Existing law establishes the Government Operations Agency, which consists of several departments including the Office of Administrative Law (OAL). Existing law, the Administrative Procedures Act, governs the procedure for the adoption, amendment, or repeal of regulations by state agencies and for the review of those regulatory actions by the OAL. Existing law requires the OAL to provide for the publication of the California Regulatory Notice Register and to include specified information in the register, including notices of proposed action prepared by regulatory agencies, a summary of regulations filed with the Secretary of State, and a summary of regulation decisions issued, as specified.

This bill bill, until January 1, 2035, would establish the Office of Regulatory Counsel in state government within the Governors office, under the direction and control of a director. The bill would require the director to be appointed by the Governor, subject to confirmation of the Senate and for the directors term to be coterminous with that of the appointing power, except as provided.

This bill would require the office to draft and assist in the preparation, consideration, amendment, and repeal of regulations for a state agency, before the state agency submits a proposed action regarding that regulation to the OAL for publication in the California Regulatory Notice Register.

Existing law establishes the Government Operations Agency, which consists of several departments including the Office of Administrative Law (OAL). Existing law, the Administrative Procedures Act, governs the procedure for the adoption, amendment, or repeal of regulations by state agencies and for the review of those regulatory actions by the OAL. Existing law requires the OAL to provide for the publication of the California Regulatory Notice Register and to include specified information in the register, including notices of proposed action prepared by regulatory agencies, a summary of regulations filed with the Secretary of State, and a summary of regulation decisions issued, as specified.

This bill would establish the Office of Regulatory Counsel in state government within the Governors office, under the direction and control of a director. The bill would require the director to be appointed by the Governor, subject to confirmation of the Senate and for the directors term to be coterminous with that of the appointing power, except as provided.

This bill would require the office to draft and assist in the preparation, consideration, amendment, and repeal of regulations for a state agency, before the state agency submits a proposed action regarding that regulation to the OAL for publication in the California Regulatory Notice Register.

SENATE COMMITTEE ON APPROPRIATIONS

Senator Anna Caballero, Chair

2023 - 2024 Regular Session

SB 1104 (Niello) - Office of Regulatory Counsel

Bill Summary:

SB 1104 establishes the Office of Regulatory Counsel (ORC) in the Governor’s office and tasks the ORC with drafting and assisting in the preparation, consideration, amendment, and repeal of regulations for a state agency, before the state agency submits a proposed action regarding that regulation to the Office of Administrative Law (OAL).

Fiscal Impact:

• Unknown, significant one-time and ongoing General Fund costs, likely in the millions of dollars, to stand-up and maintain the new office. Costs to establish the office would include equipment and other IT operating expenses. Ongoing costs would include additional staffing and outreach resources to support the director. Given the number of state agencies and the complexity and specificity of regulations that these agencies may seek assistance with, the ORC will likely need significant specialized staff with the technical and legal expertise to support its operations.

It’s unclear how the ORC will recoup its operating expenses. To the extent that the office cannot be sustained through pro rata or other billing mechanism, costs will be borne from the General Fund.

• Unknown, likely significant costs across all state agencies and departments to coordinate with the ORC in drafting, preparing, and amending proposed regulations before submission to the OAL (General Fund and various special funds). For example, the California Air Resources Board (CARB) estimates ongoing costs of $584,000 (Air Pollution Control Fund) to coordinate and interface with the ORC. CARB notes that it develops 10 regulations a year on average, many of which are major regulations that require intensive economic analysis.

While not all state agencies would require the same level of resources, costs to coordinate with the ORC will likely still be significant across all state agencies. Total fiscal impact across all agencies and department will vary and depend on, among other things, the frequency and complexity of regulation development.

Background:

OAL ensures that agency regulations are clear, necessary, legally valid, and available to the public. Since its creation on July 1, 1980, OAL is responsible for reviewing administrative regulations proposed by over 200 state agencies for compliance with the standards set forth in California’s Administrative Procedure Act (APA), for transmitting these regulations to the Secretary of State, and for publishing regulations in the California Code of Regulations.

