BILL ANALYSIS
Bill No: SB
1351
SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
Senator Roderick D. Wright, Chair
2009-2010 Regular Session
Staff Analysis
SB 1351 Author: Wright
As Amended: April 5, 2010
Hearing Date: April 13, 2010
Consultant: Chris Lindstrom
SUBJECT
State agencies: regulation adoption requirements.
DESCRIPTION
SB 1351 makes changes to the public participation
provisions of the Administrative Procedures Act (APA).
Specifically, the bill:
1)Requires an agency that adopts a regulation that requires
the use of a new or emerging technology or equipment in
order to achieve the identified purpose of the regulation
to post on its Internet Web site and in the California
Regulatory Notice Register, upon the effective date of
the regulation, that the required technology or equipment
is commercially available or will be commercially
available prior to the effective date of the regulation.
2)Provides that, if the required technology or equipment
prescribed by the regulation is not commercially
available on the effective date of a regulation, the
adopting agency is prohibited from enforcing a violation
of the regulation until at least six months after the
technology or equipment becomes commercially available
and the agency posts on its Internet Web site and in the
California Regulatory Notice Register that the required
technology or equipment is commercially available.
SB 1351 (Wright) continued
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3)Requires an agency to make any implementation schedule,
procedure, or form that is necessary for compliance with
a proposed regulation available to the public upon the
agency's final adoption of that regulation.
4)Provides that, if the implementation schedule, procedure,
or form necessary for compliance with the regulation is
not available on the effective date of the regulation,
the agency is prohibited from enforcing a violation of
the regulation for at least six months after the
implementation schedule, procedure, or form becomes
available and the agency posts on its Internet Web site
and in the California Regulatory Notice Register that the
that the require implementation schedule, procedure, or
form has become available.
5)Provides that nothing in the bill shall be construed to
require an agency to readopt a regulation already
approved by the Office of Administrative Law (OAL) and
filed with the Secretary of State.
6)Makes legislative findings and declarations.
EXISTING LAW
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 OAL to ensure that regulations follow
the rulemaking procedures outlined in the APA.
BACKGROUND
Purpose of the bill . According to the author's office, "To
meet deadlines, regulations have been adopted without the
guidelines, implementation schedules, procedures, and other
relevant compliance mechanisms that should accompany the
regulations in order for regulated entities to comply or
prepare for compliance with the new regulations. Several
regulations have been adopted without providing clear
direction to the regulated entities. Without a clear
compliance path regulated entities are forced to guess and
SB 1351 (Wright) continued
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make decisions without proper guidance which exposes these
entities to potentially costly noncompliance enforcement
actions and penalties."
Also, the author states, "Likewise, to penalize companies
for failure to install yet-to-be available technology is
unfair and burdensome."
SB 1351 seeks to address these inadequacies by requiring
agencies when adopting regulations to affirm the
availability of required new technologies and to include
implementation schedules, procedures, and forms, necessary
for compliance in the proposed regulation. If this is not
possible at the time of the adoption of the regulation than
enforcement of the regulation will be delayed for six
months following notice of the availability of the new
technology or other implementation tools. The regulation
and its proposed compliance mechanisms must be posted on
the agency's Internet Website and in the CA Regulatory
Notice Register.
Background . The APA (Government Code Section 11346.2(b)(1)
requires every agency to prepare and submit to OAL a notice
of the proposed regulatory action it is seeking to take, as
well as, among other things, an initial statement of the
reasons for proposing the adoption, amendment or repeal of
a regulation. Where the adoption or amendment to the
regulation mandates the use of specific technologies or
equipment, a statement of the reasons why the agency
believes these mandates or prescriptive standards are
required.
In some instances, agencies have been able to establish
regulatory requirements which effectively push industries
to develop new technologies to meet newly established
standards. The statement required by 11346.2 doesn't even
require the proposing agency to state whether or not the
technology or equipment exists. Perhaps, the bill should
require proposing agencies to do so.
Examples of inadequate regulations . The author's office
provided the following information to demonstrate the need
for the bill.
1)The mandatory greenhouse gas ("GHG") regulations were
adopted in December of 2007. The necessary reporting and
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accompanying support documents were released in March
2009 when the first GHG emission reports were required on
April 1, 2009.
See advisory at:
http://www.arb.ca.gov/cc/reporting/ghg-rep/ghgschedadvisor
y.pdf
2)The Low Carbon Fuel Standard ("LCFS") was adopted in
November 2008. The LCFS reporting tool is still under
development and not expected to be completed until
mid-Mar 2010. The quarterly report for January to March
of 2010 is due on May 31, 2010.
