AB 1711, as amended, Cooley. Administrative Procedures Act: economic impact assessment.
Existing law requires every state agency subject to the Administrative Procedure Act to provide an initial statement of reasons for proposing the adoption, amendment, or repeal of a regulation. The act requires the initial statement of reasons to include a standardized regulatory impact analysis prepared by each agency that proposes to adopt, amend, or repeal any major regulation, as defined, on or after November 1, 2013.
The act also requires every state agency 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 assessment that makes specified assessments.
The bill would require an economic impact assessment to be included in the initial statement of reasons.
Existing law requires the Department of Finance to adopt and update, as necessary, instructions for inclusion in the State Administrative Manual prescribing the methods that an agency is required to use in making a determination that a regulation imposes a local mandate and an estimate of the cost or savings to any state agency, the cost to any local agency or school district that is required to be reimbursed, as specified, other nondiscretionary cost or savings imposed on local agencies, and the cost or savings in federal funding to the state.
The bill would instead require the Department of Finance to adopt and update, as necessary, instructions for inclusion in the State Administrative Manual prescribing the methods that an agency would be required to use in making the determinations and estimates of fiscal or economic impact required by specified provisions of the act. The bill would also exempt from the rulemaking provisions of the act any action by the Department of Finance to adopt and update, as necessary, instructions to a state agency on the preparation of an economic impact estimate or assessment of a proposed regulation.
begin insertThis bill would incorporate additional changes to Section 11346.3 of the Government Code proposed by AB 2723 that would become operative if this bill and AB 2723 are both chaptered and this bill is chaptered last.
end insertVote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.
The people of the State of California do enact as follows:
Section 11346.2 of the Government Code is
2amended to read:
Every agency subject to this chapter shall prepare,
4submit to the office with the notice of the proposed action as
5described in Section 11346.5, and make available to the public
6upon request, all of the following:
7(a) A copy of the express terms of the proposed regulation.
8(1) The agency shall draft the regulation in plain, straightforward
9language, avoiding technical terms as much as possible, and using
10a coherent and easily readable style. The agency shall draft the
11regulation in plain English.
12(2) The agency shall include a notation following the express
13terms of each California Code
of Regulations section, listing the
14specific statutes or other provisions of law authorizing the adoption
15of the regulation and listing the specific statutes or other provisions
P3 1of law being implemented, interpreted, or made specific by that
2section in the California Code of Regulations.
3(3) The agency shall use underline or italics to indicate additions
4to, and strikeout to indicate deletions from, the California Code
5of Regulations.
6(b) An initial statement of reasons for proposing the adoption,
7amendment, or repeal of a regulation. This statement of reasons
8shall include, but not be limited to, all of the following:
9(1) A statement of the specific purpose of each adoption,
10amendment, or repeal, the problem the agency
intends to address,
11and the rationale for the determination by the agency that each
12adoption, amendment, or repeal is reasonably necessary to carry
13out the purpose and address the problem for which it is proposed.
14The statement shall enumerate the benefits anticipated from the
15regulatory action, including the benefits or goals provided in the
16authorizing statute. These benefits may include, to the extent
17applicable, nonmonetary benefits such as the protection of public
18health and safety, worker safety, or the environment, the prevention
19of discrimination, the promotion of fairness or social equity, and
20the increase in openness and transparency in business and
21government, among other things. Where the adoption or
22amendment of a regulation would mandate the use of specific
23technologies or equipment, a statement of the reasons why the
24agency believes these mandates or prescriptive standards are
25required.
26(2) (A) For a regulation that is not a major regulation, the
27economic impact assessment required by subdivision (b) of Section
2811346.3.
29(B) For a major regulation proposed on or after November 1,
302013, the standardized regulatory impact analysis required by
31subdivision (c) of Section 11346.3.
32(3) An identification of each technical, theoretical, and empirical
33study, report, or similar document, if any, upon which the agency
34relies in proposing the adoption, amendment, or repeal of a
35regulation.
