BILL NUMBER: AB 866 INTRODUCED
BILL TEXT
INTRODUCED BY Assembly Member Linder
FEBRUARY 21, 2013
An act to amend Sections 11342.548, 11346.3, 11346.45, and 11349.1
of the Government Code, relating to regulations.
LEGISLATIVE COUNSEL'S DIGEST
AB 866, as introduced, Linder. Regulations.
(1) The Administrative Procedure Act generally sets forth the
requirements for the adoption, publication, review, and
implementation of regulations by state agencies, and for review of
those regulatory actions by the Office of Administrative Law. The act
requires an agency, prior to submitting a proposal to adopt, amend,
or repeal an administrative regulation, to determine the economic
impact of the regulation by preparing an economic impact analysis.
The act defines a major regulation as a regulation that the agency
determines has an expected economic impact on California business
enterprises and individuals in an amount exceeding $50,000,000.
Existing law requires an agency proposing to adopt, amend, or repeal
a major regulation to also prepare a standardized regulatory impact
analysis.
This bill would instead define a major regulation as a regulation
that the agency determines has an expected economic impact on
California business enterprises and individuals in an amount
exceeding $15,000,000.
This bill would modify the requirements that an adopting agency
must meet when preparing the economic impact analysis and the
standardized regulatory impact analysis.
(2) The act requires that state agencies proposing to adopt
regulations, prior to publication of the notice of proposed action,
involve parties that would be subject to the proposed regulations in
public discussions regarding those proposed regulations, when the
proposed regulations involve complex proposals or a large number of
proposals that cannot easily be reviewed during the comment period.
The act also provides that these requirements are not subject to
judicial review or a specified review by the office.
This bill would instead make that requirement applicable to all
proposed regulations. The bill would repeal the provisions that
exempt these requirements from judicial review and review by the
office. The bill would require the office to return the regulation to
the agency if the agency does not comply with these requirements.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. The Legislature finds and declares all of the
following:
(a) Robust jobs and economic growth are the key to repairing
California's chronic budget problems and generating adequate revenues
to fund vital programs like education, infrastructure, and public
safety.
(b) California's jobs, business, and economic climate have been in
dire straits for several years, resulting in higher unemployment,
and a reduction in the number of businesses, small businesses in
particular, operating in the state and concomitant decline in state
revenues.
(c) California's regulatory burdens are often cited as one of the
main causes of stagnant job and economic growth and why many
businesses decide to expand in other states instead of California. In
fact, in 2011 CEO magazine ranked California last among states where
companies prefer to do business for the seventh straight year.
(d) A large part of the problem is that too much authority over
the California economy and jobs climate has been ceded to the
unelected state bureaucracy. Regulations adopted by state agencies
often impose unnecessary burdens on California's economic and jobs
climate at a time when California can least afford to discourage
economic and job growth.
(e) Today, instead of using due diligence in analyzing the
economic impacts of proposed regulations, state agencies often merely
fill out a four-page economic questionnaire that provides little
more than one-word answers and checked-off boxes and is devoid of
supporting data. On top of that, this information is not currently
required to be made available to the public.
(f) More sunshine and public input is needed in the regulatory
rulemaking process. Those subject to regulations are often in the
best position to determine the actual costs of regulations, and also
to identify equally effective but less burdensome alternatives.
(g) Additionally, the connection between those that adopt laws and
those that implement them has been eroded. Stronger and more direct
oversight of the regulatory rulemaking process by the Legislature, as
the body conferring authority to adopt regulations, will improve the
regulatory rulemaking process.
(h) It is not the intent of this act to unduly impede the
regulatory rulemaking process. It is rather to provide greater
sunshine and public participation in the fastest-growing area of
government and to develop the most thoughtful, economically
efficient, and least burdensome regulations on jobs and businesses
when carrying out the intent of authorizing statutes.
(i) Under this act, if a state agency has sufficiently involved
the public in the rulemaking process and conducted a thorough
analysis of a regulation's economic impacts, this act should have no
adverse effect on the regulatory rulemaking process.
(j) Further, the purpose of this act is not to prevent or postpone
the adoption of any particular type of regulation or regulations but
simply to ensure that accurate and honest information about a
proposed regulation's true economic impact is prepared and made
available to the public and the legislative and executive branches of
government.
