BILL ANALYSIS Ó
SB 617
Page 1
( Without Reference to File )
SENATE THIRD READING
SB 617 (Ron Calderon and Pavley)
As Amended September 8, 2011
Majority vote
SENATE VOTE :37-0
BUSINESS & PROFESSIONS 9-0
ADMINISTRATIVE REVIEW 7-0
-----------------------------------------------------------------
|Ayes:|Hayashi, Bill Berryhill, |Ayes:|Dickinson, Block, |
| |Allen, Butler, Eng, | |Buchanan, Cook, Fletcher, |
| |Hagman, Hill, Ma, Smyth | |Huber, Portantino |
| | | | |
-----------------------------------------------------------------
SUMMARY : Revises various provisions of the Administrative
Procedures Act (APA) and requires each state agency to prepare a
standardized regulatory impact analysis, as specified, with
respect to the adoption, amendment, or repeal of a major
regulation, proposed on or after November 1, 2013.
Specifically, this bill :
1)Defines "major regulation" to mean any proposed adoption,
amendment, or repeal of a regulation subject to review by the
Office of Administrative Law (OAL), as specified, that will
have an economic impact on California business enterprises and
individuals in an amount exceeding $50 million, as estimated
by the agency.
2)Requires agencies to include, when submitting an initial
statement of reasons (ISOR) for adopting, amending, or
repealing a regulation to OAL, the problem the agency intends
to address, enumerating the benefits anticipated from the
regulatory action, including the benefits or goals provided in
the authorizing statute.
3)Requires a standardized regulation impact analysis, as
specified, be included in the ISOR for a proposed major
regulation on or after November 1, 2013.
4)Requires agencies proposing to adopt, amend, or repeal a
SB 617
Page 2
regulation that is not a major regulation or that is a major
regulation proposed prior to November 1, 2013, to prepare an
economic impact analysis, as specified, that includes the
benefits of the regulation to the health and welfare of
California residents, worker safety, and the state's
environment.
5)Requires agencies proposing to adopt, amend, or repeal a major
regulation on or after November 1, 2013, to prepare a
standardized regulatory impact assessment as prescribed by the
Department of Finance (DOF), as specified, addressing the
following:
a) The creation or elimination of jobs within the state;
b) The creation of new businesses or the elimination of
existing businesses within the state;
c) The competitive advantages or disadvantages for
businesses currently doing business within the state;
d) The increase or decrease of investment in the state;
e) The incentives for innovation in products, material, or
processes; and,
f) The benefits of the regulations, including benefits to
the health, safety, and welfare of California residents,
worker safety, and the state's environment and quality of
life, among any other benefits identified by the agency.
6)Exempts the University of California, the Hastings College of
Law, and the Fair Political Practices Commission from the
requirements of this bill.
7)Specifies that regulatory impact analyses shall inform the
agencies and the public of the economic consequences of
regulatory choices, not reassess statutory policy.
8)Provides that the baseline for the regulatory analysis shall
be the most cost-effective set of regulatory measures that are
equally effective in achieving the purpose of the regulation
in a manner that ensures full compliance with the authorizing
statute or other law being implemented or made specific by the
SB 617
Page 3
proposed regulation.
9)Requires state agencies proposing to adopt, amend, or repeal a
major regulation on or after November 1, 2013, and that have
prepared a standardized regulatory impact assessment, to
submit that assessment to DOF upon completion.
10)Requires DOF to comment, within 30 days of receipt of the
assessment, on the extent to which the assessment adheres to
the regulations adopted, as specified. Authorizes state
agencies to update their analysis to reflect these comments,
as specified.
11)Requires DOF, in consultation with OAL and other state
agencies, to adopt regulations for conducting the standardized
regulatory impact analyses, as specified.
12)Requires agencies to include a standardized regulatory impact
analysis in the ISOR, as specified.
13)Requires DOF to submit the adopted regulations to the Senate
and Assembly Committees on Governmental Organization and to
publish them in the State Administrative Manual by November 1,
2013.
14)Requires the notice of proposed adoption, amendment, or
repeal of a regulation submitted by the proposing agency to
OAL to also include:
a) A policy statement overview of the benefits anticipated
by the proposed adoption, amendment, or repeal of a
regulation, including, to the extent applicable,
nonmonetary benefits such as the protection of public
health and safety, worker safety or the environment, the
prevention of discrimination, the promotion of fairness or
social equity, and the increase in openness and
transparency in business and government, among other
things;
b) An evaluation of whether a proposed regulation is
inconsistent or incompatible with existing state
regulations;
c) A statement of the results of the economic impact
SB 617
Page 4
assessment or the standardized regulatory impact analysis,
as specified; and,
d) A statement that the adopting agency must determine that
no reasonable alternative considered by the agency or that
has otherwise been identified would be more cost-effective
to affected private persons and equally effective in
implementing the statutory policy or other provision of
law. For a major regulation proposed on or after November
1, 2013, the statement shall be based upon the standardized
regulatory impact analysis of the proposed regulation, as
specified, as well as upon the benefits of the proposed
regulation, as specified.