36(4) (A) A description of reasonable alternatives to the regulation
37and the agency’s reasons for rejecting those alternatives.
38Reasonable
alternatives to be considered include, but are not
39limited to, alternatives that are proposed as less burdensome and
40equally effective in achieving the purposes of the regulation in a
P4 1manner that ensures full compliance with the authorizing statute
2or other law being implemented or made specific by the proposed
3regulation. In the case of a regulation that would mandate the use
4of specific technologies or equipment or prescribe specific actions
5or procedures, the imposition of performance standards shall be
6considered as an alternative.
7(B) A description of reasonable alternatives to the regulation
8that would lessen any adverse impact on small business and the
9agency’s reasons for rejecting those alternatives.
10(C) Notwithstanding subparagraph (A) or (B), an agency is not
11required
to artificially construct alternatives or describe
12unreasonable alternatives.
13(5) (A) Facts, evidence, documents, testimony, or other
14evidence on which the agency relies to support an initial
15determination that the action will not have a significant adverse
16economic impact on business.
17(B) (i) If a proposed regulation is a building standard, the initial
18statement of reasons shall include the estimated cost of compliance,
19the estimated potential benefits, and the related assumptions used
20to determine the estimates.
21(ii) The model codes adopted pursuant to Section 18928 of the
22Health and Safety Code shall be exempt from the requirements of
23this subparagraph. However, if an
interested party has made a
24request in writing to the agency, at least 30 days before the
25submittal of the initial statement of reasons, to examine a specific
26section for purposes of estimating the cost of compliance and the
27potential benefits for that section, and including the related
28assumptions used to determine the estimates, then the agency shall
29comply with the requirements of this subparagraph with regard to
30that requested section.
31(6) A department, board, or commission within the
32Environmental Protection Agency, the Natural Resources Agency,
33or the Office of the State Fire Marshal shall describe its efforts, in
34connection with a proposed rulemaking action, to avoid
35unnecessary duplication or conflicts with federal regulations
36contained in the Code of Federal Regulations addressing the same
37issues. These agencies may adopt
regulations different from federal
38regulations contained in the Code of Federal Regulations
39addressing the same issues upon a finding of one or more of the
40following justifications:
P5 1(A) The differing state regulations are authorized by law.
2(B) The cost of differing state regulations is justified by the
3benefit to human health, public safety, public welfare, or the
4environment.
5(c) A state agency that adopts or amends a regulation mandated
6by federal law or regulations, the provisions of which are identical
7to a previously adopted or amended federal regulation, shall be
8deemed to have complied with subdivision (b) if a statement to
9the effect that a federally mandated regulation or amendment to a
10regulation is being
proposed, together with a citation to where an
11explanation of the regulation can be found, is included in the notice
12of proposed adoption or amendment prepared pursuant to Section
1311346.5. However, the agency shall comply fully with this chapter
14with respect to any provisions in the regulation that the agency
15proposes to adopt or amend that are different from the
16corresponding provisions of the federal regulation.
17(d) This section shall be inoperative from January 1, 2012, until
18January 1, 2014.
Section 11346.3 of the Government Code is amended
20to read:
(a) A state agency proposing to adopt, amend, or
22repeal any administrative regulation shall assess the potential for
23adverse economic impact on California business enterprises and
24individuals, avoiding the imposition of unnecessary or unreasonable
25regulations or reporting, recordkeeping, or compliance
26requirements. For purposes of this subdivision, assessing the
27potential for adverse economic impact shall require agencies, when
28proposing to adopt, amend, or repeal a regulation, to adhere to the
29following requirements, to the extent that these requirements do
30not conflict with other state or federal laws:
31(1) The proposed adoption, amendment, or repeal of a regulation
32shall be
based on adequate information concerning the need for,
33and consequences of, proposed governmental action.
