BILL ANALYSIS Ó
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|Hearing Date:June 24, 2013 |Bill No:AB |
| |1098 |
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SENATE COMMITTEE ON BUSINESS, PROFESSIONS
AND ECONOMIC DEVELOPMENT
Senator Ted W. Lieu, Chair
Bill No: AB 1098Author:Quirk-Silva
As Amended:May 1, 2013 Fiscal: Yes
SUBJECT: Office of Small Business Advocate: regulations: report.
SUMMARY: Requires the Office of the Small Business Advocate to
commission a study regarding the costs of state regulations on small
businesses, as specified. Requires the study to be completed by
January 1, 2015 and updated every five years.
Existing law:
1) Establishes the Governor's Office of Business and Economic
Development (GO-Biz) within the Governor's Office for the purpose
of serving as the lead state entity for economic strategy and
marketing of California on issues relating to business development,
private sector investment and economic growth. GO-Biz also serves
as the administrative oversight for the California Business
Investment Service and the Office of the Small Business Advocate
(OSBA). (Government Code (GC) §§ 12096 - 12098.5)
2) Authorizes GO-Biz as the lead entity for economic strategy and the
marketing of California on issues relating to business development,
private sector investment and economic growth. Authorizes GO-Biz,
in this capacity, to coordinate the development of policies and
criteria to ensure that federal grants administered or directly
expended by state government advance statewide economic goals and
objectives. Authorizes GO-Biz to market the business and
investment opportunities available in California by working in
partnership with local, regional, federal, and other state public
and private institutions to encourage business development and
investment in the state. Authorizes GO-Biz to support small
businesses by providing information about accessing capital,
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complying with regulations, and supporting state initiatives that
support small business. (GC § 12096.3)
3) Finds and declares that it is in the public interest to aid,
counsel, assist, and protect the interests of small business
concerns in order to preserve free competitive enterprise and
maintain a healthy state economy. Establishes the OSBA within
GO-Biz in order to advocate the causes of small business and to
provide small businesses with the information they need to survive
in the marketplace. (GC § 12098)
4) Requires OSBA to prepare and submit a written annual report to the
Governor and to the Legislature that describes the activities and
recommendations of OSBA, including an evaluation of the efforts of
state agencies and, where appropriate, specific departments, that
significantly regulate small businesses to assist minority and
other small business enterprises, and making recommendations that
may be appropriate to assist the development and strengthening of
minority and other small business enterprises. (GC § 12098.4 (b))
5)Creates the Milton Marks "Little Hoover" Commission on California
State Government Organization and Economy to assist the Legislature
and the Governor in promoting economy, efficiency, and improved
service in the transaction of public business in state government.
(GC § 8501 et seq.)
6)Establishes the Office of Administrative Law (OAL) and declares that
it is in the public interest for OAL to be charged with the orderly
review of adopted regulations and that the purpose of such review
shall be to reduce the number of administrative regulations and to
improve the quality of those regulations which are adopted and
specifies other duties and powers of OAL. (GC §§ 11340.1 - 11342.4)
7)The Administrative Procedures Act (APA), governs the procedures for
the adoption, amendment, or repeal of regulations [or emergency
regulations] by state agencies and for the review of those
regulatory actions by the OAL, and includes as part of the state
agencies determination in adopting the regulation whether the
regulation has the potential for significant, statewide adverse
economic impact directly affecting California business enterprises,
in particular "small businesses" as defined. (GC, Chapter 3.5.
Administrative Regulations and Rulemaking, §§ 11340 - 11361)
8)Defines "major regulation" to mean any proposed adoption, amendment,
or repeal of a regulation subject to review by OAL, as specified,
and that will have an economic impact on California business
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enterprises and individuals in an amount exceeding $50 million, as
estimated by the agency. (GC § 11342.548)
9)Requires agencies to include, when submitting an initial statement of
reasons (ISOR) for adopting, amending, or repealing a regulation to
the 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. Provides
that the benefits may include non-monetary benefits such as the
protection of public health and safety; worker safety; 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. (GC §
11346.2 (b)(1))
10)Requires a standardized regulation impact analysis, as specified, be
included in the ISOR for a proposed major regulation on or after
January 1, 2013. (GC § 11346.2 (b)(2))
11)Specifies that reasonable alternatives included in the ISOR include
alternatives that are proposed as less burdensome and equally
effective in achieving the purposes 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.
(GC § 11346.2 (b) (5))
12)Requires agencies proposing to adopt, amend, or repeal a 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.
(GC § 11346.3 (a) (3) and (b))
13)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: (GC §
11346.3 (c))
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
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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.
