors and claiming that its products are a safe alternative to smoking.

“Smoking Everywhere aimed ads at minors and falsely claimed its products were safe,” Brown said. “This settlement stops the company from marketing these addictive products to kids or claiming they aren’t dangerous.”

Electronic cigarettes, or e-cigarettes, are battery-operated devices with nicotine cartridges designed to look and feel like conventional cigarettes. Instead of actual smoke, e-cigarettes produce a vapor from the nicotine cartridge that is inhaled by the user.

Smoking Everywhere and other electronic cigarette makers have claimed that e-cigarettes are safe because they contain no carcinogens or tar, and produce no second-hand smoke.

The U.S. Food and Drug Administration (FDA), however, found that some electronic cigarettes contain a variety of dangerous chemicals, including nicotine, carcinogens such as nitrosamines, and one brand also contained diethylene glycol, commonly known as antifreeze.

Some e-cigarettes come in strawberry, chocolate, mint, banana and cookies-and-cream flavors designed to appeal to a young audience.

Today's settlement prohibits Smoking Everywhere from marketing to minors and from making false or misleading claims about electronic cigarettes. Specifically, the company has agreed that it will not:

- Market or sell electronic cigarettes to minors. Its website will be age-restricted, and a customer will need to show a government-issued ID. Retail products will be behind a counter. Advertising must note the age restriction.

- Sell flavored electronic cigarette cartridges such as strawberry, mint or bubblegum that could appeal to minors.

- Advertise its products as a smoking cessation device unless the FDA approves them for that purpose.

- Claim that its products are safer than cigarettes or contain no tobacco, tar or carcinogens, and produce no second-hand smoke unless there is competent reliable scientific evidence to support the claims.

Smoking Everywhere also agreed to implement quality control standards to eliminate harmful substances in its products and submit to independent audits.

Smoking Everywhere will also provide a Proposition 65 warning that its products contain nicotine, a chemical known to be addictive and to cause birth defects or reproductive harm. The warning must appear on product packaging, Smoking Everywhere's website and at retail sites.

Smoking Everywhere and its owner will pay $170,000 in penalties and fees.

A copy of the consent judgment is attached.

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PDF icon Consent Judgment640.33 KB

Bail Set for Recycling Center Owner Accused in $7 Million Conspiracy Involving Millions of Pounds of Aluminum Cans

October 20, 2010
Contact: (916) 210-6000, agpressoffice@doj.ca.gov

RIVERSIDE – Bail of $300,000 was set today for a Riverside County recycling center owner arrested along with two employees last week by special agents with the Attorney General’s office for bilking the state’s beverage container recycling program out of $7 million. Bail was set at $30,000 each for the two employees.

“These people pretended to be recycling California aluminum cans when they were really importing tons of cans from Arizona, which are not eligible for California’s recycling refunds,” Attorney General Edmund G. Brown Jr. said. “They brazenly defrauded the state’s successful recycling program.”

Howard Leveson, 68, owner of Perris Valley Recycling in Perris, Riverside County; Jose Barragan, 35, the center’s general manager, and Susie Ambriz-Molina, 25, an office worker, were arrested October 12. Leveson was also charged with illegal possession of an assault weapon.

They face a total of 18 felony counts on charges including recycling fraud, grand theft and conspiracy. If convicted of all charges, they could each spend seven years in prison.

Special agents with the Attorney General’s office, working with the Department of Resources Recycling and Recovery (CalRecycle), conducted the investigation into Perris Valley Recycling with the help of the Riverside County Sheriff’s Department. The Attorney General’s office is prosecuting the case. CalRecycle oversees the state’s beverage container recycling program.

A search of Leveson’s home and business recovered $50,973 in cash and an Uzi assault rifle. In addition, Leveson’s assets and those of his business were frozen, including $4.2 million in bank accounts.

From February 2009 until July 2010, Perris Valley Recycling collected as much as 10,000 pounds per day in aluminum cans, far more than comparable facilities, which average about 500 pounds per day. The unusually high volume indicated the possibility that out-of-state containers were being brought to the facility.

