BILL ANALYSIS
SB 356
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Date of Hearing: June 29, 2010
ASSEMBLY COMMITTEE ON BUSINESS, PROFESSIONS AND CONSUMER
PROTECTION
Mary Hayashi, Chair
SB 356 (Wright) - As Amended: June 22, 2010
SENATE VOTE : 34-2
SUBJECT : Regulations: small businesses.
SUMMARY : Authorizes a state agency that is considering
adopting, amending, or repealing a regulation (proposed
regulations) to consult with parties subject to the proposed
regulations. Specifically, this bill :
1)Authorizes a state agency that is considering proposed
regulations to consult with parties who would be subject to
the proposed regulations instead of only interested parties.
2)Requires a state agency, if it does not or is unable to
consult with parties subject to the proposed regulation, to
inform the Office of the Small Business Advocate (SBA) and the
Department of Finance (DOF) in writing of its decision and the
reasons for not consulting the impacted businesses, as
specified.
3)Requires a state agency, when submitting an initial statement
of reasons for proposed regulations to the Office of
Administrative Law (OAL), to describe their reasons for
rejecting each specific alternative.
4)Deletes the provision stating that a state agency is not
required to artificially construct alternatives or justify why
it has not described alternatives.
5)Deletes intent language stating that the purpose of the
economic impact assessment is not to impose additional
criteria on state agencies above existing law, but only to
assure that the assessment is made early in the process of
proposed regulations.
6)Requires a state agency, before submitting proposed
regulations to the OAL to prepare a small business economic
impact statement, that considers information supplied by
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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 estimated annual average cost of compliance by a small
business subject to the proposed regulation; and,
c) The estimated statewide annual average cost of compliance by
small businesses subject to the proposed regulation.
7)Requires the OAL to ensure compliance with the provisions of
this bill in all filings to adopt, amend, or repeal any
administrative regulation, as specified.
8)Requires the state agency, if it is unaware of costs that a
person or business would incur to comply with the proposed
regulations, to include a statement with its notice to OAL,
describing how a private person or business could comply with
the proposed regulations without incurring any cost. Deletes
the current requirement to state "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."
9)Requires OAL to return any proposed regulations to the
adopting state agency if that state agency fails to provide a
small business economic impact statement or other required
information, as specified.
10)Authorizes any interested person, including, but not limited
to, a small business, organization or trade association
representing small businesses whose members are affected by
the proposed regulations to obtain a judicial declaration as
to the validity of any regulation or order of appeal as
specified.
11)Requires DOF to adopt and update, as necessary, the State
Administrative Manual (SAM) with instructions prescribing the
methods an agency is required to use in determining
significant adverse economic impacts affecting business and
what costs, if any, may be incurred by an individual or
business that complying with a proposed regulation.
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EXISTING LAW :
1)Establishes requirements for the adoption, publication,
review, and implementation of regulations by state agencies
under the Administrative Procedure Act (APA).
2)Authorizes a state agency that is considering adopting,
amending, or repealing a regulation to consult with interested
persons before initiating regulatory action, and requires a
state agency to do so when the regulation involves complex or
numerous proposals.
3)Requires every state agency subject to the APA to submit, with
the notice of the proposed regulations, an initial statement
of reasons for the proposal that includes a description of any
reasonable alternatives that would lessen any adverse impact
on small business and the state agency's reasons for rejecting
those reasonable alternatives.
4)Specifies the agency is not required, in the initial
statement, to artificially construct alternatives, describe
unreasonable alternatives, or justify why it has not described
alternatives.
5)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.
6)Requires a state agency to issue a notice of proposed action
that includes prescribed information, including, if a state
agency makes an initial determination that the proposed
regulation does not have a significant statewide adverse
economic impact directly affecting business.
7)Requires DOF to adopt and update, as necessary, instructions
for inclusion in the SAM 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.
8)Requires OAL to review and approve regulations that are
adopted, amended, or repealed, using prescribed standards and
reject a proposed regulation in specified circumstances.
9)Authorizes any interested person to obtain a judicial
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declaration as to the validity of specified regulations or
orders of repeal, by bringing an action for declaratory relief
in the superior court.
