BILL NUMBER: AB 2090 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY MARCH 29, 2012
INTRODUCED BY Assembly Member Bill Berryhill
FEBRUARY 23, 2012
An act amend Sections 11342.548, 11346.3, 11346.45, and
11349.1 of, and to add Section 11346.39 to, the Government Code,
relating to regulations.
LEGISLATIVE COUNSEL'S DIGEST
AB 2090, as amended, Bill Berryhill. Regulations.
The
(1) The Administrative Procedure
Act generally sets forth the requirements for the adoption,
publication, review, and implementation of regulations by state
agencies, and for review of those regulatory actions by the Office of
Administrative Law. The act requires an agency, prior to
submitting a proposal to adopt, amend, or repeal an
administrative regulation, to determine the economic impact of the
regulation by preparing an economic impact analysis. The act defines
a major regulation as a regulation that the agency determines has an
expected economic impact on California business enterprises and
individuals in an amount exceeding $50,000,000. Existing law requires
an agency proposing to adopt, amend, or repeal a major regulation to
also prepare a standardized regulatory impact analysis.
This bill would declare the intent of the Legislature to enact
legislation that would provide greater oversight over the regulatory
process.
This bill would instead define a major regulation as a regulation
that the agency determines has an expected economic impact on
California business enterprises and individuals in an amount
exceeding $15,000,000.
This bill would modify the requirements that an adopting agency
must meet when preparing the economic impact analysis and the
standardized regulatory impact analysis.
(2) The act requires the office to initiate, at the request of a
standing, select, or joint committee of the Legislature, a priority
review of an existing regulation that uses prescribed procedures to
determine whether the regulation continues to satisfy specified
standards.
This bill would require an agency proposing to adopt a major
regulation to submit a detailed summary of the standardized
regulatory impact analysis to specified persons and entities. This
bill would require the agency to submit a full copy of that analysis
if requested by specified persons and entities. This bill would
require the office to initiate, at the request of specified persons
and entities, a priority review of a proposed regulation, in
accordance with certain procedures, to determine whether the
regulation continues to satisfy specified standards. This bill would
require the agency, if requested by specified persons or entities, to
hold up to 2 additional public hearings or public workshops on the
proposed major regulation.
(3) The act requires that state agencies proposing to adopt
regulations, prior to publication of the notice of proposed action,
involve parties that would be subject to the proposed regulations in
public discussions regarding those proposed regulations, when the
proposed regulations involve complex proposals or a large number of
proposals that cannot easily be reviewed during the comment period.
The act also provides that these requirements are not subject to
judicial review or a specified review by the office.
This bill would instead make that requirement applicable to all
proposed regulations. The bill would repeal the provisions that
exempt these requirements from judicial review and review by the
office. The bill would require the office to return the regulation to
the agency if the agency does not comply with these requirements.
Vote: majority. Appropriation: no. Fiscal committee: no
yes . State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. The Legislature finds and declares all of the
following:
(a) Robust jobs and economic growth are the key to repairing
California's chronic budget problems and generating adequate revenues
to fund vital programs like education, infrastructure, and public
safety.
(b) California's jobs, business, and economic climate have been in
dire straits for several years, resulting in higher unemployment,
and a reduction in the number of businesses, small businesses in
particular, operating in the state and concomitant decline in state
revenues.
(c) California's regulatory burdens are often cited as one of the
main causes of stagnant job and economic growth and why many
businesses decide to expand in other states instead of California. In
fact, in 2011 CEO magazine ranked California last among states where
companies prefer to do business for the seventh straight year.
(d) A large part of the problem is that too much authority over
the California economy and jobs climate has been ceded to the
unelected state bureaucracy. Regulations adopted by state agencies
often impose unnecessary burdens on California's economic and jobs
climate at a time when California can least afford to discourage
economic and job growth.
(e) Today, instead of using due diligence in analyzing the
economic impacts of proposed regulations, state agencies often merely
fill out a four-page economic questionnaire that provides little
more than one-word answers and checked-off boxes and is devoid of
supporting data. On top of that, this information is not currently
required to be made available to the public.