In Arizona, aluminum is sold only for its scrap value. California, however, has the added incentive of the California Refund Value (CRV) deposit, which pays $1.57 for a pound of used aluminum cans.

Investigators estimate Perris Valley Recycling took in 4.4 million pounds of cans trucked from Arizona, then illegally claimed as much as $7 million in reimbursement from the California Beverage Container Recycling Fund.

As a deterrent to such fraud, recycling centers are required to report to CalRecycle purchases of more than 250 pounds of aluminum CRV material. According to investigators, Perris Valley Recycling hid the size of incoming loads by creating multiple weight tickets for trucks coming in with loads larger than 250 pounds, making it appear they were many individuals with smaller loads.

Over the past five months, 20 people have been arrested for making deliveries of out-of-state containers to the Perris center, whose slogan is “It’s Not Trash, It’s Cash.” Perris Valley Recycling remains open, however CalRecycle continues to conduct inspections and has placed restrictions on the center’s reimbursement claims.

In California, consumers pay CRV at the checkout stand when purchasing beverages in bottles or cans. When the empty container is redeemed at one of California’s more than 2,000 recycling centers, the CRV is returned to the consumer. Recycling centers recoup the CRV from the state and then make money by reselling the materials for scrap value. When an out-of-state can or bottle is fraudulently redeemed in California, the program loses money.

"By cracking down on fraud, we send an unmistakable message that criminal activity that undermines California’s beverage container recycling program will not be tolerated,” said CalRecycle Director Margo Reid Brown. “CalRecycle investigators will continue to work with law enforcement to put a stop to recycling fraud and hold accountable those responsible.”

California's program began in 1987. Last year, 82 percent of the CRV cans and bottles purchased in the state were returned for recycling. California is one of 11 states with a bottle and can redemption program.

To learn more about CalRecycle and the California Beverage Container Recycling Program, visit http://www.calrecycle.ca.gov/. CalRecycle contact: Mark Oldfield (916) 319-9942 or (916) 616-9683 (cell) or mark.oldfield@CalRecycle.ca.gov.

The suspects’ booking photographs are available upon request.

Brown Lauds Passage of the Nation's First Energy Storage Bill

September 29, 2010
Contact: (916) 210-6000, agpressoffice@doj.ca.gov

SACRAMENTO – Attorney General Edmund G. Brown Jr. today hailed the signing of AB 2514 (Skinner), the country’s first energy storage bill, as “a major step towards energy independence.”

Brown sponsored the new law to facilitate the development of solar and wind power, create jobs and increase California’s energy independence by providing a mechanism for storing wind and solar power for use at times it can’t be generated, such as nighttime. Governor Schwarzenegger signed the bill this afternoon.

“Californians want clean, renewable energy, and energy storage is an important part of that,” said Brown. “This law will help reduce global warming emissions, improve air quality, and will be a major step towards energy independence.’

The law will jumpstart the state’s energy storage industry and lead to the creation of up to 10,000 manufacturing jobs, according to the California Energy Storage Alliance. Companies already have invested in some technologies for storing energy, such as using a thermal reserve or pumped hydroelectricity. Newer technologies include storing energy in various kinds of large-scale batteries, transforming it into flywheels and compressing it into air fields.

Energy storage is important for an expanding renewable energy future because solar and wind power are not available at all times. Increasing storage allows California to take greater advantage of its renewable resources while making our electric power grid more reliable.

Expanded storage will also protect public health by reducing the need for the most polluting “peaker plants” that only operate during peak demand, usually during the summer when air conditioners in the state are in most intense use.

Attorney General Brown has fought to protect California’s environment and worked to build a clean-energy infrastructure for the 21st century. He has successfully defended the state’s landmark clean cars law, leading to improvements in fuel efficiency nationwide, and has worked with local governments to ensure that their long-term growth plans improve air quality by reducing traffic and greenhouse gas pollution. For more information, please see: http://ag.ca.gov/globalwarming/

Brown Encourages Californians to Drop Off Unused Prescriptions During Drug Take-Back Day

September 24, 2010
Contact: (916) 210-6000, agpressoffice@doj.ca.gov

SACRAMENTO -- Attorney General Edmund G. Brown Jr. encourages Californians to participate in “Prescription Drug Take-Back Day” tomorrow (Saturday, September 25) by taking their expired, unwanted and unused prescriptions to an official drop-off center, “a safe and easy way” to ensure proper disposal.

