Bill Text: CA AB1409 | 2011-2012 | Regular Session | Amended

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Bill Title: Regulations: small businesses.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Engrossed - Dead) 2012-06-25 - From committee: Do pass and re-refer to Com. on RLS. (Ayes 8. Noes 0.) (June 25). Re-referred to Com. on RLS. [AB1409 Detail]

Download: California-2011-AB1409-Amended.html

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BILL NUMBER: AB 1409	AMENDED
	BILL TEXT

	AMENDED IN SENATE  JUNE 19, 2012
	AMENDED IN SENATE  MARCH 22, 2012
	AMENDED IN SENATE  MARCH 21, 2012
	AMENDED IN ASSEMBLY  APRIL 25, 2011

INTRODUCED BY   Assembly Member V. Manuel Pérez

                        MARCH 10, 2011

   An act to amend Sections 11346.2 and 12098.3 of, and to add
Section 11346.23 to, the Government Code, relating to regulations.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 1409, as amended, V. Manuel Pérez. Regulations: small
businesses. 
   (1) Existing law creates the Milton Marks "Little Hoover"
Commission on California State Government Organization and Economy to
assist the Legislature and the Governor in promoting economy,
efficiency, and improved service in the transaction of public
business in state government.  
   This bill would make legislative findings and declarations
relating to regulatory policy based upon a study by the commission.
 
   (2) 
    (1)  The Administrative Procedure Act generally sets
forth the requirements for the adoption, publication, review, and
implementation of regulations by state agencies. The act requires
every state agency subject to the act to submit, with the notice of
the proposed adoption, amendment, or repeal of a regulation, an
initial statement of reasons for proposing the adoption, amendment,
or repeal of a regulation, which is required to include, among other
things, a description of any reasonable alternatives that would
lessen any adverse impact on small business and the agency's reasons
for rejecting those reasonable alternatives.
   This bill would clarify the nature of the reasonable alternatives
an agency is required to include in its initial statement and would
require an agency to include any reasonable alternative submitted by
the public or the Office of the Small Business Advocate in the
statement. This bill would require the initial statement to include
an assessment of whether there are similar or related  state
 regulations  that have been  adopted  by
another state regulatory entity  and require  the
  an  agency to  determine whether there are
opportunities to  coordinate  with that entity 
 and harmonize compliance activities  to reduce regulatory
burdens  on small businesses  , as provided. 
   (3) 
    (2)  Existing law requires various topics to be listed
in the State Administrative Manual.
   This bill would require the Department of General Services to
provide in the State Administrative Manual guidance on procedures
that facilitate the review of existing regulations and the
implementation of new and modified regulations, as specified.

   (4) 
    (3)  Existing law creates the Office of Small Business
Advocate to represent the views and interests of small businesses
before state agencies.
   This bill would clarify the nature of this function by requiring
the advocate to comment on, and gather input from small businesses
on, reasonable alternatives to proposed and existing regulations.
   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.    (a) The Legislature finds and
declares all of the following:
   (1) Historically, California's regulatory process has produced
meaningful benefits for Californians in consumer safety, food
security, worker protection, energy efficiency, and air and water
quality. Unfortunately, over time, California's approach to
developing regulations has, according to the Milton Marks "Little
Hoover" Commission on California State Government Organization and
Economy, resulted in an uneven regulatory environment for businesses
that lacks coordination and the kind of thorough oversight that
ensures efficiency and accountability.
   (2) The commission found, in October 2011, that the process the
state uses to develop regulations varies widely, particularly in the
use of economic analysis to determine what burden a proposed
regulation will have on an affected person or business. Further, the
commission found that the state has been reluctant to adopt and use
analytical tools employed in other states and at the federal level.
The state's current process has produced a regulatory approach that
can focus intensely on solving problems in a single arena without
taking into consideration the broader context or consequences of the
solution.
   (3) The commission reported that it found, among other things,
examples of where regulatory procedural shortcomings resulted in
failed rulemaking efforts, the potential imposition of costly
conditions that could force painful tradeoffs, or regulations
undermined by an economic analysis that did not account for real-time
changes in the economy. The commission further found that the
current system, intended to ensure that regulating agencies choose
the least burdensome alternative, failed to meet that objective.
   (4) The commission recommended, among other things, that the state
establish an Office of Economic and Regulatory Analysis that would
reestablish the regulatory analysis function which once existed in
the now-defunct Trade and Commerce Agency. In reestablishing this
function, the state can learn from the example of the United States
Office of Information and Regulatory Affairs, located in the White
House's Office of Management and Budget. The small cost associated
with reestablishing this function would be more than offset by
reducing the costs of failed regulatory processes, reducing lengthy
methodological challenges, and potentially improving confidence in
the rulemaking process.
   (b) The 
   SECTION 1.    The  Legislature  further
 finds and declares that having a well-functioning economy
that encourages innovation and new business development is highly
dependent on an effective and efficient regulatory environment that
addresses key public health, safety, and environmental conditions.
 Wasteful government   Government 
practices that  unnecessarily  increase costs and result in
project delays can threaten the state's long-term economic growth.
  SEC. 2.  Section 11346.2 of the Government Code, as amended by
Section 2 of Chapter 496 of the Statutes of 2011, 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. The 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.
   (2) For a major regulation proposed on or after January 1, 2013,
the standardized regulatory impact analysis required by 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) 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.
   (5) (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. Alternatives  may
 include, but are not limited to, phasing of implementation to
take into account the compliance capacity and resources of small
business, performance standards to provide compliance flexibility for
small business, simplification of reporting and compliance
standards, differing  requirements   compliance
methods for small and large businesses, and partial or total
exemptions based on the firm's actual degree of activity within the
regulated activity.  Alternative approaches to regulatory
compliance shall meet the same regulatory objectives. 
   (C) Notwithstanding subparagraph (A) or (B), an agency is not
required to artificially construct alternatives. The agency shall
list any alternative that was submitted to the agency by the public
and the Office of the Small Business Advocate and determined to be
unreasonable.
   (6) 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.
   (7) 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.
   (8) Each state agency shall assess whether there is a similar or
related  state  regulation that has been adopted  by
another state regulatory entity  and determine whether
there are opportunities to coordinate and harmonize compliance
activities in order to reduce the cost and regulatory burden on
 firms and individuals   small businesses 
.  In assessing and potentially developing  
coordinated and harmonized approaches to regulatory compliance, the
state agency shall ensure that the compliance method can result in
full compliance with the authorizing statute or other law being
implemented or made specific by the proposed regulation. 
   (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 provisions of the 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 become operative on January 1, 2012.
   (e) This section shall remain in effect only until January 1,
2014, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2014, deletes or extends
that date.
  SEC. 3.  Section 11346.2 of the Government Code, as amended by
Section 3 of Chapter 496 of the Statutes of 2011, 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) For a major regulation proposed on or after November 1, 2013,
the standardized regulatory impact analysis required by 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. Alternatives  may
 include, but are not limited to, phasing of implementation to
take into account the compliance capacity and resources of small
business, performance standards to provide compliance flexibility for
small business, simplification of reporting and compliance
standards, differing  requirements   compliance
methods  for small and large businesses, and partial or total
exemptions based on the firm's actual degree of activity within the
regulated activity.  Alternative approaches to regulatory
compliance shall meet the same regulatory objectives. 
   (C) Notwithstanding subparagraph (A) or (B), an agency is not
required to artificially construct alternatives. The agency shall
list any alternative that was submitted to the agency by the public
and the Office of the Small Business Advocate and determined to be
unreasonable.
   (5) 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.
   (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.
   (7) Each state agency shall assess whether there is a similar or
related  state  regulation that has been adopted  by
another state regulatory entity  and determine whether
there are opportunities to coordinate and harmonize compliance
activities in order to reduce the cost and regulatory burden on
 firms and individuals.   small businesses. In
assessing and potentially developing coordinated and harmonized
approaches to regulatory compliance, the state agency shall ensure t
  hat the compliance method can result in full compliance
with the authorizing statute or other law being implemented or made
specific by the proposed regulation. 
   (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 provisions of the 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. 4.  Section 11346.23 is added to the Government Code, to read:

   11346.23.  The Department of General Services shall provide in the
State Administrative Manual guidance on procedures that do both of
the following:
   (a) Facilitate the periodic review of existing significant
regulations  by the rulemaking entity  to determine whether
a regulation has become, or parts of the regulation have become,
outmoded, ineffective, insufficient, or excessively burdensome, and
to modify, streamline, expand, or repeal them in accordance with what
has been learned. The intent of providing guidance on such
retrospective analyses is to ensure that a regulation has not
resulted in unintended consequences that could create unexpected
harm, that a new technology has emerged making the existing
regulation obsolete  or less effective  , or that a
fundamental change in the economy creates an unforseen regulatory
burden.  Reviews shall be undertaken in a cost-effective manner
that reflects a government entity's staffing, funding, purpose, and
legal authority. 
   (b) Facilitate the orderly implementation of new and modified
regulations, including, but not limited to, limiting the
implementation date of new and modified regulations that require
compliance by private firms to two standardized dates, except in
circumstances where there is evidence that delaying implementation
could result in significant harm to the public.
  SEC. 5.  Section 12098.3 of the Government Code is amended to read:

   12098.3.  (a) The Director of the Office of Small Business
Advocate shall be appointed by, and shall serve at the pleasure of,
the Governor.
   (b) The Governor shall appoint the employees who are needed to
accomplish the purposes of this article.
   (c) The duties and functions of the advocate shall include all of
the following:
   (1) Serve as the principal advocate in the state on behalf of
small businesses, including, but not limited to, advisory
participation in the consideration of all legislation and
administrative regulations that affect small businesses, and advocacy
on state policy and programs related to small businesses on disaster
preparedness and recovery including providing technical assistance.
   (2) Represent the views and interests of small businesses before
other state agencies whose policies and activities may affect small
business, including, but not limited to, commenting on and gathering
input from small businesses, and making suggestions on reasonable
alternatives to proposed and existing regulations.
   (3) Enlist the cooperation and assistance of public and private
agencies, businesses, and other organizations in disseminating
information about the programs and services provided by state
government that are of benefit to small businesses, and information
on how small businesses can participate in, or make use of, those
programs and services.
   (4) Consult with experts and authorities in the fields of small
business investment, venture capital investment, and commercial
banking and other comparable financial institutions involved in the
financing of business, and with individuals with regulatory, legal,
economic, or financial expertise, including members of the academic
community, and individuals who generally represent the public
interest.
   (5) Seek the assistance and cooperation of all state agencies and
departments providing services to, or affecting, small business,
including the small business liaison designated pursuant to Section
14846, to ensure coordination of state efforts.
   (6) Receive and respond to complaints from small businesses
concerning the actions of state agencies and the operative effects of
state laws and regulations adversely affecting those businesses.
   (7) Counsel small businesses on how to resolve questions and
problems concerning the relationship of small business to state
government.
   (8) Maintain, publicize, and distribute an annual list of persons
serving as small business ombudsmen throughout state government.
   (9) Consult with the Department of Transportation in the
development and administration of the Small and Emerging Contractor
Technical Assistance Program established pursuant to Article 2.6
(commencing with Section 14137) of Chapter 2 of Part 5.