Bill Text: CA SB617 | 2011-2012 | Regular Session | Chaptered
Bill Title: State government: financial and administrative
Spectrum: Partisan Bill (Democrat 3-0)
Status: (Passed) 2011-10-06 - Chaptered by Secretary of State. Chapter 496, Statutes of 2011. [SB617 Detail]
Download: California-2011-SB617-Chaptered.html
BILL NUMBER: SB 617 CHAPTERED
BILL TEXT
CHAPTER 496
FILED WITH SECRETARY OF STATE OCTOBER 6, 2011
APPROVED BY GOVERNOR OCTOBER 5, 2011
PASSED THE SENATE SEPTEMBER 10, 2011
PASSED THE ASSEMBLY SEPTEMBER 9, 2011
AMENDED IN ASSEMBLY SEPTEMBER 8, 2011
AMENDED IN ASSEMBLY SEPTEMBER 2, 2011
AMENDED IN ASSEMBLY JUNE 14, 2011
AMENDED IN SENATE MAY 4, 2011
INTRODUCED BY Senators Calderon and Pavley
(Coauthor: Senator Alquist)
FEBRUARY 18, 2011
An act to amend Sections 11346.2, 11346.3, 11346.5, 11346.9,
11347.3, 11349.1, 13401, 13402, 13403, 13404, 13405, 13406, and 13407
of, and to add Sections 11342.548, 11346.36, and 11349.1.5 to, the
Government Code, relating to state government.
LEGISLATIVE COUNSEL'S DIGEST
SB 617, Calderon. State government: financial and administrative
accountability.
(1) The Administrative Procedure Act governs 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 establishes procedures for notifying
interested persons of the proposed adoption, amendment, or repeal of
a regulation. Existing law establishes procedures a state agency is
required to use to make a determination of whether a proposed
administrative regulation or proposed amendment to an administrative
regulation has the potential for significant, statewide adverse
economic impact directly affecting California business enterprises.
This bill would revise various provisions of the act with respect
to the duties of the Office of Administrative Law and state agencies
in the adoption, amendment, or repeal of regulations. The bill would
also require each state agency to prepare a standardized regulatory
impact analysis, as specified, with respect to the adoption,
amendment, or repeal of a major regulation, as defined, that is
proposed on or after November 1, 2013. The bill would require that
the agency submit the analysis to the Department of Finance for
review and comments, as specified, which would be required to be
included with the notice of proposed action.
This bill would require the Department of Finance, in consultation
with other state entities, to adopt regulations for conducting the
standardized regulatory impact analyses, as specified, to be utilized
by state agencies when promulgating major regulations pursuant to
the act, and, in particular, in developing the standardized
regulatory impact analysis. The bill would require, on or before
November 1, 2013, the department to submit these adopted regulations
to the Senate and Assembly Committees on Governmental Organization
and publish the adopted regulations in the State Administrative
Manual.
(2) The Financial Integrity and State Manager's Accountability Act
of 1983 provides that state agency heads are responsible for the
establishment and maintenance of a system or systems of internal
accounting and administrative control within their agencies, as
specified.
This bill would require that effective, independent, and ongoing
monitoring of the internal accounting and administrative controls of
state agencies be included within that system or systems.
(3) The act requires that the Director of Finance establish a
general framework to guide state agencies in conducting internal
reviews of their systems of internal accounting and administrative
controls.
This bill would require that the Director of Finance also
establish a general framework of recommended practices to guide state
agencies in conducting active ongoing monitoring of processes for
internal accounting and administrative control.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 11342.548 is added to the Government Code, to
read:
11342.548. "Major regulation" means any proposed adoption,
amendment, or repeal of a regulation subject to review by the Office
of Administrative Law pursuant to Article 6 (commencing with Section
11349) that will have an economic impact on California business
enterprises and individuals in an amount exceeding fifty million
dollars ($50,000,000), as estimated by the agency.
SEC. 2. Section 11346.2 of the Government Code, as added by
Section 2 of Chapter 398 of the Statutes of 2010, 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.
