Existing law, the Administrative Procedure Act, sets forth the requirements for the adoption, publication, review, and implementation of regulations by state agencies. The act prohibits a state agency from issuing, utilizing, enforcing, or attempting to enforce any guideline, standard of general application, or other rule that is a regulation, as defined, unless it has been adopted as a regulation and filed with the Secretary of State. The act further requires every agency subject to the act to submit to the Office of Administrative Law a notice of proposed action and to make available to the public a copy of an initial statement of reasons for the regulation. Existing

Existing law additionally requires a state agency proposing to adopt, amend, or repeal an administrative regulation to 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, as specified. individuals, as specified. Each state agency proposing to adopt, amend, or repeal a major regulation on or after November 1, 2013, is also required to prepare a standardized regulatory impact analysis addressing various additional factors. Existing law generally defines a major regulation for these purposes to mean the proposed adoption, amendment, or repeal of a regulation will have an economic impact on California business enterprises and individuals in an amount exceeding $50,000,000, as estimated by the agency.

This bill would make a nonsubstantive change to those provisions. require a state agency to provide a minimum 21-day public comment period for purposes of determining whether the proposed adoption, amendment, or repeal of a regulation would be a major regulation that requires a standardized regulatory impact analysis.

Existing law, the Administrative Procedure Act, sets forth the requirements for the adoption, publication, review, and implementation of regulations by state agencies. Existing law requires a state agency proposing to adopt, amend, or repeal an administrative regulation to 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, as specified.

This bill would make a nonsubstantive change to those provisions.

SENATE COMMITTEE ON APPROPRIATIONS

Senator Anthony Portantino, Chair

2023 - 2024 Regular Session

SB 279 (Niello) - Administrative regulations: public participation: comment process

Bill Summary:

SB 279 establishes a 21-day minimum public comment period for determining if a state agency’s proposed regulation change is a major regulation that requires a Standardized Regulatory Impact Assessment (SRIA) and requires the Department of Finance (DOF), upon receipt of a SRIA, to provide a 30-day public comment period and then comment on that analysis, as specified.

Fiscal Impact:

Unknown, potentially significant ongoing fiscal impact to state agencies that are not exempt from the provisions of the Administrative Procedure Act (General Fund and various special funds). Actual costs to each impacted state agency will likely vary and depend on the number of regulations each agency seeks to change and the extent that opening the 21-day comment period necessitates additional staff and legal resources to facilitate and address public comments.

Background:

Under existing law, all regulations are required to have an analysis of the potential economic impact of a regulation. SB 617 (Calderon, Chapter 496, Statutes of 2011) established additional regulatory impact assessment standards for major regulations. Specifically, SB 617 requires a state agency to conduct a SRIA when it estimates that a proposed regulation has an economic impact exceeding $50 million. The purpose of a SRIA is to assess the potential economic, social, and environmental impacts of the proposed regulation on businesses, consumers, and other stakeholders. The analysis typically includes information on the problem the regulation aims to address, the objectives of the regulation, alternative options considered, and the potential benefits and costs associated with the proposed regulation.

Generally, DOF oversees the SRIA process and provides guidance to state agencies. DOF is required to review the completed SRIA submitted by agencies and provide comments to the agency on the extent to which the assessment adheres to the regulations adopted by DOF.

Proposed Law:

• Requires a state agency, for purposes of determining whether a proposed adoption, amendment, or repeal of a regulation would meet the definition of a “major regulation,” to provide a minimum 21-day public comment period to allow interested parties to submit economic impact statements or other related information concerning the proposed regulation.
• Requires DOF to provide a 30-day public comment period upon receipt of a SRIA and then comment on that analysis within 30 days of receiving public input.
• Makes other nonsubstantive and conforming changes.

Related Legislation:

AB 2893 (Daly, 2022) would have required state agencies proposing to adopt, amend, or repeal a major regulation to update their analysis to reflect any comments received from DOF, as specified; would have required any update to be available for an additional 30 days, as specified; and, would have required DOF to adopt regulations for communicating the results of the SRIA in a standardized format, as specified. AB 2893 was held on the Suspense File in this committee.

Staff Comments:

Total costs of the bill are unknown, but may be significant. For example, the California Air Resources Board reports that it will need approximately $1.4 million General Fund in Fiscal Years 2023-24 and ongoing for seven positions to comply with the requirements of the bill, including preparing meeting materials, soliciting and documenting public comment, responding to comments, writing reports, conducting legal research, and revising regulatory proposals.