34(2) The state agency, prior to submitting a proposal to adopt,
35amend, or repeal a regulation to the office, shall consider the
36proposal’s impact on business, with consideration of industries
37affected including the ability of California businesses to compete
38with businesses in other states. For purposes of evaluating the
39impact on the ability of California businesses to compete with
P6 1businesses in other states, an agency shall consider, but not be
2limited to, information supplied by interested parties.
3(3) An economic impact assessment prepared pursuant to this
4subdivision for a proposed regulation that is not a major regulation
5or that is a major regulation proposed prior to
November 1, 2013,
6shall be prepared in accordance with subdivision (b), and shall be
7included in the initial statement of reasons as required by Section
811346.2. An economic assessment prepared pursuant to this
9subdivision for a major regulation proposed on or after November
101, 2013, shall be prepared in accordance with subdivision (c), and
11shall be included in the initial statement of reasons as required by
12Section 11346.2.
13(b) (1) A state agency proposing to adopt, amend, or repeal a
14regulation that is not a major regulation or that is a major regulation
15proposed prior to November 1, 2013, shall prepare an economic
16impact assessment that assesses whether and to what extent it will
17affect the following:
18(A) The creation or elimination of jobs within the state.
19(B) The creation of new businesses or the elimination of existing
20businesses within the state.
21(C) The expansion of businesses currently doing business within
22the state.
23(D) The benefits of the regulation to the health and welfare of
24California residents, worker safety, and the state’s environment.
25(2) This subdivision does not apply to the University of
26California, the Hastings College of the Law, or the Fair Political
27Practices Commission.
28(3) Information required from a state agency for the purpose of
29completing the assessment may come from existing state
30publications.
31(c) (1) Each state agency proposing to adopt, amend, or repeal
32a major regulation on or after November 1, 2013, shall prepare a
33standardized regulatory impact analysis in the manner prescribed
34by the Department of Finance pursuant to Section 11346.36. The
35standardized regulatory impact analysis shall address all of the
36following:
37(A) The creation or elimination of jobs within the state.
38(B) The creation of new businesses or the elimination of existing
39businesses within the state.
P7 1(C) The competitive advantages or disadvantages for businesses
2currently doing business within the state.
3(D) The increase or decrease of investment in the state.
4(E) The incentives for innovation in products, materials, or
5processes.
6(F) The benefits of the regulations, including, but not limited
7to, benefits to the health, safety, and welfare of California residents,
8worker safety, and the state’s environment and quality of life,
9among any other benefits identified by the agency.
10(2) This subdivision shall not apply to the University of
11California, the Hastings College of the Law, or the Fair Political
12Practices Commission.
13(3) Information required from state agencies for the purpose of
14completing the analysis may be derived from existing state, federal,
15or academic
publications.
16(d) Any administrative regulation adopted on or after January
171, 1993, that requires a report shall not apply to businesses, unless
18the state agency adopting the regulation makes a finding that it is
19necessary for the health, safety, or welfare of the people of the
20state that the regulation apply to businesses.
21(e) Analyses conducted pursuant to this section are intended to
22provide agencies and the public with tools to determine whether
23the regulatory proposal is an efficient and effective means of
24implementing the policy decisions enacted in statute or by other
25provisions of law in the least burdensome manner. Regulatory
26impact analyses shall inform the agencies and the public of the
27economic consequences of regulatory choices, not reassess
28statutory policy. The
baseline for the regulatory analysis shall be
29the most cost-effective set of regulatory measures that are equally
30effective in achieving the purpose of the regulation in a manner
31that ensures full compliance with the authorizing statute or other
32law being implemented or made specific by the proposed
33regulation.