14)Exempts the University of California, the Hastings College of Law,
and the Fair Political Practices Commission from the requirements of
preparing an impact assessment.
(GC § 11346.3 (c) (2))
15)Allows state agencies, for the purpose of completing the assessment,
to derive information from existing state, federal or academic
publications. (GC § 11346.3 (c) (3))
16)Specifies that analyses 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. Specifies that regulatory impact analyses shall
inform the agencies and the public of the economic consequences of
regulatory choices, not reassess statutory policy. 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 proposed regulation. (GC §
11346.3 (e))
17)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 Department of Finance (DOF) upon completion. 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. (GC § 1136.3 (f))
18)Requires DOF prior to November 1, 2013, and in consultation with OAL
and other state agencies, to adopt regulations for conducting the
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standardized regulatory impact analyses, as specified, and provides
that DOF's regulations shall assist the agencies in specifying the
methodologies for: (GC § 11346.36)
a) Assessing and determining the benefits and costs of the
proposed regulation, expressed in monetary terms to the extent
feasible and appropriate. Assessing the value of non-monetary
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 equality, the
increase in the openness and transparency or business and
government and other nonmonetary benefits consistent with the
statutory policy or other provisions of law.
b) Comparing proposed regulatory alternatives with an established
baseline so agencies can make analytical decisions for the
adoption, amendment, or repeal of regulations necessary to
determine that the proposed action is the most effective, or
equally effective and less burdensome, alternative in carrying
out the purpose for which the action is proposed, or the most
cost-effective alternative to the economy and to affected private
persons that would be equally effective in implementing the
statutory policy or other provision of law;
c) Determining the impact of a regulatory proposal on the state
economy, business, and the public welfare, as specified;
d) Assessing the effects of a regulatory proposal on the General
Fund and special funds of the state and affected local government
agencies attributable to the proposed regulation;
e) Determining the cost of enforcement and compliance to the
agency and to affected business enterprises and individuals; and,
f) Making the estimation if a regulation is to be deemed a major
regulation.
19)Requires DOF to convene a public hearing or hearings and take public
comment on any draft regulation, affording representatives from
state agencies and the public at large the opportunity to review and
comment on the draft regulation before it is adopted in final form.
(GC § 11346.36 (c))
20)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. (GC §
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11346.36 (f))
21)Requires the notice of proposed adoption, amendment, or repeal of a
regulation submitted by the proposing agency to OAL to also include:
(GC § 11346.5)
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 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 January 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.
22)Requires agencies when submitting to OAL a final statement of
reasons with the adopted regulation, to also include: (GC §
11346.9)
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
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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.
23)Requires DOF on or before November 1, 2015, 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 on November 1, 2013. Allows DOF to include any
recommendations from OAL for actions the Legislature might consider
for improving state agency performance. (GC § 11349.1.5 (b))
24)Authorizes OAL to notify the Legislature of noncompliance by a state
agency with the adopted regulations, in any manner or form, as
specified. (GC § 11349.1.5 (c))
25)Requires OAL to review all regulations adopted, amended, or repealed
pursuant to specified procedures and make determinations using the
standards of: (GC § 11349 and § 11349.1)
a) "Necessity," as defined.
b) "Authority," as defined.
c) "Clarity," as defined.
d) "Consistency," as defined.
e) "Reference," as defined.
f) "Non-duplication," as defined.
26)Specifies that OAL, at the request of any standing, select, or joint
committee of the Legislature, shall initiate a priority review of
any regulation, group of regulations, or series of regulations that
the committee believes does not meet the above standards. (GC §
11349.7)
This bill:
1) Makes findings and declarations that:
a) Small business remains the backbone of the state's economy.
Regulatory burdens and costs continue to be one of the major
complaints of small businesses.
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b) The federal Small Business Administration began analyzing the
cost and burdens of federal regulations on small businesses in
1995. A recent report found that the annual cost of federal
regulations in the United States totaled $1.75 trillion. It also
found the costs of federal regulations on firms with fewer than
20 employees was $10,585 in 2010. For small businesses, the
regulatory and paperwork costs were found to be more burdensome
for the small firms than larger firms.
c) Small businesses significantly impact California's economy.
They represent 99.2 percent of all employers and employ 50.4
percent of the private-sector labor force. Small businesses are
crucial to the fiscal condition of the state and numbered 3.5
million in 2010.
d) The state does not have a current analysis on state regulatory
costs similar to that created for federal regulatory costs.
Understanding the financial effect of state regulations would
help policymakers reduce or design more cost-effective regulatory
approaches that achieve desired policy objectives while placing
the least burden on the regulated industries.
