BILL NUMBER: AB 1504	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY  APRIL 16, 2012

INTRODUCED BY   Assembly Member Morrell

                        JANUARY 10, 2012

   An act to amend Sections 11342.548, 11346, 11346.3, and 11346.36
of, and to add Sections 11346.25 and 11346.37 to, the Government
Code, relating to administrative regulations.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 1504, as amended, Morrell. Administrative regulations.
   The Administrative Procedure Act governs the procedures for the
adoption, amendment, or repeal of regulations by state agencies and
the review of those regulatory actions by the Office of
Administrative Law. Existing law establishes procedures for notifying
interested persons of the proposed adoption, amendment, or repeal of
a regulation. Existing law requires a state agency that proposes to
adopt, amend, or repeal an administrative regulation to assess the
potential for adverse economic impact on California businesses and
individuals, as prescribed.
   This bill would require each state agency that is considering
adopting, amending, or repealing a regulation, in addition to those
existing economic impact analysis requirements, to complete an
economic assessment of the proposed action at least 90 days prior to
submitting a notice of proposed action to the office. The bill would
subject the economic assessment to public comment. The bill would
require the economic assessment to include specified analyses.
   On and after November 1, 2013, existing law requires a state
agency, proposing to adopt, amend, or repeal a regulation that will
have an economic impact of more than $50,000,000 on California
businesses and individuals, to conduct a standardized regulatory
impact assessment, as specified, to be included in the initial
statement of reasons for the regulation. Existing law requires the
Department of Finance to adopt regulations for conducting the
standardized regulatory impact assessment.
   This bill would, on and after November 1, 2013, instead require a
state agency to conduct a standardized regulatory impact assessment
when the economic impact on California businesses and individuals
exceeds $25,000,000. The bill would require the standardized
regulatory impact assessment to include an analysis of alternatives
that meet the statutory purpose of the proposed regulation, as
specified.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 11342.548 of the Government Code is amended to
read:
   11342.548.  "Major regulation" means any proposed adoption,
amendment, or repeal of a regulation subject to review by the Office
of Administrative Law pursuant to Article 6 (commencing with Section
11349) that will have an economic impact on California business
enterprises and individuals in an amount exceeding twenty-five
million dollars ($25,000,000), as estimated by the agency.
  SEC. 2.  Section 11346 of the Government Code is amended to read:
   11346.  (a) It is the purpose of this chapter to establish basic
minimum procedural requirements for the adoption, amendment, or
repeal of administrative regulations. Except as provided in Section
11346.1, the provisions of this chapter are applicable to the
exercise of any quasi-legislative power conferred by any statute
heretofore or hereafter enacted, but nothing in this chapter repeals
or diminishes additional requirements imposed by any statute. This
chapter shall not be superseded or modified by any subsequent
legislation except to the extent that the legislation shall do so
expressly.
   (b) As provided in Sections 11346.25 and 11346.3, an agency that
is considering adopting, amending, or repealing a regulation shall
consult with interested persons before initiating regulatory action
pursuant to this article.
  SEC. 3.  Section 11346.25 is added to the Government Code, to read:

   11346.25.  (a) An agency that is considering adopting, amending,
or repealing a regulation shall complete an economic assessment of
the proposed action 90 days prior to submitting a notice of proposed
action to the office.
   (b) The economic assessment shall be subject to public comment and
shall include all of the following:
   (1)  A cost-benefit analysis   An assessment
of the costs associated with the proposed action  , including
whether the proposed action, if adopted, may result in the
expenditure of moneys by any individual, business, state government
entity, or local government entity.
   (2) A description of the expenditure of any moneys identified
pursuant to paragraph (1), including examples of how the proposed
action may result in the expenditure of moneys by an individual,
business, state entity, or local entity.
   (3) An analysis of how the proposed action shall implement or meet
the statutory purpose for which the proposed action is necessary,
and the reason for its necessity.
   (4) An analysis that takes into consideration and addresses the
public comments received by the agency.
   (5) In the case of a major regulation, an analysis that considers
alternative regulations, which shall also be included in the analysis
required under Section 11346.37.
   (c) The agency shall notify the public of the public comment
period for the economic assessment 90 days prior to submitting a
notice of proposed action to the office, pursuant to the following:
   (1) The agency shall identify all interested parties that may be
affected by the proposed regulation.
   (2) The agency shall post that identification on its Internet Web
site along with a preliminary notice of proposed rulemaking and
initial statement of reasons.
   (3) The agency shall make public all comments that are received
under this section.
   (d) The economic assessment required by this section shall be
prepared in addition to the economic impact analysis required under
Section 11346.3, and shall be filed with the office with the notice
of proposed action.
  SEC. 4.  Section 11346.3 of the Government Code is amended to read:

   11346.3.  (a) State agencies proposing to adopt, amend, or repeal
any administrative regulation shall assess the potential for adverse
economic impact on California business enterprises and individuals,
avoiding the imposition of unnecessary or unreasonable regulations or
reporting, recordkeeping, or compliance requirements. For purposes
of this subdivision, assessing the potential for adverse economic
impact shall require agencies, when proposing to adopt, amend, or
repeal a regulation, to adhere to the following requirements, to the
extent that these requirements do not conflict with other state or
federal laws:
   (1) The proposed adoption, amendment, or repeal of a regulation
shall be based on adequate information concerning the need for, and
consequences of, proposed governmental action.
   (2) The state agency, prior to submitting a proposal to adopt,
amend, or repeal a regulation to the office, shall 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. For purposes of evaluating the
impact on the ability of California businesses to compete with
businesses in other states, an agency shall consider, but not be
limited to, information supplied by interested parties.
   (3) An economic analysis prepared pursuant to this subdivision for
a proposed regulation that is not a major regulation or that is a
major regulation proposed prior to November 1, 2013, shall be
prepared in accordance with subdivision (b). An economic analysis
prepared pursuant to this subdivision for a major regulation proposed
on or after November 1, 2013, shall be prepared in accordance with
subdivision (c), and shall be included in the initial statement of
reasons as required by Section 11346.2.
   (b) (1) All state agencies proposing to adopt, amend, or repeal a
regulation that is not a major regulation or that is a major
regulation proposed prior to November 1, 2013, shall prepare an
economic impact analysis that assesses whether and to what extent it
will affect the following:
   (A) The creation or elimination of jobs within the State of
California.
   (B) The creation of new businesses or the elimination of existing
businesses within the State of California.
   (C) The expansion of businesses currently doing business within
the State of California.
   (D) The benefits of the regulation to the health and welfare of
California residents, worker safety, and the state's environment.
   (2) This subdivision does not apply to the University of
California, the Hastings College of the Law, or the Fair Political
Practices Commission.
   (3) Information required from state agencies for the purpose of
completing the assessment may come from existing state publications.
   (c) (1) Each state agency proposing to adopt, amend, or repeal a
major regulation on or after November 1, 2013, shall prepare a
standardized regulatory impact assessment in the manner prescribed by
the Department of Finance pursuant to Section 11346.36. The
standardized regulatory impact analysis shall address all of the
following:
   (A) The creation or elimination of jobs within the state.
   (B) The creation of new businesses or the elimination of existing
businesses within the state.
   (C) The competitive advantages or disadvantages for businesses
currently doing business within the state.
   (D) The increase or decrease of investment in the state.
   (E) The incentives for innovation in products, materials, or
processes.
   (F) The benefits of the regulations, including, but not limited
to, benefits to the health, safety, and welfare of California
residents, worker safety, and the state's environment and quality of
life, among any other benefits identified by the agency.
   (G) An analysis of reasonable alternatives as required under
Section 11346.37.
   (2) This subdivision shall not apply to the University of
California, the Hastings College of the Law, or the Fair Political
Practices Commission.
   (3) Information required from state agencies for the purpose of
completing the assessment may be derived from existing state,
federal, or academic publications.
   (d) Any administrative regulation adopted on or after January 1,
1993, that requires a report shall not apply to businesses, unless
the state agency adopting the regulation makes a finding that it is
necessary for the health, safety, or welfare of the people of the
state that the regulation apply to businesses.
   (e) Analyses conducted pursuant to this section are intended to
provide agencies and the public with tools to determine whether the
regulatory proposal is an efficient and effective means of
implementing the policy decisions enacted in statute or by other
provisions of law in the least burdensome manner. Regulatory impact
analyses shall inform the agencies and the public of the economic
consequences of regulatory choices, not reassess statutory policy.
The baseline for the regulatory analysis shall be the most
cost-effective set of regulatory measures that are equally effective
in achieving the purpose of the regulation in a manner that ensures
full compliance with the authorizing statute or other law being
implemented or made specific by the proposed regulation.
   (f) Each state agency proposing to adopt, amend, or repeal a major
regulation on or after November 1, 2013, and that has prepared a
standardized regulatory impact assessment pursuant to subdivision
(c), shall submit that assessment to the Department of Finance upon