(C) Notwithstanding subparagraph (A) or (B), an agency is not
required to artificially construct alternatives or describe
unreasonable alternatives.
(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.
(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 1 of Chapter 398 of the Statutes of 2010, 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.
(C) Notwithstanding subparagraph (A) or (B), an agency is not
required to artificially construct alternatives or describe
unreasonable alternatives.
(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.
(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 11346.3 of the Government Code is amended to read:
11346.3. (a) State agencies 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 analysis 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). An economic analysis
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) 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, shall prepare an
economic impact analysis that assesses whether and to what extent it
will affect the following:
(A) The creation or elimination of jobs within the State of
California.
(B) The creation of new businesses or the elimination of existing
businesses within the State of California.
(C) The expansion of businesses currently doing business within
the State of California.
(D) The benefits of the regulation to the health and welfare of
California residents, 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 state agencies for the purpose of
completing the assessment may come from existing state publications.
(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 assessment 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 assessment may be derived from existing state,
federal, or academic publications.
(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, and that has prepared a
standardized regulatory impact assessment pursuant to subdivision
(c), shall submit that assessment to the Department of Finance upon
completion. The department shall comment, within 30 days of receiving
such assessment, on the extent to which the assessment 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. 5. Section 11346.36 is added to the Government Code, 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.
SEC. 6. Section 11346.5 of the Government Code is amended to read:
11346.5. (a) The notice of proposed adoption, amendment, or
repeal of a regulation shall include the following:
(1) A statement of the time, place, and nature of proceedings for
adoption, amendment, or repeal of the regulation.
(2) Reference to the authority under which the regulation is
proposed and a reference to the particular code sections or other
provisions of law that are being implemented, interpreted, or made
specific.
(3) An informative digest drafted in plain English in a format
similar to the Legislative Counsel's digest on legislative bills. The
informative digest shall include the following:
(A) A concise and clear summary of existing laws and regulations,
if any, related directly to the proposed action and of the effect of
the proposed action.
(B) If the proposed action differs substantially from an existing
comparable federal regulation or statute, a brief description of the
significant differences and the full citation of the federal
regulations or statutes.
(C) A policy statement overview explaining the broad objectives of
the regulation and the specific benefits anticipated by the proposed
adoption, amendment, or repeal of a regulation, including, 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.
(D) An evaluation of whether the proposed regulation is
inconsistent or incompatible with existing state regulations.
(4) Any other matters as are prescribed by statute applicable to
the specific state agency or to any specific regulation or class of
regulations.
(5) A determination as to whether the regulation imposes a mandate
on local agencies or school districts and, if so, whether the
mandate requires state reimbursement pursuant to Part 7 (commencing
with Section 17500) of Division 4.
(6) An estimate, prepared in accordance with instructions adopted
by the Department of Finance, of the cost or savings to any state
agency, the cost to any local agency or school district that is
required to be reimbursed under Part 7 (commencing with Section
17500) of Division 4, other nondiscretionary cost or savings imposed
on local agencies, and the cost or savings in federal funding to the
state.
For purposes of this paragraph, "cost or savings" means additional
costs or savings, both direct and indirect, that a public agency
necessarily incurs in reasonable compliance with regulations.
(7) If a state agency, in proposing to adopt, amend, or repeal any
administrative regulation, makes an initial determination that the
action may have a significant, statewide adverse economic impact
directly affecting business, including the ability of California
businesses to compete with businesses in other states, it shall
include the following information in the notice of proposed action:
(A) Identification of the types of businesses that would be
affected.
(B) A description of the projected reporting, recordkeeping, and
other compliance requirements that would result from the proposed
action.
(C) The following statement: "The (name of agency) has made an
initial determination that the (adoption/amendment/repeal) of this
regulation may have a significant, statewide adverse economic impact
directly affecting business, including the ability of California
businesses to compete with businesses in other states. The (name of
agency) (has/has not) considered proposed alternatives that would
lessen any adverse economic impact on business and invites you to
submit proposals. Submissions may include the following
considerations:
(i) The establishment of differing compliance or reporting
requirements or timetables that take into account the resources
available to businesses.
