BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 2738
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          ASSEMBLY THIRD READING
          AB 2738 (Niello)
          As Introduced  February 19, 2010
          Majority vote 

           BUSINESS & PROFESSIONS    10-1  APPROPRIATIONS      17-0        
           
           ----------------------------------------------------------------- 
          |Ayes:|Hayashi, Emmerson,        |Ayes:|Fuentes, Conway, Ammiano, |
          |     |Conway, Eng, Hernandez,   |     |Bradford, Charles         |
          |     |Hill, Ma, Niello, Ruskin, |     |Calderon, Coto, Davis, De |
          |     |Smyth                     |     |Leon, Hall, Harkey,       |
          |     |                          |     |Miller, Nielsen, Norby,   |
          |     |                          |     |Skinner, Solorio,         |
          |     |                          |     |Torlakson, Torrico        |
          |-----+--------------------------+-----+--------------------------|
          |Nays:|Nava                      |     |                          |
          |     |                          |     |                          |
           ----------------------------------------------------------------- 
           SUMMARY  :  Revises current law related to the adoption,  
          amendment, or repeal of regulations by state agencies.   
          Specifically,  this bill  :  

          1)Requires a state agency, when submitting proposed regulations  
            to the Office of Administrative Law (OAL), to:

        a)   Acknowledge that the imposition of a performance standard is  
               generally the preferred alternative to mandating specific  
               methods of compliance;

        b)   Identify and describe the elements of a regulation that  
               require, or may require through at least one alternative  
               method of compliance, the use of specific technologies,  
               equipment, actions, or procedures, or other potentially  
               proprietary compliance scheme, methodology, or process;  
               and,

        c)   Provide a justification for departing from the acknowledged  
               preference of imposing performance standards and a detailed  
               specification as to why certain technologies, equipment,  
               actions, or procedures are required to meet the goals of  
               the regulation, instead of imposing a performance standard.

          2)Delete the requirement, for a regulation that mandates the use  








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            of specific technologies or equipment or prescribe specific  
            actions or procedures, that the imposition of performance  
            standards be considered as an alternative.

           EXISTING LAW  :

          1)Establishes requirements for the adoption, publication,  
            review, and implementation of regulations by state agencies,  
            under the Administrative Procedure Act (APA).

          2)Requires a state agency to submit to the OAL an initial  
            statement of reasons for proposing the adoption, amendment,  
            repeal of a regulation that includes a description of  
            reasonable alternatives to the regulation.

          3)Requires, for a regulation that would mandate the use of  
            specific technologies or equipment or prescribe specific  
            actions or procedures, that the imposition of performance  
            standards be considered as an alternative.

           FISCAL EFFECT  :   According to the Assembly Appropriations  
          Committee:

          1)The workload for the OAL would be minor and absorbable within  
            existing resources.

          2)State agencies are currently required to justify their  
            proposed regulations using a detailed and deliberative  
            process.  To the extent this legislation requires agencies to  
            be more descriptive in their regulations, it would increase  
            the workload for those departments.  That workload should be  
            absorbable within existing resources.

           COMMENTS  :  According to the author's office, "AB 2738 would  
          improve on current law by requiring greater justification,  
          transparency, and specificity when an agency promulgates  
          regulations that mandate the use of a specific technology.  

          "During the rulemaking process, a state agency is required to  
          prepare an Initial Statement of Reasons (ISOR) whenever it  
          proposes to create, repeal or amend a regulation.  [Government  
          Code Section 11346.2(b)]  An ISOR describes the basis of the  
          regulation, the purpose of the rule, how it is intended to be  
          implemented and the data on which the public agency relied to  








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          develop the proposed regulatory change.  Importantly, an ISOR  
          must provide a description of reasonable alternatives to the  
          rule being proposed.

          "AB 2738 would retain the requirements for an agency to review  
          reasonable alternatives, but it would amend the language  
          regarding the consideration of a performance standard as an  
          alternative.  

          "AB 2738 would instead require an agency to acknowledge that a  
          performance standard is generally a preferred alternative to a  
          specific technology mandate, specify all ways in which specific  
          technology may be mandated, and provide a detailed justification  
          of why a specific technology is being proposed over the  
          preferred alternative.  As the statutorily defined preferred  
          alternative, a performance standard would still be included in  
          any agency's review of reasonable alternatives, as under current  
          law."

          The APA governs the adoption of regulations by state agencies  
          for purposes of ensuring that they are clear, necessary, legally  
          valid, and available to the public.  In seeking adoption of a  
          proposed regulation, state agencies must comply with procedural  
          requirements that include publishing the proposed regulation  
          along with supporting statement of reasons; mailing and  
          publishing a notice of the proposed action 45 days before a  
          hearing or before the close of the public comment  period; and  
          submitting a final statement to OAL which summarizes and  
          responds to all objections, recommendations, and proposed  
          alternatives that were raised during the public comment period.   
          The OAL is then required to approve or reject the proposed  
          regulation within 30 days.
           
          More specifically, the APA requires state agencies to justify  
          their proposed regulations by evaluating the technical and  
          empirical evidence that supports the proposed regulation in  
          comparison to reasonable alternatives, and specifically requires  
          specific supporting evaluation and documentation supporting a  
          proposed regulation that requires the use of a specific  
          technology or which could have a negative impact on business.

           Analysis Prepared by  :    Rebecca May / B.,P. & C.P. / (916)  
          319-3301                                               FN:  
          0004203








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