BILL ANALYSIS Ó
AB 12
SENATE COMMITTEE ON ENVIRONMENTAL QUALITY
Senator Jerry Hill, Chair
2013-2014 Regular Session
BILL NO: AB 12
AUTHOR: Cooley
AMENDED: May 24, 2013
FISCAL: Yes HEARING DATE: July 3, 2013
URGENCY: No CONSULTANT: Joanne Roy
SUBJECT : ADMINISTRATIVE PROCEDURE ACT: STANDARDIZED
REGULATORY IMPACT ANALYSES
SUMMARY :
Existing law :
1) Under the Administrative Procedure Act (APA) (Government
Code (GO) §11340 et seq.), establishes rulemaking
procedures and standards for state agencies. State
regulations must also be adopted in compliance with
regulations adopted by the Office of Administrative Law
(OAL). The APA, among other things:
a) Requires every agency to prepare and submit a
specified notice of the proposed action and make certain
information available to the public (e.g., draft
regulation in "plain English"; statement of reasons for
proposing the adoption, amendment, or repeal of a
regulation; the problem the agency intends to address;
benefits anticipated from the regulatory action;
evidence to support a determination that the action will
not have a significant adverse economic impact on
business). (GO §11346.2).
i) The statement of reasons must specify the
benefits anticipated from the regulatory action
such as the protection of health and safety or the
environment.
ii) The statement of reasons must identify each
technical, theoretical, and empirical report upon
which the agency relies in proposing the
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regulation.
b) Requires state agencies proposing to adopt, amend, or
repeal an administrative regulation to assess the
potential for adverse economic impact on California
businesses and individuals. (GO §11346.3).
i) In assessing the potential for adverse
economic impacts, state agencies must meet certain
requirements (e.g., be based on adequate
information concerning the need for, and
consequences of, proposed action; consider
industries affected including the ability to
compete with businesses in other states).
ii) In assessing the potential adverse economic
impacts, the state agency must assess the benefits
of the regulation to public health and welfare,
worker safety, and the state's environment.
iii) State agencies must also assess whether, and
to what extent, regulations will affect certain
matters (e.g., creation or elimination of jobs in
the state, creation of new businesses or
elimination of existing businesses in the state,
expansion of businesses currently doing business in
the state; benefits of the regulation).
c) Prior to November 1, 2013, requires the Department of
Finance (DOF), in consultation with the Office of
Administrative Law (OAL) and other state agencies, to
adopt regulations for conducting the standardized
regulatory impact analyses required by GO §11346.3. (GO
§11346.36).
d) Among the requirements for the regulations for
conducting a standardized regulatory impact analysis,
the regulations must assist agencies in specifying the
methodologies for assessing and determining the benefits
and costs of the proposed regulation in monetary terms
as well as assessing the value of nonmonetary benefits
such as the protection of public health and safety or
the environment. (GO §11346.36(b)(1)).
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e) OAL must return any regulation to the adopting agency
under certain conditions, including failure to complete
the economic impact assessment or failure to include the
assessment in the rulemaking proceeding. (GO §11349.1).
f) Requires DOF and OAL, from time to time, to review
the standardized regulatory impact analyses for
adherence to the regulations adopted by the department
pursuant to GO §11346.36. (GO §11349.1.5(a)).
g) Prior to November 1, 2015, requires OAL to submit to
the Legislature a report describing the extent to which
standardized regulatory impact analyses for proposed
major regulations adhere to the regulations adopted by
the department pursuant to GO §11346.36. (GO
§11349.1.5(b)).
h) Authorizes OAL to notify the Legislature of a state
agency's noncompliance with regulations adopted pursuant
to GO §11346.36. (GO §11349.1.5(c)).
2) Requires each board, department, and office within the
California Environmental Protection Agency, before adopting
any major regulation, to evaluate alternatives and consider
whether there is a less costly alternative or combination
of alternatives that would be equally effective in
achieving increments of environmental protection in a
manner that ensures full compliance with statutory mandates
within the same amount of time as the proposed regulatory
requirements. Under this provision, "major regulation"
means any regulation that will have an economic impact on
the state's business enterprises in an amount exceeding $10
million. (Public Resources Code §57005).
