BILL NUMBER: SB 356 INTRODUCED
BILL TEXT
INTRODUCED BY Senator Wright
FEBRUARY 25, 2009
An act to amend Sections 11346, 11346.2, 11346.3, 11346.45,
11346.5, 11346.9, 11350, 11350.3, 11357, 15570, and 65054.3 of, and
to repeal and add Section 11342.610 of, the Government Code, and to
amend Section 75121 of the Public Resources Code, relating to
regulations.
LEGISLATIVE COUNSEL'S DIGEST
SB 356, as introduced, Wright. Regulations: small businesses.
(1) The Administrative Procedure Act generally sets forth the
requirements for the adoption, publication, review, and
implementation of regulations by state agencies. An agency that is
considering adopting, amending, or repealing a regulation is
authorized to consult with interested persons before initiating
regulatory action. An agency is required to involve parties who would
be subject to the regulation, before publishing a notice of proposed
action, if the proposed regulations involve complex proposals or a
large number of proposals.
This bill would require an agency considering such an action to
consult with those persons and would delete the condition that the
agency involve those parties if the proposal is large or complex.
(2) The act defines the term "small business" with regard to
specified business activities and excludes certain types of
professional business activities.
This bill would repeal that definition and would instead define a
small business with regard to being owned and operated by a person
and meeting specified conditions regarding employment or gross
receipts.
(3) The act requires every state agency subject to the act to
submit, with the notice of the proposed adoption, amendment, or
repeal of a regulation, an initial statement of reasons for proposing
the adoption, amendment, or repeal of a regulation, which is
required to include, among other things, a description of any
reasonable alternatives that would lessen any adverse impact on small
business and the agency's reasons for rejecting those reasonable
alternatives. The act specifies the agency is not required, in this
initial statement, to artificially construct alternatives, describe
unreasonable alternatives, or justify why it has not described
alternatives.
This bill would delete the provisions authorizing an agency to not
justify alternatives and would, instead, require the description of
reasonable alternatives to include the establishment of less
stringent, consolidated, or simplified compliance or reporting
requirements, the use of performance standards, and exemptions from
the regulation, for small businesses. The bill would require an
agency that rejects a reasonable alternative that is less burdensome
to small businesses to state its reasons for rejecting the
alternative.
(4) The act requires a state agency to assess the potential of a
proposal to adopt, amend, or repeal a regulation to adversely affect
business enterprises and individuals.
This bill would instead require an agency to submit an economic
impact statement that makes that assessment and would also require an
agency, before submitting a proposal, to prepare a small business
economic impact statement that contains specified information.
(5) Under the act, if a state agency makes an initial
determination that the adoption, amendment, or repeal of a regulation
will not have a significant statewide adverse economic impact
directly affecting business, the agency is required to make a
declaration of that determination in the notice of proposed action.
This bill would additionally require a state agency adopting,
amending, or repealing a regulation to make an initial determination
whether the regulation will have an adverse economic impact directly
affecting small businesses and to consider specified factors when
making this determination. The bill would also require, if a state
agency makes an initial determination that the action will not have a
significant, statewide adverse economic impact affecting small
business, to make a declaration to that effect in the notice of
proposed action.
(6) The act requires every agency subject to the act to prepare
and submit to the office, with the adopted regulation, a final
statement of reasons that is required to include, among other things,
an explanation setting forth the reasons for rejecting any proposed
alternatives that would lessen the adverse economic impact on small
businesses.
This bill would, instead, require an agency to include, if the
agency initially determines the regulation would have a significant,
statewide adverse economic impact on small businesses, a final
regulatory flexibility analysis containing specified information.
The bill would also make conforming changes to the act.
(7) Existing law provides for the Office of Small Business
Advocate within the Office of Planning and Research, with specified
duties. Existing law requires the Secretary of Labor and Workforce
Development to convene a biennial economic strategy panel to provide
recommendations regarding a California economic development strategic
plan, with specified membership. Existing law establishes the
Strategic Growth Council, with a specified membership and requires
the council to take certain actions with regard to coordinating
programs of member state agencies to improve air and water quality,
improve natural resource protection, increase the availability of
affordable housing, improve transportation, meet the goals of the
California Global Warming Solutions Act of 2006, encourage
sustainable land use planning, and revitalize urban and community
centers in a sustainable manner.
