Amended  IN  Senate  March 25, 2020

CALIFORNIA LEGISLATURE— 2019–2020 REGULAR SESSION

Senate Bill
No. 1235


Introduced by Senator Caballero

February 20, 2020


An act to amend Section Sections 11346.3 and 11346.36 of the Government Code, relating to regulations.


LEGISLATIVE COUNSEL'S DIGEST


SB 1235, as amended, Caballero. Administrative Procedure Act: adverse economic impact.
Existing law, the Administrative Procedure Act, governs, among other things, 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. Existing law requires a state agency proposing to adopt, amend, or repeal specific administrative regulations to assess the potential for adverse economic impact on California business enterprises and individuals and individuals. Existing law requires a 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, as specified, that addresses, among other things, the creation or elimination of jobs within the state. Existing law requires a state agency proposing to adopt, amend, or repeal a major regulation, on or after November 1, 2013, to prepare a standardized regulatory impact analysis in the manner prescribed by the Department of Finance that addresses, among other things, the creation or elimination of jobs within the state.
This bill, among other things, would delete the requirement that a state agency prepare an economic impact assessment for proposed changes to a major regulation proposed prior to November 1, 2013, and would instead require a state agency to prepare a standardized regulatory impact analysis for proposed changes to all major regulations. The bill would require that the economic impact assessment and the standardized regulatory impact analysis also include identification of each regulation adopted within 10 years prior to the date of the proposed regulations when the prior adopted regulations are located in the same title or division as the proposed regulations and include a brief summary of any economic impact analysis previously performed with regard to those regulations.
Existing law requires 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 to submit the analysis to the Department of Finance upon completion.
This bill would require that the state agency also conspicuously post the standardized regulatory impact assessment on its internet website within 24 hours of submitting it to the department.
Existing law requires the department, prior to November 1, 2013, in consultation with the Office of Administrative Law and other state agencies, to adopt regulations for conducting a standardized regulatory impact analysis, as specified.
This bill would require the department to permanently post a copy of each standardized regulatory impact analysis on its internet website within 10 days of receipt.

This bill would make nonsubstantive changes to those provisions.

Vote: MAJORITY   Appropriation: NO   Fiscal Committee: NOYES   Local Program: NO  

The people of the State of California do enact as follows:


SECTION 1.

 Section 11346.3 of the Government Code is amended to read:

11346.3.
 (a) A state agency 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 impact 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), and shall be included in the initial statement of reasons as required by Section 11346.2. 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) A 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, 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 residents of the state, 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 a state agency for the purpose of completing the assessment may come from existing state publications.
(4) (A) For purposes of conducting the economic impact assessment pursuant to this subdivision, a state agency may use the consolidated definition of small business in subparagraph (B) in order to determine the number of small businesses within the economy, a specific industry sector, or geographic region. The state agency shall clearly identify the use of the consolidated small business definition in its rulemaking package.
(B) For the exclusive purpose of undertaking the economic impact assessment, a “small business” means a business that is all of the following:
(i) Independently owned and operated.
(ii) Not dominant in its field of operation.
(iii) Has fewer than 100 employees.
(C) Subparagraph (A) shall not apply to a regulation adopted by the Department of Insurance that applies to an insurance company.
(5) The economic impact assessment prepared pursuant to this subdivision shall include identification of each regulation enacted on or after a date that is 10 years prior to the date of the proposed regulation and located within the same title and division as the proposed regulation. For any regulation identified by the state agency, the economic impact assessment shall include a brief summary of any economic impact analysis previously performed by the state agency for those regulations, specifically identifying the costs and benefits identified in that analysis.
(6) For any regulation identified by the state agency pursuant to paragraph (5) that has been enforceable against regulated entities for more than two years, the state agency shall prepare an updated economic impact assessment for that regulation in accordance with this subdivision based upon data derived from implementation of that regulation.
(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.
(4) The standardized regulatory impact analysis prepared pursuant to this subdivision shall include identification of each regulation enacted on or after a date that is 10 years prior to the date of the proposed regulation and located within the same title and division as the proposed regulation. For any regulation identified by the state agency, the standardized regulatory impact analysis shall include a brief summary of any economic impact analysis previously performed by the state agency for those regulations, specifically identifying the costs and benefits identified in that analysis.
(5) For any regulation identified by the state agency pursuant to paragraph (4) that has been enforceable against regulated entities for more than two years, the state agency shall prepare an updated standardized regulatory impact analysis for that regulation in accordance with this subdivision based upon data derived from implementation of that regulation.
(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, regulation, and that has prepared a standardized regulatory impact analysis pursuant to subdivision (c), shall submit that analysis to the Department of Finance upon completion and conspicuously post the analysis on the agency’s internet website within 24 hours. 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.

SEC. 2.

 Section 11346.36 of the Government Code is amended to read:

11346.36.
 (a) Prior to November 1, 2013, the Department of Finance, in consultation with the office and other state agencies, shall adopt regulations for conducting the standardized regulatory impact analyses required by subdivision (c) of Section 11346.3.
(b) The regulations, at a minimum, shall assist the agencies in specifying the methodologies for:
(1) Assessing and determining the benefits and costs of the proposed regulation, expressed in monetary terms to the extent feasible and appropriate. Assessing the value of 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, the increase in the openness and transparency of business and government and other nonmonetary benefits consistent with the statutory policy or other provisions of law.
(2) Comparing proposed regulatory alternatives with an established baseline so agencies can make analytical decisions for the adoption, amendment, or repeal of regulations necessary to determine that the proposed action is the most effective, or equally effective and less burdensome, alternative in carrying out the purpose for which the action is proposed, or the most cost-effective alternative to the economy and to affected private persons that would be equally effective in implementing the statutory policy or other provision of law.
(3) Determining the impact of a regulatory proposal on the state economy, businesses, and the public welfare, as described in subdivision (c) of Section 11346.3.
(4) Assessing the effects of a regulatory proposal on the General Fund and special funds of the state and affected local government agencies attributable to the proposed regulation.
(5) Determining the cost of enforcement and compliance to the agency and to affected business enterprises and individuals.
(6) Making the estimation described in Section 11342.548.
(c) To the extent required by this chapter, the department shall convene a public hearing or hearings and take public comment on any draft regulation. Representatives from state agencies and the public at large shall be afforded the opportunity to review and comment on the draft regulation before the regulation is adopted in final form.
(d) State agencies shall provide the Director of Finance and the office ready access to their records and full information and reasonable assistance in any matter requested for purposes of developing the regulations required by this section. This subdivision shall not be construed to authorize an agency to provide access to records required by statute to be kept confidential.
(e) The standardized regulatory impact analysis prepared by the proposing agency shall be included in the initial statement of reasons for the regulation as provided in subdivision (b) of Section 11346.2.
(f) On or before November 1, 2013, the department shall submit the adopted regulations to the Senate and Assembly Committees on Governmental Organization and shall publish the adopted regulations in the State Administrative Manual.
(g) The department shall permanently post a copy of each standardized regulatory impact analysis in the form prescribed by subdivision (a) on its internet website within 10 days of receipt.