(ii) Consolidation or simplification of compliance and reporting
requirements for businesses.
(iii) The use of performance standards rather than prescriptive
standards.
(iv) Exemption or partial exemption from the regulatory
requirements for businesses."
(8) If a state agency, in adopting, amending, or repealing any
administrative regulation, makes an initial determination that the
action will not have a significant, statewide adverse economic impact
directly affecting business, including the ability of California
businesses to compete with businesses in other states, it shall make
a declaration to that effect in the notice of proposed action. In
making this declaration, the agency shall provide in the record
facts, evidence, documents, testimony, or other evidence upon which
the agency relies to support its initial determination.
An agency's initial determination and declaration that a proposed
adoption, amendment, or repeal of a regulation may have or will not
have a significant, adverse impact on businesses, including the
ability of California businesses to compete with businesses in other
states, shall not be grounds for the office to refuse to publish the
notice of proposed action.
(9) A description of all cost impacts, known to the agency at the
time the notice of proposed action is submitted to the office, that a
representative private person or business would necessarily incur in
reasonable compliance with the proposed action.
If no cost impacts are known to the agency, it shall state the
following:
"The agency is not aware of any cost impacts that a
representative private person or business would necessarily incur in
reasonable compliance with the proposed action."
(10) A statement of the results of the economic impact assessment
required by subdivision (b) of Section 11346.3 or the standardized
regulatory impact analysis if required by subdivision (c) of Section
11346.3, a summary of any comments submitted to the agency pursuant
to subdivision (f) of Section 11346.3 and the agency's response to
those comments.
(11) The finding prescribed by subdivision (d) of Section 11346.3,
if required.
(12) A statement that the action would have a significant effect
on housing costs, if a state agency, in adopting, amending, or
repealing any administrative regulation, makes an initial
determination that the action would have that effect. In addition,
the agency officer designated in paragraph (14), shall make available
to the public, upon request, the agency's evaluation, if any, of the
effect of the proposed regulatory action on housing costs.
(13) A statement that the adopting agency must determine that no
reasonable alternative considered by the agency or that has otherwise
been identified and brought to the attention of the agency would be
more effective in carrying out the purpose for which the action is
proposed, would be as effective and less burdensome to affected
private persons than the proposed action, or would be more
cost-effective to affected private persons and equally effective in
implementing the statutory policy or other provision of law. For a
major regulation, as defined by Section 11342.548, proposed on or
after November 1, 2013, the statement shall be based, in part, upon
the standardized regulatory impact analysis of the proposed
regulation, as required by Section 11346.3, as well as upon the
benefits of the proposed regulation identified pursuant to
subparagraph (C) of paragraph (3).
(14) The name and telephone number of the agency representative
and designated backup contact person to whom inquiries concerning the
proposed administrative action may be directed.
(15) The date by which comments submitted in writing must be
received to present statements, arguments, or contentions in writing
relating to the proposed action in order for them to be considered by
the state agency before it adopts, amends, or repeals a regulation.
(16) Reference to the fact that the agency proposing the action
has prepared a statement of the reasons for the proposed action, has
available all the information upon which its proposal is based, and
has available the express terms of the proposed action, pursuant to
subdivision (b).
(17) A statement that if a public hearing is not scheduled, any
interested person or his or her duly authorized representative may
request, no later than 15 days prior to the close of the written
comment period, a public hearing pursuant to Section 11346.8.
(18) A statement indicating that the full text of a regulation
changed pursuant to Section 11346.8 will be available for at least 15
days prior to the date on which the agency adopts, amends, or
repeals the resulting regulation.
(19) A statement explaining how to obtain a copy of the final
statement of reasons once it has been prepared pursuant to
subdivision (a) of Section 11346.9.
