BILL ANALYSIS �
AB 691
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Date of Hearing: April 27, 2011
ASSEMBLY COMMITTEE ON AGRICULTURE
Cathleen Galgiani, Chair
AB 691 (Perea) - As Amended: April 15, 2011
SUBJECT : Agency regulations and economic impacts.
SUMMARY : This bill designates the Secretary (Secretary) of the
California Department of Food and Agriculture (CDFA) as an ombudsman
responsible for providing assistance in obtaining permits
expeditiously from the state and assist in policy development of
agricultural related issues. The ombudsman is required to review
and identify agricultural regulations within the state and other
government agencies, and to initiate reviews of such. Additionally,
this bill requires agencies developing regulations to evaluate and
include additional information to the Office of Administrative Law
(OAL) for approval of proposed regulations. Specifically, this
bill :
1)Makes legislative findings and declarations that many state
agencies are responsible for regulating agriculture, but none are
responsible for determining the cumulative effects of their
activities on agriculture.
2)Designates the Secretary as the ombudsman for state agricultural
regulations, requiring all of the following be conducted:
a) Assistance in understanding processes to obtain required
state permits and to resolve concerns regarding those
processes;
b) Appropriate direction and assistance in the expeditious
completion for obtaining state required permits; and,
c) Agricultural related information and education to assist in
policy development on agricultural issues.
3)Makes the ombudsman responsible for the following:
a) Reviewing and identifying, within the state, agricultural
related regulations that that may have negative impacts on
agriculture, and make recommendations regarding but not limited
to, duplicative regulations, and necessary changes to state
statute or regulations to alleviate those negative impacts;
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b) Requiring the ombudsman to report, on or before January 1,
2013, and the same each year thereafter, to the President pro
Tempore of the Senate and the Speaker of the Assembly,
regarding recommendations of duplicative regulations, and
necessary changes to state statute or regulations to alleviate
those negative impacts; and,
c) Submitting this report, pursuant to Government Code
requirements, which details how the report is to be submitted.
4)Deletes from the required documentation required for OAL the
facts, evidence, documents, testimony, or other evidence on which
an agency relied, to support an initial determination that their
action will not have a significant adverse economic impact on
business, thereby requiring this documentation be included in an
agency's filing with OAL.
5)Makes technical non-substantive changes, adding "California" to
identify the Environmental Protection Agency and "Natural" to
reflect the new name of the Resources Agency.
6)Deletes, for the purposes of economic impacts to business, the
qualification that it is not the intent to impose additional
criteria on agencies, above existing law, in assessing adverse
economic impacts on California business, but only to ensure the
assessment is made early in the process of initiating and
developing proposed regulations for adoption, amendment or repeal.
7)Revises, for the purpose of a notice to adopt, amend, or repeal
proposed regulations to include, requirements that an agency
provide documentation or the assessment of potential adverse
economic impacts, and "cumulative adverse economic impact" on all
California businesses, rather than just small businesses.
8)Defines "cumulative adverse economic impact" as the impact on the
economy resulting from incremental economic impact of regulation
when added to other past, present, and reasonably foreseeable
future regulations, regardless of which agency is adopting those
regulations. Additionally, "cumulative adverse economic impact"
may result from individually minor, but collectively significant,
regulations taking place over time.
9)Requires all agencies subject to OAL requirements, to include in
their final statement of reasons for adoption of regulations, and
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explanation of reasons for rejecting any proposed alternatives
that would lessen the adverse economic impact on any business.
EXISTING LAW directs the Secretary of CDFA to protect and promote
agriculture in California and requires CDFA to follow the
Administrative Procedure Act (APA) for adopting regulations.
Requires all reports submitted to any member of either house shall
instead be submitted as a printed copy to both the Legislative
Counsel (LC) and the Secretary of the Senate, and as an electronic
copy to the Chief Clerk of the Assembly. Describes the structure of
the report, duties of LC, how it is made available to the public,
and required posting on the authoring agency's web.
Requires all state agencies and departments to follow the APA
procedures when proposing adoption, amendment or repeal of
regulations, except for adoption of emergency regulations.
The APA governs the procedure for the adoption, amendment, or repeal
of regulations by state agencies and for the review of those
regulatory actions by the OAL. The APA requires an agency, as part
of the regulatory adoption process, to assess the potential for
adverse economic impact on California small business enterprises and
individuals, as specified. The APA requires an agency that seeks to
adopt, amend, or repeal a regulation to release a notice of proposed
action with prescribed information, including specified information
regarding adverse economic impacts. The APA requires an agency to
file with the office, when it files the notice of proposed action,
an initial statement of reasons that include, among other things, a
description of reasonable alternatives to the proposed regulation
and the agency's reason for rejecting the alternatives, as
specified. The APA authorizes any standing, select, or joint
legislative committee to request the OAL to initiate a priority
review of any regulation that does not meet the following standards:
necessity, authority, clarity, consistency, reference, and,
non-duplication.
FISCAL EFFECT : This bill has been keyed fiscal by Legislative
Counsel.
COMMENTS : According to the author's office, "The absence of a
single oversight entity places California's agricultural industry at
a competitive disadvantage in comparison to other states.
California's permitting process for agriculture requires compliance
with multiple government agencies and as a result, some agencies
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have overlapping regulations. Duplicative regulations increase
costs, making it difficult to comply with state law. Fines imposed
on the industry for non-compliance can force people out of work or
out of business. Agencies often impose regulations without an
analysis on the impacts of a new regulation, in relation to all
other existing regulations."