2)Requires OSBA to commission a study, to be conducted every five
years, of the costs of state regulations on small businesses, which
shall parallel, to the extent feasible and practical, the scope and
study on the impact of regulatory costs on small firms conducted by
the federal Small Business Administration and examine successful
models from other states on identifying regulatory costs and
developing potential alternative approaches that meet the same
regulatory objectives, but are less burdensome on small businesses.
3)Convene one or more stakeholder meetings to provide advice on the
study. Stakeholders shall include, but not be limited to,
representatives from small business associations representing a
cross section of the small business community.
4)Requires OSBA, no later than January 1, 2015, and every five years
thereafter, to post the completed study, including recommendations,
on the OSBA Web site and remain available on the Web site at least
until the next study is posted. Requires OSBA to provide notice to
DOF, the Speaker of the Assembly, the Senate President pro Tempore,
the chair of the Assembly, Committee on Jobs, Economic Development,
and the Economy, and the chair of the Senate Committee on Government
Modernization, Efficiency and Accountability, that information is
publicly available.
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5)Provides that, for the purposes of the study, information shall be
provided based on nonemployer businesses, businesses with five or
fewer employees, businesses with 99 or fewer employees, businesses
with 499 or fewer employees, and businesses with more than 500
employees.
6)Requires OSBA, prior to commissioning the study, to determine that
sufficient funds to conduct the study are available from a
non-General Fund source. Requires OSBA, at least 30 days prior to
commissioning the study, to notify DOF that OSBA has determined that
sufficient funding is available and that the study will be
commissioned.
FISCAL EFFECT: This bill is keyed "fiscal" by Legislative Counsel.
According to the Assembly Committee on Appropriations analysis dated
May 15, 2013, estimated costs for completing a comprehensive study on
regulations are approximately $200,000.
COMMENTS:
1. Purpose. This bill is sponsored by the California Small Business
Association . According to the Author, as small businesses continue
to be the backbone of the state's economy, the regulatory burdens
and costs continue to be one of the major complaints of small
businesses. According to the Author, although state agencies are
required to consider the effects of adopted regulations on the
California economy, in general, and on small business specifically,
state agencies are not required to consider the cumulative cost
impact of regulations.
The Author states that the cost of California regulations for small
businesses is unknown, as the state does not have a current
analysis on state regulatory costs similar to that created for
federal regulatory costs. According to the Author, understanding
the financial effect of state regulations would help policymakers
reduce, or design, more cost-effective regulatory approaches that
achieve desired policy objectives while placing less burden on the
regulated industries.
2. Adoption of Regulations in California. 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
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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 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.
3. Hoover Commission Report on Regulatory Reform. In June 2010, the
Little Hoover Commission (Commission) initiated a study to evaluate
what changes could be made in the regulatory process to improve
transparency and accountability, consistency and predictability.
Subsequently and more specifically, Senator Bob Dutton (R-Inland
Empire) and Assembly Member Felipe Fuentes (D-Los Angeles) asked
the Commission to focus on how regulatory agencies developed and
used economic assessment in developing new rules. The Commission
spent over a year looking at the way state agencies develop
regulations.
On October 25, 2011, the Commission released its report, Better
Regulation: Improving California's Rulemaking Process. Its
conclusion: "In order to better protect its citizens and encourage
economic development, California must improve its regulatory
process." The Commission indicated the California had taken an
important first step with the signing of
SB 617 into law, which will start the process of improving how
regulations are made. "But there is more work to do." The
Commission indicated that its report was not focused on creating
fewer or more regulations, but rather "better" regulations - rules
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developed through a transparent and interactive process that places
the least burden on the California economy.
The conclusions and recommendations of the report were based upon
written and oral testimony presented in public hearing and a public
advisory committee meeting, as well as extensive interviews and
staff research. The Commission found that too often regulations
are developed in isolation by a department's technical staff then
released for public comment. This prevents affected parties from
offering their expertise about real world conditions or suggesting
alternative and possibly more cost-effective approaches to meet the
same goal before the proposed regulation is released for public
comment. The Commission also found that while the APA requires
agencies to do an economic impact analysis of proposed rules, few
agencies do it in a systematic and rigorous manner.
The report had five basic recommendations which were aimed at
increasing transparency, efficiency, and accountability with the
goals of finding the least burdensome alternative to solving the
identified regulatory problems and improving confidence in the
regulatory process and its oversight:
Recommendation 1 : The state should require departments
promulgating regulations or rules that impose costs on
individuals, businesses or government entities to perform an
economic assessment that takes into account costs that will be
incurred and benefits that will result.