(20) If the agency maintains an Internet Web site or other similar
forum for the electronic publication or distribution of written
material, a statement explaining how materials published or
distributed through that forum can be accessed.
(b) The agency representative designated in paragraph (14) of
subdivision (a) shall make available to the public upon request the
express terms of the proposed action. The representative shall also
make available to the public upon request the location of public
records, including reports, documentation, and other materials,
related to the proposed action. If the representative receives an
inquiry regarding the proposed action that the representative cannot
answer, the representative shall refer the inquiry to another person
in the agency for a prompt response.
(c) This section shall not be construed in any manner that results
in the invalidation of a regulation because of the alleged
inadequacy of the notice content or the summary or cost estimates, or
the alleged inadequacy or inaccuracy of the housing cost estimates,
if there has been substantial compliance with those requirements.
SEC. 7. Section 11346.9 of the Government Code is amended to read:
11346.9. Every agency subject to this chapter shall do the
following:
(a) Prepare and submit to the office with the adopted regulation a
final statement of reasons that shall include all of the following:
(1) An update of the information contained in the initial
statement of reasons. If the update identifies any data or any
technical, theoretical or empirical study, report, or similar
document on which the agency is relying in proposing the adoption,
amendment, or repeal of a regulation that was not identified in the
initial statement of reasons, or which was otherwise not identified
or made available for public review prior to the close of the public
comment period, the agency shall comply with Section 11347.1.
(2) A determination as to whether adoption, amendment, or repeal
of the regulation imposes a mandate on local agencies or school
districts. If the determination is that adoption, amendment, or
repeal of the regulation would impose a local mandate, the agency
shall state whether the mandate is reimbursable pursuant to Part 7
(commencing with Section 17500) of Division 4. If the agency finds
that the mandate is not reimbursable, it shall state the reasons for
that finding.
(3) A summary of each objection or recommendation made regarding
the specific adoption, amendment, or repeal proposed, together with
an explanation of how the proposed action has been changed to
accommodate each objection or recommendation, or the reasons for
making no change. This requirement applies only to objections or
recommendations specifically directed at the agency's proposed action
or to the procedures followed by the agency in proposing or adopting
the action. The agency may aggregate and summarize repetitive or
irrelevant comments as a group, and may respond to repetitive
comments or summarily dismiss irrelevant comments as a group. For the
purposes of this paragraph, a comment is "irrelevant" if it is not
specifically directed at the agency's proposed action or to the
procedures followed by the agency in proposing or adopting the
action.
(4) A determination with supporting information that no
alternative considered by the agency would be more effective in
carrying out the purpose for which the regulation is proposed, would
be as effective and less burdensome to affected private persons than
the adopted regulation, or would be more cost effective to affected
private persons and equally effective in implementing the statutory
policy or other provision of law. For a major regulation, as defined
by Section 11342.548 proposed on or after November 1, 2013, the
determination shall be based, in part, upon the standardized
regulatory impact analysis of the proposed regulation and, in part,
upon the statement of benefits identified in subparagraph (C) of
paragraph (3) of subdivision (a) of Section 11346.5.
(5) An explanation setting forth the reasons for rejecting any
proposed alternatives that would lessen the adverse economic impact
on small businesses. The agency shall include, as supporting
information, the standardized regulatory impact analysis for a major
regulation, if required by subdivision (c) of Section 11346.3, as
well as the benefits of the proposed regulation identified pursuant
to paragraph (3) of subdivision (a) of Section 11346.5.
(b) Prepare and submit to the office with the adopted regulation
an updated informative digest containing a clear and concise summary
of the immediately preceding laws and regulations, if any, relating
directly to the adopted, amended, or repealed regulation and the
effect of the adopted, amended, or repealed regulation. The
informative digest shall be drafted in a format similar to the
Legislative Counsel's Digest on legislative bills.
(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 this section 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 which the agency
proposes to adopt or amend that are different from the corresponding
provisions of the federal regulation.