SEC. 2. Section 11342.548 of the Government Code is amended to
read:
11342.548. "Major regulation" means any proposed adoption,
amendment, or repeal of a regulation subject to review by the Office
of Administrative Law pursuant to Article 6 (commencing with Section
11349) that will have an economic impact on California business
enterprises and individuals in an amount exceeding fifty
fifteen million dollars ($50,000,000),
($15,000,000), as estimated by the
agency. agency in the economic impact analysis
prepared pursuant to Section 11346.3.
SEC. 3. Section 11346.3 of the Government Code is amended to read:
11346.3. (a) State agencies proposing to adopt, amend, or repeal
any administrative regulation shall assess the potential for adverse
economic impact on California business enterprises and individuals,
avoiding the imposition of unnecessary or unreasonable regulations or
reporting, recordkeeping, or compliance requirements. For purposes
of this subdivision, assessing the potential for adverse economic
impact shall require agencies, when proposing to adopt, amend, or
repeal a regulation, to adhere to the following requirements, to the
extent that these requirements do not conflict with other state or
federal laws:
(1) The proposed adoption, amendment, or repeal of a regulation
shall be based on adequate information concerning the need for, and
consequences of, proposed governmental action.
(2) The state agency, prior to before
submitting a proposal to adopt, amend, or repeal a regulation
to the office, shall 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. For
purposes of evaluating the impact on the ability of California
businesses to compete with businesses in other states, an agency
shall consider, but not be limited to, information supplied by
interested parties.
(3) An economic assessment analysis
prepared pursuant to this subdivision for a proposed regulation that
is not a major regulation or that is a major regulation proposed
prior to before November 1,
2013 2014 , shall be prepared in
accordance with pursuant to subdivision (b). An
economic assessment analysis prepared
pursuant to this subdivision for a major regulation proposed on or
after November 1, 2013 2 014
, shall be prepared in accordance with
pursuant to subdivision (c), and shall be included in the
initial statement of reasons as required by Section 11346.2.
(b) (1) All state agencies proposing to adopt, amend, or repeal a
regulation that is not a major regulation or that is a major
regulation proposed prior to before
November 1, 2013 2014 , shall prepare
an economic impact assessment analysis
that assesses whether and to what extent it will affect
meets all of the following:
following requirements:
(A) Estimates the total actual costs of compliance for
affected small businesses, large businesses, and other parties
subject to the regulation or group o f regulations.
The creation or elimination economic impact
analysis shall, at a minimum, estimate the costs of
jobs within individual compliance for a representative
small business, large business, and other party subject to the
state. regulation as well as the cumulative
statewide cost of compliance.
(B) The creation If an agency declares
that it is not aware of new businesses
any cost impact that a representative small business, large business,
or other party subject to the elimination
regulation would incur in compliance with the
regulation, or group of existing businesses within
regulations authorized by the state.
same statute, the economic impact analysis shall
include an express statement to that effect as well as a detailed
statement describing how a small business, large business, or other
party subject to the regulation could comply with the regulation or
group of regulations without incurring cost.
(C) The expansion If an economic impact
analysis prepared pursuant to this section finds that the cumulative
statewide cost of businesses currently doing business
within compliance of any regulation, or group of
regulations authorized by the state.
same statute, exceeds fifteen million dollars ($15,000,000) then the
regulation or group of regulations shall be deemed to be a major
regulation. If reasonable doubt exists as to whether the cumulative
statewide cost of compliance of any regulation or group of
regulations authorized by the same statute exceeds fifteen million
dollars ($15,000,000), the doubt shall be resolved in favor of
finding that the regulation or group of regulations authorized by the
same statute qualifies as a major regulation.
(D) Each economic impact analysis that an agency prepares shall be
maintained in the agency's records and shall be made available to
the office and the Governor's Office of Planning and Research, the
Director of Finance, the Legislative Analyst, the State Auditor, the
Controller, the President pro Tempore of the Senate, the Minority
Floor Leader of the Senate, the Speaker of the Assembly, the Minority
Floor Leader of the Assembly, and the chair and ranking minority
party member of the appropriate fiscal and policy committees of the
Senate and the Assembly, upon request.
(E) An adopting agency shall prepare a standardized regulatory
impact analysis for any regulation that the agency determines is a
major regulation.
(D) The
(F) Each economic impact analysis shall
assess the benefits of the regulation to the health and
welfare of California residents, worker safety, and the state's
environment.
(2) This subdivision does shall not
apply to the University of California, the Hastings College of the
Law, or the Fair Political Practices Commission.
(3) Information required from state agencies for the purpose of
completing the assessment may come from existing state publications.