This bill would include the Director of the Office of Small
Business Advocate as a member of the California economic strategy
panel and the Strategic Growth Council.
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. The Legislature finds and declares all of the
following:
(a) A vibrant and growing small business sector is critical to
creating jobs in a dynamic economy.
(b) Small businesses bear a disproportionate share of regulatory
costs and burdens.
(c) The fundamental changes that are needed in the regulatory and
enforcement culture of state agencies to make them more responsive
to small business can be made without compromising the statutory
missions of these agencies.
(d) When adopting regulations to protect the health, safety, and
economic welfare of California, state agencies should seek to achieve
statutory goals as effectively and efficiently as possible without
imposing unnecessary burdens on employers.
(e) Uniform regulatory and reporting requirements can impose
unnecessary and disproportionately burdensome demands including
legal, accounting, and consulting costs upon small businesses with
limited resources.
(f) The failure to recognize differences in the scale and
resources of regulated businesses can adversely affect competition in
the marketplace, discourage innovation, and restrict improvements in
productivity.
(g) Unnecessary regulations create entry barriers in many
industries and discourage potential entrepreneurs from introducing
beneficial products and processes.
(h) The practice of treating all regulated businesses as
equivalent may lead to inefficient use of regulatory agency
resources, enforcement problems, and, in some cases, to actions
inconsistent with the intent of state laws to protect public health,
safety, and the environment, and to promote economic welfare.
(i) Alternative regulatory approaches that do not conflict with
the stated objective of applicable statutes must be explored to
minimize significant economic impact of regulations on small
businesses.
(j) The process by which state regulations are developed and
adopted should be reformed to require agencies to solicit the ideas
and comments of small businesses, and to examine the impact of
proposed rules on those businesses.
SEC. 2. Section 11342.610 of the Government Code is repealed.
11342.610. (a) "Small business" means a business activity in
agriculture, general construction, special trade construction, retail
trade, wholesale trade, services, transportation and warehousing,
manufacturing, generation and transmission of electric power, or a
health care facility, unless excluded in subdivision (b), that is
both of the following:
(1) Independently owned and operated.
(2) Not dominant in its field of operation.
(b) "Small business" does not include the following professional
and business activities:
(1) A financial institution including a bank, a trust, a savings
and loan association, a thrift institution, a consumer finance
company, a commercial finance company, an industrial finance company,
a credit union, a mortgage and investment banker, a securities
broker-dealer, or an investment adviser.
(2) An insurance company, either stock or mutual.
(3) A mineral, oil, or gas broker.
(4) A subdivider or developer.
(5) A landscape architect, an architect, or a building designer.
(6) An entity organized as a nonprofit institution.
(7) An entertainment activity or production, including a motion
picture, a stage performance, a television or radio station, or a
production company.
(8) A utility, a water company, or a power transmission company
generating and transmitting more than 4.5 million kilowatt hours
annually.
(9) A petroleum producer, a natural gas producer, a refiner, or a
pipeline.
(10) A manufacturing enterprise exceeding 250 employees.
(11) A health care facility exceeding 150 beds or one million five
hundred thousand dollars ($1,500,000) in annual gross receipts.
(c) "Small business" does not include the following business
activities:
(1) Agriculture, where the annual gross receipts exceed one
million dollars ($1,000,000).
(2) General construction, where the annual gross receipts exceed
nine million five hundred thousand dollars ($9,500,000).
(3) Special trade construction, where the annual gross receipts
exceed five million dollars ($5,000,000).
(4) Retail trade, where the annual gross receipts exceed two
million dollars ($2,000,000).
(5) Wholesale trade, where the annual gross receipts exceed nine
million five hundred thousand dollars ($9,500,000).
(6) Services, where the annual gross receipts exceed two million
dollars ($2,000,000).
(7) Transportation and warehousing, where the annual gross
receipts exceed one million five hundred thousand dollars
($1,500,000).
SEC. 3. Section 11342.610 is added to the Government Code, to
read:
11342.610. "Small business" means an entity, including its
affiliates, that meets both of the following requirements:
(a) Is owned and operated by a person, as defined in Section 17007
of the Revenue and Taxation Code.
(b) Meets one of the following conditions:
(1) Employs fewer than 100 full-time employees.
(2) Has average annual gross receipts of less than ten million
dollars ($10,000,000) over the previous three years.
