Amended in Senate February 8, 2016

Amended in Assembly January 4, 2016

California Legislature—2015–16 Regular Session

Assembly Bill No. 1033

Introduced by Assembly Member Eduardo Garcia

February 26, 2015

An act to amend Section 11346.3 of the Government Code, relating to state agency regulations.

LEGISLATIVE COUNSEL’S DIGEST

AB 1033, as amended, Eduardo Garcia. Economic impact begin delete analysis: end delete begin insert assessment: end insert small business definition.

Existing law, the Administrative Procedure Act, governs, among other things, the procedures for the adoption, amendment, or repeal of regulations by state agencies and for the review of those regulatory actions by the Office of Administrative Law. Existing law requires a state agency proposing to adopt, amend, or repeal specific administrative regulations to assess the potential for adverse economic impact on California business enterprises and individuals and to prepare an economic impact begin delete analysis, end delete begin insert assessment, end insert as specified, that addresses, among other things, the creation or elimination of jobs within the state.

This bill would authorize a state agency, when preparing the economic impact begin delete analysis, end delete begin insert assessment, end insert to use a consolidated definition of small business to determine the number of small businesses within the economy, a specific industry sector, or geographic region, and would define “small business” for that purpose as a business that is independently owned and operated, not dominant in its field of operation, and has fewer than 100 employees.

Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no.

The people of the State of California do enact as follows:

SECTION 1.  

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.

(4) (A) For purposes of conducting the economic impact
begin delete analysis end delete begin insert assessment end insert pursuant to this subdivision, a state agency
may use the consolidated definition of small business in
subparagraph (B) in order to determine the number of small
businesses within the economy, a specific industry sector, or
geographic region. The state agency shall clearly identify the use
of the consolidated small business definition in its rulemaking
package.

(B) For the exclusive purpose of undertaking the economic
impact begin delete analysis in a manner described by the Department of
Finance pursuant to Section 11346.36, end delete begin insert assessment, end insert a “small
business” means a business that is all of the following:

(i) Independently owned and operated.

(ii) Not dominant in its field of operation.

(iii) Has fewer than 100 employees.

(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.