34(f) Each state agency proposing to adopt, amend, or repeal a
35major regulation on or after November 1, 2013, and that has
36prepared a standardized regulatory impact analysis pursuant to
37subdivision (c), shall submit that analysis to the Department of
38Finance upon completion. The department shall comment, within
3930 days of receiving that analysis, on the extent to which the
40analysis adheres to the regulations adopted pursuant to Section
P8 111346.36. Upon receiving the comments from the department, the
2agency may update its analysis
to reflect any comments received
3from the department and shall summarize the comments and the
4response of the agency along with a statement of the results of the
5updated analysis for the statement required by paragraph (10) of
6subdivision (a) of Section 11346.5.
begin insertSection 11346.3 of the end insertbegin insertGovernment Codeend insertbegin insert is amended
8to read:end insert
(a) begin deleteState agencies end deletebegin insertA state agency end insertproposing to adopt,
10amend, or repeal any administrative regulation shall assess the
11potential for adverse economic impact on California business
12enterprises and individuals, avoiding the imposition of unnecessary
13or unreasonable regulations or reporting, recordkeeping, or
14compliance requirements. For purposes of this subdivision,
15assessing the potential for adverse economic impact shall require
16agencies, when proposing to adopt, amend, or repeal a regulation,
17to adhere to the following requirements, to the extent that these
18requirements do not conflict with other state or federal laws:
19(1) The proposed adoption, amendment, or repeal of a regulation
20shall be based on adequate information concerning the need for,
21and consequences of, proposed governmental action.
22(2) The state agency, prior to submitting a proposal to adopt,
23amend, or repeal a regulation to the office, shall consider the
24proposal’s impact on business, with consideration of industries
25affected including the ability of California businesses to compete
26with businesses in other states. For purposes of evaluating the
27impact on the ability of California businesses to compete with
28businesses in other states, an agency shall consider, but not be
29limited to, information supplied by interested parties.
30(3) An economicbegin insert impactend insert assessment
prepared pursuant to this
31subdivision for a proposed regulation that is not a major regulation
32or that is a major regulation proposed prior to November 1, 2013,
33shall be prepared in accordance with subdivisionbegin delete (b).end deletebegin insert (b), and shall
34be included in the initial statement of reasons as required by
35Section 11346.2.end insert An economic assessment prepared pursuant to
36this subdivision for a major regulation proposed on or after
37November 1, 2013, shall be prepared in accordance with
38subdivision (c), and shall be included in the initial statement of
39reasons as required by Section 11346.2.
P9 1(b) (1) begin deleteAll state agencies end deletebegin insertA
state agency end insertproposing to adopt,
2amend, or repeal a regulation that is not a major regulation or that
3is a major regulation proposed prior to November 1, 2013, shall
4prepare an economic impact assessment that assesses whether and
5to what extent it will affect the following:
6(A) The creation or elimination of jobs within the state.
7(B) The creation of new businesses or the elimination of existing
8businesses within the state.
9(C) The expansion of businesses currently doing business within
10the state.
11(D) The benefits of the regulation to the health and welfare of
12California residents, worker safety, and the state’s environment.
13(2) This subdivision does not apply to
the University of
14California, the Hastings College of the Law, or the Fair Political
15Practices Commission.
16(3) Information required frombegin insert aend insert statebegin delete agenciesend deletebegin insert agencyend insert for the
17purpose of completing the assessment may come from existing
18state publications.
19(c) (1) Each state agency proposing to adopt, amend, or repeal
20a major regulation on or after November 1, 2013, shall prepare a
21standardized regulatory impact analysis in the manner prescribed
22by the Department of Finance pursuant to Section 11346.36. The
23standardized regulatory impact analysis shall address all of the
24
following:
25(A) The creation or elimination of jobs within the state.
26(B) The creation of new businesses or the elimination of existing
27businesses within thebegin delete state.end deletebegin insert state, including the impact on sole
28proprietorships and small businesses as defined by Section
2911342.610.end insert
30(C) The competitive advantages or disadvantages for businesses
31currently doing business within the state.
32(D) The increase or decrease of investment in the state.
33(E) The incentives for innovation in products, materials, or
34
processes.
35(F) The benefits of the regulations, including, but not limited
36to, benefits to the health, safety, and welfare of California residents,
37worker safety, and the state’s environment and quality of life,
38among any other benefits identified by the agency.