(d) If an agency determines that a requirement of this section can
be satisfied by reference to an agency statement made pursuant to
Sections 11346.2 to 11346.5, inclusive, the agency may satisfy the
requirement by incorporating the relevant statement by reference.
SEC. 8. Section 11347.3 of the Government Code is amended to read:
11347.3. (a) Every agency shall maintain a file of each
rulemaking that shall be deemed to be the record for that rulemaking
proceeding. Commencing no later than the date that the notice of the
proposed action is published in the California Regulatory Notice
Register, and during all subsequent periods of time that the file is
in the agency's possession, the agency shall make the file available
to the public for inspection and copying during regular business
hours.
(b) The rulemaking file shall include:
(1) Copies of any petitions received from interested persons
proposing the adoption, amendment, or repeal of the regulation, and a
copy of any decision provided for by subdivision (d) of Section
11340.7, which grants a petition in whole or in part.
(2) All published notices of proposed adoption, amendment, or
repeal of the regulation, and an updated informative digest, the
initial statement of reasons, and the final statement of reasons.
(3) The determination, together with the supporting data required
by paragraph (5) of subdivision (a) of Section 11346.5.
(4) The determination, together with the supporting data required
by paragraph (8) of subdivision (a) of Section 11346.5.
(5) The estimate, together with the supporting data and
calculations, required by paragraph (6) of subdivision (a) of Section
11346.5.
(6) All data and other factual information, any studies or
reports, and written comments submitted to the agency in connection
with the adoption, amendment, or repeal of the regulation.
(7) All data and other factual information, technical,
theoretical, and empirical studies or reports, if any, on which the
agency is relying in the adoption, amendment, or repeal of a
regulation, including any economic impact assessment or standardized
regulatory impact analysis as required by Section 11346.3.
(8) A transcript, recording, or minutes of any public hearing
connected with the adoption, amendment, or repeal of the regulation.
(9) The date on which the agency made the full text of the
proposed regulation available to the public for 15 days prior to the
adoption, amendment, or repeal of the regulation, if required to do
so by subdivision (c) of Section 11346.8.
(10) The text of regulations as originally proposed and the
modified text of regulations, if any, that were made available to the
public prior to adoption.
(11) Any other information, statement, report, or data that the
agency is required by law to consider or prepare in connection with
the adoption, amendment, or repeal of a regulation.
(12) An index or table of contents that identifies each item
contained in the rulemaking file. The index or table of contents
shall include an affidavit or a declaration under penalty of perjury
in the form specified by Section 2015.5 of the Code of Civil
Procedure by the agency official who has compiled the rulemaking
file, specifying the date upon which the record was closed, and that
the file or the copy, if submitted, is complete.
(c) Every agency shall submit to the office with the adopted
regulation, the rulemaking file or a complete copy of the rulemaking
file.
(d) The rulemaking file shall be made available by the agency to
the public, and to the courts in connection with the review of the
regulation.
(e) Upon filing a regulation with the Secretary of State pursuant
to Section 11349.3, the office shall return the related rulemaking
file to the agency, after which no item contained in the file shall
be removed, altered, or destroyed or otherwise disposed of. The
agency shall maintain the file unless it elects to transmit the file
to the State Archives pursuant to subdivision (f).
(f) The agency may transmit the rulemaking file to the State
Archives. The file shall include instructions that the Secretary of
State shall not remove, alter, or destroy or otherwise dispose of any
item contained in the file. Pursuant to Section 12223.5, the
Secretary of State may designate a time for the delivery of the
rulemaking file to the State Archives in consideration of document
processing or storage limitations.
SEC. 9. Section 11349.1 of the Government Code is amended to read:
11349.1. (a) The office shall review all regulations adopted,
amended, or repealed pursuant to the procedure specified in Article 5
(commencing with Section 11346) and submitted to it for publication
in the California Code of Regulations Supplement and for transmittal
to the Secretary of State and make determinations using all of the
following standards:
(1) Necessity.
(2) Authority.
(3) Clarity.
(4) Consistency.
(5) Reference.
