BILL ANALYSIS Ó Bill No: SB 401 SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION Senator Roderick D. Wright, Chair 2011-2012 Regular Session Bill Analysis SB 401 Author: Fuller Introduced: February 16, 2011 Hearing Date: April 12, 2011 Consultant: Paul Donahue SUBJECT : Regulations: Review Process SUMMARY : Specifies that every regulation proposed by a state agency after January 1, 2012, shall include a provision repealing the regulation in 5 years. Existing law : The Administrative Procedure Act governs the procedure for the adoption, amendment, or repeal of regulations by state agencies and for the review of those regulatory actions by the Office of Administrative Law. (Govt. Code § 11340 et seq.) This bill : 1) Requires that every regulation proposed by an agency after January 1, 2012, include a provision repealing the regulation in 5 years. 2) Prohibits OAL from approving a proposed regulation unless it contains repeal provisions. 3) Authorizes an agency, in the year prior to a regulation's scheduled repeal, to amend the regulation to extend the repeal date after complying with certain public hearing requirements. COMMENTS : 1) Purpose and intent : The author notes that businesses have left California, contemplated leaving the state, or dismissed ever relocating to California often cite the SB 401 (Fuller) Page 2 state's regulatory climate as the primary reason for their decision. Job gains in Texas and Arizona far outpace those of California. The author states that, for years, regulations have been adopted by state agencies with no follow-up review of the new rules to find out whether a rule is achieving its original stated objective and not causing economic harm. The author believes that the built-in review process would allow a determination as to whether a new rule is necessary and would allow accumulation of at least 4 years' worth of data to develop a thorough cost-benefit analysis of the new regulation. 2) Support : The supporters note that smart regulations are necessary, cost effective, fairly enforced and regularly updated to reflect changing conditions and needs. Currently California regulations are adopted, reviewed, and approved under a system established in 1979 and only modestly changed thereafter. Since that time the Legislature has granted massive new powers to government agencies and there has been exponential growth in regulations concerning every aspect of the economy, mostly outside the control or even awareness of elected officials. Supporters believe it is reasonable to periodically examine how a regulation has been implemented for the previous 5 years, to hear public comment and bring to light problems that could be resolved by new regulations or legislation. 3) Opposition : Opponents state that nobody could argue with the notion that updating and streamlining regulations is sensible and serves taxpayers' interests. However, an automatic, across-the-board sunset mandate is totally unnecessary because review of existing regulations can be effectively addressed by agencies on a case-by-case basis, and, moreover, existing law already provides for targeted requests for review from the public and from the Legislature. The opponents to the bill contend that this type of sunset mandate is completely unrealistic given the enormous resources it would entail. They believe it would inordinately consumer limited government resources and necessarily distract the government from critically important tasks. SB 401 (Fuller) Page 3 4) Note : This bill is double referred to Senate Environmental Quality Committee. 5) Related legislation : SB 366 (Calderon, 2011) . Requires each state agency to identify any regulations that are duplicative, overlapping, inconsistent, or out of date, and adopt, amend, or repeal regulations to reconcile or eliminate any duplication, overlap, inconsistency, or out-of-date provisions. (Pending in this Committee) SB 396 (Huff, 2011) . Requires each state agency to review each regulation adopted prior to January 1, 2011, and report to the Legislature on the regulations. Beginning in 2018, at least every 5 years afterwards, each agency is directed to review its regulations that have been in effect for at least 20 years and submit a report to the Legislature on its findings associated with the review. (On calendar today in this Committee) SUPPORT: American Chemistry Council American Council of Engineering Companies of California Association of California Water Agencies California Association of Bed and Breakfast Inns California Building Industry Association California Business Properties Association California Chapter of the American Fence Association California Construction and Industrial Material Association California Fence Contractors' Association California Grocers Association California Hotel and Lodging Association California Manufacturers and Technology Association California Restaurant Association California Retailers Association Consumer Specialty Products Association Engineering and Utility Contractors Association Engineering Contractors' Association Flasher Barricade Association Golden State Builders Exchanges Marin Builders' Association OPPOSE: SB 401 (Fuller) Page 4 American Lung Association in California Breathe California CA Conference Board of the Amalgamated Transit Union CA Conference of Machinists California League of Conservation Voters CA Official Court Reporters Association California Teamsters Public Affairs Council Engineers and Scientists of California International Longshore and Warehouse Union Professional and Technical Engineers, Local 21 Sierra Club California Transform UNITE HERE! United Food and Commercial Workers - Western States Conference Utility Workers Union of America, Local 132 FISCAL COMMITTEE: Yes **********