SEC. 4. Section 11346 of the Government Code is amended to read:
11346. (a) It is the purpose of this chapter to establish basic
minimum procedural requirements for the adoption, amendment, or
repeal of administrative regulations. Except as provided in Section
11346.1, the provisions of this chapter
are applicable applies to the exercise of any
quasi-legislative power conferred by any statute heretofore or
hereafter enacted, but nothing in this chapter repeals or diminishes
additional requirements imposed by any statute. This chapter shall
not be superseded or modified by any subsequent legislation except to
the extent that the legislation shall do so expressly.
(b) An agency that is considering adopting, amending, or repealing
a regulation may shall consult with
interested persons before initiating regulatory action pursuant to
this article.
SEC. 5. 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 and the rationale for the determination by the
agency that each adoption, amendment, or repeal is reasonably
necessary to carry out the purpose for which it is proposed. 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) 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.
(3) (A) A description of reasonable alternatives to the regulation
and the agency's reasons for rejecting those alternatives. 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.
, including, but not limited to, all of the following:
(i) The establishment of less stringent compliance or
reporting requirements for small businesses.
(ii) The establishment of less stringent schedules or
deadlines for compliance or reporting requirements for small
businesses.
(iii) The consolidation or simplification of compliance or
reporting requirements for small businesses.
(iv) The use of performance standards for small businesses,
instead of design or prescriptive standards.
(v) The exemption of small businesses from all or any part of
the requirements contained in the proposed regulation.
(C) Notwithstanding subparagraph (A) or (B), an agency is
not required to artificially construct alternatives, describe
unreasonable alternatives, or justify why it has not described
alternatives. If an agency rejects a
reasonable alternative pursuant to subparagraph (B) that is less
burdensome to small businesses, the agency shall state its reasons
for rejecting the alternative.
(4) 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.
(5) 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 An 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 provisions 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.
SEC. 6. Section 11346.3 of the Government Code is amended to read:
11346.3. (a) State agencies An agency
proposing to adopt, amend, or repeal any administrative
regulation shall assess submit an economic
impact statement that assesses 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.
It is not the intent of this section to impose additional criteria
on agencies, above that which exists in current law, in assessing
adverse economic impact on California business enterprises, but only
to assure that the assessment is made early in the process of
initiation and development of a proposed adoption, amendment, or
repeal of a regulation.
(3) An agency, before submitting a proposal to adopt, amend, or
repeal a regulation to the office, shall consider the proposal's
impact on small business by preparing a small business economic
impact statement that considers the industries affected, including
the ability of California small businesses to compete with businesses
in other states. For purposes of evaluating the impact of the
proposal on the ability of California small businesses to compete
with businesses in other states, an agency shall consider, but not be
limited to, information supplied by interested parties. The small
business economic impact statement shall include all of the
following:
(A) An identification and estimate of the number of small
businesses subject to the proposed regulation.
(B) The projected reporting, recordkeeping, and other
administrative costs required for compliance with the proposed
regulation, including the type of professional skills necessary for
preparation of the report or record.
(C) A statement of the probable effect on impacted small
businesses.
(D) A description of reasonable alternatives to the regulation
that would lessen any adverse impact on small business, including,
but not limited to:
(i) The establishment of less stringent compliance or reporting
requirements for small businesses.
(ii) The establishment of less stringent schedules or deadlines
for compliance or reporting requirements for small businesses.
(iii) The consolidation or simplification of compliance or
reporting requirements for small businesses.
(iv) The use of performance standards for small businesses,
instead of design or prescriptive standards.
(b) (1) All state agencies proposing to adopt, amend, or repeal
any administrative regulations shall assess whether and to what
extent it will affect the following:
(A) The creation or elimination of jobs within the State of
California.
(B) The creation of new businesses or the elimination of existing
businesses within the State of California.
(C) The expansion of businesses currently doing business within
the State of California.
(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 state agencies for the purpose of
completing the assessment may come from existing state publications.
(c) No administrative regulation adopted on or after January 1,
1993, that requires a report shall 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.
SEC. 7. Section 11346.45 of the Government Code is amended to
read:
11346.45. (a) In order to increase public participation and
improve the quality of regulations, state agencies
proposing to adopt regulations shall, prior to publication of the
notice required by Section 11346.5, involve parties who would be
subject to the proposed regulations in public discussions regarding
those proposed regulations , when the proposed regulations
involve complex proposals or a large number of proposals that cannot
easily be reviewed during the comment period .
