BILL NUMBER: SB 942 AMENDED
BILL TEXT
AMENDED IN SENATE APRIL 5, 2010
INTRODUCED BY Senator Dutton
FEBRUARY 3, 2010
An act to add Sections 11349.10 and 11349.11 to the
Government Code, relating to the State Auditor. An act
to amend Section 11349.3 of, to add Sections 11349.10 and 11349.11
to, and to add Article 5.5 (commenci ng with Section
11348.5) to Chapter 3.5 of Part 1 of Division 3 of Title 2 of, the
Government Code, relating to regulations.
LEGISLATIVE COUNSEL'S DIGEST
SB 942, as amended, Dutton. State Auditor: analysis of
regulations. Regulations: review process.
Existing law, the Administrative Procedure Act, governs the
procedure for the adoption, amendment, or repeal of regulations by
state agencies, including a requirement that the notice of proposed
action contain prescribed cost estimates associated with the proposed
regulation. Existing law also provides for the review of these
regulatory actions by the Office of Administrative Law.
This bill would establish an Economic Analysis Unit within the
office. The bill would require agencies to make publicly available
and submit to the unit specified cost estimates that pertain to a
proposed regulation and specified information used to develop the
cost estimates, as prescribed. The bill would require the unit to
review final revised cost estimates for regulations that the agency
determines to have a cost estimate of $50,000,000 or more. The bill
also authorizes a stakeholder to petition the director of the office
to direct the unit to review a regulation that does not meet the
$50,000,000 cost estimate threshold. The bill requires the unit to
approve or reject the cost estimates of regulations that it reviews,
as specified.
This bill would require each agency to review each regulation
adopted prior to January 1, 1990, and to develop a report with
prescribed information that shall be submitted to the Legislature on
or before January 1, 2013. The bill would also require each agency,
on or before January 1, 2018, and at least every 5 years thereafter,
to conduct additional reviews of regulations that have been in effect
for at least 20 years, as specified, and to submit an annual report
to the Legislature that identifies the regulations reviewed during
that year and the associated findings.
Under existing law, the State Auditor is required to perform
financial and performance audits as directed by statute. Existing law
also requires the Office of Administrative Law to review existing
regulations, at the request of a legislative committee, to determine
if they meet specified standards. If the office determines that the
regulations do not meet those standards, existing law requires the
office to order the repeal of those regulations, pursuant to
specified procedures.
This bill would require the State Auditor to survey and perform a
cost-benefit analysis of specified regulations that impose a cost on
private persons or business, publish a catalog of these regulations
and other findings related to them in the California Regulatory
Notice Register, and consider public comment on them. The bill would
require the State Auditor, if he or she determines that any of the
regulations yield more costs to private persons or business than
benefits, to notify the adopting agency in writing the reasons for
its determination and to publish this determination and the reasons
for it in the California Regulatory Notice Register. The bill would
require the adopting agency to respond in writing to the State
Auditor regarding whether the agency will amend or repeal the
regulation or decline to do so. The bill would require the State
Auditor to review and consider all information submitted by the
agency in this connection and, if the State Auditor confirms that the
cost of a regulation to private persons or businesses exceeds its
benefits, he or she would be required to prepare a statement
specifying the reasons for its determination and to recommend to the
Legislature that it enact legislation that will function to amend or
repeal the regulation at the current legislative session. The bill
would require that this catalog, analysis, and review process be
subject to public comment, as specified.
This bill would also require that all regulations adopted after
January 1, 2011, be repealed 10 years after their effective date
unless the State Auditor determines, as specified, that the benefits
of the regulation to private persons or businesses exceed its costs.
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. Article 5.5 (commencing with Section
11348.5) is added to Chapter 3.5 of Part 1 of Division 3
of Title 2 of the Government Code , to read:
Article 5.5. Cost Estimate Analysis of Proposed Regulations
11348.5. (a) There is hereby established within the office an
Economic Analysis Unit that shall review cost estimates of proposed
regulations, as provided for in this article.
(b) For purposes of this article, "unit" means the Economic
Analysis Unit.
11348.51. (a) (1) Each agency shall, at the time it disseminates
the notice of proposed action as required by Section 11346.4, also
disclose to the public any cost estimate required pursuant to Section
11346.5 and the nonproprietary information used to develop those
cost estimates.
(2) Each agency shall, at the time when it disseminates the notice
of proposed action as required by Section 11346.4, also submit to
the unit any cost estimate required pursuant to Section 11346.5 and
all information used to develop those cost estimates, including any
proprietary information not disclosed to the public. The unit shall
treat as confidential any information identified as proprietary by
the submitting agency. The agency shall also submit to the unit any
information submitted to the agency from parties affected by the
proposed regulation.
(b) Each agency shall disclose to the public and submit to the
unit, in the same manner prescribed in subdivision (a), final revised
cost estimates for a proposed regulation 30 working days prior to
submitting the proposed regulation to the office for review pursuant
to Article 6 (commencing with Section 11349).
