BILL NUMBER: AB 2529 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY MAY 28, 2010
AMENDED IN ASSEMBLY APRIL 14, 2010
INTRODUCED BY Assembly Member Fuentes
FEBRUARY 19, 2010
An act to amend Sections 11343.4 and 11346.5 of, and to
add Sections 11346.35 and 11349.35 to, the Government Code, relating
to regulations. An act to add and repeal Section
11346.35 of the Government Code, relating to regulations.
LEGISLATIVE COUNSEL'S DIGEST
AB 2529, as amended, Fuentes. State agencies: regulations: review.
Existing law, the Administrative Procedure Act, governs the
procedure 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. Under existing law, a
regulation that is approved, or deemed approved, by the office shall
be filed with the Secretary of State and shall take effect on the
30th day after that filing, except as specified.
Existing law establishes the Bureau of State Audits, which is
headed by the State Auditor and has specified statutory duties.
Existing law establishes the State Audit Fund, which is continuously
appropriated for the expenses of the State Auditor.
This bill would require the State Auditor, using information
submitted by an agency proposing a regulation, to conduct a cost
benefit analysis of the regulation that includes certain
determinations, as specified. This bill would require the agency to
include this cost benefit analysis in its notice of proposed action
for the proposed regulation. To the extent that this bill imposes
additional duties on the State Auditor that are funded through a
continuously appropriated fund, this bill would make an
appropriation.
This bill would require the office, if a proposed regulation is
approved or deemed approved, to provide a prescribed notification to
specified committees in the Legislature if the State Auditor's cost
benefit analysis determines that the regulation has an annual
statewide economic cost of more than $10,000,000 or that the benefits
of the regulation do not equal or exceed the costs of the
regulation.
This bill would require the specified legislative committees to
conduct a public hearing to review each regulation for which it
receives a notification from the office and to issue a recommendation
as to whether the regulation should be invalidated by statute.
This bill would extend the effective date of a regulation that the
office has submitted to the Secretary of State until the 60th day
after the filing.
This bill would require the State Air Resources Board, Energy
Commission, Department of Fish and Game, and the Department of
Housing and Community Development to complete a related economic
impacts analysis, as defined, for any proposed regulation that will
have an adverse economic impact on California business enterprises
and individuals in an amount exceeding $10,000,000, as specified.
This bill would also require these entities to submit the related
economic impacts analysis to a prescribed peer review process, if
certain conditions occur.
The bill would require the office to notify specified committees
in the Legislature of each major proposed regulation that is approved
or deemed approved by the office.
This bill would repeal its provisions on January 1, 2016, as
specified.
Vote: 2/3 majority . Appropriation:
yes no . Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 11346.35 is added to the
Government Code , to read:
11346.35. (a) For purposes of this section, the following terms
have the following meanings:
(1) "Agency" means only the State Air Resources Board, the Energy
Commission, the Department of Fish and Game, and the Department of
Housing and Community Development.
(2) "Major proposed regulation" means a proposed adoption,
amendment, or repeal of a regulation that will have an adverse
economic impact on California business enterprises and individuals in
an amount exceeding ten million dollars ($10,000,000), as estimated
by the agency in the assessment required pursuant to Section 11346.3.
(3) "Related economic impacts analysis" means an analysis of the
reasonably identifiable and significant impacts of a major proposed
regulation, that are premised upon, or derived from, empirical data
or other scientific or economic findings, conclusions, or
assumptions, including, but not limited to:
(A) Short-term and long-term jobs within this state in individual
sectors of the economy affected by the major proposed regulation.
(B) The revenues to the General Fund and special funds that result
from changes in economic activity attributable to the major proposed
regulation.
(b) The agency shall complete, and include within the notice of
proposed action required pursuant to Section 11346.5, a related
economic impacts analysis for a major proposed regulation.
(c) An agency shall enter into an agreement with the National
Bureau of Economic Research, the University of California, the
California State University, or a group of economists of comparable
stature and qualifications to conduct an external peer review of the
related economic impacts analysis of the major proposed regulation if
each of the following conditions occur:
(1) Within 15 days of the public disclosure of the notice of
proposed action pursuant to Section 11346.4, a person submits, in the
manner prescribed by the agency, a request for the agency to submit
the related economic impacts analysis for external peer review
pursuant to this section.