(6) Nonduplication.
In reviewing regulations pursuant to this section, the office
shall restrict its review to the regulation and the record of the
rulemaking proceeding. The office shall approve the regulation or
order of repeal if it complies with the standards set forth in this
section and with this chapter.
(b) In reviewing proposed regulations for the criteria in
subdivision (a), the office may consider the clarity of the proposed
regulation in the context of related regulations already in
existence.
(c) The office shall adopt regulations governing the procedures it
uses in reviewing regulations submitted to it. The regulations shall
provide for an orderly review and shall specify the methods,
standards, presumptions, and principles the office uses, and the
limitations it observes, in reviewing regulations to establish
compliance with the standards specified in subdivision (a). The
regulations adopted by the office shall ensure that it does not
substitute its judgment for that of the rulemaking agency as
expressed in the substantive content of adopted regulations.
(d) The office shall return any regulation subject to this chapter
to the adopting agency if any of the following occur:
(1) The adopting agency has not prepared the estimate required by
paragraph (6) of subdivision (a) of Section 11346.5 and has not
included the data used and calculations made and the summary report
of the estimate in the file of the rulemaking.
(2) The agency has not complied with Section 11346.3.
"Noncompliance" means that the agency failed to complete the economic
impact assessment or standardized regulatory impact analysis
required by Section 11346.3 or failed to include the assessment or
analysis in the file of the rulemaking proceeding as required by
Section 11347.3.
(3) The adopting agency has prepared the estimate required by
paragraph (6) of subdivision (a) of Section 11346.5, the estimate
indicates that the regulation will result in a cost to local agencies
or school districts that is required to be reimbursed under Part 7
(commencing with Section 17500) of Division 4, and the adopting
agency fails to do any of the following:
(A) Cite an item in the Budget Act for the fiscal year in which
the regulation will go into effect as the source from which the
Controller may pay the claims of local agencies or school districts.
(B) Cite an accompanying bill appropriating funds as the source
from which the Controller may pay the claims of local agencies or
school districts.
(C) Attach a letter or other documentation from the Department of
Finance which states that the Department of Finance has approved a
request by the agency that funds be included in the Budget Bill for
the next following fiscal year to reimburse local agencies or school
districts for the costs mandated by the regulation.
(D) Attach a letter or other documentation from the Department of
Finance which states that the Department of Finance has authorized
the augmentation of the amount available for expenditure under the
agency's appropriation in the Budget Act which is for reimbursement
pursuant to Part 7 (commencing with Section 17500) of Division 4 to
local agencies or school districts from the unencumbered balances of
other appropriations in the Budget Act and that this augmentation is
sufficient to reimburse local agencies or school districts for their
costs mandated by the regulation.
(4) The proposed regulation conflicts with an existing state
regulation and the agency has not identified the manner in which the
conflict may be resolved.
(5) The agency did not make the alternatives determination as
required by paragraph (4) of subdivision (a) of Section 11346.9.
(e) The office shall notify the Department of Finance of all
regulations returned pursuant to subdivision (d).
(f) The office shall return a rulemaking file to the submitting
agency if the file does not comply with subdivisions (a) and (b) of
Section 11347.3. Within three state working days of the receipt of a
rulemaking file, the office shall notify the submitting agency of any
deficiency identified. If no notice of deficiency is mailed to the
adopting agency within that time, a rulemaking file shall be deemed
submitted as of the date of its original receipt by the office. A
rulemaking file shall not be deemed submitted until each deficiency
identified under this subdivision has been corrected.
(g) Notwithstanding any other law, return of the regulation to the
adopting agency by the office pursuant to this section is the
exclusive remedy for a failure to comply with subdivision (c) of
Section 11346.3 or paragraph (10) of subdivision (a) of Section
11346.5.
SEC. 10. Section 11349.1.5 is added to the Government Code, to
read:
11349.1.5. (a) The Department of Finance and the office shall,
from time to time, review the standardized regulatory impact analyses
required by subdivision (c) of Section 11346.3 and submitted to the
office pursuant to Section 11347.3, for adherence to the regulations
adopted by the department pursuant to Section 11346.36.
