In light of Governor Gavin Newsom’s recent decision to veto Senate Bill 1432 (the “Bill”), California hospitals must quickly act to upgrade their facilities within the next five years. Governor Newsom’s decision to veto the Bill will likely result in an uptick in business for contractors in the coming years.

Historical Background

Following the 1971 Sylmar earthquake, which decimated multiple hospitals and demonstrated the dire need for additional seismic safety building standards for California’s hospitals, the Legislature passed the Alfred E. Alquist Seismic Safety Act (“Seismic Safety Act”), which established specific seismic safety requirements for hospitals built on or after March 7, 1973. In 1994, the Northridge earthquake reinforced the need for such building standards, as many hospitals built prior to March 7, 1973, suffered major structural damage, while hospitals built in accordance with the standards set forth in the Seismic Safety Act suffered far less structural damage. As a result, Senate Bill 1953 (“SB 1953”) was signed into law on September 21, 1994, requiring hospitals that were build prior to March 7, 1973, to be brought up to the structural standards set forth in the Seismic Safety Act by January 1, 2030. Under SB 1953, if a hospital fails to comply with the 2030 retrofit deadline, it must immediately discontinue its operations.

SB 1432

According to a report published by the RAND Corporation, a self-proclaimed “nonprofit, nonpartisan research organization,” the estimated total cost to bring California Hospitals into compliance by 2030 is between $34 and $143 billion. Hospitals have argued that extensions to the current 2030 deadline are necessary in light of the financial toll such building standards have and will continue to impose on them. In an effort to combat this financial toll, the Bill was introduced by a bipartisan group of senators. According to the Legislative Counsel’s Digest:

This bill would authorize a hospital owner or operator to submit an application, by specified dates, to the [Department of Health Care Access and Information] for additional extensions to the compliance deadline. The bill would require the department to grant or deny an extension of the deadline for substantial compliance with seismic safety regulations or standards up to January 1, 2035.

While the Bill successfully passed through the California State Assembly and California State Senate, on September 12, 2024, the Bill was vetoed by Governor Newsom. That same day, Governor Newsom sent the California State Senate a Veto Message, wherein he outlined the reasons for his decision to veto the Bill and highlighted the fact that “California hospitals have known for 30 years that they face a 2030 deadline to be fully compliant.” Governor Newsom continued,

[t]he question is not if California will experience a significant earthquake, it’s when. According to the U.S. Geological Survey, Northern California faces a 72 percent chance of a magnitude 6.7 or greater earthquake by 2043. Any extensions that may be considered to the 2030 deadline must balance the increased risk for the patients, hardworking hospital staff and emergency responders, and people living in that community. Providing an extended deadline should be limited in scope, granted only on a case-by-case basis to hospitals with demonstrated need and a clear path to compliance, and in combination with strong accountability and enforcement mechanisms.

What this Means

Opponents of the Bill believe Governor Newsom’s veto provides communities – particularly rural communities – with peace of mind, knowing that California hospitals will remain operational through future seismic events, which are an unfortunate inevitability in California. On the other hand, proponents of the Bill argue the financial impact that the fast-approaching 2030 deadline imposes on California hospitals will force some hospitals to close their doors. Both of these positions may prove correct in the years to come. As hospitals race to meet the 2030 seismic retrofit deadline without the relief SB 1432 would have provided, the construction industry will play a critical role in ensuring these essential upgrades are completed safely, efficiently, and on time.

 

Evan K. McNally, Esq., is an associate attorney with the law firm of Dunn DeSantis Walt & Kendrick. Evan’s practice is in civil litigation, with a focus in labor and employment law, and commercial disputes.

Dunn DeSantis Walt & Kendrick provides a broad spectrum of legal services to businesses of all sizes, from small, local start-ups and non-profits to large, national companies. DDWK’s real estate development and construction practice includes representing all segments of the development and construction industries on both private and public projects. 

You can find additional information and resources related to helping business owners and their businesses on the DDWK website.