(c) (1) Each state agency proposing to adopt, amend, or repeal a
major regulation on or after November 1, 2013
2014 , shall prepare a standardized regulatory impact
analysis assessment in the manner prescribed by
the Department of Finance pursuant to Section 11346.36. The
standardized regulatory impact analysis shall address
contain all of the following:
(A) A detailed estimate, in both the short term and long term, of
the average individual cost of compliance for small businesses, large
businesses, and other parties subject to the major regulation.
(B) A detailed estimate, in both the short term and long term, of
the cumulative statewide cost of compliance with the major regulation
for small businesses, large businesses, and other parties.
(C) A detailed distributional assessment that evaluates, in both
the short term and long term, how certain industries, income groups,
and geographic regions are likely to experience benefits or costs as
a consequence of the major regulation.
(A) The
(D) A detailed estimate of the
short-term and long-term creation or elimination of jobs
within in individual sectors as a result of
the state. major regulation.
(E) A detailed estimate, in both the short term and long term, of
the potential for economic leakage as a result of the major
regulation in which economic activity is relocated from California to
another state or country.
(B) The creation
(F) A detailed estimate, in both the
short term and long term, of new the
impact on the ability of California businesses or
to compete with businesses in other states and
California's ability to attract businesses to locate in the
elimination of existing businesses within
state as a result of the state. major
regulation.
(G) A detailed estimate, in both the short term and long term, of
the effects on excise tax, sales and use tax, income tax, corporation
tax, and other tax revenue to the General Fund, and fee revenues to
special funds, as a result of the major regulation and changes in
economic activity as a result of the major regulation.
(C) The competitive advantages
(H) A precise statement enumerating the
benefits, in both the short term and long term, anticipated from the
major regulation, including the benefits or
disadvantages for businesses currently doing business within the
state. goals provided in the authorizin g
statutes. Where applicable, the statement shall include the failures
in private markets or public institutions that warrant the proposed
major regulation, in a manner consistent with the guidelines
published by the federal Office of Management and Budget in OMB
Circular No. A-94, Revised.
(D) The increase
(I) An identification of each
technical, theoretical, and empirical study, report, or
decrease of investment similar document, if
any, upon which the agency relies in proposing the
state. major regulation.
(E) The incentives for innovation in products, materials, or
processes.
(J) A copy of the economic impact analysis prepared pursuant to
subdivision (b).
(F) The
(K) A description of the benefits
of the regulations, regulation,
including, but not limited to, 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.
(2) This subdivision shall not apply to the University of
California, the Hastings College of the Law, or the Fair Political
Practices Commission.
(3) Information required from state agencies for the purpose of
completing the analysis assessment may
be derived from existing state, federal, or academic publications.
(d) Any administrative regulation adopted on or after January 1,
1993, that requires a report shall not apply to businesses, unless
the state agency adopting the regulation makes a finding that it is
necessary for the health, safety, or welfare of the people of the
state that the regulation apply to businesses.
(e) Analyses conducted pursuant to this section are intended to
provide agencies and the public with tools to determine whether the
regulatory proposal is an efficient and effective means of
implementing the policy decisions enacted in statute or by other
provisions of law in the least burdensome manner. Regulatory impact
analyses shall inform the agencies and the public of the economic
consequences of regulatory choices, not reassess statutory policy.
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 proposed regulation.
(f) Each state agency proposing to adopt, amend, or repeal a major
regulation on or after November 1, 2013 2014
, and that has prepared a standardized regulatory impact
analysis assessment pursuant to
subdivision (c), shall submit that analysis
assessment to the Department of Finance upon completion. The
department shall comment, within 30 days of receiving that
analysis, the assessment, on the extent to which
the analysis assessment adheres to the
regulations adopted pursuant to Section 11346.36. Upon receiving the
comments from the department, the agency may update its analysis to
reflect any comments received from the department and shall summarize
the comments and the response of the agency along with a statement
of the results of the updated analysis for the statement required by
paragraph (10) of subdivision (a) of Section 11346.5.
SEC. 4. Section 11346.45 of the Government Code is amended to
read:
11346.45. (a) In order to increase public participation and
improve the quality of regulations, state agencies proposing to adopt
regulations shall, prior to before
publication of the notice required by Section 11346.5, involve
parties who would be subject to the proposed regulations in public
discussions regarding those proposed regulations, when the
proposed regulations involve complex proposals or a large number of
proposals that cannot easily be reviewed during the comment period.
regulations.
(b) This section does shall not
apply to a state agency in any instance where that state agency is
required to implement federal law and regulations for which there is
little or no discretion on the part of the state to vary.
