BILL ANALYSIS �
AB 1322
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Date of Hearing: May 3, 2011
ASSEMBLY COMMITTEE ON BUSINESS, PROFESSIONS AND CONSUMER
PROTECTION
Mary Hayashi, Chair
AB 1322 (Bradford) - As Amended: April 15, 2011
SUBJECT : Regulations: principles of regulation.
SUMMARY : Enacts the regulatory philosophy and the principles
of regulation of Presidential Executive Order (PEO) 12866 into
state law. Specifically, this bill :
1)Enacts the regulatory philosophy of PEO 12866 as follows:
a) Agencies should promulgate only those regulations
required by law, necessary to interpret the law, or
necessary by compelling public need, such as material
failures of private markets to protect or improve the
health and safety of the public, the environment, or the
well-being of Californians; and,
b) In deciding whether and how to regulate, agencies should
assess all costs and benefits of available regulatory
alternatives, including the alternative of not regulating,
as specified.
2)Enacts the principles of regulation of PEO 12866 for each
state agency as follows:
a) Identify the problem that it intends to address,
including, where applicable, the failures of private
markets or public institutions that warrant new agency
action, as well as assess the significance of that problem;
b) Examine whether existing regulations, or other law, have
created, or contributed to, the problem that a new
regulation is intended to correct and whether those
regulations, or other law, should be modified to achieve
the intended goal of regulation more effectively;
c) Identify and assess available alternatives to direct
regulation, including providing economic incentives to
encourage the desired behavior, such as user fees or
marketable permits, or providing information upon which
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choices can be made by the public;
d) Consider, to the extent reasonable, the degree and
nature of the risks posed by various substances or
activities within its jurisdiction when setting regulatory
priorities;
e) Design its regulations in the most cost-effective manner
to achieve the regulatory objective and consider incentives
for innovation, consistency, predictability, the costs of
enforcement and compliance to the government, regulated
entities, and the public, and flexibility, distributive
impacts, and equity;
f) Assess both the costs and benefits of the intended
regulation and, recognizing that some costs and benefits
are difficult to quantify, propose or adopt a regulation
only upon a reasoned determination that the benefits of the
intended regulation justify its costs;
g) Base its decisions on the best reasonably obtainable
scientific, technical, economic, and other information
concerning the need for, and consequences of, the intended
regulation;
h) Identify and assess alternative forms of regulation and
to the extent feasible, specify performance objectives,
rather than specifying the behavior or manner of compliance
that regulated entities must adopt;
i) Seek views of appropriate state, local, and tribal
officials before imposing regulatory requirements that
might significantly or uniquely affect those governmental
entities, assess the effects of state regulations on state,
local, and tribal governments, including the availability
of resources to carry out those mandates, and seek to
minimize those burdens that uniquely or significantly
affect those governmental entities, consistent with
achieving regulatory objectives. Additionally seek to
harmonize state regulatory actions with related state,
local, and tribal regulatory and other governmental
functions;
j) Avoid regulations that are inconsistent, incompatible,
or duplicative with its other regulations;
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aa) Tailor its regulations to impose the least burden on
society, including individuals, businesses of differing
sizes, and other entities, including small communities and
governmental entities, consistent with obtaining the
regulatory objectives, taking into account the costs of
cumulative regulations; and,
bb) Draft regulations to be simple and easy to understand,
with the goal of minimizing the potential for uncertainty
and litigation arising from such uncertainty.
3)Provides that nothing in this bill be construed to weaken or
undermine in any manner any human health, public or worker
rights, public welfare, environmental, or other protection
established under statute.
4)Provides that nothing in this bill be construed to effect the
authority or requirement for an agency to adopt regulations as
provided by statute.
5)Makes legislative findings and declarations.
EXISTING LAW : 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 Procedure
Act.
FISCAL EFFECT : Unknown
COMMENTS :
Purpose of this bill . According to the author's office, "The
continued support of new, small and emerging businesses
throughout the country has been the focus of state and national
leaders during this current economic downturn. As we develop
strategies to reboot California's economy, it is important to
identify areas of improvement in regulatory areas to help new
and burgeoning businesses remain afloat, remain in California,
and ease some of the burden to open their doors or expand their
business.
"Micro enterprises are of a particular focus because they have a
smaller profit margin, have fewer employees and have a slower
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growth potential. The cost of doing business in the state is
particularly difficult for these businesses because they are
often women and/or minority owned, receive little to no
investment capital and as a result, have a higher potential of
failing.
"Applying a benefit-cost analysis methodology to California's
current regulatory process similar to the strategy implemented
at the federal level through PEO 12866 signed by President Bill
Clinton and developed by the Federal Office of Management and
Budget, California can improve its regulatory relationship with
small and micro businesses through shared solutions and
alternatives."
Background . On September 30, 1993, President Bill Clinton
issued PEO 12866, stating, "The American people deserve a
regulatory system that works for them, not against them: a
regulatory system that protects and improves their health,
safety, environment, and well-being and improves the performance
of the economy without imposing unacceptable or unreasonable
costs on society; regulatory policies that recognize that the
private sector and private markets are the best engine for
economic growth; regulatory approaches that respect the role of
state, local, and tribal governments; and regulations that are
effective, consistent, sensible, and understandable. We do not
have such a regulatory system today.
"With this PEO, the Federal Government begins a program to
reform and make more efficient the regulatory process. The
objectives of this PEO are to enhance planning and coordination
with respect to both new and existing regulations; to reaffirm
the primacy of Federal agencies in the regulatory
decision-making process; to restore the integrity and legitimacy
of regulatory review and oversight; and to make the process more
accessible and open to the public. In pursuing these
objectives, the regulatory process shall be conducted so as to
meet applicable statutory requirements and with due regard to
the discretion that has been entrusted to the Federal agencies."
This bill requests state agencies to follow the regulatory
philosophy and the principles of regulation, as outlined in PEO
12866, in order to achieve the same regulatory benefits within
California.
Related legislation . AB 127 (Logue) of 2011, requires that a
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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 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.
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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 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
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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.
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.
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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,
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
None on file.
Opposition
None on file.
Analysis Prepared by : Rebecca May / B.,P. & C.P. / (916)
319-3301