BILL ANALYSIS �
AB 1322
Page 1
Date of Hearing: May 18, 2011
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 1322 (Bradford) - As Amended: April 15, 2011
Policy Committee: Business and
Professions Vote: 9 - 0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill would adopt the regulatory philosophy and principles
of regulation, as outlined in Presidential Executive Order
12866, in order to achieve similar regulatory benefits within
the state. Specifically, this bill:
1)States agencies should only promulgate those regulations
required by law, necessary to interpret the law, or necessary
due to compelling public need.
2)States agencies should assess all costs and benefits of
available regulatory alternatives, including the alternative
of not regulating.
3)Requires each agency to identify the problem that it intends
to address, including the failures of private markets or
public institutions.
4)Requires each agency to examine whether existing regulations
or other laws have created or contributed to the problem that
the new regulation is intending to correct.
5)Requires each agency to base its decisions on the best
reasonably obtainable scientific, economic, and technical
information.
6)To the extent possible, requires each agency to specify
performance objectives rather than specifying the behavior or
manner of compliance that regulated entities must adopt.
AB 1322
Page 2
FISCAL EFFECT
1)Unknown, likely millions of dollars in on-going costs for
state agencies to comply with all of the requirements outlined
in this legislation when promulgating regulations. For
example, agencies will now need to establish a method for
determining whether or not the benefits of a proposed
regulation justify its costs.
2)On-going costs, likely in excess of $300,000 (GF) for the
Office of Administrative Law (OAL) to ensure that all
submitted regulations meet the new standard outlined in this
legislation, particularly the requirement that all regulations
must justify their costs, despite the requirements of the
overarching statute governing the regulation and the
requirement that the proposed regulations impose the least
burden on society.
OAL currently reviews 700 proposed regulations packages
consisting of tens of thousands of pages of documents in order
to ensure that the proposed regulations meet the required
rulemaking standard set forth in the Administrative Procedures
Act (APA). To the extent that this legislation increases the
complexity of those proposed regulations and size of those
regulations packages it would result in increased costs for
OAL.
In addition, the requirements in this bill may require OAL to
expand its staff to include people with expertise that is
currently outside of the scope of OAL's current duties.
COMMENTS
1)Rationale . This bill codifies a presidential executive order
pertaining to the philosophy that should apply to the
promulgation of regulations. According to the author's office,
"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."
2)Presidential Executive Order 12866 . On September 30, 1993,
AB 1322
Page 3
President 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."
3)Implementation Concern . While the language in the federal
executive order may be laudable and make sense in a federal
regulatory framework, it is unclear that these federal goals
translate to the state rulemaking process. For example, this
bill suggests that one trigger for rulemaking should be the
failure of private markets and public institutions. That type
of trigger would certainly be appropriate at the federal level
where the government is attempting to deal with the collapse
of the housing market and the failure of banks, but less
appropriate at the state level.
In addition, placing this language in state statute could
result in adding confusion and further complexity to the state
regulatory process. For example, this bill requires agencies
to consider alternatives to direct regulation, including
providing economic incentives to encourage behavior. State
regulations are driven by state statutes. Encouraging
departments to avoid regulating and to develop alternatives to
regulations would likely result in an increase in underground
regulations and could increase the cost of litigation.
While the bill begins by stating that the state should adopt
the federal government's regulatory philosophy to the extent
it does not conflict with state law, it then goes on to state
that agencies shall make certain changes to their regulatory
process. It is unclear whether this legislation is intended as
a request or a requirement for state agencies.
4)Related Legislation . Over the last two years, dozens of bills
have been introduced in the Legislature that attempt to
change, streamline, or improve the regulations process. Among
the bills pending in the Assembly are AB 127 (Logue), AB 213
(Silva), AB 273 (Valadao), AB 338 (Wagner), AB 410 (Swanson),
AB 1322
Page 4
AB 425 (Nestande), AB 429 (Knight), AB 530 (Smyth), AB 535
(Morrell), AB 586 (Garrick), AB 632 (Wagner), AB 691 (Perea),
and AB 1213 (Nielsen).
Analysis Prepared by : Julie Salley-Gray / APPR. / (916)
319-2081