BILL NUMBER: AB 1711 AMENDED
BILL TEXT
AMENDED IN SENATE AUGUST 21, 2014
AMENDED IN ASSEMBLY APRIL 3, 2014
AMENDED IN ASSEMBLY MARCH 20, 2014
INTRODUCED BY Assembly Member Cooley
FEBRUARY 13, 2014
An act to amend Sections 11346.2, 11346.3, and 11357 of the
Government Code, relating to administrative regulations.
LEGISLATIVE COUNSEL'S DIGEST
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.
This 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.
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. Section 11346.2 of the Government Code is amended to
read:
11346.2. Every agency subject to this chapter shall prepare,
submit to the office with the notice of the proposed action as
described in Section 11346.5, and make available to the public upon
request, all of the following:
(a) A copy of the express terms of the proposed regulation.
(1) The agency shall draft the regulation in plain,
straightforward language, avoiding technical terms as much as
possible, and using a coherent and easily readable style. The agency
shall draft the regulation in plain English.
(2) The agency shall include a notation following the express
terms of each California Code of Regulations section, listing the
specific statutes or other provisions of law authorizing the adoption
of the regulation and listing the specific statutes or other
provisions of law being implemented, interpreted, or made specific by
that section in the California Code of Regulations.
(3) The agency shall use underline or italics to indicate
additions to, and strikeout to indicate deletions from, the
California Code of Regulations.
(b) An initial statement of reasons for proposing the adoption,
amendment, or repeal of a regulation. This statement of reasons shall
include, but not be limited to, all of the following:
(1) A statement of the specific purpose of each adoption,
amendment, or repeal, the problem the agency intends to address, and
the rationale for the determination by the agency that each adoption,
amendment, or repeal is reasonably necessary to carry out the
purpose and address the problem for which it is proposed. The
statement shall enumerate the benefits anticipated from the
regulatory action, including the benefits or goals provided in the
authorizing statute. These benefits may include, 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. Where the adoption or amendment of a regulation
would mandate the use of specific technologies or equipment, a
statement of the reasons why the agency believes these mandates or
prescriptive standards are required.
(2) (A) For a regulation that is not a major regulation, the
economic impact assessment required by subdivision (b) of Section
11346.3.
(B) For a major regulation proposed on or after November 1, 2013,
the standardized regulatory impact analysis required by subdivision
(c) of Section 11346.3.
(3) An identification of each technical, theoretical, and
empirical study, report, or similar document, if any, upon which the
agency relies in proposing the adoption, amendment, or repeal of a
regulation.
(4) (A) A description of reasonable alternatives to the regulation
and the agency's reasons for rejecting those alternatives.
Reasonable alternatives to be considered include, but are not limited
to, 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. In
the case of a regulation that would mandate the use of specific
technologies or equipment or prescribe specific actions or
procedures, the imposition of performance standards shall be
considered as an alternative.
(B) A description of reasonable alternatives to the regulation
that would lessen any adverse impact on small business and the agency'
s reasons for rejecting those alternatives.
(C) Notwithstanding subparagraph (A) or (B), an agency is not
required to artificially construct alternatives or describe
unreasonable alternatives.
(5) (A) Facts, evidence, documents, testimony, or other evidence
on which the agency relies to support an initial determination that
the action will not have a significant adverse economic impact on
business.
(B) (i) If a proposed regulation is a building standard, the
initial statement of reasons shall include the estimated cost of
compliance, the estimated potential benefits, and the related
assumptions used to determine the estimates.
(ii) The model codes adopted pursuant to Section 18928 of the
Health and Safety Code shall be exempt from the requirements of this
subparagraph. However, if an interested party has made a request in
writing to the agency, at least 30 days before the submittal of the
initial statement of reasons, to examine a specific section for
purposes of estimating the cost of compliance and the potential
benefits for that section, and including the related assumptions used
to determine the estimates, then the agency shall comply with the
requirements of this subparagraph with regard to that requested
section.
(6) A department, board, or commission within the Environmental
Protection Agency, the Natural Resources Agency, or the Office of the
State Fire Marshal shall describe its efforts, in connection with a
proposed rulemaking action, to avoid unnecessary duplication or
conflicts with federal regulations contained in the Code of Federal
Regulations addressing the same issues. These agencies may adopt
regulations different from federal regulations contained in the Code
of Federal Regulations addressing the same issues upon a finding of
one or more of the following justifications:
(A) The differing state regulations are authorized by law.
(B) The cost of differing state regulations is justified by the
benefit to human health, public safety, public welfare, or the
environment.
(c) A state agency that adopts or amends a regulation mandated by
federal law or regulations, the provisions of which are identical to
a previously adopted or amended federal regulation, shall be deemed
to have complied with subdivision (b) if a statement to the effect
that a federally mandated regulation or amendment to a regulation is
being proposed, together with a citation to where an explanation of
the regulation can be found, is included in the notice of proposed
adoption or amendment prepared pursuant to Section 11346.5. However,
the agency shall comply fully with this chapter with respect to any
provisions in the regulation that the agency proposes to adopt or
amend that are different from the corresponding provisions of the
federal regulation.
(d) This section shall be inoperative from January 1, 2012, until
January 1, 2014.
SEC. 2. Section 11346.3 of the Government Code is amended to read:
11346.3. (a) A state agency 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 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 impact assessment prepared pursuant to this
subdivision for a proposed regulation that is not a major regulation
or that is a major regulation proposed prior to November 1, 2013,
shall be prepared in accordance with subdivision (b), and shall be
included in the initial statement of reasons as required by Section
11346.2. An economic assessment prepared pursuant to this subdivision
for a major regulation proposed on or after November 1, 2013, shall
be prepared in accordance with subdivision (c), and shall be included
in the initial statement of reasons as required by Section 11346.2.