Recommendation 2 : The state should require departments proposing
a major regulation (a regulation that would impose an annual cost
of $25 million or more) to perform a high-quality, rigorous
economic analysis.
Recommendation 3 : The state should create guidelines that set
out standards and the appropriate use of different types of
economic assessment methodologies and data quality that can be
used to properly describe and analyze the economic impact of new
regulations. The use of these guidelines should be mandated by
the Administrative Procedure Act.
Recommendation 4 : To improve the quality of regulations
promulgated by California agencies, and to ensure the process of
developing regulations is consistent and transparent, the
Governor should form an Office of Economic and Regulatory
Analysis.
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Recommendation 5 : The state should create a look-back mechanism
to determine whether regulations are still needed and whether
they work.
4. Federal Regulatory Reform Efforts. In 1976, the federal government
established the Office of Advocacy (FAO) within the federal Small
Business Administration. The purpose of the FAO is to "protect,
strengthen and effectively represent the nation's small businesses
within the federal government's legislative and rule-making
processes."
Among its duties, the FAO reviews federal regulations and makes
recommendations on how to reduce the burden on small firms and
maximize the benefits small businesses can receive from the federal
government. In 2010, the FAO issued 46 letters (up from 39 in
2009) to federal agencies, each posted on the FAO website and
accompanied by a fact sheet summarizing key points in the FAO
letter. The letters covered a range of rulemaking including, but
not limited to:
The Truth in Lending Proposed Rule, the U.S. Treasury;
National emission standards for hazardous air pollutants
for major and area sources: industrial, commercial and
institutional boilers, Environmental Protection Agency; and,
Proposed changes to the consultation procedures rules at
the Department of Labor, Occupational Safety and Health
Administration.
Another activity of the FAO is the convening of issue specific
Small Business Advocacy Review Panels. Having a specific
government entity responsible for the review and comment on federal
regulations is particularly useful because the FAO can provide more
detailed comments and make specific and technical recommendations
to assist the rulemaking entity in modifying a rule to lessen its
impact on small businesses, without necessarily reducing its policy
objective.
In January 2011, President Obama signed Executive Order 13563 (EO)
for the purpose of improving regulation and regulatory review.
Among other factors, the EO stated that the federal "regulatory
system must protect public health, welfare, safety and our
environment while promoting economic growth, innovation,
competitiveness, and job creation."
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In furtherance of these objectives, the EO outlines the steps
federal agencies are required to take in adopting regulations,
including tailoring rules to impose the least burden on society,
while achieving policy objectives; developing rules through an open
exchange of perspectives from affected stakeholders in the private
sector (among others); and, promoting the use of retrospective
analysis on impacts of previously adopted regulations. The EO also
states that federal regulators should recognize that some
industries face significant regulatory requirements, some of which
are redundant, inconsistent and overlapping. Federal agencies are
then directed to increase coordination, simplification and
harmonization of regulations applied to the same industry when
rulemaking.
1. Small Businesses in California and the Impact of Regulations.
California small businesses comprised 96% of the state's 60,000
exporters in 2009, which accounted for over 44% of total exports in
the state. Nationally, small businesses represented only 31.9% of
total exports. These numbers include the export of only goods and
not services.
Business owners, with no employees, make up the single largest
component of businesses in California; 2.8 million out of an
estimated 3.5 million firms in 2010. As these businesses grow,
they continue to serve as an important component of California's
dynamic $1.9 trillion economy. Microenterprises, meaning
businesses with less than five employees represent approximately
93% of all businesses in the state, or approximately 3.2 million of
all businesses. Businesses with 99 or less employees comprise
nearly 98% of all businesses and employee approximately 38% of all
workers. These non-employer and small employer firms create jobs,
generate taxes, and revitalize communities.
In hard economic times, smaller size businesses often function as
economic engines. In this most recent recession the trend
continued, with the number of nonemployer firms increasing from 2.6
million firms ($137 billion in revenues) for 2008, to 2.8 million
firms ($138 billion in revenues) for 2010. In the post-recession
economy, small businesses are expected to become increasingly
important due to their ability to be more flexible and better
suited to meet niche market needs.
Their small size, however, also results in certain challenges in
meeting regulatory requirements, accessing capital, and marketing
their goods and services. California's network of SBDCs provide
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small size businesses, including business start-ups, with access to
quality education, one-on-one counseling, and other business
development resources.
According to information provided by the Sponsor, there are two
major sources of data on the cost of regulatory compliance on
businesses, the federal SBA and OSBA. For the last number of
years, the federal SBA has conducted a peer reviewed study that
analyzes the cost of federal government regulations on different
sizes of businesses. This research shows that small businesses
continue to bear a disproportionate share of the federal regulatory
burden. On a per employee basis for firms with less than 20
employees, it costs about $10,585, or 36%, more for small firms to
comply with federal regulations than their larger counterparts.
