BILL ANALYSIS �
AB 273
Page 1
Date of Hearing: May 3, 2011
ASSEMBLY COMMITTEE ON BUSINESS, PROFESSIONS AND CONSUMER
PROTECTION
Mary Hayashi, Chair
AB 273 (Valadao) - As Amended: February 7, 2011
SUBJECT : Regulations: economic impacts review.
SUMMARY : Requires the Department of Finance (DOF) to review
the determinations, estimates, statements, and findings of
agencies related to the economic and cost impact of proposed
regulations, as specified. Specifically, this bill :
1)Requires DOF to add the following instructions for inclusion
in the State Administrative Manual (Manual) prescribing the
methods for agencies to use when making the determinations,
estimates, statements, and findings related to the economic
and cost impacts of a proposed regulation on businesses and
private individuals:
a) The format and criteria that the agency shall use in
making an initial determination that a regulation either
may have or will not have a significant statewide adverse
economic impact directly affecting business, as specified,
and including the corresponding information required in the
notice of proposed adoption, amendment, or repeal of a
regulation;
b) The criteria the agency shall consider in determining
and describing cost impacts that a representative private
person or business would necessarily incur in reasonable
compliance with a proposed regulation;
c) The format and criteria that the agency shall use in
assessing and stating the impact of a regulation on the
creation or elimination of jobs, the creation of new
businesses, the elimination of existing businesses, and the
expansion of businesses in California, as specified; and,
d) The format and criteria that the agency shall use in
making a finding that a regulation that imposes a reporting
requirement applicable to businesses is necessary for the
health, safety, or welfare of the people of the state, as
specified.
AB 273
Page 2
2)Requires, instead of permits, DOF to review any determination,
estimate, statement, and finding prepared pursuant to this
bill for content, including, but not limited to, the data and
assumptions used in its preparation.
3)Requires DOF to summit its determinations, along with any
supporting documents to the agency in the form of public
comment, if DOF determines that any determination, estimate,
statement, or finding described by the agency is erroneous or
otherwise inconsistent with the guidelines, criteria, or
format required by this bill, as specified.
EXISTING LAW :
1)Governs the procedure for the adoption, amendment, or repeal
of regulations by state agencies and for the review of those
regulatory actions by the Office of Administrative Law (OAL),
under the Administrative Procedures Act (APA).
2)Requires DOF to adopt and update, as necessary, instructions
for inclusion in the Manual, that prescribe the methods that
any agency shall use in making certain determinations relating
to the impact of proposed regulations.
3)Authorizes DOF to review any estimate prepared pursuant the
Manual for content.
FISCAL EFFECT : Unknown
COMMENTS :
Purpose of this bill . According to the author's office, "AB 273
would codify the current practice of DOF to conduct a review of
an agency's EIS for proposed regulations, and would require that
DOF submit the results of its review into public record during
the public comment period for the proposed regulations.
"Current law, under the APA, requires state agencies to conduct
analyses of proposed regulations and report their estimated
negative effect on businesses and the economy. However,
agencies are allowed to analyze their own proposed regulations
with no oversight. Agencies are not held accountable if their
analyses are inaccurate or incomplete, even if the proposed
regulations are likely to have a significant negative effect on
AB 273
Page 3
the economy or a particular industry.
"AB 273 would codify the current practice of DOF. It would also
add a requirement that DOF submit the findings of its review
into public record during the public comment period, holding
agencies accountable by allowing the public to know when
agencies conduct inaccurate or misleading economic analyses.
This will ensure that agencies make a complete and fair
assessment of all proposed regulations and pay particular
attention to the economic consequences of a proposed action."
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 with a 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 period.
The OAL is then required to approve or reject the proposed
regulation within 30 days.
More specifically, the APA requires state agencies proposing to
adopt, amend, or repeal any administrative regulation to assess
the potential for adverse economic impact on California business
enterprises and individuals, and avoid imposing unnecessary or
unreasonable regulations. Agencies are required to 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. Additionally, agencies
are required to assess whether and to what extent the proposed
regulation change will affect the creation or elimination of
jobs, the creation of new businesses or the elimination of
existing businesses, and the expansion of businesses currently
doing business within California.
This bill requires DOF to review the determinations, estimates,
statements, and findings of agencies related to the economic and
cost impact of proposed regulations, as specified, and to
comment during the agency's public comment period if DOF finds
that the agency's findings are erroneous or otherwise
inconsistent with the guidelines in the Manual.