The author cites other states such as Michigan, Washington, and
Rhode Island as having simplified permitting processes, and that
Washington, having a single licensing agency that oversees permits
and fees for over 80% of all businesses, has an unemployment rate of
9.1%, compared to California's 12.2%, and with several rural
counties being above 18% and as high as 27.1%. Accordingly, by
authorizing CDFA to review regulations in order to eliminate
duplicative regulations and having agencies responsible for
conducting a cumulative impact report of proposed regulations,
California's unemployment could be reduced.
As an example, the estimated agencies required to be contacted for
permits, licensure, inspection or other types of approval for a
dormant cotton gin to reopen, according to industry sources is as
follows:
Board of Equalization
Cal/OSHA
Cal/OSHA Pressure Vessel Unit
California Air Resources Board
California Department of Fish and Game
California Department of Food and
Agriculture
California Highway Patrol
CalTrans (if located on state highway)
County Agricultural Commissioner (Respective counties)
County Building Department
County Environmental Health Department
County or Regional Fire Department
Department of Labor Standards Enforcement
Department of Motor Vehicles
Department of Toxic Substances Control
Federal Department of Labor
Internal Revenue Service
Office of Environmental Health Hazard
Assessment
Public Utilities Commission
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Regional Air Districts
Regional Water Quality Control Board
Social Security Administration
U.S. EPA
The California Cotton Industry has been in decline over the last
several years with reduced planted acreage requiring fewer gins.
This last year, the increased cotton prices has led to increased
acreage anticipated to be planted this year, and the need for
additional ginning capacity. A ginning operation will be required
to meet all the requirements of these various entities, and possibly
others, before it can gin any cotton. This may include structural
improvement or other upgrades if it had been operating on a
conditional permit prior to shutting down.
The merits of this bill are laudable. Over-regulation has been the
outcry of many California businesses from various industry sectors.
It is the mechanics of how to resolve the goals of this bill that
create new policies over state regulation. Requiring agencies to
look at economic impacts to all businesses rather than just small
businesses would be new policy. Having them look at the cumulative
adverse economic impacts of all regulations would be new policy.
The committee may wish to consider if these new policies are
appropriate in the consideration of new regulations?
Requiring CDFA to review all regulations to determine duplication of
regulations and to report recommendations to the legislature would
be a new role for them. Additionally, this bill creates a precedent
giving one state agency the authority and ability to impact another
agency's or department's rule making. The requirement for CDFA to
"review and identify" regulations that may have a negative impact on
agriculture, also requires CDFA to make a judgment, while not
providing any option if the impacting regulation is valid or
reasonable. There are numerous entities within state government and
each has different responsibilities and expertise. The committee
may wish to consider if CDFA has the technical expertise to address
these many different responsibilities and if there should be a
qualification for valid and reasonable regulations?
Further, this would be a herculean task for CDFA. There are an
estimated 600 to 800 regulations filed annually with OAL, not to
mention the existing regulations. It is unknown what staffing level
would be required to handle this amount of review. Currently, CDFA
has reduced their general fund budget in the current year by over
$11 million and has been asked to prepare for another $15 million
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reduction in the budget year. The committee may wish to consider if
CDFA has the staffing and fiscal ability to perform these
requirements?
Assemblymember Felipe Fuentes and Senator Robert Dutton requested
the Little Hoover Commission (LHC) do a review of California's
regulatory process and identify improvements in certain areas. The
current LHC study's focus is on the state's regulatory processes,
with the goal of improving clarity and accountability, in the way
the state develops regulations and assesses their impacts and
outcomes. The study is intended to take a broad look at the state's
regulatory process, including the rule-making phase at the agency
level, as well as the assessment of proposed regulations by the
Department of Finance and the Office of Administrative Law.
In the course of its study, LHC will assess the role of economic
analysis, including the use and limits of cost-benefit analysis and
cost-effectiveness tests. LHC will examine regulatory reform
efforts in other governments - at the city, state and federal level
- to learn about ways that California's regulatory development and
review process can be made more efficient, more effective, and more
transparent. This study is projected to be released late August or
September of 2011.
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(s), state agencies must comply with procedural
requirements that include publishing the proposed regulation(s),
along with supporting statements 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 that 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 avoiding the imposition of
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
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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.
NOTE TO MEMBERS : The April 15, 2011 amendments may cause this bill
to be double referred to the Assembly Committee on Business,
Professions and Consumer Protection.
RELATED LEGISLATION : 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
scheduled to be heard in the Assembly Business, Professions and
Consumer Protection Committee on April 26, 2011.
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 the Department of
Finance, as specified. This bill is scheduled to be heard in the
Assembly Business, Professions and Consumer Protection Committee on
May 3, 2011
AB 1037 (V. Manuel P�rez) of 2011, raises 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 passed the Assembly Business, Professions and
Consumer Protection Committee, with a vote of 8-0, and is scheduled
to be heard in Assembly Jobs, Economic Development, and the Economy
Committee on May 3, 2011.
PREVIOUS LEGISLATION : AB 2738 (Niello), Chapter 398, Statutues of
2010, established new requirements for state agency adoption of
regulations that required the use of specific technology, equipment,
or procedures.
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REGISTERED SUPPORT / OPPOSITION :
Support
California Center for Rural Policy
California Citrus Mutual
California Farm Bureau Federation
Del Monte Foods
Hudson Farms
Fresno County Farm Bureau
Western Growers
One individual
Opposition
None on file.
Analysis Prepared by : Jim Collin / AGRI. / (916) 319-2084