In the federal peer reviewed study, the most costly regulations for
small businesses were found to be environmental compliance, where
small business costs were 364% higher than in large-size firms.
The regulatory categories with the least disproportionate cost
impact between large and small businesses were occupational safety
and health and homeland security.
The impact of California regulations on small businesses was
relatively unknown until 2009, when the study required by AB 2330
(Arambula, Chapter 232, Statutes of 2006) was published by OSBA.
Although state agencies have been required to consider the costs of
adopted regulations on the California economy, in general, and on
small business specifically, state agencies have historically
failed to meaningfully undertake such an analysis, and instead,
have indicated that the need for the regulation was an overriding
state concern. This first state study found that total cost of
regulations to the State of California was $493 billion. Since
small businesses constitute 99.2 % of all employer businesses in
California and all of non-employer business, the regulatory cost,
according to the report, is shouldered substantially by small
business (averaging $134,123 per small business in 2007). AB 2330
also required that state agencies examine the cumulative impact of
regulations. Due, in part, to the difficult economic times, state
agencies have done a poor job in meeting this new requirement when
developing and amending regulations.
2. Related Legislation This Session. SB 176 (Galgiani) requires a
state agency proposing to adopt regulations to involve parties that
would be subject to those regulations in public discussions prior
to publishing the notice without regard to the complexity or number
of proposals. ( Status: This bill is pending in the Assembly
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Committee on Accountability and Administrative Review.)
SB 401 (Hueso) requires any state entity proposing amendments to
non-residential model building codes, and when requested for new
standards within the model codes, to estimate the cost of
compliance and the potential benefits of the new standard as well
as disclose the assumptions used to determine the estimates.
( Status: This bill is pending in the Assembly Committee on
Accountability and Administrative Review.)
AB 12 (Cooley) requires DOF and OAL to annually review the
standardized regulatory impact analyses for adherence to the
regulations adopted by a state agency and report to the
Legislature. ( Status: This bill is pending in the Senate
Committee on Governmental Organization.)
AB 292 (Nestande) requires OAL to provide that the full text of the
California Code of Regulations shall bear an open access creative
commons attribution license, allowing any individual, at no cost,
to use, distribute, and create derivative works based on the
material for either commercial or noncommercial purposes. ( Status:
This bill is pending in the Assembly Committee on Accountability
and Administrative Review.)
AB 376 (Donnelly) requires a state agency that enforces a
regulation promulgated on or after January 1, 2014, to notify a
business that is mandated to comply with the regulation 30 days
before the regulation becomes effective. ( Status: This bill is
pending in the Assembly Committee on Accountability and
Administrative Review.)
AB 866 (Linder) would 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 and would modify the requirements that an
adopting agency must meet when preparing the economic impact
analysis and the standardized regulatory impact analysis. ( Status:
This bill is pending in the Assembly Committee on Accountability
and Administrative Review.)
3. Prior Related Legislation. SB 1099 (Wright, Chapter 295, Statutes
of 2012) revised the dates that a regulation or order of repeal is
effective. The bill also required filing a state agency's
regulation with the Secretary of State (SOS) and posting of the
regulation on the agency's Internet Web site for at least six
months from the date the regulation is filed with the SOS. The
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bill also required OAL to provide on its Web site a list of, and a
link to, the full text of each regulation filed with the SOS that
is pending.
AB 1409 (V. Manuel Perez) of 2012 would have clarified the nature
of the reasonable alternatives to be considered by an agency when
they are preparing their ISOR for proposing adoption, amendment, or
repeal of a regulation. The bill also required the ISOR to also
include any reasonable alternative submitted by the public to OSBA
and an assessment of whether there are similar or related state
regulations that have been adopted and determine whether there are
opportunities to coordinate and harmonize compliance activities in
order to reduce the cost and regulatory burden on small business.
The bill also required the Department of General Services to
provide in its State Administrative Manual guidance on procedures
that facilitate the review of existing regulations and the
implementation of new and modified regulations, as specified, and
required the Director of OSBA to comment and gather input from
small business on reasonable alternatives to be proposed and
existing regulations. ( Status: This bill was held in the Senate
Committee on Rules.)
AB 1504 (Morrell) of 2012 would have revised various provisions of
the APA related to public participation and lowered the threshold
for the "major regulation" from $50 to $25 million. ( Status: This
bill failed passage in the Assembly Committee on Business,
Professions and Consumer Protection.)