AB 273
Page 4
Manual . The Manual is a reference source for statewide
policies, procedures, regulations and information developed and
issued by authoring agencies such as the Governor's Office,
Department of General Services (DGS), DOF, and the Department of
Personnel Administration. In order to provide a uniform
approach to statewide management policy, the contents have the
approval of and are published by the authority of the DOF
Director and the DGS Director.
Support . The National Federation of Independent Business writes
in support, "Under the APA, proposed regulations are to be
reviewed and reported on their estimated negative effect on
businesses and the economy. However, agencies are allowed to
analyze their own proposed regulations with no oversight.
Agencies are not held accountable if their analyses are
inaccurate or incomplete, even if the proposed regulations are
likely to have significant negative effect on the economy or a
particular industry.
"AB 273 would codify the current practice of the DOF. It would
also add a requirement the DOF submit the findings of tis review
into public record during the public comment period, holding
agencies accountable by allowing the public to know when
agencies conduct inaccurate or misleading economic analyses.
This bill would ensure that agencies make a complete and fair
assessment of all proposed regulations and pay particular
attention to the economic consequences of a proposed action."
Related legislation . AB 127 (Logue) of 2011, requires that a
regulation or an order of repeal of a regulation become
effective on the following January 1 after a 90-day period
following the date it is filed with the Secretary of State
(SOS), instead of 30 days after the date of filing, except where
already exempted. This bill is pending in the Assembly
Business, Professions and Consumer Protection Committee.
AB 213 (Silva) of 2011, requires agencies to mail or
electronically mail a notice of prosed action to adopt, amend,
or repeal a regulation to local government agencies or local
government agency representatives that are likely to be affected
by the proposed action. This bill is pending in the Assembly
Appropriations Committee.
AB 338 (Wagner) of 2011, increases the effective date for a
AB 273
Page 5
regulation or an order of repeal of a regulation from 30 days to
90 days and requires the OAL to submit a copy of disapproved
regulations to the Legislature when certain criteria are met, as
specified. This bill is pending in the Assembly Business,
Professions and Consumer Protection Committee.
AB 410 (Swanson) of 2011, requires an agency, upon a request
from a person with a visual disability or other disability for
which effective communication is required to provide that person
a narrative description of the proposed regulation and for an
extended public comment period for that person. This bill is
pending in the Assembly Appropriations Committee.
AB 425 (Nestande) of 2011, requires each state entity that
promulgates regulations to review those regulations, and repeal
or report to the Legislature those identified as duplicative,
archaic, or inconsistent with statute or other regulations or
deemed to inhibit economic growth in the state by December 31,
2012. This bill is pending in the Assembly Business,
Professions and Consumer Protection Committee.
AB 429 (Knight) of 2011, requires an agency, for any regulation
that it has identified as having a gross cost of $15 million or
more, an increased cost of 5% or more over the cost of an
existing regulation, or both, to submit a copy of the rulemaking
record for that regulation to the appropriate policy committee
in each house of the Legislature when the agency submits the
regulation to the OAL for approval. This bill is pending in the
Assembly Business, Professions and Consumer Protection
Committee.
AB 530 (Smyth) of 2011, requires a state agency, when it files a
notice of proposed action with the OAL, to include technical,
theoretical, and empirical studies, reports, or similar
documents, upon which the agency relied in rejecting each
reasonable alternative. Additionally, this bill would prohibit
an agency from rejecting a reasonable alternative unless the
statement of reasons includes at least one of these documents.
Further, this bill requires an agency to determine whether a
proposed regulation will have a significant adverse economic
impact by completing an economic impact statement, using a form
developed by DOF, as specified. This bill is pending in the
Assembly Business, Professions and Consumer Protection
Committee.
AB 273
Page 6
AB 535 (Morrell) of 2011, requires a state agency to review and
report to the Legislature on regulations that it adopts or
amends on and after January 1, 2012, 5 years after adoption, as
specified. This bill is pending in the Assembly Business,
Professions and Consumer Protection Committee.
AB 541 (Morrell) of 2011, requires the California Small Business
Board, until January 1, 2014, to review the state's licensing
and permitting regulations as they impact small businesses, with
special attention to the regulatory impact on small business
startups, and would require each state agency to cooperate with
the board in that review. This bill is pending in the Assembly
Appropriations Committee.