(b) This section does not apply to a state
an agency in any instance where that state
agency is required to implement federal law and regulations for which
there is little or no discretion on the part of the state to vary.
(c) If the agency does not or cannot comply with the
provisions of subdivision (a), it shall state the reasons
for noncompliance with reasonable specificity in the rulemaking
record.
(d) The provisions of this section shall not be subject to
judicial review or to the provisions of Section 11349.1.
SEC. 8. 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 , and the cost or savings to small
businesses .
For purposes of this paragraph, "cost or savings" means additional
costs or savings, both direct and indirect, that a public agency
or small business 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 may have or 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) If a state agency, in proposing to adopt, amend, or repeal any
administrative regulation, makes an initial determination that the
action may have an adverse economic impact directly affecting small
business, including the ability of California small businesses to
compete with small businesses in other states, it shall include the
following information in the notice of proposed action:
(A) Identification of the types of small 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 small business, including the ability of
California businesses to compete with small businesses in other
states. The (name of agency) (has/has not) considered proposed
alternatives that would lessen any adverse economic impact on small
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 small businesses.
(ii) Consolidation or simplification of compliance and reporting
requirements for small businesses.
(iii) The use of performance standards for small businesses,
instead of prescriptive or design standards.
(iv) Exemption or partial exemption from the regulatory
requirements for businesses.
(10) (A) 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 affecting small business, including the ability of California
small businesses to compete with businesses in other states, it shall
make a declaration to that effect in the notice of proposed action.
(B) In making a declaration pursuant to subparagraph (A), the
agency shall provide in the record facts, evidence, documents,
testimony, or other evidence upon which the agency relies to support
its initial determination.
(C) An agency's initial determination and declaration pursuant to
subparagraph (A) that a proposed adoption, amendment, or repeal of a
regulation may have or will not have a significant, adverse impact on
small businesses, including the ability of California small
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)
(11) 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)
(12) A statement of the results of the assessment
required by subdivision (b) of Section 11346.3.
(11)
(13) The finding prescribed by subdivision (c) of
Section 11346.3, if required.
(12)
(14) 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)
(16) , 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)
(15) 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)
(16) 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)
(17) 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)
(18) 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)
(19) 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)
(20) 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)
(21) 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)
(22) 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.
(b) The agency representative designated in paragraph (14)
(16) 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. 9. Section 11346.9 of the Government Code is amended to read:
11346.9. Every agency subject to this chapter shall do the
following:
(a) Prepare and submit to the office with the adopted regulation a
final statement of reasons that shall include all of the following:
(1) An update of the information contained in the initial
statement of reasons. If the update identifies any data or any
technical, theoretical or empirical study, report, or similar
document on which the agency is relying in proposing the adoption,
amendment, or repeal of a regulation that was not identified in the
initial statement of reasons, or which was otherwise not identified
or made available for public review prior to the close of the public
comment period, the agency shall comply with Section 11347.1.
(2) A determination as to whether adoption, amendment, or repeal
of the regulation imposes a mandate on local agencies or school
districts. If the determination is that adoption, amendment, or
repeal of the regulation would impose a local mandate, the agency
shall state whether the mandate is reimbursable pursuant to Part 7
(commencing with Section 17500) of Division 4. If the agency finds
that the mandate is not reimbursable, it shall state the reasons for
that finding.
(3) A summary of each objection or recommendation made regarding
the specific adoption, amendment, or repeal proposed, together with
an explanation of how the proposed action has been changed to
accommodate each objection or recommendation, or the reasons for
making no change. This requirement applies only to objections or
recommendations specifically directed at the agency's proposed action
or to the procedures followed by the agency in proposing or adopting
the action. The agency may aggregate and summarize repetitive or
irrelevant comments as a group, and may respond to repetitive
comments or summarily dismiss irrelevant comments as a group. For
the purposes of this paragraph, a comment is
"irrelevant" if it is not specifically directed at the agency's
proposed action or to the procedures followed by the agency in
proposing or adopting the action.
(4) A determination with supporting information that no
alternative considered by the agency would be more effective in
carrying out the purpose for which the regulation is proposed or
would be as effective and less burdensome to affected private persons
than the adopted regulation.