11348.52. (a) (1) The unit shall review final revised cost
estimates submitted pursuant to subdivision (b) of Section 11348.51
for a proposed regulation for which the agency has provided an
estimated cost of fifty million dollars ($50,000,000) or more.
(2) The unit may review cost estimates submitted pursuant to
subdivision (a) of Section 11348.51 for a proposed regulation for
which the agency has provided an estimated cost of fifty million
dollars ($50,000,000) or more. If the unit reviews cost estimates for
a proposed regulation pursuant to this paragraph, it shall conduct
the review and make determinations in the manner provided pursuant to
subdivision (c).
(b) A stakeholder may petition the office to direct the unit to
review final revised cost estimates for a proposed regulation that
has an estimated cost that is less than fifty million dollars
($50,000,000). The director of the office shall be authorized, in his
or her sole discretion, to approve or deny the petition.
(c) (1) The unit review of the cost estimates shall determine if
the submitting agency used an appropriate methodology to develop
those cost estimates and whether the submitted cost estimates are a
fair assessment of the estimated cost of the regulation based on the
information available to the agency to develop the cost estimate.
(2) The unit shall approve or reject a cost estimate within 50
working days. If the unit rejects the cost estimate, the proposed
regulation shall be returned to the agency with a written statement
of reasons for the rejection, which shall also be made available to
the public. If the unit approves the cost estimate, then the unit
shall notify the agency and the office that the proposed regulation
is eligible for final approval by the office pursuant to Article 6
(commencing with Section 11349).
11348.53. Subject to the requirements of subdivision (b) of
Section 11348.51, the office may concurrently review a proposed
regulation as required pursuant to Article 6 (commencing with Section
11349), except that the office shall not approve a regulation
pursuant to Section 11349.3 that is being concurrently reviewed by
the unit until the EAU approves the cost estimates for that
regulation.
SEC. 2. Section 11349.3 of the
Government Code is amended to read:
11349.3. (a) The Subject to Section
11348.53, the office shall either approve a regulation
submitted to it for review and transmit it to the Secretary of State
for filing or disapprove it within 30 working days after the
regulation has been submitted to the office for review. If the office
fails to act within 30 days, the regulation shall be deemed to have
been approved and the office shall transmit it to the Secretary of
State for filing.
(b) If the office disapproves a regulation, it shall return it to
the adopting agency within the 30-day period specified in subdivision
(a) accompanied by a notice specifying the reasons for disapproval.
Within seven calendar days of the issuance of the notice, the office
shall provide the adopting agency with a written decision detailing
the reasons for disapproval. No regulation shall be disapproved
except for failure to comply with the standards set forth in Section
11349.1 or for failure to comply with this chapter.
(c) If an agency determines, on its own initiative, that a
regulation submitted pursuant to subdivision (a) should be returned
by the office prior to completion of the office's review, it may
request the return of the regulation. All requests for the return of
a regulation shall be memorialized in writing by the submitting
agency no later than one week following the request. Any regulation
returned pursuant to this subdivision shall be resubmitted to the
office for review within the one-year period specified in subdivision
(b) of Section 11346.4 or shall comply with Article 5 (commencing
with Section 11346) prior to resubmission.
(d) The office shall not initiate the return of a regulation
pursuant to subdivision (c) as an alternative to disapproval pursuant
to subdivision (b).
SEC. 2. Section 11349.10 is added to the
Government Code , to read:
11349.10. (a) Each agency shall review each regulation adopted
prior to January 1, 1990. The review shall be developed into a report
that includes, but is not limited to, the following information for
each regulation:
(1) The date that the office approved the regulation.
(2) The purpose.
(3) The statutory authority.
(4) The identification of impacted sectors.
(5) The direct costs by sector.
(6) Whether the regulation is duplicative of other regulations.
(7) Whether the regulation is still relevant.
(8) Whether the regulation needs to be updated in order to become
more effective or less burdensome.
(b) The agency shall consult with parties affected by the
regulation in developing the report.
(c) The agency shall submit the report to the Legislature on or
before January 1, 2013.
(d) To the extent that an agency is a component member of another
agency, the member agency shall submit a copy of its report to the
highest ranking agency head prior to submitting the report to the
Legislature as required by this section. The agency head shall review
the reports for each component agency for the purpose of identifying
duplicative or conflicting regulations between departments.
SEC. 3. Section 11349.11 is added to the
Government Code , to read:
11349.11. (a) On or before January 1, 2018, and at least every
five years thereafter, each agency shall review each regulation that
is at least 20 years old and has not been reviewed within the last 10
years. The review shall be developed into a report that shall be
submitted to the Legislature and includes, but is not limited to, the
following information for each regulation:
(1) The date that the office approved the regulation.
(2) The purpose.
(3) The statutory authority.
(4) The identification of impacted sectors.
(5) The direct costs by sector.