completion. The department shall comment, within 30 days of receiving
such assessment, on the extent to which the assessment adheres to
the regulations adopted pursuant to Section 11346.36. Upon receiving
the comments from the department, the agency may update its analysis
to reflect any comments received from the department and shall
summarize the comments and the response of the agency along with a
statement of the results of the updated analysis for the statement
required by paragraph (10) of subdivision (a) of Section 11346.5.
  SEC. 5.  Section 11346.36 of the Government Code is amended to
read:
   11346.36.  (a) Prior to November 1, 2013, the Department of
Finance, in consultation with the office and other state agencies,
shall adopt regulations for conducting the standardized regulatory
impact analyses required by subdivision (c) of Section 11346.3.
   (b) The regulations, at a minimum, shall assist the agencies in
specifying the methodologies for:
   (1) Assessing and determining the benefits and costs of the
proposed regulation, expressed in monetary terms to the extent
feasible and appropriate. Assessing the value of nonmonetary benefits
such as the protection of public health and safety, worker safety,
or the environment, the prevention of discrimination, the promotion
of fairness or social equity, the increase in the openness and
transparency of business and government and other nonmonetary
benefits consistent with the statutory policy or other provisions of
law.
   (2) Comparing proposed regulatory alternatives with an established
baseline so agencies can make analytical decisions for the adoption,
amendment, or repeal of regulations necessary to determine that the
proposed action is the most effective, or equally effective and less
burdensome, alternative in carrying out the purpose for which the
action is proposed, or the most cost-effective alternative to the
economy and to affected private persons that would be equally
effective in implementing the statutory policy or other provision of
law.
   (3) Determining the impact of a regulatory proposal on the state
economy, businesses, and the public welfare, as described in
subdivision (c) of Section 11346.3.
   (4) Assessing the effects of a regulatory proposal on the General
Fund and special funds of the state and affected local government
agencies attributable to the proposed regulation.
   (5) Determining the cost of enforcement and compliance to the
agency and to affected business enterprises and individuals.
   (6) Making the estimation described in Section 11342.548.
   (7) Complying with the requirements under Section 11346.37.
   (c) To the extent required by this chapter, the department shall
convene a public hearing or hearings and take public comment on any
draft regulation. Representatives from state agencies and the public
at large shall be afforded the opportunity to review and comment on
the draft regulation before the regulation is adopted in final form.
   (d) State agencies shall provide the Director of Finance and the
office ready access to their records and full information and
reasonable assistance in any matter requested for purposes of
developing the regulations required by this section. This subdivision
shall not be construed to authorize an agency to provide access to
records required by statute to be kept confidential.
   (e) The standardized regulatory impact analysis prepared by the
proposing agency shall be included in the initial statement of
reasons for the regulation as provided in subdivision (b) of Section
11346.2.
   (f) On or before November 1, 2013, the department shall submit the
adopted regulations to the Senate and Assembly Committees on
Governmental Organization and shall publish the adopted regulations
in the State Administrative Manual.
  SEC. 6.  Section 11346.37 is added to the Government Code, to read:

   11346.37.  (a) An agency that proposes to adopt a major regulation
pursuant to Section 11346.3 shall include in its standardized
regulatory impact assessment both of the following:
   (1) An assessment of the cost effectiveness of alternatives that
meet the statutory purpose of the proposed major regulation and a
determination of which alternative is the lowest cost alternative.
   (2) A demonstration that the proposed major regulation is the most
cost-effective approach to meeting the statutory purpose of the
regulation as compared to all other alternatives.
   (b) In implementing this section, an agency shall make a
substantial effort to engage all regulated and interested parties in
the development of alternatives that would satisfy the statutory
purpose of the proposed major regulation. Public comment under
Section 11346.25 shall be taken into consideration and utilized to
refine the analysis under this section and to develop additional
alternatives. The agency shall consider and address all comments made
during the public comment period under Section 11346.25 pertaining
to its analysis of the alternatives, including why the agency
selected the proposed major regulation as compared to the
alternatives.
   (c) The requirements of this section shall be in addition to the
analysis required under paragraph (5) of subdivision (b) of Section
11346.2.
   (d) For purposes of this section, "alternative" means any other
alternative approach or project that could be, or could have been,
considered by the agency in lieu of the proposed major regulation.