BILL ANALYSIS �
Bill No: SB
643
SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
Senator Roderick D. Wright, Chair
2011-2012 Regular Session
SB 643 Author: Correa
As Introduced: February 18, 2011
Hearing Date: March 22, 2011
Consultant: Paul Donahue
SUBJECT
Administrative Regulations: Housing; Cost of Compliance
DESCRIPTION
Existing law requires every state agency to publish a
notice of the proposed adoption, amendment or repeal of a
regulation. Agency officials must make available the
agency's evaluation of the effect of the proposed
regulatory action on housing costs.
This bill would require that the housing costs evaluation
include the estimated costs of compliance with the proposed
regulatory action.
Existing law requires state agencies to provide an initial
statement of reasons for proposing to adopt, amend, or
repeal a state regulation.
This bill would additionally require that, if the proposed
regulation has an impact on housing, then the initial
statement of reasons must include the estimated cost of
compliance and the related assumptions used in determining
that estimate.
BACKGROUND
Administrative Procedure Act (APA) : Powers granted to
state agencies in laws enacted by the Legislature often
include the making of rules and regulations in order to
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carry out their duties under the law. Unless the
Legislature has created an exemption, agencies must follow
the procedures in the APA when adopting, amending or
repealing regulations. The Administrative Procedure Act
(Govt. Code � 11340 et seq.) establishes rulemaking
procedures and standards for the adoption, amendment, or
repeal of regulations by state agencies. Proposed
regulations are subject to review and approval by the
Office of Administrative Law.
Notice of Proposed Action (NOPA) and Initial Statement of
Reasons : The APA requires every agency to prepare and
submit a specified NOPA and make certain information
available to the public in connection with NOPA. (Govt.
Code � 11346.2)
An Initial Statement of Reasons must accompany every NOPA
submitted by an agency prior to adoption, amendment or
repeal of a regulation. (Govt. Code � 11346.2(b). The
statement of reasons must include a statement of the
specific purpose of each proposed regulations and the
rationale for the determination by the agency that the
regulation is reasonably necessary to carry out its
intended purpose.
Housing considerations in the APA : Each NOPA must include
a statement that the proposed regulatory action would have
a significant effect on housing costs, if the state agency
makes an initial determination that the action would have
that effect. If so, the agency must also make available to
the public the agency's evaluation, if any, of the effect
of the proposed action on housing costs. This bill would
add that the evaluation shall include the estimated cost of
compliance.
The APA requires any Initial Statement of Reasons to
include facts, evidence, documents, testimony or other
evidence on which the agency relies to support an initial
determination that the action will not have a significant
adverse economic effect on business. This bill specifies
that, if the proposed regulation impacts housing, the
Initial Statement of Reasons shall include the estimated
costs of compliance and the related assumptions used in
determining that estimate.
Purpose : The author notes that, since 1982 state agencies
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have been required to prepare an economic impact analysis
that clearly identifies any adverse impacts on housing.
The author states that most of the time, the economic
impact "analysis" is little more than a boilerplate
statement that "the agency has determined that there will
be no significant impact on business or housing." The
author states that this gives no indication to interested
parties as to what will be the actual dollar cost to comply
with the proposed regulation.
The California Building Industry Association (CBIA),
sponsor of the bill, notes that the use of such boilerplate
language may well give interested parties the wrong
impression regarding specific economic impact. CBIA
contends that, as a matter of fact, they have yet to locate
a NOPA or an Initial Statement of Reasons where such
boilerplate language was not used.
The author also observes that many state agencies are
capable of determining that their regulations won't have
significant impacts on businesses or housing, but these
same agencies are unable to provide the regulated community
with the actual costs of compliance with the regulations.
In the author's view, the bottom line consideration is
that, if an agency can say the regulation won't have a
significant impact on the economy, then that agency should
therefore know what the proposed regulation will cost.
The CBIA adds that agencies are already required to produce
a "determination of economic impact," which is
significantly more complex than producing basic cost of
compliance data.
PRIOR/RELATED LEGISLATION
SB 1351 (Wright) 2009-2010 Session. Would have required
agencies, when adopting regulations, to affirm the
availability of required new technologies, and to include
implementation schedules, procedures, and forms, necessary
for compliance in the proposed regulation. If this were
not possible at the time of the adoption of the regulation,
the regulation would not have taken effect for six months
following notice of the availability of the new technology
or other implementation tools. (Failed on concurrence in
Senate E.Q. Committee)
SB 643 (Correa) continued
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AB 2118 (Villines) 2007-2008 Session. Would have
prohibited state agencies from adopting regulations
requiring the use of a specific technology unless it has
been operational and proven effective for more
than two years, or would place an undue burden on business
on an annual basis and result in a significant loss of
jobs. (Failed passage in Assembly policy committee)
AB 505 (Wright), Chap. 1059, Stats. 2000. Modified
provisions relating to OAL and the adoption of regulations,
and created the Governor's Small Business Reform Task
Force.
SUPPORT:
American Council of Engineering Companies California
California Apartment Association
California Association of Realtors
California Building Industry Association
California Business Properties Association
California Chamber of Commerce
California Manufacturers & Technology Association
OPPOSE: None on File
DUAL REFERRAL: Senate Committee on Rules
FISCAL COMMITTEE: Senate Appropriations Committee
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