AB 1537 (Cook) of 2012 would have required any major regulation
proposed on or after January 1, 2013, to include a provision
repealing the regulation two years after the date it is approved by
OAL. ( Status: This bill failed passage in the Assembly Committee
on Business, Professions and Consumer Protection.)
AB 1969 (Gaines) of 2012 would have prohibited OAL from
transmitting any regulations to the SOS for filing that it receives
between January 1, 2013, and January 1, 2015 until after January 1,
2015 except for regulations proposed by a public safety agency or
department, or a public health agency or department, including the
California Health and Human Services Agency. ( Status: This bill
failed passage in the Assembly Committee on Business, Professions
and Consumer Protection.)
AB 1982 (Gorell and Wagner) of 2012 would have increased from 30 to
90 days the time period that a regulation or an order of repeal
becomes effective after being filed with the Secretary of State
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(SOS). This bill required the Office of Administrative Law (OAL)
to submit all major regulations packages to the Legislature for
review. ( Status: The bill was held in the Assembly Committee on
Appropriations.)
AB 2090 (Berryhill) of 2012 would have redefined a "major
regulation" as a regulation that an agency determines has an
expected economic impact on California businesses and individuals
in an amount exceeding $15 million. ( Status: The bill was held in
the Assembly Committee on Appropriations.)
AB 2091 (Berryhill) of 2012 would have required state agencies
proposing to adopt, amend or repeal an administrative regulation
requiring the use of a new or emerging technology or equipment to
determine if that technology is available and effective for at
least two years, as specified. ( Status: This bill failed passage
in the Assembly Committee on Business, Professions and Consumer
Protection.)
SB 196 (Canella) of 2011 would have required the standardized
economic assessment to consider additional factors, such as the
benefits of the regulation and the extent to which it will achieve
regulatory and statutory objectives and would have required
agencies preparing the economic assessment to request a review of
the assessment by the University of California, and to include any
review by the university with the assessment. The bill would have
also required DOF to adopt regulations, on or before June 30, 2013,
to guide agencies in conducting the standardized economic
assessments, as specified and commencing January 1, 2014, would
make the standardized economic assessment requirements applicable
only to a proposed regulation that the agency has concluded may
have an economic impact of more than $50,000,000. ( Status: This
bill was held in the Senate Committee on Rules.)
SB 396 (Huff) of 2011 would have required each agency to review
each regulation adopted prior to January 1, 2011, and develop into
a report specified information for each regulation. The agency
must consult with parties affected by the regulation in developing
the report and must submit the report to the Legislature by January
1, 2013. Also, required each agency, by January 1, 2018, and at
least every 5 years thereafter, to review each regulation that is
at least 20 years old and has not been reviewed within the last 10
years. The review must be developed into a report and submitted to
the Legislature and each agency must annually report to the
Legislature that identifies the regulations reviewed during the
previous year and the associated findings. ( Status: The bill
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failed passage in the Senate Committee on Environmental Quality.)
SB 353 (Blakeslee) of 2011 would have created the Office of
Economic and Regulatory Analysis within the Department of Finance
to review and approve economic analyses of proposed regulations,
exempted OAL actions from the California Environmental Quality Act,
set other economic impact analysis requirements, and made other APA
revisions. ( Status: The bill was held in the Senate Committee on
Governmental Organization.)
SB 366 (Calderon and Pavley) of 2011 would have required each state
agency to review its regulations to identify duplicative,
overlapping, inconsistent or outdated provisions and repeal or
amend identified regulations and would have created a Streamlined
Permit Review Team charged with improving the efficiency of the
state permitting process for development projects. ( Status: This
bill was never heard in a Senate policy committee.)
SB 400 (Dutton) of 2011 would have expanded economic impact
analysis requirements and requireed OAL analysis of regulations
under certain circumstances. ( Status: This bill failed passage in
the Senate Committee on Environmental Quality.)
SB 401 (Fuller) of 2011 would have required every regulation
proposed by an agency on or after January 1, 2012, to include a
provision that repeals the regulation in five years after OAL
approval of the regulation. The agency may amend the repeal date
and extend that regulation another five years if the agency
conducted another regulatory review of the regulation. ( Status:
This bill failed passage in the Senate Committee on Environmental
Quality.)
SB 553 of 2011 would have specified that a regulation that has or
is likely to have an adverse economic impact of $10 million or more
becomes effective 180 days after adoption. ( Status: This bill was
never heard in a Senate policy committee.)
SB 560 (Wright) of 2011 would have required an agency to submit an
economic impact statement and a small business economic impact
statement, required OAL to reject a proposed regulation in certain
circumstances, and made other APA related revisions. ( Status:
This bill failed passage in the Senate Committee on Environmental
Quality.)