(6) Whether the regulation is duplicative of other regulations.
(7) Whether the regulation is still relevant.
(8) Whether the regulation needs to be updated in order to become
more effective or less burdensome.
(b) Each agency shall submit an annual report to the Legislature
that identifies the regulations reviewed during the previous year and
the associated findings.
SECTION 1. Section 11349.10 is added to the
Government Code, to read:
11349.10. (a) Upon appropriation by the Legislature, the State
Auditor shall review all existing regulations that impose a cost on
private persons or business, excluding regulations that give effect
to federal law or impose costs on the basis of that private person or
business voluntarily contracting with the government. The State
Auditor shall make a preliminary determination of which regulations
appear to impose the most significant cost on private persons or
businesses, and shall prepare a catalog of these regulations that
lists them in order of cost, with those regulations with the highest
cost listed first. The State Auditor may decline to include those
regulations for which the costs appear to be insignificant. The
catalog shall be completed within one year of completion of the
review, and shall include all of the following:
(1) A brief description of the regulation.
(2) The effective date of the regulation.
(3) Whether the regulation is duplicative of any other regulation.
(4) An identification of the business sectors, if any, impacted by
the cost imposed by the regulation.
(b) Based on the regulations listed, the State Auditor shall
publish the catalog in the California Regulatory Notice Register and
consider the written comments submitted by interested persons as to
the order of the regulations listed in the catalog. The public
comment period and any revisions made to the catalog shall be
completed within 30 days of the date of publication.
(c) Following the publication of the list in subdivision (b), the
State Auditor shall prepare a preliminary cost-benefit analysis of
each regulation in the order listed in the catalog, by applying the
standards established by the Federal Office of Management and Budget,
set out in the most recent publication of "Circular A-4" (Office of
Management and Budget), and shall make a preliminary analysis of
whether the cost of each regulation to a private person or business
outweighs its benefit. In making this analysis, the State Auditor
shall analyze the potential prospective costs and benefits of each
regulation over the next five to 10 years. During the period of the
preliminary analysis made pursuant to this subdivision, all
information available to the State Auditor relating to the analysis
shall be made available to the public.
(d) Upon completion of the preliminary cost-benefit analysis, the
State Auditor shall publish its findings in the California Regulatory
Notice Register, and shall consider the written comments submitted
by interested persons. The public comment period and any revisions
made to the preliminary cost-benefit analysis shall be completed
within 30 days of the date of publication of the analysis. The State
Auditor may change its findings based on the information received
from the public during the comment period.
(e) The State Auditor shall prepare a final cost-benefit analysis
within 60 days from the close of the public comment period described
in subdivision (d). The final cost-benefit analysis shall list each
regulation under which the cost to private persons or business
exceeds the benefits of the regulation.
(f) If the State Auditor determines that any of the regulations
subject to the analysis yield more costs to private persons or
business than benefits, the State Auditor shall notify the adopting
agency, and specify, in writing, the reasons for its determination
that the cost of the regulation exceeds its benefits. The reasons for
his or her determination shall be made available to the public. The
State Auditor shall also publish this determination and the reasons
for it in the California Regulatory Notice Register.
(g) On or before 60 days after the State Auditor has made the
notification described in subdivision (f), the agency shall respond
in writing to the State Auditor regarding whether the agency will
amend or repeal the regulation or decline to do so. Upon written
application by the agency, the State Auditor may extend the time to
respond an additional 30 days.
(h) (1) If the agency responds pursuant to subdivision (g) that it
will decline to amend or repeal a regulation, the State Auditor
shall review and consider all information submitted by the agency,
and determine whether it should reconsider its conclusion that the
costs of the regulation to private persons or businesses exceed its
benefits. The State Auditor shall make this determination within 60
days of receipt of an agency's response. In making this
determination, the office shall also review any written comments
submitted to it by the public within 30 days of the publication
required by subdivision (f) in the California Regulatory Notice
Register. During the period of review and reconsideration, the
information available to the State Auditor relating to each
regulation shall be made available to the public. The State Auditor
shall notify the adopting agency within two working days of the
receipt of information submitted by the public in this connection.
(2) If, after reconsideration, the State Auditor confirms that the
cost of a regulation to private persons or businesses exceeds its
benefits, it shall prepare a statement specifying the reasons for its
determination, and shall recommend to the Legislature that it enact
legislation that will function to amend or repeal the regulation at
the current legislative session. The statement and recommendation
shall be delivered to the adopting agency and the Legislature, and
shall be made available to the public and the courts.
(i) The requirements of this chapter do not apply to the actions
of the State Auditor in carrying out this section.
SEC. 2. Section 11349.11 is added to the
Government Code, to read:
11349.11. All regulations adopted on or after January 1, 2011,
shall be repealed 10 years after their effective date unless the
State Auditor determines, pursuant to Section 11349.10, that the
benefits of the regulation to private persons or businesses exceed
its costs.