(f) More sunshine and public input is needed in the regulatory
rulemaking process. Those subject to regulations are often in the
best position to determine the actual costs of regulations, and also
to identify equally effective but less burdensome alternatives.
(g) Additionally, the connection between those that adopt laws and
those that implement them has been eroded. Stronger and more direct
oversight of the regulatory rulemaking process by the Legislature, as
the body conferring authority to adopt regulations, will improve the
regulatory rulemaking process.
(h) It is not the intent of this act to unduly impede the
regulatory rulemaking process. It is rather to provide greater
sunshine and public participation in the fastest-growing area of
government and to develop the most thoughtful, economically
efficient, and least burdensome regulations on jobs and businesses
when carrying out the intent of authorizing statutes.
(i) Under this act, if a state agency has sufficiently involved
the public in the rulemaking process and conducted a thorough
analysis of a regulation's economic impacts, this act should have no
adverse effect on the regulatory rulemaking process.
(j) Further, the purpose of this act is not to prevent or postpone
the adoption of any particular type of regulation or regulations but
simply to ensure that accurate and honest information about a
proposed regulation's true economic impact is prepared and made
available to the public and the legislative and executive branches of
government.
SEC. 2. It is the intent of the Legislature to
enact legislation that would provide greater oversight over the
regulatory process.
SEC. 2. 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 fifty
million dollars ($50,000,000) fifteen million dollars
($15,000,000) , as estimated by the agency in the economic
impact analysis prepared pursuant to Section 11346.3 .
SEC. 3. 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 meets all of the
following requirements :
(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.
(A) Estimates the total actual costs of compliance for affected
small businesses, large businesses, and other parties subject to the
regulation or group of regulations. The economic impact analysis
shall, at a minimum, estimate the costs of individual compliance for
a representative small business, large business, and other party
subject to the regulation as well as the cumulative statewide cost of
compliance.
(B) If an agency declares that it is not aware of any cost impact
that a representative small business, large business, or other party
subject to the regulation would incur in compliance with the
regulation, or group of regulations authorized by the same statute,
the economic impact analysis shall include an express statement to
that effect as well as a detailed statement describing how a small
business, large business, or other party subject to the regulation
could comply with the regulation or group of regulations without
incurring cost.
(C) If an economic impact analysis prepared pursuant to this
section finds that the cumulative statewide cost of compliance of any
regulation, or group of regulations authorized by the same statute,
exceeds fifteen million dollars ($15,000,000) then the regulation or
group of regulations shall be deemed to be a major regulation. If
reasonable doubt exists as to whether the cumulative statewide cost
of compliance of any regulation or group of regulations authorized by
the same statute exceeds fifteen million dollars ($15,000,000), the
doubt shall be resolved in favor of finding that the regulation or
group of regulations authorized by the same statute qualifies as a
major regulation.
(D) Each economic impact analysis that an agency prepares shall be
maintained in the agency's records and shall be made available to
the office and the parties identified in subdivision (a) of Section
11346.39 upon request.
(E) An adopting agency shall prepare a standardized regulatory
impact analysis for any regulation that the agency determines is a
major regulation.
(2) This subdivision does 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 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
contain 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.
(A) A detailed estimate, in both the short term and long term, of
the average individual cost of compliance for small businesses, large
businesses, and other parties subject to the major regulation.
(B) A detailed estimate, in both the short term and long term, of
the cumulative statewide cost of compliance with the major regulation
for small businesses, large businesses, and other parties.
(C) A detailed distributional assessment that evaluates, in both
the short term and long term, how certain industries, income groups,
and geographic regions are likely to experience benefits or costs as
a consequence of the major regulation.
(D) A detailed estimate of the short-term and long-term creation
or elimination of jobs in individual sectors as a result of the major
regulation.
(E) A detailed estimate, in both the short term and long term, of
the potential for economic leakage as a result of the major
regulation in which economic activity is relocated from California to
another state or country.