(b) (1) A 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, shall prepare an
economic impact assessment that assesses whether and to what extent
it will affect the following:
(A) The creation or elimination of jobs within the state.
(B) The creation of new businesses or the elimination of existing
businesses within the state.
(C) The expansion of businesses currently doing business within
the state.
(D) The benefits of the regulation to the health and welfare of
California residents, worker safety, and the state's environment.
(2) This subdivision does not apply to the University of
California, the Hastings College of the Law, or the Fair Political
Practices Commission.
(3) Information required from a state agency 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, shall prepare a
standardized regulatory impact analysis in the manner prescribed by
the Department of Finance pursuant to Section 11346.36. The
standardized regulatory impact analysis shall address all of the
following:
(A) The creation or elimination of jobs within the state.
(B) The creation of new businesses or the elimination of existing
businesses within the state.
(C) The competitive advantages or disadvantages for businesses
currently doing business within the state.
(D) The increase or decrease of investment in the state.
(E) The incentives for innovation in products, materials, or
processes.
(F) The benefits of the regulations, 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 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, and that has prepared a
standardized regulatory impact analysis pursuant to subdivision (c),
shall submit that analysis to the Department of Finance upon
completion. The department shall comment, within 30 days of receiving
that analysis, on the extent to which the analysis 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. 2.5. Section 11346.3 of the
Government Code is amended to read:
11346.3. (a) State agencies A state
agency 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 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 impact assessment prepared pursuant to
this subdivision for a proposed regulation that is not a major
regulation or that is a major regulation proposed prior to November
1, 2013, shall be prepared in accordance with subdivision
(b). (b), and shall be included in the initial
statement of reasons as required by Section 11346.2. An
economic assessment prepared pursuant to this subdivision for a major
regulation proposed on or after November 1, 2013, shall be prepared
in accordance with subdivision (c), and shall be included in the
initial statement of reasons as required by Section 11346.2.
(b) (1) All state agencies A
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, shall prepare an economic impact
assessment that assesses whether and to what extent it will affect
the following:
(A) The creation or elimination of jobs within the state.
(B) The creation of new businesses or the elimination of existing
businesses within the state.
(C) The expansion of businesses currently doing business within
the state.
(D) The benefits of the regulation to the health and welfare of
California residents, worker safety, and the state's environment.
(2) This subdivision does not apply to the University of
California, the Hastings College of the Law, or the Fair Political
Practices Commission.
(3) Information required from a state agencies
agency 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, shall prepare a
standardized regulatory impact analysis in the manner prescribed by
the Department of Finance pursuant to Section 11346.36. The
standardized regulatory impact analysis shall address all of the
following:
(A) The creation or elimination of jobs within the state.
(B) The creation of new businesses or the elimination of existing
businesses within the state. state, including
the impact on sole proprietorships and small businesses as defined
by Section 11342.610.
(C) The competitive advantages or disadvantages for businesses
currently doing business within the state.
(D) The increase or decrease of investment in the state.
(E) The incentives for innovation in products, materials, or
processes.
(F) The benefits of the regulations, 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 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, and that has prepared a
standardized regulatory impact analysis pursuant to subdivision (c),
shall submit that analysis to the Department of Finance upon
completion. The department shall comment, within 30 days of receiving
that analysis, on the extent to which the analysis 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. 3. Section 11357 of the Government Code is amended to read:
11357. (a) The Department of Finance shall adopt and update, as
necessary, instructions for inclusion in the State Administrative
Manual prescribing the methods that an agency subject to this chapter
shall use in making the determinations and the estimates of fiscal
or economic impact required by Sections 11346.2, 11346.3, and
11346.5. The instructions shall include, but need not be limited to,
the following:
(1) Guidelines governing the types of data or assumptions, or
both, that may be used, and the methods that shall be used, to
calculate the estimate of the cost or savings to public agencies
mandated by the regulation for which the estimate is being prepared.
(2) The types of direct or indirect costs and savings that should
be taken into account in preparing the estimate.
(3) The criteria that shall be used in determining whether the
cost of a regulation must be funded by the state pursuant to Section
6 of Article XIII B of the California Constitution and Part 7
(commencing with Section 17500) of Division 4.
(4) The format the agency preparing the estimate shall follow in
summarizing and reporting its estimate of the cost or savings to
state and local agencies, school districts, and in federal funding of
state programs that will result from the regulation and its estimate
of the economic impact that will result from the regulation.
(b) An action by the Department of Finance to adopt and update,
as necessary, instructions to any state or local agency for the
preparation, development, or administration of the state budget, or
instructions to a state agency on the preparation of an economic
impact estimate or assessment of a proposed regulation, including any
instructions included in the State Administrative Manual, shall be
exempt from this chapter.
(c) The Department of Finance may review an estimate prepared
pursuant to this section for content including, but not limited to,
the data and assumptions used in its preparation.
SEC. 4. Section 2.5 of this bill incorporates
amendments to Section 11346.3 of the Government Code proposed by both
this bill and AB 2723. It shall only become operative if (1) both
bills are enacted and become effective on or before January 1, 2015,
(2) each bill amends Section 11346.3 of the Government Code, and (3)
this bill is enacted after AB 2723, in which case Section 2 of this
bill shall not become operative.