BILL ANALYSIS Ó
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
SB 1228 (Runner) - Small business: California Small Business
Regulatory Fairness Act
-----------------------------------------------------------------
| |
| |
| |
-----------------------------------------------------------------
|--------------------------------+--------------------------------|
| | |
|Version: April 20, 2016 |Policy Vote: B., P. & E.D. 3 - |
| | 1, B., P. & E.D. 9 - |
| | 0, B., P. & E.D. 9 - |
| | 0 |
| | |
|--------------------------------+--------------------------------|
| | |
|Urgency: No |Mandate: No |
| | |
|--------------------------------+--------------------------------|
| | |
|Hearing Date: May 2, 2016 |Consultant: Robert Ingenito |
| | |
-----------------------------------------------------------------
This bill meets the criteria for referral to the Suspense File.
Bill
Summary: SB 1228 would require state agencies to assist a small
business, as defined, comply with (1) all statutes and
regulations they administer, and (2) any enforcement action they
undertake. The bill would, no later than December 31, 2017,
require state agencies to create a policy, as specified, that
provides for the reduction, and under certain circumstances
waiver, of civil penalties for a small business based upon
specified mitigating factors.
Fiscal
Impact: This bill would result in unknown, but likely major
costs (General Fund, special funds) to state departments to
SB 1228 (Runner) Page 1 of
?
comply with the bill's requirements as they relate to small
business (See Staff Comments).
Background: According to a 2015 U.S. Small Business Administration report,
California has more than 3.6 million small businesses, over 1.2
million more than any other state. The report also noted that
California's small businesses employed 6.5 million employees in
2012, half of the state's private workforce. According to the
U.S. Census Bureau, small businesses made up 99.2 percent of all
employers in the State for the same year.
By nature of their size, small businesses face certain
challenges in meeting regulatory requirements, accessing
capital, and marketing their goods and services. California's
network of technical assistance providers assist businesses with
a range of services, including access to quality training,
one-on-one counseling, mentoring, marketing data, and other
business development resources.
Proposed Law:
This bill would do all of the following:
Require state agencies (excluding the Franchise Tax
Board and the Board of Equalization) to do the following:
o Assist a small business in achieving
compliance with statutes and regulations administered
by the state agency.
o Assist a small business during an enforcement
action by the state agency.
o Not later than December 31, 2017, establish a
policy to provide for reduction, and under certain
circumstances waiver, of civil penalties for a small
business based upon mitigating factors including, but
not limited to:
SB 1228 (Runner) Page 2 of
?
§ The small business has not been
subject to previous enforcement actions by the
agency.
§ The violation by the small business
did not involve willful or criminal conduct.
§ The violation by the small business
did not pose an imminent health, safety, or
environmental threat.
§ The small business is unable to pay
the penalty or the penalty would impair the
ability of the small business to conduct business
or compete effectively.
§ The small business has a low degree
of culpability when its conduct is judged in
light of its size, length of operation, and the
sophistication of its owners or managers.
§ The small business cooperated during
any investigation by the state agency.
§ The small business engaged in
subsequent action to correct the violation.
Specify that a small business shall not be required to
meet all of the mitigating factors adopted by a state
agency to receive relief under the policy. A state agency
shall not require the mitigating factors to be weighed
equally when granting relief to a small business under the
policy.
SB 1228 (Runner) Page 3 of
?
Related
Legislation:
SB 606 (Nielsen) of 2015 would have established the
Small Business Appeals Board and authorized the board to
grant a hearing and review the order, ruling, action, or
failure to act of any state agency upon petition of any
small business affected and to grant any remedy or impose
any penalty authorized under existing law governing
administrative procedures. The bill died in the Senate
Committee on Governmental Organization.
AB 19 (Chang) of 2015 would have required the Governor's
Office of Business and Economic Development (GO-Biz) to
review regulations affecting small businesses to determine
whether the regulations need to be amended in order to
become more effective, less burdensome, or to decrease the
cost impact to affected sectors. The bill died in the
Assembly Appropriations Committee.
Staff
Comments: This bill would result in unknown, but likely major
costs across multiple state departments to comply with the
bill's requirements as they relate to small business. With over
200 state agencies, this bill could have wide-ranging impact.
However, the regulations of many agencies are not directed
toward small business. The exact number of state agencies with
regulations affecting small business is currently unknown.
Moreover, not all regulations affecting small business have
civil penalties associated with them.
The Department of General Services' (DGS) largest program that
provides for civil penalties for private sector firms is the
state small business program. Thus, the bill could lead to DGS
reducing civil penalties for small businesses that have abused
SB 1228 (Runner) Page 4 of
?
their small business certification. Additionally, the bill makes
reference to the small business definition in Section 14837 of
the Small Business Procurement and Contract Act; DGS administers
this body of law. Section 14839.1, subdivision (a), provides
that DGS shall have sole responsibility for certifying and
determining the eligibility of small businesses and
microbusinesses under that Act. It is unclear whether the
author's intent is for other agencies to rely just on the
eligibility criteria in the Small Business Procurement and
Contract Act, or instead they rely on whether DGS had certified
the firm. If it is the latter, firms could potentially seek
certification with DGS without having any interest in doing
business with the State, just to have access to the reduced
civil penalties.
-- END --