(c) If the agency does not or cannot comply with the
provisions of subdivision (a), it shall
state the reasons for noncompliance with reasonable specificity in
the rulemaking record.
(d) The provisions of this section shall not be subject to
judicial review or to the provisions of Section 11349.1.
SEC. 5. Section 11349.1 of the Government Code is amended to read:
11349.1. (a) The office shall review all regulations adopted,
amended, or repealed pursuant to the procedure specified in Article 5
(commencing with Section 11346) and submitted to it for publication
in the California Code of Regulations Supplement and for transmittal
to the Secretary of State and make determinations using all of the
following standards:
(1) Necessity.
(2) Authority.
(3) Clarity.
(4) Consistency.
(5) Reference.
(6) Nonduplication.
In reviewing regulations pursuant to this section, the office
shall restrict its review to the regulation and the record of the
rulemaking proceeding. The office shall approve the regulation or
order of repeal if it complies with the standards set forth in this
section and with this chapter.
(b) In reviewing proposed regulations for the criteria in
subdivision (a), the office may consider the clarity of the proposed
regulation in the context of related regulations already in
existence.
(c) The office shall adopt regulations governing the procedures it
uses in reviewing regulations submitted to it. The regulations shall
provide for an orderly review and shall specify the methods,
standards, presumptions, and principles the office uses, and the
limitations it observes, in reviewing regulations to establish
compliance with the standards specified in subdivision (a). The
regulations adopted by the office shall ensure that it does not
substitute its judgment for that of the rulemaking agency as
expressed in the substantive content of adopted regulations.
(d) The office shall return any regulation subject to this chapter
to the adopting agency if any of the following occur:
(1) The adopting agency has not prepared the estimate required by
paragraph (6) of subdivision (a) of Section 11346.5 and has not
included the data used and calculations made and the summary report
of the estimate in the file of the rulemaking.
(2) The adopting agency has not complied with Section
11346.3. "Noncompliance" means that the agency failed to complete the
economic impact assessment or standardized regulatory impact
analysis required by Section 11346.3 or failed to include the
assessment or analysis in the file of the rulemaking proceeding as
required by Section 11347.3.
(3) The adopting agency has prepared the estimate required by
paragraph (6) of subdivision (a) of Section 11346.5, the estimate
indicates that the regulation will result in a cost to local agencies
or school districts that is required to be reimbursed under Part 7
(commencing with Section 17500) of Division 4, and the adopting
agency fails to do any of the following:
(A) Cite an item in the Budget Act for the fiscal year in which
the regulation will go into effect as the source from which the
Controller may pay the claims of local agencies or school districts.
(B) Cite an accompanying bill appropriating funds as the source
from which the Controller may pay the claims of local agencies or
school districts.
(C) Attach a letter or other documentation from the Department of
Finance which states that the Department of Finance has approved a
request by the agency that funds be included in the Budget Bill for
the next following fiscal year to reimburse local agencies or school
districts for the costs mandated by the regulation.
(D) Attach a letter or other documentation from the Department of
Finance which states that the Department of Finance has authorized
the augmentation of the amount available for expenditure under the
agency's appropriation in the Budget Act which is for reimbursement
pursuant to Part 7 (commencing with Section 17500) of Division 4 to
local agencies or school districts from the unencumbered balances of
other appropriations in the Budget Act and that this augmentation is
sufficient to reimburse local agencies or school districts for their
costs mandated by the regulation.
(4) The proposed regulation conflicts with an existing state
regulation and the agency has not identified the manner in which the
conflict may be resolved.
(5) The adopting agency did not make the alternatives
determination as required by paragraph (4) of subdivision (a) of
Section 11346.9.
(6) The adopting agency did not comply with Section 11346.10.
(e) The office shall notify the Department of Finance of all
regulations returned pursuant to subdivision (d).
(f) The office shall return a rulemaking file to the submitting
agency if the file does not comply with subdivisions (a) and (b) of
Section 11347.3. Within three state working days of the receipt of a
rulemaking file, the office shall notify the submitting agency of any
deficiency identified. If no notice of deficiency is mailed to the
adopting agency within that time, a rulemaking file shall be deemed
submitted as of the date of its original receipt by the office. A
rulemaking file shall not be deemed submitted until each deficiency
identified under this subdivision has been corrected.
(g) Notwithstanding any other law, return of the regulation to the
adopting agency by the office pursuant to this section is the
exclusive remedy for a failure to comply with subdivision (c) of
Section 11346.3 or paragraph (10) of subdivision (a) of Section
11346.5.