California Legislature—2013–14 Regular Session

Assembly Bill No. 1711

Introduced by Assembly Member Cooley

February 13, 2014

An act to amend Sections 11346.2 and 11346.3 of the Government Code, relating to administrative regulations.

LEGISLATIVE COUNSEL’S DIGEST

AB 1711, as introduced, Cooley. Administrative Procedures Act: economic impact assessment.

Existing law requires every state agency subject to the Administrative Procedure Act to provide an initial statement of reasons for proposing the adoption, amendment, or repeal of a regulation. The act requires the initial statement of reasons to include a standardized regulatory impact analysis prepared by each agency that proposes to adopt, amend, or repeal any major regulation, as defined, on or after November 1, 2013.

The act also requires every state agency 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, to prepare an economic impact assessment that makes specified assessements. This bill would require economic impact assessment to be included in the initial statement of reasons.

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 11346.2 of the Government Code is
amended to read:

11346.2.  

Every agency subject to this chapter shall prepare,
submit to the office with the notice of the proposed action as
described in Section 11346.5, and make available to the public
upon request, all of the following:

(a) A copy of the express terms of the proposed regulation.

(1) The agency shall draft the regulation in plain, straightforward
language, avoiding technical terms as much as possible, and using
a coherent and easily readable style. The agency shall draft the
regulation in plain English.

(2) The agency shall include a notation following the express
terms of each California Code of Regulations section, listing the
specific statutes or other provisions of law authorizing the adoption
of the regulation and listing the specific statutes or other provisions
of law being implemented, interpreted, or made specific by that
section in the California Code of Regulations.

(3) The agency shall use underline or italics to indicate additions
to, and strikeout to indicate deletions from, the California Code
of Regulations.

(b) An initial statement of reasons for proposing the adoption,
amendment, or repeal of a regulation. This statement of reasons
shall include, but not be limited to, all of the following:

(1) A statement of the specific purpose of each adoption,
amendment, or repeal, the problem the agency intends to address,
and the rationale for the determination by the agency that each
adoption, amendment, or repeal is reasonably necessary to carry
out the purpose and address the problem for which it is proposed.
The statement shall enumerate the benefits anticipated from the
regulatory action, including the benefits or goals provided in the
authorizing statute. These benefits may include, to the extent
applicable, 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, and
the increase in openness and transparency in business and
government, among other things. Where the adoption or
amendment of a regulation would mandate the use of specific
technologies or equipment, a statement of the reasons why the
agency believes these mandates or prescriptive standards are
required.

(2)  begin delete For end delete begin insert (A) end insert begin insert   end insert begin insert For a regulation that is not a major regulation, the
economic impact assessment required by subdivision (b) of Section
11346.3. end insert

begin insert (B) end insert begin insert   end insert begin insert For end insert a major regulation proposed on or after November 1,
2013, the standardized regulatory impact analysis required by
begin insert subdivision (c) of end insert Section 11346.3.

(3) An identification of each technical, theoretical, and empirical
study, report, or similar document, if any, upon which the agency
relies in proposing the adoption, amendment, or repeal of a
regulation.

(4) (A) A description of reasonable alternatives to the regulation
and the agency’s reasons for rejecting those alternatives.
Reasonable alternatives to be considered include, but are not
limited to, alternatives that are proposed as less burdensome and
equally effective in achieving the purposes 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. In the case of a regulation that would mandate the use
of specific technologies or equipment or prescribe specific actions
or procedures, the imposition of performance standards shall be
considered as an alternative.

(B) A description of reasonable alternatives to the regulation
that would lessen any adverse impact on small business and the
agency’s reasons for rejecting those alternatives.

(C) Notwithstanding subparagraph (A) or (B), an agency is not
required to artificially construct alternatives or describe
unreasonable alternatives.

(5) (A) 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 impact on business.

(B) (i) If a proposed regulation is a building standard, the initial
statement of reasons shall include the estimated cost of compliance,
the estimated potential benefits, and the related assumptions used
to determine the estimates.

(ii) The model codes adopted pursuant to Section 18928 of the
Health and Safety Code shall be exempt from the requirements of
this subparagraph. However, if an interested party has made a
request in writing to the agency, at least 30 days before the
submittal of the initial statement of reasons, to examine a specific
section for purposes of estimating the cost of compliance and the
potential benefits for that section, and including the related
assumptions used to determine the estimates, then the agency shall
comply with the requirements of this subparagraph with regard to
that requested section.

(6) A department, board, or commission within the
Environmental Protection Agency, the Natural Resources Agency,
or the Office of the State Fire Marshal shall describe its efforts, in
connection with a proposed rulemaking action, to avoid
unnecessary duplication or conflicts with federal regulations
contained in the Code of Federal Regulations addressing the same
issues. These agencies may adopt regulations different from federal
regulations contained in the Code of Federal Regulations
addressing the same issues upon a finding of one or more of the
following justifications:

(A) The differing state regulations are authorized by law.

(B) The cost of differing state regulations is justified by the
benefit to human health, public safety, public welfare, or the
environment.

(c) A state agency that adopts or amends a regulation mandated
by federal law or regulations, the provisions of which are identical
to a previously adopted or amended federal regulation, shall be
deemed to have complied with subdivision (b) if a statement to
the effect that a federally mandated regulation or amendment to a
regulation is being proposed, together with a citation to where an
explanation of the begin delete provisions of the end delete regulation can be found, is
included in the notice of proposed adoption or amendment prepared
pursuant to Section 11346.5. However, the agency shall comply
fully with this chapter with respect to any provisions in the
regulation that the agency proposes to adopt or amend that are
different from the corresponding provisions of the federal
regulation.

(d) This section shall be inoperative from January 1, 2012, until
January 1, 2014.

SEC. 2.  

Section 11346.3 of the Government Code is amended
to read:

11346.3.  

(a)  begin delete State agencies end delete begin insert A state agency end insert 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 begin insert impact end insert assessment 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) begin insert , and shall be
included in the initial statement of reasons as required by Section
11346.2 end insert . An economic assessment 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)  begin delete All state agencies end delete begin insert A state agency end insert 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 assessment that assesses whether and
to what extent it will affect 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 expansion of businesses currently doing business within
the state.

(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 begin insert a end insert state begin delete agencies end delete begin insert agency end insert 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 analysis 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.

(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 analysis 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 analysis pursuant to
subdivision (c), shall submit that analysis to the Department of
Finance upon completion. The department shall comment, within
30 days of receiving that analysis, on the extent to which the
analysis 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.