(b) On or before November 1, 2015, the office shall submit to the
Senate and Assembly Committees on Governmental Organization a report
describing the extent to which submitted standardized regulatory
impact analyses for proposed major regulations adhere to the
regulations adopted pursuant to Section 11346.36. The report shall
include a discussion of agency adherence to the regulations as well
as a comparison between various state agencies on the question of
adherence. The report may also include any recommendations from the
office for actions the Legislature might consider for improving state
agency performance.
(c) In addition to the report required by subdivision (b), the
office may notify the Legislature of noncompliance by a state agency
with the regulations adopted pursuant to Section 11346.36, in any
manner or form determined by the office.
SEC. 11. Section 13401 of the Government Code is amended to read:
13401. (a) The Legislature hereby finds the following:
(1) Active oversight processes, including regular and ongoing
monitoring processes, for the prevention and early detection of fraud
and errors in program administration are vital to public confidence
and the appropriate and efficient use of public resources.
(2) Fraud and errors in state programs are more likely to occur
from a lack of effective systems of internal accounting and
administrative control in the state agencies when active monitoring
measures are not maintained to ensure that accounting and
administrative controls are functioning properly.
(3) Effective systems of internal accounting and administrative
control provide the basic foundation upon which a structure of public
accountability must be built.
(4) Effective systems of internal accounting and administrative
control are necessary to ensure that state assets and funds are
adequately safeguarded, as well as to produce reliable financial
information for the agency.
(5) Systems of internal accounting and administrative control are
necessarily dynamic and must be routinely monitored, continuously
evaluated, and, where necessary, improved.
(6) Reports regarding the continuing adequacy of the systems of
internal accounting and administrative control of each state agency
are necessary to enable the executive branch, the Legislature, and
the public to evaluate the agency's performance of its public
responsibilities and accountability.
(b) The Legislature declares it to be the policy of the State of
California that:
(1) Each state agency must maintain effective systems of internal
accounting and administrative control as an integral part of its
management practices.
(2) The systems of internal accounting and administrative control
of each state agency shall be evaluated on an ongoing basis through
regular and ongoing monitoring processes and, when detected,
weaknesses must be promptly corrected.
(3) All levels of management of the state agencies must be
involved in assessing and strengthening the systems of internal
accounting and administrative control to minimize fraud, errors,
abuse, and waste of government funds, however, key monitoring
processes should be structured to ensure the independence and
objectivity of persons tasked with such monitoring.
SEC. 12. Section 13402 of the Government Code is amended to read:
13402. State agency heads are responsible for the establishment
and maintenance of a system or systems of internal accounting,
administrative control, and effective, independent, and objective
ongoing monitoring of the internal accounting and administrative
controls within their agencies. This responsibility includes
documenting the system, communicating system requirements to
employees, and ensuring that the system is functioning as prescribed
and is modified, as appropriate, for changes in conditions.
SEC. 13. Section 13403 of the Government Code is amended to read:
13403. (a) Internal accounting and administrative controls, if
maintained and reinforced through effective monitoring systems and
processes, are the methods through which reasonable assurances can be
given that measures adopted by state agency heads to safeguard
assets, check the accuracy and reliability of accounting data,
promote operational efficiency, and encourage adherence to prescribed
managerial policies are being followed. The elements of a
satisfactory system of internal accounting and administrative
control, shall include, but are not limited to, the following:
(1) A plan of organization that provides segregation of duties
appropriate for proper safeguarding of state agency assets.
(2) A plan that limits access to state agency assets to authorized
personnel who require these assets in the performance of their
assigned duties.
(3) A system of authorization and recordkeeping procedures
adequate to provide effective accounting control over assets,
liabilities, revenues, and expenditures.
(4) An established system of practices to be followed in
performance of duties and functions in each of the state agencies.
(5) Personnel of a quality commensurate with their
responsibilities.
