BILL ANALYSIS �
Bill No: AB
2723
SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
Senator Lou Correa, Chair
2013-2014 Regular Session
Staff Analysis
AB 2723 Author: Medina
As Amended: May 1, 2014
Hearing Date: June 10, 2014
Consultant: Paul Donahue
SUBJECT
Administrative regulations: Small businesses
DESCRIPTION
This bill makes clarifying changes to the Administrative
Procedure Act (APA) to include "sole proprietorships" and
"small business" in the required standardized regulatory
impact analysis when a state agency proposes to adopt,
amend, or repeal a major regulation. Specifically, this
bill :
1)Adds "sole proprietorship" and "small business" to the
definition of businesses covered within the definition of
"cost impact."
2)Adds landscape architects, architects, and building
designers with 50 or more employees to the list of
businesses and entities excluded under the definition of
"small business."
3)Specifies that only nonprofit institutions with more
than100 employees are excluded under the definition of
"small business."
4)Adds to the legislative findings and declarations in the
APA preamble, stating that, "given the importance of
small businesses within the California economy, it is
especially important that regulations that may have
AB 2723 (Medina) continued
Page 2
significant impacts on the private sectors be evaluated
to determine the potential impact on these smaller size
businesses."
EXISTING LAW
1)Requires the notice of proposed adoption, amendment, or
repeal of a regulation to include, among other things, a
description of all cost impacts known to the agency at
the time the notice of the proposed action is submitted
to the Office of Administrative Law (OAL), that a
representative private person or business would
necessarily incur in reasonable compliance with the
proposed action.
2)Defines "cost impact" as the amount of reasonable range
of direct costs, or a description of the type and extent
of direct costs, that a representative private person or
business necessarily incurs in reasonable compliance with
the proposed action.
3)Requires every state agency to prepare and submit to the
OAL a final statement of reasons with the adopted
regulation that includes, among other things, an
explanation setting forth the reasons for rejecting any
proposed alternatives that would lessen the adverse
economic impact on small businesses, as defined.
4)Specifies that a small business does not include, among
others, a landscape architect, an architect, or a
building designer or an entity organized as a nonprofit.
5)Requires 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, to prepare an economic impact assessment that
assesses whether, and to what extent, the proposal will
affect, among other things, creation of new businesses or
the elimination of existing businesses within the state.
6)Requires a state agency to include certain information in
the notice of proposed action, including, but not limited
to, identification of the types of businesses that would
be affected, if, in proposing to adopt, amend, or repeal
any administrative regulation, the agency initially
determines that the action may have a significant,
AB 2723 (Medina) continued
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statewide adverse economic impact directly affecting
businesses, including the ability of California
businesses to compete with businesses in other states.
BACKGROUND
The author's office states that existing law governing the
rulemaking process declares that the purpose of the
rulemaking is to avoid the imposition of unreasonable and
unnecessary regulations, reporting, recordkeeping, or
compliance requirements. However, the author notes that
many businesses have repeatedly testified before the
Assembly Jobs Committee that they believe that California's
regulatory process is expensive, overly burdensome, and
that compliance has not necessarily provided a better
quality of life for people in the state.
AB 2723 modifies the state rulemaking process by:
Requiring state agencies to consider the effect on
sole proprietorships and other small businesses, when
assessing the economic impact of a proposed major
regulation on new business formation or elimination of
existing businesses.
Allowing nonprofits to be considered small
businesses for purpose of state rulemaking if they
have less than 100 employees.
Allowing architects with less than 50 employees to
be considered a small business for the purposes of
state rulemaking.
PRIOR/RELATED LEGISLATION
AB 1711 (Cooley), 2013-2014 Session. Requires the
Department of Finance (DOF) to adopt and update guidelines
for estimating the economic impact of a regulation, and
clarifies that the economic impact assessment for non-major
regulations (economic impact less than $50 million) must be
included in the initial statement of reasons when
proposing, amending, or repealing a regulation. (Pending in
Senate G.O. Committee)
AB 2723 (Medina) continued
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AB 12 (Cooley), 2013-2014 Session. Would have required DOF
and OAL to annually review the economic impact analyses
prepared by agencies proposing major regulations, and
requires OAL to notify the Legislature and the public if an
economic impact analysis is not in compliance with the law.
(Vetoed)
SB 617 (Calderon), Chapter 496, Statutes of 2011. Requires
agencies proposing new regulations to consider and assess
the benefits of a regulation, including the prevention of
discrimination, promotion of fairness or social equity, and
the protection of public health, worker safety, the
environment, and quality of life. It required agencies to
prepare a standardized regulatory impact assessment
incorporating these benefits, and allowed agencies to
consider these benefits in rejecting alternative
regulations that may be less costly for businesses.
SUPPORT:
Air Conditioning Trade Association
America Institute of Architects, California Council
Assembly Committee on Jobs, Economic Development, and the
Economy (sponsor)
Associated Builders and Contractors of California
Associated Builders and Contractors-San Diego Chapter
Building Owners & Managers Association of California
California Association for Health Services at Home
California Association of Boutique & Breakfast Inns
California Business Properties Association
California Business Roundtable
California Chamber of Commerce
California Chapter of American Fence Association
California Construction and Industrial Materials
Association
California Council/American Society of Landscape Architects
California Fence Contractor's Association
California Grocers Association
California Hispanic Chamber of Commerce
California Hotel & Lodging Association
California Manufacturers & Technology Association
California Restaurant Association
Coalition of Small and Disabled Veteran Businesses
Commercial Real Estate Development Association, NAIOP of
California
Family Business Association
AB 2723 (Medina) continued
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Flasher Barricade Association
Industrial Environmental Association
International Council of Shopping Centers
Los Angeles County Economic Development Corporation
Marin Builders Association
National Federation of Independent Business
Plumbing-Heating-Cooling Contractors Association of
California
San Jose Silicon Valley Chamber of Commerce
Small Business California
Southwest California Legislative Council
Star Milling Company
State of California Auto Dismantler's Association
The California Asian Pacific Chamber of Commerce
The California Association for Micro Enterprise Opportunity
The California Small Business Development Center Leadership
Council
United Contractors
Western Electrical Contractors Association
OPPOSE:
None on file
DUAL REFERRAL: Senate Environmental Quality Committee
FISCAL COMMITTEE: Senate Appropriations Committee
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