SB 591 (Gaines) would have required state agencies to determine how
many regulations it imposes and reduce the total number of
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regulations it has identified by 33% according to specified
priorities and would have required review of regulations to
determine burden on regulated persons. ( Status: This bill failed
passage in the Senate Committee on Governmental Organization.)
SB 617 (Calderon and Pavley, Chapter 93, Statutes of 2011) required
each state agency adopting a major regulation that is subject to
Office of Administrative Law (OAL) to review and prepare a more
extensive economic analysis for those regulations defined as "major
regulations" and required state agencies to monitor internal
auditing and financial controls.
SB 639 (Cannella) of 2011 would have required the California
Environmental Protection Agency (including boards, departments, and
offices within the Agency) and the Division of Occupational Safety
and Health to prepare an economic impact analysis prior to the
adoption, amendment, or repeal of a regulation. ( Status: This
measure was never heard in a Senate Policy Committee.)
SB 643 (Correa) required the initial statement of reasons to
include the estimated cost of compliance and related assumptions
used in determining that estimate if the proposed regulation
impacts housing. ( Status: This bill was held in the Assembly
Committee on Appropriations.)
SB 688 (Wright) of 2011 would have required agencies to produce a
cumulative statewide cost impacts for affected business and
prohibited a regulation from taking effect until January 1, next,
one year following the date the regulation is filed with the
Secretary of State if that estimate exceeds $10 million. ( Status:
This bill failed passage in the Senate Committee on Environmental
Quality.)
AB 29 (J. Perez, Chapter 475, Statutes of 2011) created within the
Governor's Office the Office of Business and Economic Development
(or "Go Biz") as the lead agency to develop economic strategy and
marketing of California's inherent advantages for commerce. Also
created a California Business Investment Services Program to assist
people and businesses who want to invest in, and expand, California
trade and industry.
AB 127 (Logue) of 2011 would have required that a regulation or an
order of repeal of a regulation become effective on the following
January 1 after a 90-day period following the date it is filed with
the Secretary of State (SOS), instead of 30 days after the date of
filing, except where already exempted. ( Status: This bill was
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held in the Assembly Committee on Business, Professions and
Consumer Protection.)
AB 213 (Silva) of 2011 would have required agencies to mail or
electronically mail a notice of prosed action to adopt, amend, or
repeal a regulation to local government agencies or local
government agency representatives that are likely to be affected by
the proposed action. ( Status: This bill was held in the Assembly
Committee on Appropriations.)
AB 273 (Valadao) of 2011 would have required DOF to adopt and
update instructions for inclusion in the State Administrative
Manual prescribing the methods that any agency shall use in making
certain determinations, estimates, statements, and findings
relating to the economic and cost impacts of a regulation on
businesses and private individuals. ( Status: This bill was held
in the Assembly Committee on Appropriations.)
AB 338 (Wagner) of 2011 increased the effective date for a
regulation or an order of repeal of a regulation from 30 days to 90
days and requires the OAL to submit a copy of disapproved
regulations to the Legislature when certain criteria are met, as
specified. ( Status: This bill failed passage in the Senate
Committee on Environmental Quality.)
AB 410 (Swanson, Chapter 495, Statutes of 2011) required an agency,
upon a request from a person with a visual disability or other
disability for which effective communication is required to provide
that person a narrative description of the proposed regulation and
for an extended public comment period for that person.
AB 425 (Nestande) of 2011 would have required each state entity
that promulgates regulations to review those regulations, and
repeal or report to the Legislature those identified as
duplicative, archaic, or inconsistent with statute or other
regulations or deemed to inhibit economic growth in the state by
December 31, 2012. ( Status: This bill was held in the Assembly
Committee on Appropriations.)
AB 429 (Knight) of 2011 would have required an agency, for any
regulation that it has identified as having a gross cost of $15
million or more, an increased cost of 5% or more over the cost of
an existing regulation, or both, to submit a copy of the rulemaking
record for that regulation to the appropriate policy committee in
each house of the Legislature when the agency submits the
regulation to the OAL for approval. ( Status: This bill failed
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passage in the Assembly Committee on Business, Professions and
Consumer Protection.)
AB 530 (Smyth) of 2011 would have required a state agency, when it
files a notice of proposed action with the OAL, to include
technical, theoretical, and empirical studies, reports, or similar
documents, upon which the agency relied in rejecting each
reasonable alternative. Additionally, this bill would have
prohibited an agency from rejecting a reasonable alternative unless
the statement of reasons includes at least one of these documents.