“Flushing unused prescription drugs down the toilet puts dangerous drugs into our waterways,” Brown said, “and throwing them into the trash can result in prescriptions landing in the wrong hands. Take-Back Day is a safe and easy way to clear your cabinets of leftover medication.”

Unused prescription drugs left sitting in a medicine cabinet contribute to drug abuse, especially among teenagers. In June, the Centers for Disease Control released a study showing that one out of five high school students in America abuses prescription drugs.

Other recent studies show that prescription drug abuse is soaring. The 2008 National Survey on Drug Use and Health found that there are some 6.2 million non-medical users of prescription drugs in the United States, and there are more Americans abusing prescription drugs than abusing cocaine, heroin and hallucinogenics.

Tomorrow’s National Take-Back Day provides a safe alternative to fouling our lakes and rivers or creating a risk of prescription drugs falling into the wrong hands. Californians can bring prescription medications and over-the-counter tablets and capsules to any of the nearly 200 collection centers participating in the state. The U.S. Drug Enforcement Agency’s website has a listing of all drop-off locations at http://www.deadiversion.usdoj.gov/takeback/

Collection centers are open from 10:00 a.m. to 2:00 p.m. and staffed by law enforcement officials. The medications will be destroyed in accordance with federal and state regulations.

Intravenous solutions, injectables, needles and illicit substances such as marijuana or methamphetamine will not be accepted.

Brown's office has been at the forefront of efforts to combat prescription drug abuse in California. In addition to costing the state millions of dollars each year, prescription drug abuse can have serious public safety consequences. Many abusers hold down regular jobs, including driving trucks, operating transit vehicles, and working in medical facilities.

Brown Files Charges Against Sham Electronic Waste Recyclers

August 25, 2010
Contact: (916) 210-6000, agpressoffice@doj.ca.gov

SAN JOSE – Attorney General Edmund G. Brown Jr. today announced criminal charges against the owner and two managers of San Jose-based electronic waste recycler Tung Tai Group, after the company submitted $1 million in “fraudulent and fictitious” reimbursement claims for more than 2 million pounds of electronic waste that they never recycled.

“Tung Tai Group attempted to collect $1 million in fraudulent and fictitious state reimbursements for millions of pounds of electronic waste that didn’t exist,” Brown said. “This brazen scheme is a violation of state law and the public trust.”

Two managers, John Chen, 38, of Hillsborough, and Jason Huang, 65, of Foster City, were arrested last week and posted bail, set at $1 million each. The owner, Joseph Chen, 69, of Hillsborough, is in China and arrangements are being made for him to return to the U.S. to be arraigned on the charges.

Together, the men face 17 criminal counts for submitting false documents, attempting to defraud the state, forgery and hazardous waste storage and handling violations. If convicted, the men face a maximum of nine years in prison.

“These arrests show that this department is committed to keeping e-waste out of our landfills and to rooting out those who would defraud our system for private financial gain,” said Maziar Movassaghi, acting director of the Department of Toxic Substances Control.

Electronic waste recyclers break down televisions, computer monitors, laptop computers and other waste collected from California businesses and households. Recyclers break the waste into various recyclable parts and submit a claim for reimbursement to the Department of Resources Recycling and Recovery (CalRecycle). On average, CalRecycle pays 39 cents per pound of material recycled.

In late 2008, CalRecycle auditors contacted investigators at the Department of Toxic Substances Control after noticing discrepancies in the claims submitted by Tung Tai and the records kept by Golden State Records and Recycling, a company that collected and transferred materials to Tung Tai.

In July 2009, agents searched the Tung Tai facility and discovered two separate sets of records, which provided evidence that the company submitted claims to CalRecycle between January and September 2008 that grossly inflated the amount of pounds of recycled material eligible for reimbursement.

For example, one set of records showed that a collector delivered 62,000 pounds of material to Tung Tai, but forms submitted to CalRecycle for reimbursement listed nearly 555,000 pounds. This deception increased the amount Tung Tai sought from the state by more than $235,000.