While most impacted state agencies may not require as extensive resources, to the extent that agencies anticipate similar resource needs, costs to each agency may range in the hundreds of thousands of dollars.

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SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION

Senator Bill Dodd

Chair

2023 - 2024 Regular

Bill No: SB Hearing Date: 4/25/2023

SUBJECT:

DIGEST: This bill establishes a 21-day minimum public comment period for determining if a proposed regulation change is a “major regulation,” requiring a standardized regulatory impact analysis (SRIA), and requires the Department of Finance (DOF), upon receipt of an analysis, to provide a 30-day public comment period, as specified.

ANALYSIS:

Existing law:

1. The Administrative Procedures Act (APA) sets forth the requirements for the adoption, publication, review, and implementation of regulations by state agencies, as specified.
2. Prohibits a state agency from issuing, utilizing, enforcing, or attempting to enforce any guideline, standard of general application, or other rule that is a regulation, as defined, unless it has been adopted as a regulation and filed with the Secretary of State (SOS).
3. Requires each state agency proposing to adopt, amend, or repeal an administrative regulation to assess the potential for adverse economic impact on California business enterprises and individuals, as specified.
4. Requires each state agency proposing to adopt, amend, or repeal a major regulation and that has prepared an SRIA to submit that analysis to DOF upon completion.
5. Defines “major regulation” to mean the proposed adoption, amendment, or repeal of a regulation that will have an economic impact on California business enterprises and individuals in an amount exceeding $50 million, as estimated by the agency.

This bill:

1. Requires a state agency, for purposes of determining whether a proposed adoption, amendment, or repeal of a regulation would meet the definition of a “major regulation,” to provide a minimum 21-day public comment period to allow interested parties to submit economic impact statements or other related information concerning the proposed regulation.
2. Requires DOF, upon receipt of the SRIA, to provide a 30-day public comment period on the analysis, and requires DOF to then comment, within 30 days of receiving public input on that analysis, on the extent to which the analysis adheres to the adopted regulations, as specified.

Background

Purpose of the Bill. According to the author’s office, “the SRIA process is an important tool to ensure that state agencies are analyzing and implementing laws in a cost-effective way for major regulations. Their requirement to produce these analyses will be best achieved with information from the public that includes facts, data points, testimonies and economic data that may challenge their own economic assumptions. For these reasons it is critical that state entities work with the public and have formal processes in place to hear from the public and stakeholder communities they regulate.”

The California Administrative Procedures Act. The APA, originally established by SB 705 (DeLap, Chapter 867, Statutes of 1945), predates the federal version and is a set of laws and regulations that governs how state agencies in California must conduct administrative rulemaking and adjudicative proceedings. The APA was established in response to concerns that the number of administrative regulations had grown significantly, and that many regulations were written in an unclear and unnecessarily complex manner. The APA aims to ensure that regulations are written in a comprehensible manner, are authorized by statute, and are consistent with other law.

To achieve these goals, the APA established the Office of Administrative Law (OAL) as a central office within state government charged with the orderly review of adopted regulations. The OAL is responsible for reviewing regulations to ensure that they are written in a comprehensible manner, are authorized by statute, and are consistent with other law. The OAL is also tasked with reducing the number of administrative regulations and improving the quality of those regulations that are adopted.

State agencies must actively seek to reduce the unnecessary regulatory burden on private individuals and entities by substituting performance standards for prescriptive standards wherever performance standards can be reasonably expected to be as effective and less burdensome, and that this substitution shall be considered during the course of the agency rulemaking process.

The APA requires that state agencies must give the OAL ready access to their records and full information and reasonable assistance in any matter of research requiring recourse to them or to data within their knowledge or control.

Furthermore, any interested person may petition a state agency requesting the adoption, amendment, or repeal of a regulation as provided in Article 5 of the APA. The state agency must notify the petitioner in writing of the receipt and must within 30 days deny the petition indicating why the agency has reached its decision on the merits of the petition in writing or schedule the matter for public hearing in accordance with the notice and hearing requirements of that article.

The APA was designed to promote transparency, fairness, and public participation in the administrative process. Its main objectives are to ensure that regulations are written in a comprehensible manner, are authorized by statute, and are consistent with other law. The APA established the OAL to review and improve the quality of adopted regulations, and state agencies must actively seek to reduce the unnecessary regulatory burden on private individuals and entities.