(5) An explanation setting forth the reasons for rejecting any
proposed alternatives that would lessen the adverse economic impact
on small businesses.
(5) If an agency determines the regulation would have a
significant, statewide adverse economic impact directly affecting
small businesses pursuant to paragraph (9) of subdivision (a) of
Section 11346.5, a final regulatory flexibility analysis containing
all of the following:
(A) A summary of the significant issues raised by the public
comments in response to the initial regulatory flexibility analysis,
a summary of the assessment of the agency of those issues, and a
statement of changes made in the proposed regulation as a result of
those comments.
(B) A description of, and an estimate of the number of, small
businesses to which the proposed regulation will apply, and the
projected costs of the regulation to small businesses, or an
explanation of why that information is not available.
(C) A description of the projected reporting, recordkeeping, and
other compliance requirements of the proposed regulation, including
an estimate of the types of small businesses that will be subject to
the proposed regulation and the types of professional skills
necessary for preparation of the report or record.
(D) A description of the steps the agency has taken to minimize
the significant economic impact on small businesses, including a
statement of the factual, policy, and legal reasons for selecting the
alternative adopted in the final regulation and why each of the
other significant alternatives was rejected.
(b) Prepare and submit to the office with the adopted regulation
an updated informative digest containing a clear and concise summary
of the immediately preceding laws and regulations, if any, relating
directly to the adopted, amended, or repealed regulation and the
effect of the adopted, amended, or repealed regulation. The
informative digest shall be drafted in a format similar to the
Legislative Counsel's Digest on legislative bills.
(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 this section 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
provisions 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 which
that the agency proposes to adopt or amend that
are different from the corresponding provisions of the federal
regulation.
(d) If an agency determines that a requirement of this section can
be satisfied by reference to an agency statement made pursuant to
Sections 11346.2 to 11346.5, inclusive, the agency may satisfy the
requirement by incorporating the relevant statement by reference.
SEC. 10. Section 11350 of the Government Code is amended to read:
11350. (a) Any interested person , including, but not
limited to, a small business or an organization or trade association
whose members are affected by the regulation, may
obtain a judicial declaration as to the validity of any regulation or
order of repeal by bringing an action for declaratory relief in the
superior court in accordance with the Code of Civil Procedure. The
right to judicial determination shall not be affected by the failure
either to petition or to seek reconsideration of a petition filed
pursuant to Section 11340.7 before the agency promulgating the
regulation or order of repeal. The regulation or order of repeal may
be declared to be invalid for a substantial failure to comply with
this chapter, or, in the case of an emergency regulation or order of
repeal, upon the ground that the facts recited in the finding of
emergency prepared pursuant to subdivision (b) of Section 11346.1 do
not constitute an emergency within the provisions of Section 11346.1.
(b) In addition to any other ground that may exist, a regulation
or order of repeal may be declared invalid if either of the following
exists:
(1) The agency's determination that the regulation is reasonably
necessary to effectuate the purpose of the statute, court decision,
or other provision of law that is being implemented, interpreted, or
made specific by the regulation is not supported by substantial
evidence.
(2) The agency declaration pursuant to paragraph (8) or (10)
of subdivision (a) of Section 11346.5 is in conflict with
substantial evidence in the record.
(c) The approval of a regulation or order of repeal by the office
or the Governor's overruling of a decision of the office disapproving
a regulation or order of repeal shall not be considered by a court
in any action for declaratory relief brought with respect to a
regulation or order of repeal.
(d) In a proceeding under this section, a court may only consider
the following evidence:
(1) The rulemaking file prepared under Section 11347.3.
(2) The finding of emergency prepared pursuant to subdivision (b)
of Section 11346.1.
(3) An item that is required to be included in the rulemaking file
but is not included in the rulemaking file, for the sole purpose of
proving its omission.
(4) Any evidence relevant to whether a regulation used by an
agency is required to be adopted under this chapter.
SEC. 11. Section 11350.3 of the Government Code is amended to
read:
11350.3. Any interested person , including, but not limited
to, a small business or an organization or trade
association whose members are affected by the regulation,
may obtain a judicial declaration as to the validity of a
regulation or order of repeal which the office has disapproved
pursuant to Section 11349.3, or 11349.6, or of a regulation that has
been ordered repealed pursuant to Section 11349.7 by bringing an
action for declaratory relief in the superior court in accordance
with the Code of Civil Procedure. The court may declare the
regulation valid if it determines that the regulation meets the
standards set forth in Section 11349.1 and that the agency has
complied with this chapter. If the court so determines, it may order
the office to immediately file the regulation with the Secretary of
State.