In addition, Tung Tai submitted records to CalRecycle listing items that were never delivered to Tung Tai by any approved collector of electronic waste.

The state did not make payments on the falsified and inflated requests for reimbursement, which totaled $1 million.

These charges underscore Brown’s commitment to prosecuting fraud against state agencies. In May, Brown shut down three recycling fraud rings that smuggled cans and bottles worth more than $3.5 million in recycling fees into California.

John Chen and Huang are being arraigned at the San Jose Courthouse on September 9.

A copy of the complaint, which was filed in Santa Clara Superior Court, is attached.

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PDF icon n1983_tung_tai_complaint.pdf261.04 KB

Brown Takes Action to Make Children's Bounce Houses Safe

August 11, 2010
Contact: (916) 210-6000, agpressoffice@doj.ca.gov

OAKLAND – Continuing his fight to ensure the safety of equipment used by children, Attorney General Edmund G. Brown Jr. today filed a lawsuit against several companies involved in manufacturing children’s bounce houses because some of the inflatable structures contain unsafe amounts of lead.

Testing done by the Center for the Environmental Health and the Attorney General’s office found that some of the vinyl in the bounce houses contains lead levels that violate both federal and state regulations.

“Kids at birthday parties can spend hours playing in bounce houses,” Brown said. “The goal of our lawsuit is to eliminate any chance they will be exposed to lead while they’re jumping around having a good time.”

Bounce houses are large inflatable structures designed for children to play in and on. Facilities that feature indoor inflatables are popular sites for children’s parties, serving millions of children a year. Companies also rent inflatables for use at children’s parties.

In February and March 2010, the Attorney General’s office received notices from the Center for Environmental Health alleging that its testing showed parts of some bounce houses were contaminated with high levels of lead, ranging from 5,000 parts per million (ppm) to 29,000 ppm. Federal limits on lead in children’s products are 90 ppm for painted surfaces and 300 ppm for all other parts.

Today’s lawsuit is intended to force these companies to stop using lead-containing vinyl immediately and to cease selling the lead-containing products. In addition, the action is intended to warn purchasers of these products, and require party places and rental companies to post warnings.

The main exposure pathway from the bounce house to the child is hand-to-mouth. Lead is transferred from the vinyl to a child’s hand during play and then to the mouth.

There is no safe exposure to lead. The tested levels of lead are not high enough by themselves to cause acute health problems, but some people, especially children, who are exposed to lead from a variety of sources can suffer health problems. For that reason, it’s important to eliminate sources of lead whenever possible.

Companies named in the lawsuit include:

Bay Area Jump
Cutting Edge Creations
Funtastic Factory, known as einflatables.com
Magic Jump
Leisure Activities Co.
Thrillworks
The Inflatable Store
Jump for Fun, Inc.
Jump for Fun National, Inc.

In the past year, Brown has initiated several enforcement actions against manufacturers and retailers for lead in products designed for children.

In July, Brown reached a settlement with artificial turf manufacturers to lower lead levels in turf fields and playgrounds. In June, Brown demanded that Rainbow and 5-7-9 stores remove from shelves jewelry with parts containing as much as 97% lead.

Earlier this year, Target removed teddy bears from its stores after Brown notified the company that lead was found in the product. In November 2009, Brown warned several retailers, including Walmart, Sears and Walgreens, to remove several products designed for children that were found to contain excessive levels of lead.

A copy of today’s complaint is attached.

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PDF icon Bounce Houses Complaint476.74 KB

Brown Announces Electronic Cigarette Maker's Agreement to Stop Deceptive Marketing and Sales to Minors

August 3, 2010
Contact: (916) 210-6000, agpressoffice@doj.ca.gov

OAKLAND – Attorney General Edmund G. Brown Jr. today announced a settlement with Sottera, one of the country’s largest electronic cigarette producers, to prevent the company from targeting minors and claiming that electronic cigarettes are a safe alternative to smoking.

"Electronic cigarette companies have targeted minors with fruit-flavored products and misleading claims that their products are safe,' Brown said. 'This settlement will stop Sottera from marketing these dangerous and addictive products to kids.”