(2) The requester pays an administrative fee to the agency to
cover the administrative costs of processing the request. The
administrative fee shall be in an amount determined by the agency,
not to exceed the administrative costs of processing the requests,
and in no event to exceed five hundred dollars ($500).
(3) The requester and the agency, within 30 calendar days of the
date that the request is submitted, enter into a contract whereby the
requester shall be required to fully reimburse the agency for the
nonadministrative costs incurred by the agency to obtain the
completed peer review from the peer review entity.
(d) (1) Except as otherwise provided in this subdivision, the
agency shall select external peer reviewers using the process
established pursuant to Section 57004 of the Health and Safety Code.
(2) A person shall not serve as an external peer reviewer if that
person participated in the development of the related economic
impacts analysis of the major proposed regulation, or if that person
has a financial interest in an entity or person that would be subject
to the major proposed regulation or has any other conflict of
interest.
(3) The person who requests the external peer review pursuant to
this section, a person affiliated with that requester, and personnel
of the adopting agency shall not participate in the selection of the
individual external peer reviewers or contact or communicate with the
individual external peer reviewer during the peer review.
(4) Notwithstanding paragraph (3), the agency may contact or
communicate with an external peer reviewer for the purpose of
entering into the contract with the reviewer as described in
subdivision (c), and for purposes of providing the information
described in paragraph (1) of subdivision (e).
(5) The identity of the individual external peer reviewers shall
remain confidential until the external peer reviewer submits the
written report to the specified department or commission.
(e) If the requirements of subdivision (c) are met, the agency
shall not take any action to adopt the final version of a major
proposed regulation unless all of the following conditions are met:
(1) The agency submits to the external peer reviewer for
evaluation the text of the major proposed regulation, the related
economic impacts analysis for the major proposed regulation, and
other appropriate materials on which the related economic impacts
analysis is based.
(2) The external peer review entity prepares a written report that
contains an evaluation of the related economic impacts analysis
within a timeframe determined by the agency. If the external peer
review entity finds that the related economic impacts analysis
prepared by the agency is not based upon sound economic knowledge,
methods, or practices, the report shall state that finding and the
reasons supporting that finding.
(3) The agency accepts the findings of the external peer review
entity, in whole or in part, and revises the major proposed
regulation accordingly, or rejects the finding. If the agency
disagrees with any aspect of the findings of the external peer review
entity, it shall explain, and include as part of the rulemaking
record, its basis for the disagreement, including support for its
determination that the related economic impacts analysis is based on
sound economic knowledge, methods, and practices.
(4) A public hearing is conducted to provide opportunity for
public comment on the written report prepared by the external peer
review entity or, as appropriate, the agency explanation relating to
its disagreement with the written report. The public hearing
conducted pursuant to this paragraph shall be in addition to any
public hearing for purposes of adopting the final version of a major
proposed regulation. The agency shall not issue notice of a public
hearing on adoption of the final version of the major proposed
regulation until the public hearing described in this paragraph has
concluded.
(f) In the event that the external peer review entity fails to
provide a written report to the agency by the deadline prescribed by
paragraph (2) of subdivision (e), an agency shall not be required to
comply with the remaining requirements of subdivision (e) and may
proceed with the adoption of the final version of the major proposed
regulation.
(g) The requirements of this section shall not apply to an
emergency regulation adopted pursuant to Section 11346.1.
(h) This section shall not be construed to limit the authority of
an agency to adopt a regulation pursuant to the requirements of any
other law that authorizes or requires the adoption of the regulation.
(i) Once an external peer review of the related economic impacts
analysis has been completed for a major proposed regulation, the
agency shall not be required to conduct additional peer reviews
pursuant to this section for that major proposed regulation.
(j) The office shall notify the fiscal committees of each house of
the Legislature and the Joint Legislative Budget Committee of each
major proposed regulation that is approved or deemed approved by the
office pursuant to Section 11349.3. The notification shall include
the text of the regulation, the related economic impacts analysis
conducted by the agency, and the written report, if any, of the
external peer reviewer.
(k) This section shall remain in effect only until January 1,
2016, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2016, deletes or extends
that date.
SECTION 1. Section 11343.4 of the Government
Code is amended to read:
11343.4. A regulation or an order of repeal required to be filed
with the Secretary of State shall become effective on the 60th day
after the date of filing unless:
(a) Otherwise specifically provided by the statute pursuant to
which the regulation or order of repeal was adopted, in which event
it becomes effective on the day prescribed by the statute.