3) Provides the California Air Resources Board (ARB) with
primary responsibility for control of mobile source air
pollution, including adoption of rules for reducing vehicle
emissions and the specification of vehicular fuel
composition. (Health and Safety Code (HSC) §39000 et seq.
and §39500 et seq.). When making information available to
the public under the APA relating to studies and reports
that ARB relied upon, ARB must also make information public
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that is related to, but not limited to, air emissions,
public health impacts, and economic impacts before the
comment period for any regulation proposed for adoption by
the ARB. (HSC §39601.5).
This bill :
1) Requires the Department of Finance (DOF) and OAL to
annually review standardized regulatory impact analyses
(which are required for state agencies to do when adopting,
amending, or repealing administrative regulations) for
adherence to regulations adopted by DOF and report to the
Legislature.
2) Requires the report to include any recommendations for the
Legislature to consider to improve state agency performance
and compliance in the creation of the standardized
regulatory impact analyses as described in GO §11346.3.
3) Requires OAL to post the report and notice of noncompliance
of a state agency with regards to conducting the
standardized regulatory, economic impact analysis on its
website.
COMMENTS :
1) Purpose of Bill . According to the author, "AB 12 increases
accountability and legislative oversight in the regulatory
adoption process by requiring DOF to review major
regulatory impact analysis reports and issue its findings
annually to the Legislature on state agencies' compliance
in creating the reports. It further increases government
transparency by instructing the OAL to make public notice
on its website of any state agency failing to issue a
standardized regulatory impact report or failing to comply
with the guidelines set out by DOF in creating the report."
2) Costs of inaction . While some parties may disagree over
various economic studies, delays in acting on certain
matters, such as climate change, can also result in costs.
A recent Climate Action Team (CAT) draft assessment on
climate change provides analyses on climate change impacts
relating to various matters, such as warming trends,
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precipitation, sea-level rise, agriculture, forestry, water
resources, and public health.
For example, regarding sea-level rise, the report notes, "Sea
level measured over several decades at California tide gage
stations has risen at a rate of about 17 cm (7 inches) per
century. The sea-level rise projections in the 2008
Impacts Assessment indicate that the rate and total
sea-level rise in future decades may increase substantially
above the recent historical rates. The 2008 estimates
represent a significant departure from those in the 2006
CAT report." According to the report, "By 2050, sea-level
rise could range from 30 to 45 cm (11 to 18 inches) higher
than in 2000, and by 2100, sea-level rise could be 60 to
140 cm (23 to 55 inches) higher than in 2000. As sea level
rises, there will be an increased rate of extreme high
sea-level events, which can occur when high tides coincide
with winter storms and their associated high wind wave and
beach run-up conditions." The draft CAT report notes,
"analysis reveals that $100 billion of property and 475,000
people are located in Bay and open coast areas vulnerable
to inundation in 2099. However, risk is not evenly
distributed among the counties in the San Francisco Bay,
with San Mateo and Alameda counties having 40 percent of
assets at risk, the greatest amount in the Bay Area.
Marin, Santa Clara, and San Francisco counties are also
exposed to a high degree of risk; exposure to risk in these
counties is higher than in all other counties along the
Pacific coast, with the exception of Orange County.
Exposure to risk in Sonoma and Napa counties is relatively
modest. While all sectors are vulnerable to the impacts
from sea-level rise, 70 percent of all assets at risk are
residential, followed by the commercial sector with 20
percent. In addition to buildings and their contents, a
wide range of other critical infrastructure, such as roads,
hospitals, schools, emergency facilities, water and
wastewater treatment plants, and others will also be at
increased risk of flooding. Continued development in
vulnerable areas would put additional assets and people at
risk."