Brown and Sottera reached the settlement without litigation based on Sottera’s willingness to adopt measures that address Brown’s concerns about the dangers of its electronic cigarettes. In January this year, Brown filed suit against the nation’s other leading e-cigarette retailer, Smoking Everywhere. That lawsuit is proceeding in Alameda County Superior Court.

Electronic cigarettes, or e-cigarettes, are battery-operated devices with nicotine cartridges designed to look and feel like conventional cigarettes. Instead of actual smoke, e-cigarettes produce a vapor from the nicotine cartridge that is inhaled by the user. Sottera and other electronic cigarette makers have claimed in advertisements and other marketing materials that the e-cigarettes have no carcinogens, no tar, no second-hand smoke, and are therefore safe.

However, the U.S. Food and Drug Administration (FDA) has determined that electronic cigarettes contain a variety of dangerous chemicals, including nicotine, carcinogens such as nitrosamines and, in at least one case, diethylene glycol, commonly known as antifreeze.

The products are often marketed with advertisements, and flavors like strawberry, chocolate, mint, banana and cookies-and-cream, that are designed to appeal to a youthful target audience.

Today’s settlement prohibits Sottera from marketing to minors and from making false or misleading claims about electronic cigarettes. Specifically, the company has agreed that it will not:

• Sell electronic cigarettes to minors. Its website will be age-restricted, and a customer will need to provide a government ID before making a purchase. Retail products will be behind a counter. Any advertising will note the age restriction.
• Sell flavored electronic cigarette cartridges, such as strawberry, mint or bubblegum, that could appeal to minors.
• Advertise its product as a smoking cessation device unless the FDA approves it as such.
• Sell cartridges that contain vitamins unless the company obtains competent and reliable scientific evidence to support an implied health claim.
• Claim that the product is safer than cigarettes, contains no tobacco, no tar, no carcinogens or no second-hand smoke unless there is competent reliable scientific evidence to support the claims.

Sottera also agreed to adopt and implement quality control standards for its products to preclude the presence of harmful substances. The company will regularly be subject to independent audits.

Sottera will also provide a Proposition 65 warning that its products contain nicotine, a chemical known by the State of California to cause birth defects or reproductive harm. The warning will include additional information about risks associated with nicotine, including that it is addictive and toxic if swallowed. The warning will appear on product packaging, Sottera’s website and at retail sites.

Sottera will also pay $85,000 in penalties and fees.

A copy of the consent judgment is attached.

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PDF icon Sottera Consent Judgment378.11 KB

Brown Reaches Settlement to Reduce Children's Lead Exposure in Artificial Turf

July 16, 2010
Contact: (916) 210-6000, agpressoffice@doj.ca.gov

OAKLAND – Continuing his fight to reduce children’s exposure to lead, Attorney General Edmund G. Brown Jr. today announced a settlement that requires two of the largest makers and installers of artificial turf to eliminate nearly all lead from their products.

“Because schools, public parks and daycare centers use artificial turf, it’s critical that we minimize the amount of lead it contains,” Brown said. “Today’s agreement will get the lead out of artificial turf in playgrounds and ball fields around the state.”

The settlement requires Georgia-based Beaulieu, LLC, the country’s largest supplier of artificial turf to retailers, and Field Turf, USA, the nation’s largest maker and installer of artificial turf fields, to reformulate their products to reduce lead levels to negligible amounts.

The agreement follows a landmark settlement last year with AstroTurf, LLC. Collectively, the three companies control most of the artificial turf market, and their settlements with Brown’s office establish the nation’s first enforceable standards applicable to lead in artificial turf.

Brown brought the case in 2008 against these companies for excessive lead levels after testing by the Center for Environmental Health found high concentrations of lead in their products. Brown’s office confirmed these findings in independent tests.

Today’s settlement requires Beaulieu and FieldTurf to change their products so that they contain less than 50 parts per million lead. Lab results found some artificial turf products with more than 5,000 parts per million, which is more than 10 times state and federal guidelines for content in children’s products. Lead is added to the products to keep colors vibrant.