SEC. 12. 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 any agency subject to this
chapter shall use in making the determination required by paragraph
(5) and the estimate required by paragraph (6) of subdivision (a) of
Section 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
or small businesses 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 criteria that shall be used in
determining whether the cost of a regulation will have a significant,
statewide adverse economic impact on small businesses.
(4)
(5) 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, small
businesses, and in federal funding of state programs that will
result from the regulation.
(b) Any 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,
including any instructions included in the State Administrative
Manual, shall be exempt from this chapter.
(c) The Department of Finance may review any estimate prepared
pursuant to this section for content including, but not limited to,
the data and assumptions used in its preparation.
SEC. 13. Section 15570 of the Government Code is amended to read:
15570. (a) The secretary shall lead the preparation of a biennial
California Economic Development Strategic Plan. In fulfilling this
duty, the secretary shall do the following:
(1) Review the recommendations made by the California Economic
Strategy Panel in their biennial economic development strategic plan
document. This document shall make recommendations regarding an
economic development strategic plan for the state, covering a
two-year time period and containing a statement of economic goals for
the state, a prioritized list identifying significant issues learned
from economic development strategic plan panel meetings, proposals
for legislation, regulations, and administrative reforms necessary to
improve the business climate and economy of the state, evaluation of
the effectiveness of the state's economic development programs, a
list of key industries in which the state shall focus its economic
development efforts, and strategies to foster job growth and economic
development covering all state agencies, offices, boards, and
commissions that have economic development responsibilities.
(2) Convene a biennial economic strategy panel to provide
recommendations regarding a California economic development strategic
plan. This panel shall conduct meetings in Sacramento, all cities of
the state with populations over 500,000, and in major cities of
other regions of California as designated by the secretary. The
secretary shall invite businesses, labor unions, organizations
representing the interests of diverse ethnic and gender groups, local
government leaders, academic economists and business professors,
chambers of commerce and other business organizations, government
agencies, and key industries to contribute to the preparation of the
recommended economic strategy. These meetings shall address at least
the following matters of concern:
(A) Strengths and weaknesses of the California economy and the
state's prospects for future economic prosperity.
(B) Emerging and declining industries in California and elsewhere.
(C) Effectiveness of California's economic development programs in
creating and retaining jobs and attracting industries.
(D) Adequacy of state and local physical and economic
infrastructure.
(E) Government impediments to economic development.
(F) The development of a system of accountability for use in the
annual state budget process and in the legislative process to measure
the performance of all state policies, programs, and tax
expenditures intended to stimulate the economy. In developing a
system of accountability, the panel shall, by using only existing
resources and without future budget augmentation made for this
purpose, do all of the following:
(i) Develop a standard definition of economic development.
(ii) Develop, for use in state law, standard measurements of real
per capita income, job growth, new business creation, private sector
investment, minority entrepreneurship, and income inequality.
(iii) Survey and evaluate efforts in other states to develop
accountability measures for public investments in economic
development.
(iv) Determine whether a return on investment calculation is
feasible for public investments in economic development.
(v) Conduct a comparative study of various methodologies for
preparing the economic development sections of a state budget,
including unified functional budget, zero-based budget, and
performance-based budget methodologies.
(vi) Study the feasibility of statutory disclosure requirements on
specified publicly funded subsidies to private sector businesses.
(vii) Submit a report of its findings and recommendations
regarding this subparagraph to the Legislature no later than one year
after its first meeting after January 1, 2005.
(b) The panel shall be composed of the following 15
16 members:
(1) The Secretary of Labor and Workforce Development, who shall
serve as chair of the panel.
(2) Eight persons appointed by the Governor.
(3) The Speaker of the Assembly or his or her designee.
(4) The President pro Tempore of the Senate or his or her
designee.
(5) The Minority Leader of the Assembly or his or her designee.
(6) The Minority Leader of the Senate or his or her designee.
(7) One person appointed by the Speaker of the Assembly.
(8) One person appointed by the Senate Committee on Rules.
(9) The Director of the Office of Small Business Advocate.
