BILL ANALYSIS �
------------------------------------------------------------
|SENATE RULES COMMITTEE | SB 643|
|Office of Senate Floor Analyses | |
|1020 N Street, Suite 524 | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
------------------------------------------------------------
THIRD READING
Bill No: SB 643
Author: Correa (D)
Amended: 5/10/11
Vote: 21
SENATE GOVERNMENTAL ORG. COMMITTEE : 12-0, 3/22/11
AYES: Wright, Anderson, Berryhill, Calderon, Cannella,
Corbett, De Le�n, Evans, Padilla, Strickland, Wyland, Yee
NO VOTE RECORDED: Hernandez
SENATE ENVIRONMENTAL QUALITY COMMITTEE : 5-0, 5/2/11
AYES: Simitian, Strickland, Blakeslee, Kehoe, Lowenthal
NO VOTE RECORDED: Hancock, Pavley
SENATE APPROPRIATIONS COMMITTEE : 9-0, 5/23/11
AYES: Kehoe, Walters, Alquist, Emmerson, Lieu, Pavley,
Price, Runner, Steinberg
SUBJECT : Administrative regulations: housing: cost of
compliance
SOURCE : California Building Industry Association
DIGEST : This bill requires state agencies, when adopting
building standard regulations that impact housing, to
disclose information on costs and benefits of the
regulation used by the state agency to perform required
economic analysis.
ANALYSIS : Existing law requires every state agency to
CONTINUED
SB 643
Page
2
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 requires that the housing costs evaluation
include the estimated costs and benefits 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 additionally requires that, if the proposed
regulation has an impact on housing, then the initial
statement of reasons must include the estimated cost and
benefits 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
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
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.
An Initial Statement of Reasons must accompany every NOPA
submitted by an agency prior to adoption, amendment or
repeal of a regulation. 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
CONTINUED
SB 643
Page
3
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 adds
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.
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 Environmental Quality Committee)
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), Chapter 1059, Statutes of 2000, modifies
CONTINUED
SB 643
Page
4
provisions relating to OAL and the adoption of regulations,
and created the Governor's Small Business Reform Task
Force.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee analysis:
Fiscal Impact (in thousands)
Major Provisions 2011-12 2012-13
2013-14 Fund
Reporting economic info. Minor costs
Various
SUPPORT : (Verified 5/24/11)
California Building Industry Association (source)
American Council of Engineering Companies CA
Brea Chamber of Commerce
California Apartment Association
California Association of Realtors
California Business Properties Association
California Chamber of Commerce
California Industry Association
California Manufacturers and Technology Association
Fullerton Chamber of Commerce
North Orange County Legislative Alliance
Regional Council of Rural Counties
ARGUMENTS IN SUPPORT : The author's office notes that,
since 1982 state agencies have been required to prepare an
economic impact analysis that clearly identifies any
adverse impacts on housing. The author's office state 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's office states that this
gives no indication to interested parties as to what will
be the actual dollar cost to comply with the proposed
regulation.
CONTINUED
SB 643
Page
5
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's office 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.
PQ:do 5/24/11 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
**** END ****
CONTINUED