Standardized Regulatory Impact Analysis. An SRIA is an evaluation conducted by a state agency proposing to adopt, amend, or repeal a major regulation. The purpose of this analysis is to assess the potential economic, social, and environmental impacts of the proposed regulation on businesses, consumers, and other stakeholders. SB 617 (Calderon, Chapter 496, Statutes of 2011) requires state agencies to conduct an SRIA when it estimates that a proposed regulation has an economic impact exceeding $50 million.

In California, DOF oversees the standardized regulatory impact analysis process and provides guidance to state agencies. The analysis typically includes information on the problem the regulation aims to address, the objectives of the regulation, alternative options considered, and the potential benefits and costs associated with the proposed regulation.

The goal of a standardized regulatory impact analysis is to ensure that the potential impacts of regulations are thoroughly assessed and weighed against alternative solutions, and to promote transparency and informed decision-making in the rulemaking process. Existing law requires each state agency proposing to adopt, amend, or repeal a major regulation to prepare an SRIA. For purposes of the APA, “major regulation” generally means the proposed adoption, amendment, or repeal of a regulation that would have an economic impact on California business enterprises and individuals in an amount exceeding $50 million, as estimated by the agency.

This bill requires state agencies to provide a 21-day public comment period for determining if a proposed regulation is considered "major." This period allows interested parties to contribute information about the potential economic impact of the regulation, helping to better classify it.

Second, the DOF must offer a 30-day public comment period on the standardized regulatory impact analysis submitted by state agencies for major regulations. This change encourages transparency and allows the public to voice their opinions on the evaluation of the analysis.

Supporters of the bill state that these changes promote public engagement, giving people the opportunity to share their thoughts and information on the potential economic consequences of proposed regulations.

Prior/Related Legislation

AB 2893 (Daly, 2022) would have required state agencies proposing to adopt, amend, or repeal a major regulation to update their analysis to reflect any comments received from the DOF, as specified; requires any update to be available for an additional 30 days, as specified; and, requires DOF to adopt regulations for communicating the results of the SRIA in a standardized format, as specified. (Held on the Senate Appropriations Committee Suspense File)

SB 617 (Calderon, Chapter 496, Statutes of 2011) revised various provisions of the APA and required each state agency to prepare an SRIA, as specified, with respect to the adoption, amendment, or repeal of a major regulation, proposed on or after November 1, 2013.

SB 705 (DeLap, Chapter 867, Statutes of 1945) established the APA, which governs how state agencies in California must conduct administrative rulemaking and adjudicative proceedings.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No

SUPPORT:

Acclamation Insurance Management Services

Agricultural Council of California

Allied Managed Care

California Association of Winegrape Growers

Calexico Chamber of Commerce

California Attractions and Parks Association

California Building Industry Association

California Business Roundtable

California Chamber of Commerce

California Farm Bureau

California Restaurant Association

California Retailers Association

Coalition of Small and Disabled Veteran Businesses

Flasher Barricade Association

Housing Contractors of California

National Federation of Independent Business

Orange County Business Council

Western Growers Association

Wine Institute

OPPOSITION:

California Rural Legal Assistance Foundation

ARGUMENTS IN SUPPORT: The coalition of supporters write that, “[u]nder existing law, a state agency does its best to determine whether a SRIA needs to be completed. However, it is not reasonable to assume that the state agency has all the information it needs to make an accurate determination. When the public is not afforded an opportunity to formally provide information early in the regulatory process, a state agency may move a proposed regulation along without having complete information. When the public is then later made aware of the flaws in the fiscal analysis, it is just too late to rectify the problem without starting the regulatory process all over again.”

Further, supporters write that, “SB 279 would assure that those in favor of or opposed to a proposed regulation would have the same opportunity early in the process to provide valuable input, data, cost estimates and economic impact information. This would help the state agency proposing the regulation to make a fully informed estimate of costs. By increasing public review of the SRIA, SB 279 is closely aligned with the overarching public participation governing principle of the Administrative Procedure Act.”

ARGUMENTS IN OPPOSITION: In opposition to the bill, the California Rural Legal Assistance Foundation writes that the “administrative process already requires public comment periods on proposed regulations and stakeholder involvement in development of major regulations which afford adequate opportunity to provide comments on economic analyses. Additional public comment periods are completely unnecessary and would cause substantial delays in urgently needed development and update of regulations needed, for example to maintain and improve public and worker health and safety and environmental protection.”