(c) The panel shall be representative of state government,
business, labor, finance, and academic institutions, and shall be
broadly reflective of the state's population as to gender, ethnicity,
and geographic residence within California.
At least one-half of all the persons on the panel shall be from
the private sector and at least two appointments shall be from
private businesses with less than 50 employees. At least two
appointments shall be from rural areas of the state. Beginning
January 1, 2004, appointments to the panel shall be for four-year
terms, except that the Governor's appointments made pursuant to
paragraph (2) of subdivision (b) shall be made as follows:
(1) Four members shall be appointed on January 1, 2004, and every
four years thereafter.
(2) Four members shall be appointed on January 1, 2004, for a
two-year term.
(3) Upon the expiration of the initial appointments made pursuant
to paragraph (2), four members shall be appointed on January 1, 2006,
and every four years thereafter.
(d) The secretary shall deliver copies of the economic strategy
panel's recommended California economic development strategic plan to
every constitutional officer, legislator, member of the Governor's
cabinet, members of the economic development strategic plan panel,
and every state agency, office, board, and commission having economic
development responsibilities.
(e) In each succeeding two-year cycle, the secretary shall
undertake this process anew, so as to update the economic strategy on
or before October 31 of each succeeding second year.
SEC. 14. Section 65054.3 of the Government Code is amended to
read:
65054.3. (a) The Director of the Office of Small Business
Advocate shall be appointed by, and shall serve at the pleasure of,
the Governor.
(b) The Governor shall appoint the employees that are needed to
accomplish the purposes of Section 65054, this section, and Section
65054.4.
(c) The duties and functions of the advocate shall include all of
the following:
(1) Serve as the principal advocate in the state on behalf of
small businesses, including, but not limited to, advisory
participation in the consideration of all legislation and
administrative regulations that affect small businesses, and advocacy
on state policy and programs related to small businesses on disaster
preparedness and recovery including providing technical assistance.
(2) Represent the views and interests of small businesses before
other state agencies whose policies and activities may affect small
business.
(3) Enlist the cooperation and assistance of public and private
agencies, businesses, and other organizations in disseminating
information about the programs and services provided by state
government that are of benefit to small businesses, and information
on how small businesses can participate in, or make use of, those
programs and services.
(4) Issue a report every two years evaluating the efforts of state
agencies and, where appropriate, specific departments that
significantly regulate small businesses to assist minority and other
small business enterprises, and making recommendations that may be
appropriate to assist the development and strengthening of minority
and other small business enterprises.
(5) Consult with experts and authorities in the fields of small
business investment, venture capital investment, and commercial
banking and other comparable financial institutions involved in the
financing of business, and with individuals with regulatory, legal,
economic, or financial expertise, including members of the academic
community, and individuals who generally represent the public
interest.
(6) Determine the desirability of developing a set of rational,
objective criteria to be used to define small business, and develop
that criteria, if appropriate.
(7) Seek the assistance and cooperation of all state agencies and
departments providing services to, or affecting, small business,
including the small business liaison designated pursuant to Section
14846, to ensure coordination of state efforts.
(8) Receive and respond to complaints from small businesses
concerning the actions of state agencies and the operative effects of
state laws and regulations adversely affecting those businesses.
(9) Counsel small businesses on how to resolve questions and
problems concerning the relationship of small business to state
government.
(10) Maintain, publicize, and distribute an annual list of persons
serving as small business ombudsmen throughout state government.
(11) Consult with the Department of Transportation in the
development and administration of the Small and Emerging Contractor
Technical Assistance Program established pursuant to Article 2.6
(commencing with Section 14137) of Chapter 2 of Part 5 of Division 3
of Title 2.
(12) Serve as a member of the California Economic Strategy Panel
created pursuant to Section 15570 and the Strategic Growth Council,
created pursuant to Section 75121 of the Public Resources Code.
SEC. 15. Section 75121 of the Public Resources Code is amended to
read:
75121. (a) The Strategic Growth Council is hereby established in
state government and it shall consist of the Director of State
Planning and Research, the Secretary of the Resources Agency, the
Secretary for Environmental Protection, the Secretary of Business,
Transportation and Housing, the Secretary of California Health and
Human Services, the Director of the Office of Small Business
Advocate and one member of the public to be appointed by the
Governor. The public member shall have a background in land use
planning, local government, resource protection and management, or
community development or revitalization.
(b) Staff for the council shall be reflective of the council's
membership.