Further, this bill would have required an agency to determine
whether a proposed regulation will have a significant adverse
economic impact by completing an economic impact statement, using a
form developed by DOF, as specified. ( Status: This bill was held
in the Assembly Committee on Appropriations.)
AB 535 (Morrell) of 2011 would have required a state agency to
review and report to the Legislature on regulations that it adopts
or amends on and after January 1, 2012, five years after adoption,
as specified. ( Status: This bill was held in the Assembly
Committee on Appropriations.)
AB 541 (Morrell) of 2011 would have required the California Small
Business Board, until January 1, 2014, to review the state's
licensing and permitting regulations as they impact small
businesses, with special attention to the regulatory impact on
small business startups, and would have required each state agency
to cooperate with the board in that review. ( Status: This bill
was held in the Assembly Committee on Appropriations.)
AB 586 (Garrick) of 2011 would have required standing committees of
the Legislature to hold informational hearings regarding any
proposed regulation with a gross cost in excess of $10 million.
( Status: This bill failed passage in the Assembly Committee on
Business, Professions and Consumer Protection.)
AB 632 (Wagner) of 2011 would have required state agencies to
submit to the Legislature a notice of a proposed action to adopt,
amend or repeal a regulation, if the notice identifies an economic
impact, cost impact, statement or finding related to the proposed
regulation, as specified. ( Status: This bill was never heard in
an Assembly policy committee.)
AB 691 (Perea) would have designated the Secretary of the
California Department of Food and Agriculture as an ombudsman
responsible for reviewing all regulations promulgated by the state
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and other government agencies that affect agriculture. ( Status:
This bill was held in the Assembly Committee on Appropriations.)
AB 1037 (V. Manuel Perez) of 2011 would have increased the
threshold for business activities under the definition of "small
business" and required agencies to reassess regulations five years
after adoption, as specified. ( Status: This bill was held in the
Assembly Committee on Appropriations.)
AB 1213 (Nielsen) of 2011 authorized a chair or vice chair of a
standing, select, or joint committee of the Legislature to initiate
a priority review of any regulation, as specified. ( Status: This
bill failed passage in the Assembly Committee on Business,
Professions and Consumer Protection.)
AB 1307 (V. Manuel Perez) of 2011 was similar to the Author's AB
1409 above in providing changes to reasonable alternatives
considered by the state agency when preparing their initial
statement of reasons for regulations, but also made more extensive
changes in the regulatory requirements for state agencies and
increased thresholds for business activities of small businesses
and required agencies to reassess regulations five years from
adoption. ( Status: This bill was held in the Assembly Committee
on Appropriations.)
AB 1322 (Bradford) of 2011 would have adopted the regulatory
philosophy and the principles of regulation, as outlined in
Presidential Executive Order 12866, in order to achieve the same
regulatory benefits within the state, as specified. ( Status: This
bill was held in the Assembly Committee on Appropriations.)
8. Arguments in Support. The California Small Business Association
(CSBA), the Sponsor of this bill, writes in support, noting that
regulations and paperwork is the number one source of frustration
to the organization and they are confident that the provisions in
this bill will be a valuable tool to the small business community.
CSBA adds that without reviewing the effects of regulations on
small business and correcting problems, businesses will continue to
hold off on job creation. CSBA believes that this bill will
correct these issues and encourage small businesses to grow their
businesses and stimulate job creation and the California economy.
9. Suggested Technical Amendment. This bill requires OSBA to provide
notice to various Legislative entities about the availability of
the study on costs of regulations to small business, including the
AB 1098
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Senate Committee on Government Modernization, Efficiency and
Accountability. This Committee no longer exists. Staff suggests
that notice of the report be provided instead to this Committee,
the Senate standing committee with jurisdiction for small business
issues.
On page 3, lines 25-26, strike "Government Modernization,
Efficiency and Accountability" and replace it with "Business,
Professions and Economic Development".
(c) No later than January 1, 2015, and every five years
thereafter, post the completed study required pursuant to
subdivision (a), including recommendations, on the advocate's
Internet Web site and the advocate shall provide notice to the
Department of Finance, the Speaker of the Assembly, the Senate
President pro Tempore, the chair of the Assembly, Committee on
Jobs, Economic Development, and the Economy, and the chair of the
Senate Committee on Government Modernization, Efficiency and
Accountability Business, Professions and Economic Development , that
information is publicly available. The study shall remain available
on the Internet Web site at least until the next study is posted.
NOTE : Double-referral to Environmental Quality Committee, second.
SUPPORT AND OPPOSITION:
Support:
California Small Business Association
Opposition:
None on file as of June 18, 2013
Consultant:Sarah Mason