(b) A later date is prescribed by the state agency in a written
instrument filed with, or as part of, the regulation or order of
repeal.
(c) The agency makes a written request to the office demonstrating
good cause for an earlier effective date, in which case the office
may prescribe an earlier date.
SEC. 2. Section 11346.35 is added to the
Government Code, to read:
11346.35. (a) The State Auditor shall, within a reasonable time,
conduct a cost benefit analysis of any proposed regulation before the
agency issues a notice of proposed action pursuant to Section
11346.4. Based on the results of the cost benefit analysis, the State
Auditor shall make a determination, to be included in the cost
benefit analysis, as to both of the following:
(1) Whether the proposed regulation will have an annual statewide
economic cost of at least ten million dollars ($10,000,000).
(2) Whether the proposed regulation, considered in its totality,
has regulatory benefits that equal or exceed the overall economic
costs.
(b) The agency proposing the regulation shall provide the State
Auditor with any information that the State Auditor deems necessary
to conduct the cost benefit analysis, including, but not limited to,
any information that the agency is required to include in the notice
of proposed action pursuant to Section 11346.5.
(c) The agency shall not issue the notice of proposed action
pursuant to Section 11346.4 until the State Auditor completes the
cost benefit analysis.
SEC. 3. Section 11346.5 of the Government Code
is amended to read:
11346.5. (a) The notice of proposed adoption, amendment, or
repeal of a regulation shall include the following:
(1) A statement of the time, place, and nature of proceedings for
adoption, amendment, or repeal of the regulation.
(2) Reference to the authority under which the regulation is
proposed and a reference to the particular code sections or other
provisions of law that are being implemented, interpreted, or made
specific.
(3) An informative digest drafted in plain English in a format
similar to the Legislative Counsel's digest on legislative bills. The
informative digest shall include the following:
(A) A concise and clear summary of existing laws and regulations,
if any, related directly to the proposed action and of the effect of
the proposed action.
(B) If the proposed action differs substantially from an existing
comparable federal regulation or statute, a brief description of the
significant differences and the full citation of the federal
regulations or statutes.
(C) A policy statement overview explaining the broad objectives of
the regulation and, if appropriate, the specific objectives.
(4) Any other matters as are prescribed by statute applicable to
the specific state agency or to any specific regulation or class of
regulations.
(5) A determination as to whether the regulation imposes a mandate
on local agencies or school districts and, if so, whether the
mandate requires state reimbursement pursuant to Part 7 (commencing
with Section 17500) of Division 4.
(6) An estimate, prepared in accordance with instructions adopted
by the Department of Finance, of the cost or savings to any state
agency, the cost to any local agency or school district that is
required to be reimbursed under Part 7 (commencing with Section
17500) of Division 4, other nondiscretionary cost or savings imposed
on local agencies, and the cost or savings in federal funding to the
state.
For purposes of this paragraph, "cost or savings" means additional
costs or savings, both direct and indirect, that a public agency
necessarily incurs in reasonable compliance with regulations.
(7) If a state agency, in proposing to adopt, amend, or repeal any
administrative regulation, makes an initial determination that the
action may have a significant, statewide adverse economic impact
directly affecting business, including the ability of California
businesses to compete with businesses in other states, it shall
include the following information in the notice of proposed action:
(A) Identification of the types of businesses that would be
affected.
(B) A description of the projected reporting, recordkeeping, and
other compliance requirements that would result from the proposed
action.
(C) The following statement: "The (name of agency) has made an
initial determination that the (adoption/amendment/repeal) of this
regulation may have a significant, statewide adverse economic impact
directly affecting business, including the ability of California
businesses to compete with businesses in other states. The (name of
agency) (has/has not) considered proposed alternatives that would
lessen any adverse economic impact on business and invites you to
submit proposals. Submissions may include the following
considerations:
(i) The establishment of differing compliance or reporting
requirements or timetables that take into account the resources
available to businesses.
(ii) Consolidation or simplification of compliance and reporting
requirements for businesses.
(iii) The use of performance standards rather than prescriptive
standards.
(iv) Exemption or partial exemption from the regulatory
requirements for businesses."
(8) If a state agency, in adopting, amending, or repealing any
administrative regulation, makes an initial determination that the
action will not have a significant, statewide adverse economic impact
directly affecting business, including the ability of California
businesses to compete with businesses in other states, it shall make
a declaration to that effect in the notice of proposed action. In
making this declaration, the agency shall provide in the record
facts, evidence, documents, testimony, or other evidence upon which
the agency relies to support its initial determination.
