BILL ANALYSIS �
AB 535
Page 1
Date of Hearing: May 3, 2011
ASSEMBLY COMMITTEE ON BUSINESS, PROFESSIONS AND CONSUMER
PROTECTION
Mary Hayashi, Chair
AB 535 (Morrell) - As Introduced: February 16, 2011
SUBJECT : Regulations: 5-year review and report.
SUMMARY : Requires state agencies to review and report specified
information on regulations it adopts or amends on and after
January 1, 2012 to the Office of Administrative Law (OAL), five
years after the regulation was adopted or amended.
Specifically, this bill :
1)Requires state agencies to review and report on all
regulations that it adopts or amends on and after January 1,
2012, as specified, and submit the review and report to OAL by
May 1 immediately following five years after the regulation
was adopted or amended.
2)Requires OAL to make the report available on its Internet Web
site.
3)Requires the agency's review and report to include the
following factors:
a) The general and specific statutes authorizing the
regulation;
b) The objective of the regulation;
c) The effectiveness of the regulation in achieving the
objective;
d) The consistency of the regulation with state and federal
statutes and regulations and a listing of the statutes or
regulations used in determining the consistency;
e) The agency enforcement policy, including whether the
regulation is currently being enforced and, if so, whether
there are any problems with enforcement;
f) The agency view regarding current wisdom of the
regulation;
AB 535
Page 2
g) The clarity, conciseness, and understandability of the
regulation;
h) A summary of the written criticisms of the regulation
received by the agency during the five years immediately
preceding the report, including letters, memoranda,
reports, and written allegations made in litigation or
administrative proceedings, to which the agency was a
party, that the regulation is discriminatory, unfair,
unclear, inconsistent with statute, or beyond the authority
of the agency to enact, and the result of the litigation or
administrative proceedings;
i) The estimated economic, small business, and consumer
impact of the regulation as compared to the economic, small
business, and consumer impact statement prepared on the
last making of the regulation, or, if no economic, small
business, and consumer impact statement was prepared on the
last making of the rule, an assessment of the actual
economic, small business, and consumer impact of the
regulation; and,
j) The course of action the agency proposes to take
regarding each regulation, including the month and year in
which the agency anticipates submitting the rules to the
OAL if the agency determines it is necessary to amend or
repeal an existing rule, or to make a new rule.
EXISTING LAW sets forth the requirements for the adoption,
publication, review, and implementation of regulations by state
agencies, under the Administrative Procedures Act (APA).
FISCAL EFFECT : Unknown
COMMENTS :
Purpose of this bill . According to the author's office,
"Businesses have fled our state, taking with them thousands of
jobs. Unemployment in California is the second highest in the
Nation, at record levels of over 12%, according to the
Department of Labor. One of the primary reasons for that is the
costly and burdensome regulation imposed by loosely supervised
state agencies and departments. This bill seeks to assess the
economic impact that regulations imposed by state agencies have
AB 535
Page 3
on small businesses and consumers. This bill is a necessary
tool in holding state agencies accountable for their impacts on
the economy."
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 each state entity to review and report
certain information on previously adopted regulations five years
after adoption, to the OAL.
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
AB 535
Page 4
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 273 (Valadao) of 2011, requires the Department of Finance
(DOF) to adopt and update instructions for inclusion in the
State Administrative Manual prescribing the methods that any
agency shall use in making certain determinations, estimates,
statements, and findings relating to the economic and cost
impacts of a regulation on businesses and private individuals.
This bill is pending in the Assembly Business, Professions and
Consumer Protection Committee.
AB 338 (Wagner) of 2011, increases the effective date for a
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
AB 535
Page 5
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 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
AB 535
Page 6
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
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 535
Page 7
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,
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.
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
USANA Health Sciences, Inc.
Western Growers
Opposition
None on file.
AB 535
Page 8
Analysis Prepared by : Rebecca May / B.,P. & C.P. / (916)
319-3301