(6) An effective system of internal review.
(b) State agency heads shall follow these standards of internal
accounting and administrative control in carrying out the
requirements of Section 13402.
(c) Monitoring systems and processes are vital to the following:
(1) Ensuring that routine application of internal controls do not
diminish their efficacy over time.
(2) Providing timely notice and opportunity for correction of
emerging weaknesses with established internal controls.
(3) Facilitating public resources and other decisions by ensuring
availability of accurate and reliable information.
(4) Facilitating production of timely and accurate financial
reports.
(d) State agency heads shall implement systems and processes to
ensure the independence and objectivity of the monitoring of internal
accounting and administrative control as an ongoing activity in
carrying out the requirements of Section 13402.
SEC. 14. Section 13404 of the Government Code is amended to read:
13404. As used in this chapter:
(a) "Governor" means the Governor of California.
(b) "Controller" means the Controller of California.
(c) "Director" means the Director of Finance.
(d) "Attorney General" means the Attorney General of California.
(e) "Treasurer" means the Treasurer of California.
SEC. 15. Section 13405 of the Government Code is amended to read:
13405. (a) To ensure that the requirements of this chapter are
fully complied with, the head of each state agency that the director
determines is covered by this section shall, on a biennial basis but
no later than December 31 of each odd-numbered year, conduct an
internal review and prepare a report on the adequacy of the agency's
systems of internal accounting, administrative control, and
monitoring practices in accordance with the guide prepared by the
director pursuant to subdivision (d).
(b) The report, including the state agency's response to review
recommendations, shall be signed by the head of the agency and
addressed to the agency secretary, or the director for agencies
without a secretary. Copies of the reports shall be submitted to the
Legislature, the State Auditor, the Controller, the Treasurer, the
Attorney General, the Governor, the director, and to the State
Library where they shall be available for public inspection.
(c) The report shall identify any material inadequacy or material
weakness in an agency's systems of internal accounting and
administrative control that prevents the head of the agency from
stating that the agency's
systems comply with this chapter. No later than 30 days after the
report is submitted, the agency shall provide to the director a plan
and schedule for correcting the identified inadequacies and
weaknesses, which shall be updated every six months until all
corrections are completed.
(d) The director, in consultation with the State Auditor and the
Controller, shall establish, and may modify from time to time as
necessary, a system of reporting and a general framework to guide
state agencies in conducting internal reviews of their systems of
internal accounting and administrative control.
(e) The director, in consultation with the State Auditor and the
Controller, shall establish, and may modify from time to time as
necessary, a general framework of recommended practices to guide
state agencies in conducting active, ongoing monitoring of processes
for internal accounting and administrative control.
SEC. 16. Section 13406 of the Government Code is amended to read:
13406. (a) The head of the internal audit staff of a state agency
or a division, as specified by the director, or, in the event there
is no internal audit function, a professional accountant, if
available on the staff, designated as the internal control person by
the head of the state agency or a division, shall receive and
investigate any allegation that an employee of the agency provided
false or misleading information in connection with the review of the
agency's systems of internal accounting and administrative control or
in connection with the preparation of the biennial report on the
systems of internal accounting, administrative control, and
monitoring practices.
(b) If, in connection with any investigation under subdivision
(a), the head of the internal audit staff or the designated internal
control person determines that there is reasonable cause to believe
that false or misleading information was provided, he or she shall
report in writing that determination to the head of the agency or the
division.
(c) The head of the agency or division shall review any matter
referred to him or her under subdivision (b), shall take such
disciplinary or corrective action as he or she deems necessary, and
shall forward a copy of the report, indicating therein the action
taken, to the director within 90 days of the date of the report.
SEC. 17. Section 13407 of the Government Code is amended to read:
13407. Because sound internal accounting and administrative
controls and the regular and ongoing monitoring of those internal
controls significantly inhibits waste of resources and thereby
creates savings, the director and agencies and divisions shall carry
out the provisions of this chapter by using existing resources.