AB 586 (Garrick) of 2011, requires standing committees of the
Legislature to hold informational hearings regarding proposed
regulation with a gross cost in excess of $10 million. This
bill is pending in the Assembly Business, Professions and
Consumer Protection Committee.
AB 632 (Wagner) of 2011, requires state agencies to submit to
the Legislature a notice of a proposed action to adopt, amend or
repeal a regulation, if the notice identifies an economic
impact, cost impact, statement or finding related to the
proposed regulation, as specified. This bill is pending in the
Assembly Business, Professions and Consumer Protection
Committee.
AB 1037 (V. Manuel Perez) of 2011, increases the threshold for
business activities under the definition of "small business" and
requires agencies to reassess regulations five years after
adoption, as specified. This bill is currently pending in the
Assembly Jobs, Economic Development, and the Economy Committee.
AB 1213 (Nielsen) of 2011, authorizes a chair or vice chair of a
standing, select, or joint committee of the Legislature to
initiate a priority review of any regulation, as specified.
This bill is pending in the Assembly Business, Professions and
Consumer Protection Committee.
AB 1322 (Bradford) of 2011, adopts the regulatory philosophy and
the principles of regulation, as outlined in Presidential
Executive Order 12866, in order to achieve the same regulatory
benefits within the state, as specified. This bill is pending
in the Assembly Business, Professions and Consumer Protection
AB 273
Page 7
Committee.
Previous legislation . AB 1833 (Logue) of 2010, requires the
California Environmental Protection Agency, the Division of
Occupational Safety and Health and the State Air Resources Board
to complete an economic impact analysis prior to adopting,
amending, or repealing an administrative regulation. This bill
was held in the Assembly Business, Professions and Consumer
Protection Committee.
AB 1949 (Logue) of 2010, requires a state agency to review and
report on regulations that it adopts or amends on and after
January 1, 2011, five years after adoption, as specified. This
bill was held in the Assembly Business, Professions and Consumer
Protection Committee.
AB 1957 (Silva) of 2010, requires state agencies, when providing
notice of proposed adoption, amendment, or repeal of a
regulation, to mail the notice to local government agencies or
local government agency representatives that the agency believes
may be interested in, or impacted by, the proposed action. This
bill was held in the Assembly Appropriations Committee.
AB 2466 (Smyth) of 2010, requires the OAL submit all regulations
packages to the Legislature and require that the appropriate
legislative policy committees review those regulations. This
bill was held in the Assembly Appropriations Committee.
AB 2529 (Fuentes) of 2010, establishes, until January 1, 2016, a
process for peer review of economic impacts analyses for a
proposed regulation and requires OAL to send specified
regulations to the fiscal committees in both houses of the
Legislature if they meet certain criteria. This bill was held
in the Senate Business, Professions and Economic Development
Committee.
AB 2603 (Gaines) of 2010, requires every state agency to reduce
its total number of regulations by 33% by December 31, 2012.
This bill was held in the Assembly Business, Professions and
Consumer Protection Committee.
AB 2738 (Niello), Chapter 398, Statutes of 2010, requires the
initial statement of reasons submitted by an agency to the OAL
to include a description of any performance standard that was
considered as an alternative to a proposed adoption, amendment,
AB 273
Page 8
or repeal of a regulation.
AB 2118 (Villines) of 2008, prohibits state agencies from
adopting regulations that require the use of a specific
technology unless it has been operational and proven effective
for more than two years, or that would place an undue burden on
business on an annual basis and result in a significant loss of
jobs. This bill was held in the Assembly Business and
Professions Committee.
Double referred . This bill is double-referred to Assembly
Accountability and Administrative Review Committee.
REGISTERED SUPPORT / OPPOSITION :
Support
American Council of Engineering Companies of California
Associated Builders and Contractors of California
California Building Industry Association
California Business Properties Association
California Forestry Association
California Grocers Association
California League of Food Processors
California Manufacturers & Technology Association
California Retailers Association
Chemical Industry Council of California
Consumer Specialty Products Association
Engineering and Utility Contractors Association
Golden State Builders Exchanges
Industrial Environmental Association
National Federation of Independent Business
Taxpayer Advocacy Group
USANA Health Sciences, Inc.
Western Growers
Opposition
None on file.
Analysis Prepared by : Rebecca May / B.,P. & C.P. / (916)
319-3301
AB 273
Page 9