See advisory at:
http://www.arb.ca.gov/fuels/lcfs/LCFS%20Advisory%2010-01%2
0_Final.pdf
3)Enhanced Vapor Recovery (EVR) regulations adopted by the
Board in March 2000 required approximately 13,000 service
stations (Gasoline Dispensing Facilities or "GDF"s) to
upgrade equipment to reduce gasoline vapor emissions by
April 1, 2009. Phase 2 of this regulation relied on the
certification of new technology. The first certified
system did not cover all the systems used by GDFs
throughout the state. The needed technologies to fill
the gap were costly and not available to market until a
short period before the compliance deadline. Several
Legislators wrote letters to the ARB and AQMDs in order
to suspend or stay the compliance deadline as it became
apparent that a large percentage of GDFs were unable to
comply because of the lack of technology in the market
and the lack of contractors to install the systems in a
timely fashion.
For further information on EVRvisit
http://www.arb.ca.gov/vapor/vapor.htm
Arguments in support . The sponsor of the bill, California
Council for Environmental and Economic Balance, writes that
this bill will accomplish two important public policy
objectives. First, SB 1351 would require state agencies to
include implementation schedules, procedures and forms
necessary for compliance. Often regulations are adopted
with little time to implement them and with insufficient
guidance. The result can leave businesses with no choice
SB 1351 (Wright) continued
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but to guess and make decisions without proper guidance.
This in turn exposes the regulated community to potentially
costly non-compliance enforcement actions and penalties.
The resultant impact on jobs and economic activity further
impairs our state's ability to prosper and attract high
quality businesses and employees. Second, this bill would
require agencies when adopting regulations to affirm the
availability of new technologies that are deemed to be
necessary to meet the regulation. This component of the
bill is important to ensure that affected entities have the
wherewithal to comply with a regulatory requirement. While
CCEEB appreciates the need to "push the technological
envelop" our regulatory agencies must do so in a prudent
and realistic way.
The California State Council of Laborers writes a support
letter that mirrors the sponsor's letter.
A coalition of proponents supports Senate Bill 1351 that
would require regulatory agencies to include implementation
schedules, procedures and forms necessary for regulatory
compliance. Recently regulations have been adopted with
insufficient time to implement and therefore regulated
entities are required to guess and make decisions without
proper guidance from the regulating agency. These best
guesses for compliance expose these entities to potentially
costly enforcement actions and penalties for noncompliance.
Additionally, proponents argue that this bill would require
agencies when promulgating regulations to certify the
availability of new technologies necessary to meet the
regulation and/or adopt compliance deadlines six months
after required technologies are certified. By clarifying
deadlines and certifying technology regulated entities are
allowed reasonable paths towards compliance.
The California Chamber of Commerce writes in support of
requiring state agencies that develop and implement
regulations related to new technologies to include
implementation schedules, procedures and forms necessary
for compliance.
At times, regulations have been adopted with insufficient
time for the regulated community to appropriately and
adequately prepare for full compliance, requiring them to
base decisions on estimates without proper guidance from
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the regulating agencies. SB 1351 would also require
regulating agencies to certify availability of the new
technology necessary to meet the provisions of the
regulation.
SB 1351 will create more clear and reasonable pathways for
the regulated community to appropriately reach full
compliance.
The National Federation of Independent Business writes that
SB 1351 ensures California businesses have an appropriate
amount of time to comply with new regulations prior to
enforcement taking place.
SB 1351 requires that regulatory agencies affirm the
existence of relevant technologies, forms, implementation
schedules and other resources required by proposed
regulations prior to adoption. This bill does provide that
if the compliance mechanisms are not available in time to
meet statutory requirements that enforcement shall be
delayed until six months after the required technology or
implementation information is made public.
California small businesses struggle more than large
businesses to comply with federal, state, and local
regulations. A 2005 study of federal regulations found that
small businesses spend in time and dollars approximately 40
percent more per employee than larger businesses in
compliance costs because small businesses generally do not
have professional departments to handle these issues on a
daily basis.
The enforcement of new requirements by regulatory agencies,
under the crush of arbitrary deadlines, compounds this
imbalance. In some cases, the necessary forms to comply
with a major regulation have not been made available to the
very businesses that are expected to complete them.
SB 1351 puts in place a commonsense provision that
regulatory agencies make the tools required to comply with
a regulation available to the regulated businesses with
sufficient time for the business to comply. This bill does
not weaken existing or future regulations, nor does it
limit the authority of regulatory agencies to fully
implement statutory provisions as directed by legislative
action.
SB 1351 (Wright) continued
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Arguments in opposition . The American Lung Association,
Breathe California, Sierra Club - California, and the Union
of Concerned Scientists are opposed to SB 1351 because the
bill will have a significant impact on technological
innovation.
SB 1351 would hamper the ability of agencies to adopt
regulations that require the use of new or emerging
technologies by requiring the regulatory agency to announce
at the time of the final rulemaking that technology needed
to comply with the regulation is commercially available.
