BILL NUMBER: SB 356 AMENDED
BILL TEXT
AMENDED IN SENATE JANUARY 11, 2010
AMENDED IN SENATE MAY 11, 2009
AMENDED IN SENATE APRIL 16, 2009
INTRODUCED BY Senator Wright
(Coauthors: Senators Calderon, Correa, DeSaulnier, and Dutton)
(Coauthors: Assembly Members Arambula, DeVore, Jeffries, Niello,
Nielsen, Silva, Smyth, and Solorio)
FEBRUARY 25, 2009
An act to amend Sections 11346, 11346.2, 11346.3,
11346.45, 11346.5, 11346.9, 11350, 11350.3, and 11357 of, and to
repeal and add Section 11342.610 of, 11350, 11350.3,
and 11357 of the Government Code, relating to regulations.
LEGISLATIVE COUNSEL'S DIGEST
SB 356, as amended, 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. The act requires
that the notice of proposed adoption, amendment, or repeal of a
regulation include prescribed information relating to certain
determinations, including mandates on local agencies or school
districts and significant, statewide adverse economic impacts
directly affecting business. The act also requires the Department of
Finance to adopt and update, as necessary, instructions for inclusion
in the State Administrative Manual prescribing the methods that any
agency is required to use in making the determinations relating to
mandates on local agencies or school districts, as specified.
This bill would also require the Department of Finance to adopt
and update, as necessary, instructions prescribing the methods that
any agency is required to use in making the determinations relating
to significant, statewide adverse economic impacts directly affecting
business, as specified.
(2) The act authorizes any interested person to obtain a judicial
declaration as to the validity of specified regulations or orders of
repeal, by bringing an action for declaratory relief in the superior
court in accordance with the Code of Civil Procedure.
This bill would specify that an interested person includes, but is
not limited to, a small business or an organization or trade
association whose members are affected by the regulation.
(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 use the
definition of "small business" contained in the Small Business
Procurement and Contract Act.
(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
burdensome, 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
analysis containing specified information.
The bill would also make conforming changes to the act.
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.
SEC. 3. Section 11342.610 is added to the
Government Code, to read:
11342.610. "Small business" means an entity, including its
affiliates, as defined in Section 14837.
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, this chapter 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 consult with parties who would be subject to the
proposed regulations before initiating regulatory action pursuant to
this article. If the agency does not, or is unable to, consult with
parties who would be subject to the proposed regulation, it shall
inform in writing the Office of Small Business Advocate and the
Department of Finance of its decision and the reasons for not
consulting the impacted businesses.
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 small business economic impact statement that includes both
of the following:
(A) An estimate of the number of small businesses subject to the
proposed regulation.
(B) The estimated annual average cost of compliance by a small
business subject to the proposed regulation.
(4) (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, including,
but not limited to, all of the following:
(i) The establishment of less burdensome compliance or reporting
requirements for small businesses.
(ii) The establishment of less burdensome 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 some or all small businesses, if appropriate
to the cost burden imposed, from all or any part of the requirements
contained in the proposed regulation.
(C) 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.
(5) 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.
(6) 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) 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) An agency proposing to adopt, amend, or repeal any
administrative regulation shall assess the potential for adverse
economic impact on California business enterprises and individuals,
avoiding the imposition of unnecessary or unreasonable regulations or
reporting, recordkeeping, or compliance requirements. For purposes
of this subdivision, assessing the potential for adverse economic
impact shall require agencies, when proposing to adopt, amend, or
repeal a regulation, to adhere to the following requirements, to the
extent that these requirements do not conflict with other state or
federal laws:
(1) The proposed adoption, amendment, or repeal of a regulation
shall be based on adequate information concerning the need for, and
consequences of, proposed governmental action.
(2) The state agency, prior to submitting a proposal to adopt,
amend, or repeal a regulation to the office, shall consider the
proposal's impact on business, with consideration of industries
affected including the ability of California businesses to compete
with businesses in other states. For purposes of evaluating the
impact on the ability of California businesses to compete with
businesses in other states, an agency shall consider, but not be
limited to, information supplied by interested parties.
(3) An 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. 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 estimate of the number of small businesses subject to the
proposed regulation.
(B) The estimated annual average cost of compliance by a small
business subject to the proposed regulation.
(C) 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 burdensome compliance or reporting
requirements for small businesses.
(ii) The establishment of less burdensome 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.
(1) The office shall ensure compliance with the provisions of this
section in all filings to adopt, amend, or repeal any administrative
regulations.
(2) If the office determines that no economic impact statement has
been filed with the rulemaking package, or that the economic impact
statement is incomplete based on the criteria in this section, the
office shall return the rulemaking package to the regulatory agency
with a statement identifying the incomplete provisions.
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, 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.
(b) This section does not apply to an agency in any instance where
that 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 subdivision (a),
it shall state the reasons for noncompliance with reasonable
specificity in the rulemaking record and to the Office of Small
Business Advocate and the Department of Finance.
(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.
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 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, except as provided in subdivision (c) of
Section 11346.3.
(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, 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) The estimated average annual cost of compliance by a small
business subject to the proposed regulation.
(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) The exemption of small businesses, if appropriate to the cost
burden imposed, from all or part of the requirements contained in
the proposed regulation.
(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, 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, shall not be grounds for the office to refuse to
publish the notice of proposed action, except as provided in
paragraphs (1) and (2) of subdivision (c) of Section 11346.3.
(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."
(12) A statement of the results of the assessment required by
subdivisions (a) and (b) of Section 11346.3.
(13) The finding prescribed by subdivision (c) of Section 11346.3,
if required.
(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 (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.
(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.
(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.
(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.
(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).
(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.
(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.
(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.
(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 (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
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) 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 analysis containing all of the following:
(A) A summary of the significant issues raised by the public
comments from small businesses, 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) An estimate of the number of small businesses subject to the
proposed regulation.
(C) The estimated annual average cost of compliance by a small
business subject to the proposed regulation.
(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 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 1. 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. SEC. 2. 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. SEC. 3. 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 determinations and estimates required
by paragraphs (5) to (12) (10) ,
inclusive, 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.
(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. SEC. 4. The changes made to
the Government Code by Sections 2 to 12 1 to
3 , inclusive, of this act at the 2009-10 Regular Session of
the Legislature do not affect any regulation that is adopted pursuant
to, and in compliance with, a law that is in effect on, before, or
after January 1, 2010 2011 .