BILL ANALYSIS �
AB 1213
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Date of Hearing: May 3, 2011
ASSEMBLY COMMITTEE ON BUSINESS, PROFESSIONS AND CONSUMER
PROTECTION
Mary Hayashi, Chair
AB 1213 (Nielsen) - As Amended: April 12, 2011
SUBJECT : Regulations.
SUMMARY : 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. Specifically,
this bill :
1)Revises the definition of "necessity" to require that the need
for the regulation be demonstrated by a preponderance of the
evidence.
2)Includes the chair or vice chair of a standing, select, or
joint committee of the Legislature in requesting the Office of
Administrative Law (OAL) to initiate a priority review of any
regulation, group of regulations, or series of regulation, as
specified.
3)Specifies that a regulation or order or repeal shall be
invalidated if the regulation exceeds the scope of authority
delegated to the agency by a statute or, where the plain
meaning of the language of the statute is determined to be
ambiguous, the regulation is not consistent with the
legislative intent in enacting the statute that is being
interpreted, implemented, or made specific.
4)Authorizes the court to exercise its independent judgment in
determining whether a regulation exceeds the scope of
authority delegated to the agency by statute or, if the plain
meaning of the language of the statute is determined to be
ambiguous, the regulation is not consistent with the
legislative intent in enacting the statute that is being
interpreted, implemented, or made specific.
5)Authorizes the court to grant deference to an agency
interpretation of a statute with broad or ambiguous terms or
where the agency interpretation is consistent and of long
standing and specifies that the court shall be the final
arbiter of legal interpretation and shall invalidate an
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erroneous interpretation consistent with the requirements of
this bill.
6)Makes technical and clarifying changes.
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 OAL, under the Administrative
Procedure Act (APA).
2)Requires OAL to review the regulation, among other things, for
"necessity" which is defined to mean that the record of the
rulemaking proceeding demonstrates the need for the regulation
by substantial evidence.
3)Requires OAL to initiate, at the request of a standing,
select, or joint committee of the Legislature, a priority
review of an existing regulation, which uses prescribed
procedures to determine whether the regulation continues to
satisfy specified standards.
4)Authorizes any interested person to obtain a judicial
declaration as to the validity of any regulation or order of
repeal by bringing an action for declaratory relief in
superior court, as specified.
5)Authorizes the court to declare a regulation to be invalid
for, among other things, a substantial failure to comply with
the act or if the agency's determination that a regulation is
reasonably necessary to effectuate the purpose of the statute,
court decision, or other law is not supported by substantial
evidence.
FISCAL EFFECT : Unknown
COMMENTS :
Purpose of this bill . According to the author's office, "AB
1213 contains three amendments to the rulemaking portion of the
APA. The first amendment changes the evidentiary support when
an agency determines that a regulation is "necessary." Today,
the law only requires substantial evidence. This amendment
would require that necessity be demonstrated by a preponderance
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of the evidence.
"The substantial evidence standard is a highly deferential
standard. Virtually any articulation of a rationale satisfies
it. Members of the affected public may present overwhelming
evidence that the regulation is not needed or that the precise
regulation is not the necessary approach to address the
identified problem. Nevertheless, the regulation will be
approved by OAL and upheld by a court if there is some evidence
in the record to support the agency's determination. The change
to a preponderance of the evidence standard means that the
evidence supporting the agency's determination of necessity has
to outweigh the evidence opposing that determination by at least
a 51 to 49 percent margin. The purpose of this amendment is to
assure that regulations adopted are truly necessary and not
simply supported by some evidence.
"The second amendment authorizes the chair and vice chair of
legislative committees to ask the OAL to conduct a priority
review of an existing regulation. Today, the law permits
standing or select committees to make that request. The statute
is ambiguous as to the process that the committee is to
undertake such a request. This amendment would authorize the
two members of the committee with the greatest interest in the
subject matter of the regulation, the chair and vice chair, to
make that request.
"This amendment is also necessary to assure that existing
regulations that may impinge on economic development and job
creation, for example, meet the statutory standards of
necessity, authority, and consistency.
"The third amendment adds to the current law dealing with
judicial review of adopted regulations. First, it simply
provides for judicial review, whereas the current law calls for
declaratory judgment. In fact, courts permit regulations to be
challenged in petitions for writs of mandate, complaints for
injunctive relief, or complaints for declaratory relief. This
change codifies current judicial practice.
"Additionally, the amendment adds specificity to the statute
setting forth grounds upon which a court should declare a
regulation to be invalid. This language, other than the change
to conform with the evidentiary standard, has devolved from
decisions of the California Supreme Court and simply codifies
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its standards of judicial review. The leading example of that
is Justice Mosk's concurring opinion in the Yamaha decision.
This amendment is necessary because over the decades, numerous
articulations of the judicial review standards have been made,
and attorneys and courts are often confused by the many
articulations. To avoid that confusion is what led Justice Mosk
to write his concurring opinion in Yamaha. This amendment
codifies the principles as enunciated in Mosk's legacy to the
practice of administrative law."
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 along with 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 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.
OAL is responsible for reviewing administrative regulations
proposed by over 200 state agencies for compliance with the
standards set forth in the APA, for transmitting these
regulations to SOS and for publishing regulations in the
California Code of Regulations. Existing law already requires
OAL to review all regulations for necessity and non-duplication.
This bill 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. Additionally,
this bill would require, instead of authorize, a court to
invalidate a regulation upon a determination that it exceeds the
scope of authority delegated to the agency by statute or, where
the plain meaning of the language of the authorizing statute is
determined to be ambiguous, the regulation is not consistent
with the legislative intent in enacting the statute that is
being interpreted, implemented, or made specific.
Support . The American Council of Engineering Companies of
California writes in support, "We support 'smart regulations'
that are necessary, cost-effective, fairly enforced and
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regulatory updated to reflect changing conditions and needs.
Currently California regulations are adopted, reviewed and
approved under a system established in 1979 and only modestly
changed thereafter. Since 1979 the Legislature has granted
massive new powers to government agencies and there has been
exponential growth in regulation concerning every aspect of the
economy, mostly outside the control or even awareness of elected
officials. We should modernize the system to enable policy
makers to take a more informed role in shaping regulations that
now have a tremendous impact on the California economy.
"Specific improvements we support include an enhanced role for
the Legislature in review and oversight of regulations,
independent analysis of the economic impact of regulations and
legislation, and an ongoing regulatory review process that will
lead to the reform or elimination of ineffective and excessively
burdensome regulations."
Opposition . The Sierra Club California writes in opposition,
"In California's system, regulations can be adopted only with
statutory authority and after an open and usually quite lengthy
public process. The current recession was caused not be
regulations, but by deregulations of financial markets that
allowed greedy speculators to manipulate those markets and
defraud consumers. Making it harder for agencies to protect
public health and safety will not put people back to work.
"AB 1213 would change the evidentiary standard for demonstrating
the need for a new standard. It would also allow the minority
party in the Legislature to unilaterally instigate regulatory
reviews by the OAL, and would contain the discretion of the
judiciary's review of regulations. None of these changes would
improve the regulatory process or create jobs (except for
litigators). Instead, they would make it more difficult to set
standards to protect health and safety and address threats to
our air, water, and precious natural resources."
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.
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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 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
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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 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.
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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 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
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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,
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
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Sierra Club California
Union of Concerned Scientists
Analysis Prepared by : Rebecca May / B.,P. & C.P. / (916)
319-3301