A “regulation” is any rule, regulation, order or standard of general application or the amendment, supplement, or revision of any rule, regulation, order, or standard adopted by any state agency to implement, interpret, or make specific the law enforced or administered by it. When adopting regulations, every department, division, office, officer, bureau, board or commission in the executive branch of the California state government must follow the rulemaking procedures in the APA and regulations adopted by the OAL, unless expressly exempted by statute from some or all of these requirements.

The APA requirements are designed to provide the public with a meaningful opportunity to participate in the adoption of regulations or rules that have the force of law by California state agencies and to ensure the creation of an adequate record for the OAL and judicial review.

Regulations subject to the APA are generally adopted through the “Regular” or “Emergency” rulemaking processes. The rulemaking process used by an agency to adopt regulations will dictate what procedural requirements must be followed, including but not limited to the contents of the rulemaking record, timeframes, opportunities for public participation, OAL’s review, and effective dates for the regulations.

Proposed Law:

• Establishes the Office of Regulatory Counsel in the Governor’s office and tasks the office with drafting and assisting in the preparation, consideration, amendment, and repeal of regulations for a state agency, before the state agency submits a proposed action regarding that regulation to the Office of Administrative Law for publication in the California Regulatory Notice Register.
• Provides the office is under the direction and control of an executive officer known as the director, who shall be appointed by the Governor and subject to Senate confirmation. Specifies the director’s term is coterminous with that of the appointing power, except the director is subject to reappointment.
• Sunsets the office on January 1, 2035.

-- END --

SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION

Senator Bill Dodd

Chair

2023 - 2024 Regular

Bill No: 1104 Hearing Date: 4/9/2024

SUBJECT: Office of Regulatory Counsel

DIGEST: This bill establishes the Office of Regulatory Counsel (ORC), in the Governor’s office, to draft and assist in the preparation, consideration, amendment, and repeal of regulations for a state agency, before the state agency submits a proposed action regarding that regulation to the Office of Administrative Law (OAL) for publication in the California Regulatory Notice Register, as specified.

ANALYSIS:

Existing law:

1. Establishes the Government Operations Agency (GovOps), which consists of several departments including the OAL.
2. The Administrative Procedures Act (APA) governs the procedure for the adoption, amendment, or repeal of regulations by state agencies and for the review of those regulatory actions by the OAL.
3. Requires the OAL to provide for the publication of the California Regulatory Notice Register and to include specified information in the register, including notices of proposed action prepared by regulatory agencies, a summary of regulations filed with the Secretary of State (SOS), and a summary of regulation decisions issued, as specified.
4. Establishes, in state government, the Legislative Counsel Bureau, as specified.
5. Defines “regulation” to mean every rule, regulation, order, or standard of general application or the amendment, supplement, or revision of any rule, regulation, order, or standard adopted by any state agency to implement, interpret, or make specific law enforced or administered by it, or to govern its procedure.

This bill:

1. Establishes the ORC in the Governor’s office, under the direction and control of an executive officer who shall be known as the director. The director’s term of office shall be coterminous with that of the appointing power, except that they shall be subject to reappointment.
2. Provides that the director shall be appointed by the Governor and subject to the confirmation of the Senate.
3. Requires the ORC to draft and assist in the preparation, consideration, amendment, and repeal of regulations for a state agency, before the state agency submits a proposed action regarding that regulation to the OAL for publication in the California Regulatory Notice Register, as specified.

Background

Author Statement. According to the author’s office, “SB 1104 will improve the regulatory environment in California by having experienced personnel drafting regulations for all state entities. Having such an office will improve clarity and understanding of California’s regulations which will reduce misinterpretations, ease compliance, and bring better outcomes for Californians striving to comply with state laws and rules.”

Office of Legislative Counsel. Established in 1913, the Office of Legislative Counsel (OLC) has continuously operated in state government for more than a century to assist the Legislature, Governor, and other state officers by providing nonpartisan legal services relating to the legislative process. Beginning in the 1970s, at the request of the Legislature, the OLC began to implement computer capabilities to support the process of drafting and printing legislation. Since then, the office has delivered an array of technology services to improve the efficiency of additional business processes and expand public access to legislative information.

