BILL ANALYSIS �
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|SENATE RULES COMMITTEE | AB 2723|
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THIRD READING
Bill No: AB 2723
Author: Medina (D), et al.
Amended: 8/18/14 in Senate
Vote: 21
SENATE GOVERNMENTAL ORGANIZATION COMMITTEE : 8-0, 6/10/14
AYES: Correa, Cannella, De Le�n, Galgiani, Hernandez, Padilla,
Torres, Vidak
NO VOTE RECORDED: Berryhill, Lieu, Vacancy
SENATE ENVIRONMENTAL QUALITY COMMITTEE : 6-0, 6/25/14
AYES: Hill, Gaines, Hancock, Jackson, Leno, Pavley
NO VOTE RECORDED: Fuller
SENATE APPROPRIATIONS COMMITTEE : 5-0, 8/14/14
AYES: De Le�n, Hill, Lara, Padilla, Steinberg
NO VOTE RECORDED: Walters, Gaines
ASSEMBLY FLOOR : 73-0, 5/23/14 (Consent) - See last page for
vote
SUBJECT : Administrative procedure: small businesses
SOURCE : Author
DIGEST : 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.
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ANALYSIS :
Existing law:
1.Governs, under the APA, the procedures for the adoption,
amendment, or repeal of regulations by state agencies and for
the review of those regulatory actions by the Office of
Administrative Law (OAL).
2.Establishes OAL to administer the APA and ensure that state
agency regulations are clear, necessary, legally valid, and
available to the public.
3.Requires agencies, when submitting to OAL an Initial Statement
of Reasons (ISOR) for a proposed regulation, to identify the
problem the agency intends to address, and enumerate the
benefits anticipated from the regulatory action, including the
benefits or goals provided in the authorizing statute. The
benefits may include non-monetary benefits such as the (a)
protection of public health and safety; (b) worker safety; (c)
the environment; (d) the prevention of discrimination; (e) the
promotion of fairness or social equity; and (f) the increase
in openness and transparency in business and government, among
other things.
4.Requires, on and after November 1, 2013, the agency to include
in its ISOR for a proposed major regulation a standardized
regulation impact assessment that is prepared in a manner
prescribed by the Department of Finance (DOF). The assessment
shall address (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, material, or processes; and (f) the
benefits of the regulations, including 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.
5.Requires DOF and OAL to periodically review the standardized
regulatory impact analyses for adherence to regulations
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adopted by DOF.
This bill makes changes to the APA to include sole
proprietorships and small business in the required standardized
regulatory impact analysis or EIA when a state agency proposes
to adopt, amend, or repeal regulations. 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 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 significant impacts
on the private sectors be evaluated to determine the potential
impact on these smaller size businesses."
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee:
Unknown, potentially significant impacts on state agencies
proposing regulatory changes that impact businesses.
Specifically, many state agencies will incur increased costs
to conduct a more rigorous assessment of a regulation's
economic impact to specifically determine the impacts on small
businesses and sole proprietorships. (General Fund, various
special funds)
Minor one-time costs to DOF, likely in the range of $20,000 to
$30,000, to update regulations related to the preparation of
EIAs. (General Fund)
OAL indicates that it could absorb this bill's new
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requirements into its current review of notices and initial
statements. (General Fund)
SUPPORT : (Verified 8/11/14)
Air Conditioning Trade Association
America Institute of Architects, California Council
Associated Builders and Contractors of California
Associated Builders and Contractors-San Diego Chapter
Building Owners & Managers Association of California
California Asian Pacific Chamber of Commerce
California Association for Health Services at Home
California Association for Microenterprise Opportunity
California Association of Boutique & Breakfast Inns
California Business Properties Association
California Business Roundtable
California Chamber of Commerce
California Chapter 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
California Small Business Development Center Leadership Council
Coalition of Small and Disabled Veteran Businesses
Commercial Real Estate Development Association, NAIOP of
California
Family Business Association
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
United Contractors
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Western Electrical Contractors Association
OPPOSITION : (Verified 8/11/14)
Department of Finance
ARGUMENTS IN SUPPORT : 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's office notes that many businesses 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. This bill modifies the
state rulemaking process by (1) 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; (2) allowing nonprofits to be considered
small businesses for purpose of state rulemaking if they have
less than 100 employees; and (3) allowing architects with less
than 50 employees to be considered a small business for the
purposes of state rulemaking.
ARGUMENTS IN OPPOSITION : The Department of Finance is opposed
to this bill because it is duplicative and unnecessary as costs
and benefits of the proposed regulations are already required to
be separately identified for different groups of agencies,
businesses and individuals in the standardized regulatory impact
analysis, if the impact of the regulation will differ
significantly among identifiable groups. Additionally, this
bill results in unknown statewide costs for agencies to assess
the affect that proposed regulations would have on sole
proprietorships and small businesses separately.
ASSEMBLY FLOOR : 73-0, 5/23/14
AYES: Achadjian, Alejo, Allen, Ammiano, Bigelow, Bloom,
Bocanegra, Bonta, Bradford, Brown, Buchanan, Ian Calderon,
Campos, Chau, Ch�vez, Chesbro, Conway, Cooley, Dababneh,
Dahle, Daly, Dickinson, Donnelly, Eggman, Fong, Fox, Frazier,
Beth Gaines, Garcia, Gatto, Gomez, Gonzalez, Gordon, Gorell,
Gray, Grove, Hagman, Hall, Holden, Jones, Jones-Sawyer,
Levine, Linder, Logue, Lowenthal, Maienschein, Mansoor,
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Medina, Mullin, Muratsuchi, Nazarian, Olsen, Pan, Patterson,
Perea, John A. P�rez, Quirk, Quirk-Silva, Rendon,
Ridley-Thomas, Rodriguez, Salas, Skinner, Stone, Ting, Wagner,
Waldron, Weber, Wieckowski, Wilk, Williams, Yamada, Atkins
NO VOTE RECORDED: Bonilla, Harkey, Roger Hern�ndez, Melendez,
Nestande, V. Manuel P�rez, Vacancy
MW:e 8/16/14 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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