P10 1(2) This subdivision shall not apply to the University of
2California, the Hastings College of the Law, or the Fair Political
3Practices Commission.
4(3) Information required from state agencies for the purpose of
5completing the analysis may be derived from existing state, federal,
6or academic publications.
7(d) Any administrative regulation adopted on or after January
81, 1993, that requires a report shall not apply to businesses, unless
9the state agency adopting the regulation makes a finding that
it is
10necessary for the health, safety, or welfare of the people of the
11state that the regulation apply to businesses.
12(e) Analyses conducted pursuant to this section are intended to
13provide agencies and the public with tools to determine whether
14the regulatory proposal is an efficient and effective means of
15implementing the policy decisions enacted in statute or by other
16provisions of law in the least burdensome manner. Regulatory
17impact analyses shall inform the agencies and the public of the
18economic consequences of regulatory choices, not reassess
19statutory policy. The baseline for the regulatory analysis shall be
20the most cost-effective set of regulatory measures that are equally
21effective in achieving the purpose of the regulation in a manner
22that ensures full compliance with the authorizing statute or other
23law being implemented or made specific by the proposed
24regulation.
25(f) Each state agency proposing to adopt, amend, or repeal a
26major regulation on or after November 1, 2013, and that has
27prepared a standardized regulatory impact analysis pursuant to
28subdivision (c), shall submit that analysis to the Department of
29Finance upon completion. The department shall comment, within
3030 days of receiving that analysis, on the extent to which the
31analysis adheres to the regulations adopted pursuant to Section
3211346.36. Upon receiving the comments from the department, the
33agency may update its analysis to reflect any comments received
34from the department and shall summarize the comments and the
35response of the agency along with a statement of the results of the
36updated analysis for the statement required by paragraph (10) of
37subdivision (a) of Section 11346.5.
Section 11357 of the Government Code is amended
39to read:
(a) The Department of Finance shall adopt and update,
2as necessary, instructions for inclusion in the State Administrative
3Manual prescribing the methods that an agency subject to this
4chapter shall use in making the determinations and the estimates
5of fiscal or economic impact required by Sections 11346.2,
611346.3,
and 11346.5. The instructions shall include, but need not
7be limited to, the following:
8(1) Guidelines governing the types of data or assumptions, or
9both, that may be used, and the methods that shall be used, to
10calculate the estimate of the cost or savings to public agencies
11mandated by the regulation for which the estimate is being
12prepared.
13(2) The types of direct or indirect costs and savings that should
14be taken into account in preparing the estimate.
15(3) The criteria that shall be used in determining whether the
16cost of a regulation must be funded by the state pursuant to Section
176 of Article XIII B of the California Constitution and Part 7
18(commencing with Section 17500)
of Division 4.
19(4) The format the agency preparing the estimate shall follow
20in summarizing and reporting its estimate of the cost or savings
21to state and local agencies, school districts, and in federal funding
22of state programs that will result from the regulation and its
23estimate of the economic impact that will result from the regulation.
24(b) An action by the Department of Finance to adopt and update,
25as necessary, instructions to any state or local agency for the
26preparation, development, or administration of the state budget,
27or instructions to a state agency on the preparation of an economic
28impact estimate or assessment of a proposed regulation, including
29any instructions included in the State Administrative Manual, shall
30be exempt from this chapter.
31(c) The Department of Finance may review an estimate prepared
32pursuant to this section for content including, but not limited to,
33the data and assumptions used in its preparation.
Section 2.5 of this bill incorporates amendments to
35Section 11346.3 of the Government Code proposed by both this
36bill and AB 2723. It shall only become operative if (1) both bills
37are enacted and become effective on or before January 1, 2015,
38(2) each bill amends Section 11346.3 of the Government Code,
39and (3) this bill is enacted after AB 2723, in which case Section 2
40of this bill shall not become operative.
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