Attorneys in the OLC, with the assistance of highly trained support staff: draft bills, constitutional amendments, resolutions, and proposed amendments to those measures; render legal opinions on issues of constitutionality, statutory interpretation, and other legal matters; provide counsel to the Members and committees of the Legislature; represent the Senate and Assembly in litigation; prepare contracts for services to the Senate and Assembly; provide various legal services to the Governor; assist in the preparation of an initiative measure when requested to do so by 25 or more electors; and assist judges in the drafting of legislation.

Office of Administrative Law. Established in July, 1980, the OAL ensures that agency regulations are clear, necessary, legally valid, and available to the public. Since its creation, OAL has been and continues to be responsible for reviewing administrative regulations proposed by over 200 state agencies for compliance with the standards set forth in California’s Administrative Procedure Act, for transmitting these regulations to the Secretary of State and for publishing regulations in the California Code of Regulations.

OAL assists state regulatory agencies through a formal training program, as well as through other less formal methods, to understand and comply with the Administrative Procedure Act. OAL also accepts petitions challenging alleged underground regulations–those rules issued by state agencies which meet the APA’s definition of a “regulation” but were not adopted pursuant to the APA process and are not expressly exempt. OAL also oversees the publication and distribution, in print and on the Internet, of the California Code of Regulations and the California Regulatory Notice Register.

Rulemaking Process. OAL is responsible for ensuring that California state agencies comply with the rulemaking procedures and standards set forth in California’s APA. A “regulation” is any rule, regulation, order or standard of general application or the amendment, supplement, or revision of any rule, regulation, order, or standard adopted by any state agency to implement, interpret, or make specific the law enforced or administered by it. When adopting regulations, every department, division, office, officer, bureau, board or commission in the executive branch of the California state government must follow the rulemaking procedures in the APA (Government Code section 11340 et seq.) and regulations adopted by the Office of Administrative Law (OAL), unless expressly exempted by statute from some or all of these requirements.

The APA requirements are designed to provide the public with a meaningful opportunity to participate in the adoption of regulations or rules that have the force of law by California state agencies and to ensure the creation of an adequate record for the OAL and judicial review.

Regulations subject to the APA are generally adopted through the “Regular” or “Emergency” rulemaking processes. The rulemaking process used by an agency to adopt regulations will dictate what procedural requirements must be followed, including but not limited to the contents of the rulemaking record, timeframes, opportunities for public participation, OAL’s review, and effective dates for the regulations.

The Legislature Enacts Statutes. The People of the State may also enact statutes and constitutional provisions. Administrative agencies adopt, amend, and repeal regulations under the authority granted to them by either constitutional provisions or statutes. Unless the Legislature has created an exemption, agencies must follow the procedures in the APA when adopting, amending or repealing regulations.

Generally, OAL has 30 working days to approve or disapprove a regulation after it has been submitted to OAL for review (Government Code section 11349.3). Weekends and state holidays are excluded from counting this 30 working day time period. OAL only has 10 calendar days to approve or disapprove an emergency regulation after it has been submitted to OAL for review (Government Code section 11349.6). When counting calendar days, weekends and state holidays are not excluded unless they fall on the last day of the review period. An example of counting calendar days for OAL’s review of emergency regulations would be as follows: an agency submits emergency regulations to OAL on Wednesday, April 4, 2007. Excluding the submittal day, Day 1 of the ten days is Thursday. Day 10 falls on Saturday, April 14th. Excluding the weekend, the due date for filing the regulation with the SOS will fall on Monday, April 16th. (If the Monday following a weekend is a state holiday, the due date will fall on Tuesday.)

California Regulatory Notice Register. The California Regulatory Notice Register contains notices of proposed regulatory actions by state regulatory agencies to adopt, amend, or repeal regulations contained in the California Code of Regulations. A state agency must complete its rulemaking and submit the rulemaking file to OAL within one year of the date of publication of a Notice of Proposed Action (“Notice”) in the Notice Register. (Government Code Section 11346.4(b)). OAL provides online access to current and past issues of the California Regulatory Notice Register online.

The Notice of Proposed Action contains a variety of information about the nature of the proposed regulatory changes including various findings, determinations, statutory authority and the law(s) being implemented. The Notice of Proposed Action also contains procedural information, such as deadlines for submitting comments, scheduling of hearings (if any), and where copies of the Express Terms, Initial Statement of Reasons, and any other supporting information can be obtained. For non-major regulations, the results of the Economic Impact Assessment will be included in the Notice of Proposed Action. If the rulemaking is a major regulation, any comments provided by the Department of Finance (DOF), along with the agency’s responses, will be included in the Notice of Proposed Action.