(F) A detailed estimate, in both the short term and long term, of
the impact on the ability of California businesses to compete with
businesses in other states and California's ability to attract
businesses to locate in the state as a result of the major
regulation.
(G) A detailed estimate, in both the short term and long term, of
the effects on excise tax, sales and use tax, income tax, corporation
tax, and other tax revenue to the General Fund, and fee revenues to
special funds, as a result of the major regulation and changes in
economic activity as a result of the major regulation.
(H) A precise statement enumerating the benefits, in both the
short term and long term, anticipated from the major regulation,
including the benefits or goals provided in the authorizing statutes.
Where applicable, the statement shall include the failures in
private markets or public institutions that warrant the proposed
major regulation, in a manner consistent with the guidelines
published by the federal Office of Management and Budget in OMB
Circular No. A-94, Revised.
(I) An identification of each technical, theoretical, and
empirical study, report, or similar document, if any, upon which the
agency relies in proposing the major regulation.
(J) A copy of the economic impact analysis prepared pursuant to
subdivision (b).
(K) Any written comments submitted pursuant subdivision (c) of
Section 11346.39, as well as the agency's written responses to those
comments.
(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. 4. Section 11346.39 is added to the
Government Code , immediately following
11346.36 , to read:
11346.39. (a) After completing a standardized regulatory impact
analysis pursuant to Section 11346.3, the adopting agency shall
submit a detailed summary of that analysis to the Governor's Office
of Planning and Research, the Director of Finance, the Legislative
Analyst, the State Auditor, the Controller, the President pro Tempore
of the Senate, the Minority Floor Leader of the Senate, the Speaker
of the Assembly, the Minority Floor Leader of the Assembly, and the
chair and ranking minority party member of the appropriate fiscal and
policy committees of the Senate and the Assembly.
(b) Any party identified in subdivision (a) may request the
adopting agency to provide a complete copy of the standardized
regulatory impact analysis. The adopting agency shall comply with
that request within 10 working days of receiving the request.
(c) Within 60 days of receiving a complete copy of standardized
regulatory impact analysis pursuant to subdivision (b), any party
identified in subdivision (a) may submit written comments to the
adopting agency on that report. The adopting agency shall consider
any of those written comments submitted to it, and shall respond to
those comments in writing. Any comments submitted to the adopting
agency pursuant to this section, and any responses to those comments,
shall be included in the rulemaking file pursuant to Section
11347.3.
(d) The office, at the request of any of the parties identified in
subdivision (a), shall initiate a priority review of any regulation,
group of regulations, or series of regulations that the party
believes does not meet the requirements of this chapter. For major
regulations adopted on or after January 1, 2013, a party identified
in subdivision (a) may also request a priority review to evaluate
whether the major regulation fails to utilize a less burdensome
alternative. The office shall conduct a priority review under this
subdivision in accordance with the procedures set out in Section
11349.7.
(e) An agency proposing to adopt a major regulation, upon the
request of a party identified in subdivision (a), shall hold up to
two additional public hearings or two additional public workshops on
the proposed major regulation.
SEC. 5. Section 11346.45 of the
Government Code is amended to read:
11346.45. (a) In order to increase public participation and
improve the quality of regulations, state agencies proposing to adopt
regulations shall, prior to publication of the notice required by
Section 11346.5, involve parties who would be subject to the proposed
regulations in public discussions regarding those proposed
regulations , when the proposed regulations involve complex
proposals or a large number of proposals that cannot easily be
reviewed during the comment period .
(b) This section does shall not
apply to a state agency in any instance where that state agency is
required to implement federal law and regulations for which there is
little or no discretion on the part of the state to vary.
(c) If the agency does not or cannot comply with the
provisions of subdivision (a), it shall state the reasons
for noncompliance with reasonable specificity in the rulemaking
record.
(d) The provisions of this section shall not be subject to
judicial review or to the provisions of Section 11349.1.
SEC. 6. Section 11349.1 of the
Government Code is amended to read:
11349.1. (a) The office shall review all regulations adopted,
amended, or repealed pursuant to the procedure specified in Article 5
(commencing with Section 11346) and submitted to it for publication
in the California Code of Regulations Supplement and for transmittal
to the Secretary of State and make determinations using all of the
following standards:
(1) Necessity.