FISCAL EFFECT : Unknown
COMMENTS :
Purpose of this bill . According to the author's office, "State
regulations continue to be a costly and burdensome obstacle to
the growth of small businesses in California. State agencies
are required to analyze the economic impact of potential
regulations by specifically preparing a small business economic
impact statement. Unfortunately the law permits agencies to
comply by simply stating there is no impact on small business
nor any reasonable alternatives to the proposed regulation
without providing any information or explanation.
"California agencies are encouraged to consult with interested
parties in the regulatory development process, but are not
required to speak with small businesses. The results, however,
are inadequate or unequal at best. If agencies develop
regulation in closer coordination with small business owners and
more thoroughly consider the economic impact of regulations,
California can mitigate the disparate burden of regulations on
small businesses.
"[This bill] closes a loophole in the [APA] by requiring state
agencies to analyze the economic impact of potential regulations
by preparing a small business economic impact statement prior to
submitting a proposal and specifies the criteria that must be
included. It also requires an agency to seek out the input of
small business owners during the regulatory drafting process."
Background . The APA governs the adoption of regulations by
state agencies for purposes of ensuring that they are clear,
necessary, legally valid, and available to the public. In
seeking adoption of a proposed regulation, state agencies must
comply with procedural requirements that include publishing the
proposed regulation along with supporting statement of reasons;
mailing and publishing a notice of the proposed action 45 days
before a hearing or before the close of the public comment
period; and submitting a final statement to OAL which summarizes
and responds to all objections, recommendations, and
proposed alternatives that were raised during the public comment
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period. The OAL is then required to approve or reject the
proposed regulation within 30 days.
The APA also requires an evaluation of the negative impact a
proposed regulation would have on businesses and reasonable
alternatives that would eliminate undue burdens.
Previous legislation . AB 2854 (Mendoza) of 2008, would have
required, upon available funding, the SBA to create a one-stop
website for small business-related announcements and funding
opportunities offered by state agencies. AB 2854 was vetoed.
AB 2330 (Arambula), Chapter 232, Statutes of 2006, required the
SBA to examine the costs of state regulations on small
businesses, as specified.
AB 3058 (Assembly Committee on Jobs, Economic Development, and
the Economy), Chapter 233, Statutes of 2006, required the SBA,
in cooperation with the Office of Emergency Services and the
Department of Industrial Relations, to develop a web-based
handbook for small businesses on emergency preparedness,
emergency response, and recovery strategies.
SB 1436 (Figueroa), Chapter 234, Statutes of 2006, enhanced the
state's technical assistance to small businesses by improving
the state's Internet information for small businesses and
requiring the designation of agency-level small business
liaisons.
REGISTERED SUPPORT / OPPOSITION :
Support
National Federation of Independent Business (sponsor)
California Small Business Association (sponsor)
Acclamation Insurance Management Services
American Council of Engineering Companies - California
B Metal Fabrication
Bennett Tile Company
C&G Plastics, Inc.
CalChamber
California Association of Competitive Telecommunications
Companies (CALTEL)
California Association of Health Facilities
California Automotive Business Coalition (CalABC)
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California Black Chamber of Commerce
California Chapter of the American Fence Contractors'
Association
California Construction Industry Materials Association
California Council American Society of Landscape Architects
California Dump Truck Owners Association
California Farm Bureau Federation
California Fence Contractors' Association
California Groundwater Association
California Hispanic Chambers of Commerce
California Hospital Association
California Hotel & Lodging Association
California Independent Grocers Association
California Independent Oil Marketers Association
California Manufacturers' & Technology Association
California Metals Coalition
California Restaurant Association
California Service Station and Automotive Repair Association
California Service Station and Automotive Repair Association
Efficiency Data & Development
Engineering Contractors' Association
Flasher/Barricade Association
Independent Waste Oil Collectors and Transporters
Irvine Chamber of Commerce
Long Beach Area Chamber of Commerce
Marin Builders' Association
Metal Finishing Association of Southern California
Napa Chamber of Commerce
National Association of Women Business Owners - Los Angeles
Chapter
Procurement Services Associates
QTE North American, Inc.
R&D Restaurants, Inc.
San Francisco Bay Guardian
San Francisco Chamber of Commerce
San Pedro Chamber of Commerce
Small Business Action Committee
Small Business California
South Bay Association of Chambers of Commerce
TechAmerica
Tree Lovers Floors, Inc.
Valley Industry Commerce Association (VICA)
Western Growers Association
Opposition
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United Policyholders
Analysis Prepared by : Rebecca May / B.,P. & C.P. / (916)
319-3301