OAL publishes the Notice Register every Friday. To be published, a Notice must be received by OAL no later than 10 calendar days before the publication date. Section 5, Title 1, California Code of Regulations describes what an agency must submit with its Notice. The Notice for a rulemaking must be published at least 45 calendar days before the close of the public comment period and public hearing, if a hearing is scheduled (Government Code section 11346.4(a).

The Notice Register Publication Schedule identifies the required deadline date for OAL to receive the Notice for publication in order to meet the desired date for the close of the public comment period and for the public hearing, if a hearing is scheduled.

Office of Regulatory Counsel. This bill proposes to establish the ORC, within the Governor’s office, and under the direction and control of an executive officer, to draft and assist in the preparation, consideration, amendment, and repeal of regulations for a state agency, before the state agency submits a proposed action regarding that regulation to the OAL for publication in the California Regulatory Notice Register.

The author’s office and supporters of the bill contend that the “need for specialized drafting attorneys is borne out by the fact that the number one reason for the [OAL] rejecting regulations is based on the lack of clarity. The lack of clarity can generally be addressed by good drafting attorneys. While the attorneys at OLC specialize in drafting statutes for the Legislature, California’s 200+ rulemaking entities also need attorneys in the same – those who specialize in drafting regulations.”

Further, “considering the volume of regulations being proposed every year (which is 600 to 700 per year), there should be a centralized location of attorneys trained to draft regulatory language. Just like OLC has developed an outstanding team of legislative attorneys, the executive branch needs a team of regulatory attorneys to drafting the language of regulations, as well as assist rulemaking entities in the preparation of documents that accompany regulations.”

Policy Consideration. It has been the general practice of the Senate Governmental Organization Committee, when considering legislation establishing new entities within state government, to request a sunset date to allow for the future review of any new state entity and to determine whether that new state entity is efficiently and effectively providing its intended services. Therefore, the Committee may consider requesting an amendment to this bill adding a 10-year sunset.

Prior/Related Legislation

SB 1910 (Johannessen, Chapter 501, Statutes of 1996) required the OAL to make the California Code of Regulations available on the Internet, free of charge, as specified.

SB 726 (Hill, Chapter 870, Statutes of 1993) requires a state agency, when proposing to adopt or amend a regulation that affects small business, to adopt a plain English policy statement overview regarding each proposed regulation containing specified information, to draft the regulations in plain English, as defined, and to make available to the public a noncontrolling plain English summary of a regulation, if the regulation is technical in nature.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

SUPPORT:

Acclamation Insurance Management Services
Allied Managed Care
American Petroleum and Convenience Store Association
Boma California
California Association of Winegrape Growers
CA Association of Sheet, Metal & Air Conditioning Contractors Association
California Farm Bureau
California Hotel & Lodging Association
California League of Food Producers
Coalition of Small & Disabled Veteran Business
Family Business Association of California
Flasher Barricade Association
Housing Contractors of California

OPPOSITION:

None received

ARGUMENTS IN SUPPORT: In support of the bill, the California Winegrape Growers write that the “Legislature contemplated this kind of approach when it created the [APA]. For example, Section 11346.5(a)(3) of the Government Code requires proposed regulations to include ‘An informative digest drafted in plain English in a format similar to the Legislative Counsel’s digest on legislative bills.’ SB 1104 is consistent with and builds upon existing provisions of the APA.”

Further, “State agencies routinely report they simply do not have the bandwidth to do the detailed work needed to draft regulations. For example, at the November, 2023 meeting of the Occupational Safety and Health Standards Board, Cal/OSHA staff stated that they cannot go line by line in drafting language with stakeholders because, ‘our regulations are pretty complex and lengthy.’ Conversely, Legislative Counsel routinely drafts legislation that is both complex and dozens of pages long. The Office of Regulatory Counsel, as proposed by SB 1104, would relieve some of the demands on agency staff and facilitate the creation of regulations that are written in a more cohesive fashion and with uniformity across multiple agencies.”