BILL ANALYSIS �
AB 2090
Page 1
Date of Hearing: May 25, 2012
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 2090 (Bill Berryhill) - As Amended: April 10, 2012
Policy Committee: Business and
Professions Vote: 7 - 0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill redefines a major regulation as a regulation that an
agency determines has an expected economic impact on California
businesses and individuals in an amount exceeding $15 million.
Specifically, this bill:
1)Lowers the threshold for a "major regulation" from $50 million
to $15 million..
2)Requires state agencies proposing to adopt, amend, or repeal a
regulation to prepare an economic impact analysis that:
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,
including, the costs of individual compliance as well as
the cumulative statewide cost of compliance, as specified;
and,
b) Includes an express statement 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, if an agency declares that it is not aware of any
cost impact, as specified.
3)Specifies information that must be included by the agency in a
standardized regulatory impact analysis for any major
regulation, including detailed estimates of the short term and
long term cost of compliance for businesses, a detailed
distributional assessment that evaluates industries, income
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groups, and geographic regions, and the potential for economic
leakage.
4)Requires the Office of Administrative Law (OAL) to return any
regulations to the adopting agency if the adopting agency does
not comply with the requirements of this bill.
FISCAL EFFECT
1)On-going costs likely in excess of $1 million per year for the
workload associated with agencies providing the more detailed
and extensive economic impact analyses on all regulations
packages and standardized regulatory impact analyses for major
regulations. The Air Resources Board estimates that their
on-going costs alone would be approximately $325,000 per year
(Motor Vehicle Account).
2)On-going costs, likely in excess of $150,000 (GF) for the OAL
to ensure that all submitted regulations meet the new
requirements for economic impact analysis and standardized
regulatory impact analysis. The increased workload will likely
double or triple the review time of each notice of regulation
and initial statement of reasons.
COMMENTS
1)Purpose . This bill amends the requirements that an adopting
agency must meet when preparing economic impact and
standardized regulatory impact analyses, and lowers the
threshold for a major regulation from $50 to $15 million.
State agencies adopt regulations based on laws passed by the
Legislature. According to the author, however, agencies do
not involve businesses in the rulemaking process until the end
of the process.
The intent of this bill is to foster an understanding of
unintended consequences of regulations for all affected
parties. The bill attempts to accomplish this by increasing
the information that must be included in the economic impact
and standardized regulatory impact analyses. For example,
rather than simply requiring an economic impact analysis
include information on the creation or elimination of jobs
within the state, this bill requires, "Estimates of the total
actual costs of compliance for affected small, businesses,
large businesses, and other parties subject to the regulation
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or group of regulations. At a minimum, the analysis must
estimate the costs of individual compliance for a
representative of those businesses and the cumulative
statewide cost of compliance."
2)Background . The Administrative Procedures Act (APA) governs
the adoption of regulations by state agencies for purposes of
ensuring they are clear, necessary, legally valid, and
available to the public. OAL is responsible for reviewing the
administrative regulations proposed by over 200 state agencies
for compliance with the standards set forth in the APA, for
transmitting these regulations to the Secretary of State and
for publishing regulations in the California Code of
Regulations. Existing law requires OAL to review all
regulations for necessity and non-duplication, and requires
OAL to print a summary of all regulations filed with the
Secretary of State in the previous week in the California
Regulatory Notice Register.
On average, OAL reviews over 600 regulations packages per
year. Those packages can be anywhere from 1 to 400 pages long.
In 2011, almost 4,000 different regulations sections were
reviewed by OAL.
During the rulemaking process, a state agency is required to
prepare an Initial Statement of Reasons (ISOR) whenever it
proposes to create, repeal or amend a regulation. An ISOR
describes the basis of the regulation, the purpose of the
rule, how it is intended to be implemented and the data on
which the public agency relied to develop the proposed
regulatory change. An ISOR must provide a description of
alternatives to the rule being proposed.
3)Opposition . The California State Association of Electrical
Workers, the California State Pipe Trades Council, and the
Western Sates Council of Sheet Metal Workers argue that AB
2090 undermines a compromise that was struck last year on
regulatory reform in SB 617 (Calderon/Pavley) Chapter 496,
Statutes of 2011, which required each state agency to prepare
a standardized regulatory impact analysis with respect to the
adoption, amendment, or repeal of a major regulation ($50
million or more), proposed on or after November 1, 2013.
The opposition argues that the new, more complex analysis
required by SB 617 was intended to apply only to the most
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costly regulations. This bill, by changing the threshold from
$50 million to $15 million would expand the requirement to
apply to far more regulations, including many worker
protections regulations.
Analysis Prepared by : Julie Salley-Gray / APPR. / (916)
319-2081