However, many effective regulations are designed to bring
emerging technologies to market. SB 1351 would place
similar restrictions on rulemaking as related to schedules,
forms and other procedures needed for reporting and
compliance. This bill would threaten technological
innovation needed to address California's air quality and
global warming issues.
For example, California motor vehicle standards have been
highly successful in spurring technological advancement in
order to cut smog-forming emissions that harm human health
and the environment. Placing additional barriers on
regulatory development will set back California's efforts
to protect public health and meet state and national air
quality standards. Technology forcing standards have been
highly successful in hastening the advancement of processes
and equipment that protect California's public health,
economy and environment and this bill would interfere with
those goals. CARB has a track record of carefully
reviewing technological readiness and the pace of
advancement of technologies before each regulation is
adopted, and continuing to review technology progress after
regulations are implemented.
Further, SB 1351 would prevent an agency from enforcing a
new regulation until six months after new or emerging
technology has become commercially available. This
provision would appear to allow regulated parties to avoid
regulation by simply failing to innovate, or by delaying
demand for new technologies and limiting market readiness.
This bill also does not define the criteria for commercial
availability of technology, in terms of cost thresholds,
volume trigger, etc. Similar provisions would apply to
schedules, forms and procedures not in place at the time of
SB 1351 (Wright) continued
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enactment. These provisions are unnecessary as state
agencies currently evaluate the availability of
technologies and enforcement of new regulations on a
case-by-case basis.
The innovative companies are taking a financial risk to
invest in research and development, and are depending on a
reliable base of product orders when pricing new
technologies as they come to market. By demanding a strict
timeline for delay in enforcement, this regulatory
uncertainty could pose problems for achieving the needed
economy of scale for emerging technologies to be affordable
and economically feasible. The bill could tie up
regulations in court at the very date that clean technology
companies need to be closing on orders.
Companies need reasonable reliance on when new standards
will be mandatory.
Note : The author's office is working with the opposition
to address their concerns. Specifically, the author does
not want to stymie technological innovation but believes a
balance needs to be struck for segments of the regulated
industry that have no direct role or responsibility in the
development or manufacturing of the new or emerging
technology or equipment. If a segment of the regulated
industry does not have a direct role in the development or
manufacturing of new or emerging technology or equipment,
and the development or manufacturing of new or emerging
technology or equipment is not a core competency of that
industry's business, then it may be reasonable to exclude
that business from having to comply with the regulations
until such technologies or equipment are commercially
available.
PRIOR/RELATED LEGISLATION
AB 1857 (Wayne), Chapter 389, Statutes of 2002 . Expands
the requirement that an agency publish certain rulemaking
documents on its Web site including, the text of a proposed
emergency rulemaking action and the date the proposed
action is submitted to OAL. Provides that rulemaking
documents shall be posted on issuance and remain posted
until at least 15 days after the end of the rulemaking
process. Clarifies requirements that an agency must
describe reasonable alternatives to a proposed regulation
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and reasonable alternatives that would lessen any adverse
impact on small business.
AB 1822 (Wayne), Chapter 1060, Statutes of 2000 .
Authorizes state agencies to consult with interested
parties prior to the commencement of a regulatory action.
Modifies provisions relating to the requirement that a
state agency demonstrate the necessity of a proposed
regulation, as described. Requires state agencies to
notify the OAL as stated, when they choose not to proceed
with a proposed action.
AB 505 (Wright), Chapter 1059, Statutes of 2000 . Modifies
provisions relating to OAL and the adoption of regulations,
moves the Office of Small Business Advocate from the Trade
and Commerce Agency to the Governor's Office of Planning
and Research and creates the Governor's Small Business
Reform Task Force.
SUPPORT: As of April 9, 2010:
Association of California Insurance Companies
California Business Properties Association
California Cement Manufacturers Environmental Coalition
California Chamber of Commerce
California Chapter of the American Fence Association
California Construction and Industrial Material Association
California Council for Environmental and Economic Balance
(Sponsor)
California Fence Contractors' Association
California Forestry Association
California Grocers Association
California Hospital Association
California Independent Oil Marketers Association
California League of Food Processors
California Manufacturers & Technology Association
California Nevada Cement Association
California Precast Concrete Association
California Retailers Association
California Small Business Association
California State Council of Laborers
Consumer Specialty Products Association
Engineering Contractors' Association
Flasher/Barricade Association
Independent Waste Oil Collectors
Industrial Environmental Association
SB 1351 (Wright) continued
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Marin Builders' Association
National Federation of Independent Business
Western Growers
Western States Petroleum Association
OPPOSE: As of April 9, 2010:
American Lung Association
Breathe California
Sierra Club - California
Union of Concerned Scientists
FISCAL COMMITTEE: Senate Appropriations Committee
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