BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
988 (Huff)
Hearing Date: 05/17/2010 Amended: 05/05/2010
Consultant: Brendan McCarthy Policy Vote: GO 7-0
SB 988 (Huff), Page 2
_________________________________________________________________
____
BILL SUMMARY: SB 988, an urgency measure, requires the Bureau of
State Audits to review and make recommendations on all
energy-related regulations five years after their adoption or
amendment. The agency that adopted the regulation would then be
required to allow the regulation to sunset, adopt the Bureau's
recommendations, or develop its own plan for addressing the
Bureau's recommendations.
_________________________________________________________________
____
Fiscal Impact (in thousands)
Major Provisions 2010-11 2011-12 2012-13 Fund
BSA review of regulations Costs between $3,000 and
$50,000 per General
year, beginning in 2016
CEC record keeping and About $70 per year General
*
revising regulations
PUC record keeping and Between $50 and $100 per year Special
**
revising regulations
* Energy Resources Program Account.
** Public Utilities Commission Utilities Reimbursement Account.
_________________________________________________________________
____
STAFF COMMENTS: This bill meets the criteria for referral to the
Suspense File.
Existing law, the Administrative Procedures Act, governs the
process for adopting regulations by state agencies. The
Administrative Procedures Act requires state agencies to explain
why the regulation is being adopted, discuss potential
alternatives to the proposed regulation, and to include analyses
of the potential impacts on businesses and the creation or
elimination of jobs in the state.
Under current law, the Office of Administrative Law is required
to review proposed regulations to ensure that they meet
specified standards, including: necessity, authority for
SB 988 (Huff), Page 3
adopting the regulation, clarity of the regulation, consistency
with the law, reference to the underlying law, and
nonduplication of other federal laws or regulations. The Office
of Administrative Law is authorized to reject a proposed
regulation if it does not meet those standards.
The Public Utilities Commission is generally exempt from the
requirements of the Administrative Procedures Act.
SB 988, an urgency measure, requires the Bureau of State Audits
to conduct a five-year review of all energy-related regulations
adopted or amended after January 2011. The intent of the bill is
to require reviews of regulations adopted by the California
Energy Commission and the Public Utilities Commission. It is not
clear whether orders and rules adopted by the Public Utilities
Commission would qualify as regulations under the bill. Nor is
it clear or whether non-energy related orders and rules adopted
by the Public Utilities Commission would be covered under the
bill.
The Bureau of State Audits' review must address: 1) the
statutory authority for the regulation, 2) the purpose of the
regulation, 3) the effectiveness of the regulation, 4) the
consistency of the regulation with applicable law, 5) the
enforcement policy of the adopting agency, 6) the view of the
adopting agency as to the current wisdom of regulation, 7) the
clarity of the regulation, 8) a summary of all written
criticisms of the regulation received by the adopting agency
over the preceding five years, 9) the estimated economic, small
business, and consumer impact of the regulation, and 10) the
course of action the adopting agency intends to take with
respect to the regulation. The Bureau must then make
recommendation on the regulation.
Based on the review and recommendations made by the Bureau of
State Audits, the adopting agency is required to: 1) do nothing,
in which case the regulation will be repealed by the bill two
years after the report is issued, 2) implement any
recommendations made by the Bureau, or 3) develop its own plan
to address issues raised by the Bureau.
The scope of the reviews conducted by the Bureau will depend on
the scope of the particular regulation, its complexity, and the
associated impacts of the regulation. The bill requires the
Bureau to both collect information from the adopting agency and
to develop independent information on the regulation's impact on
SB 988 (Huff), Page 4
the economy and business. The Bureau estimates that the average
cost of performing a review under the bill will be about
$300,000.
The number of reviews conducted by the Bureau will depend on how
many actions taken by the Energy Commission and the Public
Utilities Commission are considered regulations. At this time,
the number of potential reviews is unknown. The Energy
Commission generally averages three rule-making proceedings per
year, each of which may include the adoption or amendment of up
to twenty of regulations. The Public Utilities Commission can
complete as many as 150 rulemakings per year. It is not clear
how many of these rulemakings will be considered individual
regulations under the bill. Thus, the costs of performing the
reviews could range from $5 million per year to over $50 million
per year.
In addition to the costs to perform the reviews, the Energy
Commission and the Public Utilities Commission will likely face
additional workload to collect, preserve, and make available to
the Bureau all the required information on existing regulations.
These costs are likely to be between $50,000 and $100,000 per
agency per year.
This bill is an urgency measure.
Staff recommends the bill be amended to clarify what actions
should be considered regulations under the bill.
SB 942 (Dutton) requires state agencies proposing to adopt
regulations to develop more detailed information on economic
impacts and requires the Office of Administrative Law to perform
additional review of cost impacts. That bill is on this
committee's Suspense File.
SB 954 (Harman) requires proposed bills that would have a
significant impact on the state's economy to be reviewed by a
new legislative committee. That bill is in the Senate Rules
Committee.
SB 1160 requires state agencies that are proposing to adopt,
amend, or repeal regulations that will have an impact of more
than $100 million per year to use dynamic economic modeling
techniques to assess the economic impact of the regulation. That
bill is on this committee's Suspense File.
SB 988 (Huff), Page 5
SB 1351 (Wright) requires the Air Resources Board to make public
the implementation schedules of regulatory measures to implement
AB 32 (Nunez, Chapter 488, Statutes of 2006) dealing with
greenhouse gas emissions. That bill will be heard in this
committee.