An agency's initial determination and declaration that a proposed
adoption, amendment, or repeal of a regulation may have or will not
have a significant, adverse impact on businesses, including the
ability of California businesses to compete with businesses in other
states, shall not be grounds for the office to refuse to publish the
notice of proposed action.
(9) A description of all cost impacts, known to the agency at the
time the notice of proposed action is submitted to the office, that a
representative private person or business would necessarily incur in
reasonable compliance with the proposed action.
If no cost impacts are known to the agency, it shall state the
following:
"The agency is not aware of any cost impacts that a representative
private person or business would necessarily incur in reasonable
compliance with the proposed action."
(10) A statement of the results of the assessment required by
subdivision (b) of Section 11346.3.
(11) The finding prescribed by subdivision (c) of Section 11346.3,
if required.
(12) A statement that the action would have a significant effect
on housing costs, if a state agency, in adopting, amending, or
repealing any administrative regulation, makes an initial
determination that the action would have that effect. In addition,
the agency officer designated in paragraph (14), shall make available
to the public, upon request, the agency's evaluation, if any, of the
effect of the proposed regulatory action on housing costs.
(13) A statement that the adopting agency must determine that no
reasonable alternative considered by the agency or that has otherwise
been identified and brought to the attention of the agency would be
more effective in carrying out the purpose for which the action is
proposed or would be as effective and less burdensome to affected
private persons than the proposed action.
(14) The name and telephone number of the agency representative
and designated backup contact person to whom inquiries concerning the
proposed administrative action may be directed.
(15) The date by which comments submitted in writing must be
received to present statements, arguments, or contentions in writing
relating to the proposed action in order for them to be considered by
the state agency before it adopts, amends, or repeals a regulation.
(16) Reference to the fact that the agency proposing the action
has prepared a statement of the reasons for the proposed action, has
available all the information upon which its proposal is based, and
has available the express terms of the proposed action, pursuant to
subdivision (b).
(17) A statement that if a public hearing is not scheduled, any
interested person or his or her duly authorized representative may
request, no later than 15 days prior to the close of the written
comment period, a public hearing pursuant to Section 11346.8.
(18) A statement indicating that the full text of a regulation
changed pursuant to Section 11346.8 will be available for at least 15
days prior to the date on which the agency adopts, amends, or
repeals the resulting regulation.
(19) A statement explaining how to obtain a copy of the final
statement of reasons once it has been prepared pursuant to
subdivision (a) of Section 11346.9.
(20) If the agency maintains an Internet Web site or other similar
forum for the electronic publication or distribution of written
material, a statement explaining how materials published or
distributed through that forum can be accessed.
(21) The results of the cost benefit analysis issued by the State
Auditor pursuant to Section 11346.35.
(b) The agency representative designated in paragraph (14) of
subdivision (a) shall make available to the public upon request the
express terms of the proposed action. The representative shall also
make available to the public upon request the location of public
records, including reports, documentation, and other materials,
related to the proposed action. If the representative receives an
inquiry regarding the proposed action that the representative cannot
answer, the representative shall refer the inquiry to another person
in the agency for a prompt response.
(c) This section shall not be construed in any manner that results
in the invalidation of a regulation because of the alleged
inadequacy of the notice content or the summary or cost estimates, or
the alleged inadequacy or inaccuracy of the housing cost estimates,
if there has been substantial compliance with those requirements.
SEC. 4. Section 11349.35 is added to the
Government Code, to read:
11349.35. (a) The office shall identify, for each proposed
regulation that is approved or deemed approved by the office pursuant
to Section 11349.3, the determinations made by the State Auditor in
the cost benefit analysis conducted pursuant to Section 11346.35. The
office shall notify the Committee on Appropriations of each house of
the Legislature of each regulation for which the State Auditor
determined that the regulation will have an annual statewide economic
cost of at least ten million dollars ($10,000,000) or that the
regulation's benefits do not equal or exceed the overall economic
costs. The notification shall include, but not be limited to, the
text of the regulation and the cost benefit analysis conducted by the
State Auditor.
(b) The Committee on Appropriations of each house of the
Legislature shall conduct a public hearing to review each regulation
for which it receives a notification from the office and shall issue
a recommendation as to whether the regulation should be invalidated
by statute.