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

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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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  MARCH 21, 2012
	AMENDED IN ASSEMBLY  APRIL 25, 2011

INTRODUCED BY   Committee on Jobs, Economic Development, and the
Economy (V. Manuel Pérez (Chair), Beall, Block, Grove, Hueso, and
Morrell)

                        MARCH 10, 2011

    An act to amend Sections 13996.4 and 13996.55 of the
Government Code, relating to economic development.   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, Committee on Jobs, Economic Development, and
the Economy.  Economic development: international trade and
investment.   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) 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 regulations
adopted by another state regulatory entity and require the agency to
coordinate with that entity to reduce regulatory burdens, as
provided.  
   (3) 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) 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.
 
   Existing law requires the Secretary of Business, Transportation
and Housing to provide to the Legislature a strategy for
international trade and investment that is required to address
specified topics. Existing law requires that this strategy be updated
at least once every 5 years.  
   This bill would require that the strategy prepared by the
secretary also address specified topics related to international
trade and infrastructure. This bill would require that the strategy
be updated by February 1, 2013, and once every 5 years thereafter.

   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 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 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 practices that 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
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 for small and large businesses, and partial or
total exemptions based on the firm's actual degree of activity
within the regulated activity. 
   (C) Notwithstanding subparagraph (A) or (B), an agency is not
required to artificially construct alternatives  or describe
unreasonable alternatives  .  The agency shall list any
alternative that was submitted to the agency by the pu  
blic 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 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. 
   (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
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 for small and large businesses, and partial or
total exemptions based on the firm's actual degree of activity
within the regulated activity. 
   (C) Notwithstanding subparagraph (A) or (B), an agency is not
required to artificially construct alternatives  or describe
unreasonable 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 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. 
   (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 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 that a fundamental change in the
economy creates an unforseen regulatory burden.
   (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. 
  SECTION 1.    Section 13996.4 of the Government
Code is amended to read:
   13996.4.  The Legislature finds and declares all of the following:

   (a) The statutory authority for the Technology, Trade, and
Commerce Agency, including the agency's international trade and
investment promotion programs, was repealed by Chapter 229 of the
Statutes of 2003, thereby reducing the capacity of state government
to assist California firms in developing global business
opportunities.
   (b) The repeal of the statutory authority for the Technology,
Trade, and Commerce Agency has increased the importance of
strengthening collaborative linkages among remaining California-based
international trade and investment promotion programs operated at
federal, state, regional, and local levels. These programs include,
but are not limited to, the Centers for International Trade
Development operated by the California Community Colleges, 15 offices
of the United States Commercial Service within the United States
Department of Commerce, numerous local and regional World Trade
Centers, and public and private economic development and trade
associations.
   (c) According to data for 2000, international trade and investment
activity in the state supports one in every seven California jobs.
   (d) According to the Public Policy Institute of California:
   (1) Nearly 94 percent of all exporters located in California are
small- or medium-sized firms. Over 90 percent of businesses in
California are small businesses and over 50 percent of all workers
are employed by a small business.
   (2) Exporters are more productive and pay higher wages than
nonexporters.
   (3) Effective state programs supporting export opportunities
should identify and respond to differing needs of both export-willing
and export-ready firms.
   (e) The adequacy of the state's infrastructure, workforce,
research facilities, manufacturing and service industries, and access
to capital form the foundation of California's global market-related
economy.
   (f) California's multicultural and ethnic populations offer unique
opportunities for international trade and investment.
   (g) United States subsidiaries of foreign companies in California
employed 561,000 California workers from 2000 to 2005. This is an
increase of 15 percent. In comparison to other states, California is
an attractive location for international employers, ranking first in
the United States in the number of employees supported by United
States subsidiaries.
   (h) California's trade and investment policy is a living document
that should be regularly updated to reflect emerging business trends
and the changing needs of California businesses and workers.
   (i) California must ensure that it has an adequate and robust
trade infrastructure in place at its airports, seaports, and land
ports of entry for the efficient facilitation of exports and imports
of cargo.
   (j) California's exporters will play a critical role in the
National Export Initiative, a federal effort to double American
exports from 2010 to 2015, inclusive, and support the growth of two
million jobs across the United States, and California should support
the federal government's export-promotion strategy, the United States
Department of Commerce, and the International Trade Administration
in their efforts to open new markets and implement the National
Export Initiative.  
  SEC. 2.    Section 13996.55 of the Government Code
is amended to read:
   13996.55.  (a) Based on the study prepared pursuant to Section
13996.5, the Secretary of Business, Transportation and Housing shall
provide to the Legislature, no later than February 1, 2013, a
strategy for international trade and investment that, at a minimum,
includes all of the following:
   (1) Policy goals, objectives, and recommendations necessary to
implement a comprehensive international trade and investment program
for the State of California. This information shall be provided in a
fashion that clearly indicates priority within the overall strategy.
   (2) Measurable outcomes and timelines for the goals, objectives,
and actions for the international trade and investment program.
   (3) Identification of impediments for achieving goals and
objectives.
   (4) Identification of key stakeholder partnerships that will be
used in implementing the strategy.
   (5) Identification of options for funding recommended actions.
   (6) Policy goals, objectives, and recommendations adopted in the
Goods Movement Action Plan that are found appropriate by the
secretary to provide the trade infrastructure necessary to implement
a comprehensive international trade and investment program for the
State of California.
   (7) Measurable outcomes and timelines for the goals, objectives,
and actions for the completion of those aspects of the Goods Movement
Action Plan determined to be appropriate by the secretary to
implement a comprehensive international
                 trade and investment program for the State of
California.
   (8) Identification of those public agencies and private sector
entities necessary to implement those aspects of the Goods Movement
Action Plan that are identified in the strategy update.
   (b) The strategy shall be developed in consultation with the
California Economic Strategy Panel. In the course of developing the
strategy, the secretary shall also consult with other agencies,
boards, and commissions that have statutory responsibilities related
to workforce development, infrastructure, business, and international
trade and investment including, but not limited to, the California
Commission on Industrial Innovation, the Office of the Small Business
Advocate, the California Transportation Commission, the California
Community Colleges, the University of California, the California
State University, the Workforce Investment Board, the Employment
Training Panel, and the California Energy Commission.
   (c) The strategy shall be submitted to the Chief Clerk of the
Assembly and the Secretary of the Senate. A copy of the strategy
shall be provided to the Speaker of the Assembly, the President pro
Tempore of the Senate, and the chairs of the Assembly Committee on
Jobs, Economic Development, and the Economy and the Senate Committee
on Business, Professions and Economic Development, or the successor
committees with jurisdiction over international trade and economic
development programs.
   (d) (1) The strategy shall be reviewed in at least one public
hearing by the relevant policy and fiscal committees of each house of
the Legislature. The hearings shall be held within 60 days of the
strategy being submitted to the Legislature. If the strategy is
submitted when the Legislature is in recess, the hearings shall occur
within 60 days of the members convening.
   (2) The legislative committees may make recommendations to the
secretary on the strategy, and the secretary may modify the strategy
accordingly.
   (e) The secretary shall report to the fiscal committees of the
Legislature on or before February 1, 2009, and by that date each year
thereafter, on how the Governor's proposed budget relates to the
strategy.
   (f) The strategy shall be updated pursuant to the procedures of
this section by February 1, 2013, and at least once every five years
thereafter.