There is no safe exposure to lead. In lengthy or high exposures, it is toxic to many organs and tissues including the heart, bones, intestines and kidneys. Since excessive exposure can interfere with development of the nervous system, it is particularly dangerous in children and can cause permanent learning and behavior disorders.

Lead in artificial turf usually enters the human body hand-to-mouth. Children playing on it get lead onto their hands and stick them into their mouths. Hand washing is a good way of reducing exposure.

In addition to reformulating their products, Beaulieu agreed to pay for wipe-testing of products in California daycare facilities, schools and playgrounds that were purchased after October 2004. FieldTurf took action in 2003 to reduce lead in its turf products. This settlement requires it to replace turf fields installed in California before November 2003 at a discount if they test high for lead, and also to reduce the lead content of its new products.

The Los Angeles City Attorney and Solano County District Attorney joined Brown in the case against the three companies. AstroTurf paid $170,000 in penalties, grants and fees, and agreed to improve its products. Beaulieu will pay $285,000 and FieldTurf will pay $212,500.

In the past year, Brown has initiated several enforcement actions against manufacturers and retailers for lead in products designed for children.

In June, Brown demanded that Rainbow and 5-7-9 stores remove from their shelves jewelry with parts containing as much as 97% lead. Earlier this year, Target removed teddy bears from its stores after Brown notified the company that lead was found in the bears. In November 2009, Brown warned several retailers, including Walmart, Sears and Walgreens, to remove from their store shelves several products designed for children found to contain excessive levels of lead.

Copies of the artificial turf settlements are attached.

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PDF icon FieldTurf Consent Judgment211.77 KB
PDF icon Beaulieu Consent Judgment1.62 MB

Brown Fights to Preserve Job-Creating Clean Energy Program

July 14, 2010
Contact: (916) 210-6000, agpressoffice@doj.ca.gov

SAN DIEGO – Attorney General Edmund G. Brown Jr. today filed a lawsuit against mortgage giants Fannie Mae and Freddie Mac for blocking an innovative California clean energy program that was designed to create tens of thousands of jobs, promote energy independence and lower utility bills.

“As the nation struggles through the worst recession in modern times, California is taking action in federal court to stop the regulatory strangulation of the state’s grass-roots program that is spreading across the country,” said Brown.

The PACE (Property Assessed Clean Energy) program stimulates the economy and promotes energy independence by assisting homeowners and small businesses in securing funding to make their properties more energy efficient. Property owners repay the costs of energy improvements through assessments spread out over a decade or more. Under California law, these costs are classified as tax assessments.

Ignoring California law, Fannie Mae and Freddie Mac have effectively shut down the program by wrongly characterizing PACE assessments as loans that must be subordinate to their own mortgages. The Federal Housing Finance Agency affirmed Fannie and Freddie’s decision on July 6 over the objections of Attorney General Brown and congressional leaders.

For California, the stakes are high. Almost half the counties in California have developed PACE programs or plan to start one. The mortgage giants’ actions have stopped these programs dead in their tracks, destroying job creation, stifling energy independence and hampering California’s economic recovery. Clean energy companies have had to lay off workers, and California risks losing more than $100 million in federal stimulus money.

“Fannie Mae and Freddie Mac received enormous federal bailouts,” Brown said, “but now they’re throwing up impermeable barriers to bank lending that creates jobs, stimulates the economy and boosts clean energy.”

One example of the effects of this: San Diego planned to launch a PACE program this summer but it has now been suspended indefinitely, leaving more than 100 people trained in energy retrofits without jobs.

“I believe that the PACE program is critical to stimulating our local and statewide economy,” said San Diego Mayor Jerry Sanders. “I’m glad to see this lawsuit filed so that this novel program can continue.”

In his lawsuit, Brown asks the court to apply California law, require Fannie Mae and Freddie Mac to recognize PACE assessments for what they are, and allow PACE to move California’s economy forward.

The lawsuit is attached to this release. A letter from Attorney General Brown to President Obama is also attached. For a copy of the Attorney General’s letter sent to federal housing regulators in May, please see http://ag.ca.gov/newsalerts/release.php?id=1920&

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PDF icon PACE Complaint2.61 MB
PDF icon Letter to President Obama88.09 KB