3) Environmental and public health impacts and costs . This
bill concerns regulations adopted by state agencies and
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assessing potential adverse economic impacts of those
regulations. However, regulations may also have public
health and environmental impacts with associated costs,
e.g. poor air quality and costs relating to those effects
such as increased number of premature deaths and the cost
of medical care.
According to ARB regarding regulations on heavy-duty
diesel-fueled vehicles for particulate matter (PM)
emissions and nitrous oxides (NOx) emissions, for example,
"The regulation is projected to provide significant diesel
PM and NOx emissions reductions that would have a
substantial positive air quality impact throughout
California. PM emissions are projected to be reduced by
about 13 tons per day in 2014 and 3.5 tons per day in 2023.
NOx emissions are projected to be reduced by about 124
tons per day and 98 tons per day, for 2014 and 2023,
respectively. These reductions are critical towards
meeting federal clean air standards. The regulation would
also reduce diesel PM emissions by the maximum level
achievable from inuse on-road diesel vehicles. Staff
estimates that approximately 9,400 premature deaths
statewide would be avoided by the year 2025 from the
implementation of the regulation, and would provide
associated health benefits of $48 to $69 billion."
ARB also notes, "The cost impact of the regulation is not
expected to be significant. While it is expected that most
fleets will pass through these costs to their customers,
this is expected to result in a negligible impact on
consumers, equating to about a few cent increase for a pair
of shoes, less than one one-hundredth of a cent increase
per pound of produce, or an increase of from $3 to $10 for
a new car."
According to a recent RAND Corporation report, "Meeting
federal clean air standards would have prevented an
estimated 29,808 hospital admissions and ER visits
throughout California over 2005-2007." The report notes
that Medicare spent $103,600,000 on air pollution-related
hospital care during 2005-2007, Medi-Cal spent $27,299,199,
and private health insurers spent about $55,879,780 on
hospital care. According to the RAND report, "These
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results suggest that the stakeholders of public programs
may benefit substantially from meeting federal clean air
standards. Private health insurers and employers (who
contribute to employee health insurance premiums) may also
have sizable stakes in improved air quality."
4) Recent APA reform . SB 617 (Calderon, Pavley), Chapter 496,
Statutes of 2011, revises various provisions of APA and
requires each state agency to prepare a standardized
regulatory impact analysis with respect to the adoption,
amendment, or repeal of a major regulation. The economic
impact analysis must include the benefits of the regulation
to the health and welfare of California residents, worker
safety, and the state's environment.
When deliberating the cost of regulation, it is important to
look at the reason the regulation was passed in the first
place. It is often to address a public health or
environmental protection need. For example, the Clean
Water Act ensures drinking water quality. While
regulations are adopted to implement the act, which may
have a cost to businesses and individuals, they also have
crucial societal benefits and purpose. To provide a more
balanced economic impact analysis, in addition to
identifying any adverse economic impacts of a regulation,
it is appropriate and prudent for state agencies to
identify and give adequate consideration to, for example:
a) benefits to the regulation (including environmental and
health benefits); and, b) reduced environmental impacts and
reduced costs to the public from the regulation.
5) Double Referral to Senate Committee on Governmental
Organization . This measure is double-referred to the
Senate Committees on Governmental Organization and
Environmental Quality. AB 12 was heard on June 25, 2013,
in Senate Governmental Organization Committee and passed
out with a vote of 11-0.
SOURCE : Author
SUPPORT : Alliance of Automobile Manufacturers
American Council of Engineering Companies of
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California
California Asian Pacific Chamber of Commerce
California Association of Health Facilities
California Business Properties Association
California Chamber of Commerce
California Construction and Industrial
Materials Association
California Hotel & Lodging Association
California Independent Oil Marketers
Association
California Manufacturers & Technology
Association
California Retailers Association
California Service Station & Automotive Repair
Association
California Trucking Association
Chemical Industry Council of California
Consumer Specialty Products Association
Golden State Builders Exchanges
Industrial Environmental Association
National Aerosol Association
Pacific Merchant Shipping Association
United Contractors
Western States Petroleum Association
OPPOSITION : None on file