(2) Authority.
(3) Clarity.
(4) Consistency.
(5) Reference.
(6) Nonduplication.
In reviewing regulations pursuant to this section, the office
shall restrict its review to the regulation and the record of the
rulemaking proceeding. The office shall approve the regulation or
order of repeal if it complies with the standards set forth in this
section and with this chapter.
(b) In reviewing proposed regulations for the criteria in
subdivision (a), the office may consider the clarity of the proposed
regulation in the context of related regulations already in
existence.
(c) The office shall adopt regulations governing the procedures it
uses in reviewing regulations submitted to it. The regulations shall
provide for an orderly review and shall specify the methods,
standards, presumptions, and principles the office uses, and the
limitations it observes, in reviewing regulations to establish
compliance with the standards specified in subdivision (a). The
regulations adopted by the office shall ensure that it does not
substitute its judgment for that of the rulemaking agency as
expressed in the substantive content of adopted regulations.
(d) The office shall return any regulation subject to this chapter
to the adopting agency if any of the following occur:
(1) The adopting agency has not prepared the estimate required by
paragraph (6) of subdivision (a) of Section 11346.5 and has not
included the data used and calculations made and the summary report
of the estimate in the file of the rulemaking.
(2) The adopting agency has not complied with Section
11346.3. "Noncompliance" means that the agency failed to complete the
economic impact assessment or standardized regulatory impact
analysis required by Section 11346.3 or failed to include the
assessment or analysis in the file of the rulemaking proceeding as
required by Section 11347.3.
(3) The adopting agency has prepared the estimate required by
paragraph (6) of subdivision (a) of Section 11346.5, the estimate
indicates that the regulation will result in a cost to local agencies
or school districts that is required to be reimbursed under Part 7
(commencing with Section 17500) of Division 4, and the adopting
agency fails to do any of the following:
(A) Cite an item in the Budget Act for the fiscal year in which
the regulation will go into effect as the source from which the
Controller may pay the claims of local agencies or school districts.
(B) Cite an accompanying bill appropriating funds as the source
from which the Controller may pay the claims of local agencies or
school districts.
(C) Attach a letter or other documentation from the Department of
Finance which states that the Department of Finance has approved a
request by the agency that funds be included in the Budget Bill for
the next following fiscal year to reimburse local agencies or school
districts for the costs mandated by the regulation.
(D) Attach a letter or other documentation from the Department of
Finance which states that the Department of Finance has authorized
the augmentation of the amount available for expenditure under the
agency's appropriation in the Budget Act which is for reimbursement
pursuant to Part 7 (commencing with Section 17500) of Division 4 to
local agencies or school districts from the unencumbered balances of
other appropriations in the Budget Act and that this augmentation is
sufficient to reimburse local agencies or school districts for their
costs mandated by the regulation.
(4) The proposed regulation conflicts with an existing state
regulation and the agency has not identified the manner in which the
conflict may be resolved.
(5) The adopting agency did not make the alternatives
determination as required by paragraph (4) of subdivision (a) of
Section 11346.9.
(6) The adopting agency did not comply with Section 11346.10.
(e) The office shall notify the Department of Finance of all
regulations returned pursuant to subdivision (d).
(f) The office shall return a rulemaking file to the submitting
agency if the file does not comply with subdivisions (a) and (b) of
Section 11347.3. Within three state working days of the receipt of a
rulemaking file, the office shall notify the submitting agency of any
deficiency identified. If no notice of deficiency is mailed to the
adopting agency within that time, a rulemaking file shall be deemed
submitted as of the date of its original receipt by the office. A
rulemaking file shall not be deemed submitted until each deficiency
identified under this subdivision has been corrected.
(g) Notwithstanding any other law, return of the regulation to the
adopting agency by the office pursuant to this section is the
exclusive remedy for a failure to comply with subdivision (c) of
Section 11346.3 or paragraph (10) of subdivision (a) of Section
11346.5.