BILL ANALYSIS
AB 2529
Page 1
ASSEMBLY THIRD READING
AB 2529 (Fuentes)
As Amended May 28, 2010
Majority vote
BUSINESS & PROFESSIONS 8-2 APPROPRIATIONS 17-0
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|Ayes:|Hayashi, Emmerson, |Ayes:|Fuentes, Conway, Ammiano, |
| |Conway, Hernandez, Hill, | | |
| |Ma, Niello, Smyth | |Bradford, Charles |
| | | |Calderon, Coto, |
| | | |Davis, Harkey, Miller, |
| | | |Monning, |
| | | |Nielsen, Norby, Ruskin, |
| | | |Skinner, |
| | | |Solorio, Torlakson, |
| | | |Torrico |
|-----+--------------------------+-----+--------------------------|
|Nays:|Nava, Ruskin | | |
| | | | |
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SUMMARY : Establishes a peer review process for specified
agencies with regards to a proposed action for a major proposed
regulation (MPR). Specifically, this bill :
1)Requires the State Air Resources Board, the Energy Commission,
the Department of Fish and Game and the Department of Housing
and Community Development (agency) to complete and include a
related economic impacts analysis within the notice of
proposed action for a MPR.
2)Requires the agency to 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 MPR if each of the following conditions occur:
a) Within 15 days of the public disclosure of the notice of
proposed action, as specified, a person submits, in the
manner prescribed by the agency, a request for the agency
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to submit the related economic impacts analysis for
external peer review pursuant to this bill;
b) The requester pays an administrative fee to the agency
to cover the costs of processing the request. The
administrative fee shall be in an amount determined by the
agency, not to exceed the costs of processing the requests,
and in no event to exceed $500; and,
c) 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 (PRE).
3)Requires the agency to select external peer reviewers (EPR)
using existing legal processes.
4)Prohibits a person from serving as an EPR if that person
participated in the development of the related economic
impacts analysis of the MPR, or if that person has a financial
interest in an entity or person that would be subject to the
MPR, or has any other conflict of interest.
5)Prohibits the person who requests the external peer review, a
person affiliated with that requester, and personnel of the
adopting agency from participating in the selection of the
individual EPR, or contacting or communicating with the
individual EPR during the peer review.
6)Permits the agency to contact or communicate with an EPR for
the purpose of entering into the contract with the reviewer
and to provide information, as specified.
7)Requires the identity of individual EPRs to remain
confidential until the EPR submits the written report to the
specified department or commission.
8)Requires the agency to meet the following conditions, after
the requirements of 1) are met, before taking action to adopt
the final version of an MPR:
a) The agency submits to the EPR the text of the MPR, the
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related economic impacts analysis for the MPR, and other
appropriate materials on which the related economic impacts
analysis is based;
b) The external PRE prepares a written report that contains
an evaluation of the related economic impacts analysis
within a timeframe determined by the agency. If the
external PRE 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;
c) The agency accepts the findings of the external PRE, in
whole or in part, and revises the MPR accordingly, or
rejects the finding. If the agency disagrees with any
aspect of the findings of the external PRE, 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;
and,
d) A public hearing is conducted to provide opportunity for
public comment on the written report prepared by the
external PRE or, as appropriate, the agency explanation
relating to its disagreement with the written report. The
public hearing shall be in addition to any public hearing
for purposes of adopting the final version of the MPR. The
agency shall not issue notice of a public hearing on
adoption of the final version of the MPR until the public
hearing has concluded.
9)Does not require an agency to comply with the above
requirements, and instead allow the agency to proceed with the
adoption of the final version of the MPR if the external PRE
fails to provide a written report to the agency by the
deadline.
10)Exempts emergency regulations, as specified, from this bill.
11)Prohibits this bill from being 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
regulation's adoption.
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12)Does not require the agency to conduct additional peer
reviews after one external peer review of related economic
impacts analysis has been completed for a MPR.
13)Requires the office to notify the fiscal committees of each
house of the Legislature and the Joint Legislative Budget
Committee of each MPR that is approved or deemed approved by
the office, as specified. 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 EPR.
14)Sunsets on January 1, 2016.
15)Defines the following terms:
a) "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;
b) "MPR" 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 $10 million, as estimated by the agency in
the assessment required, as specified; and,
c) 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:
i) Short-term and long-term jobs within this state in
individual sectors of the economy affected by the MPR;
and,
ii) The revenues to the General Fund and special funds
that result from changes in economic activity
attributable to the MPR;
EXISTING LAW :
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1)Establishes requirements for the adoption, publication,
review, and implementation of regulations by state agencies,
under the Administrative Procedure Act (APA).
2)Requires a state agency to submit to the OAL an initial
statement of reasons for proposing the adoption, amendment,
repeal of a regulation that includes a description of
reasonable alternatives to the regulation.
FISCAL EFFECT : According to the Assembly Appropriations
Committee:
1)Potential ongoing costs to the affected departments of an
unknown amount, but likely in the range of several hundred
thousand dollars, for the departments to contract with outside
entities for peer review of proposed major regulations. The
departments' actual costs will depend upon the number of peer
reviews they must contract for and the cost of each peer
review. In any case, the bill provides that the departments
will be reimbursed for these costs by the person requesting
the peer review.
2)Potential ongoing costs to the departments to process
applications for peer review, fully covered by the processing
fee authorized by this bill.
COMMENTS : According to the author's office, "While an
assessment of the economic impact on California business
enterprises and individuals comprises part of the rulemaking
process, an agency's assessment is not reviewed by an
independent third party to ensure accuracy, and therefore could
result in regulations with significant adverse economic impacts
on Californians, impacts that may not have been the intent of
the legislature's original statute. This bill remedies this
deficiency."
The APA governs the adoption of regulations by state agencies
for purposes of ensuring that they are clear, necessary, legally
valid, and available to the public. In seeking adoption of a
proposed regulation, state agencies must comply with procedural
requirements that include publishing the proposed regulation
along with supporting statement of reasons; mailing and
publishing a notice of the proposed action 45 days before a
hearing or before the close of the public comment period; and
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submitting a final statement to OAL which summarizes and
responds to all objections, recommendations, and proposed
alternatives that were raised during the public comment period.
The OAL is then required to approve or reject the proposed
regulation within 30 days.
More specifically related to this bill, the APA requires an
evaluation of the negative impact a proposed regulation would
have on businesses and reasonable alternatives that would
eliminate undue burdens. The APA also requires state agencies
to justify their proposed regulations by evaluating the
technical and empirical evidence that supports the proposed
regulation in comparison to reasonable alternatives.
Analysis Prepared by : Rebecca May / B.,P. & C.P. / (916)
319-3301
FN: 0004725