15)Requires agencies when submitting to OAL a final statement of
reasons with the adopted regulation, to also include:
a) A determination with supporting information that no
alternative considered by the agency would be more cost
effective to affected private persons and equally effective
in implementing the statutory policy or other provision of
law. For a major regulation proposed on or after November
1, 2013, the determination shall be based upon the
standardized regulatory impact analysis of the proposed
regulation, and upon the statement of benefits, as
specified; and,
b) An explanation setting forth the reasons for rejecting
any proposed alternatives that would lessen the adverse
economic impact on small businesses including the
standardized regulatory impact analysis for a major
regulation, as well as the benefits of the proposed
regulation, as specified.
16)Requires OAL to return a regulation to the adopting agency if
the proposed regulation conflicts with an existing regulation
and the agency has not identified the manner in which the
conflict may be resolved or the agency has not made the
alternatives determination, as specified.
17)Provides that, notwithstanding any other law, the return of a
regulation to the adopting agency by OAL is the exclusive
remedy for a failure to comply with certain requirements, as
specified.
SB 617
Page 5
18)Requires DOF and OAL to review the standardized regulatory
impact analyses for adherence to the regulations adopted by
DOF, as specified, from time to time.
19)Requires DOF to submit to the Senate and Assembly Committees
on Governmental Organization a report describing the extent to
which submitted standardized regulatory impact analyses for
proposed major regulations adhere to the regulations adopted,
as specified, by November 1, 2015. Allows DOF to include any
recommendations from OAL for actions the Legislature might
consider for improving state agency performance.
20)Authorizes OAL to notify the Legislature of noncompliance by
a state agency with the adopted regulations, in any manner or
form, as specified.
21)Provides that state agency heads are responsible for the
establishment and maintenance of effective, independent, and
objective ongoing monitoring of the internal accounting and
administrative controls within their agencies.
22)Provides that monitoring systems and processes, included with
existing elements of a satisfactory system of internal
accounting and administrative control, are vital to:
a) Ensuring that routine application of internal controls
do not diminish their efficacy over time;
b) Providing timely notice and opportunity for correction
of emerging weaknesses with established internal controls;
c) Facilitating public resources and other decisions by
ensuring availability of accurate and reliable information;
and,
d) Facilitating production of timely and accurate financial
reports.
23)Requires state agency heads to implement systems and
processes to ensure the independence and objectivity of the
monitoring of internal accounting and administrative control
as an ongoing activity, as specified.
SB 617
Page 6
24)Adds the Controller, the Treasurer, and the Attorney General
to the list of recipients of a biennial report regarding the
adequacy of each state agency's systems of internal
accounting, administrative control, and monitory practices, as
specified.
25)Requires the director of DOF, in consultation with the State
Auditor and the Controller, to establish, and modify as
necessary, a general framework of recommended practices to
guide state agencies in conducting active, ongoing monitoring
of processes for internal accounting and administrative
control.
26)Makes technical, conforming changes.
EXISTING LAW :
1)Governs the procedures for the adoption, amendment, or repeal
of regulations by state agencies and for the review of those
regulatory actions by the OAL under the APA.
2)Establishes procedures state agencies are required to use to
make a determination of whether a proposed administrative
regulation or proposed amendment to an administrative
regulation has the potential for significant, statewide
adverse economic impact directly affecting California business
enterprises.
3)Provides that state agency heads are responsible for the
establishment and maintenance of a system or systems of
internal accounting and administrative control within their
agencies, under the Financial Integrity and State Manager's
Accountability Act (FISMA) of 1983.
FISCAL EFFECT : Unknown
COMMENTS : 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 with a 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
SB 617
Page 7
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 proposing to
adopt, amend, or repeal any administrative regulation to assess
the potential for adverse economic impact on California business
enterprises and individuals, and avoid imposing unnecessary or
unreasonable regulations. Agencies are required to consider the
proposal's impact on business, with consideration of industries
affected, including the ability of California businesses to
compete with businesses in other states. Additionally, agencies
are required to assess whether and to what extent the proposed
regulation change will affect the creation or elimination of
jobs, the creation of new businesses or the elimination of
existing businesses, and the expansion of businesses currently
doing business within California.
This bill revises the APA by requiring each state agency to
prepare a standardized regulatory impact analysis with respect
to the adoption, amendment, or repeal of a major regulation, as
defined, on or after January 1, 2013, and submit the analysis to
DOF for review and comments.
This bill also requires DOF to adopt regulations for conducting
the standardized regulatory impact analyses to be utilized by
state agencies in developing the standardized regulatory impact
analysis.
Additionally, this bill updates FISMA to include ongoing
monitoring of internal auditing and financial controls and other
best practices in financial accounting.
Analysis Prepared by : Rebecca May / B.,P. & C.P. / (916)
319-3301
FN: 0002822