Regulations: economic analysis.

(1) Existing law, the Administrative Procedure 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 Office of Administrative Law. This bill would also provide that the activities of the office in reviewing and approving regulations, and amendments or repeal of regulations, as prescribed, be exempt from the California Environmental Quality Act. (2) The act requires that state agencies proposing to adopt regulations, prior to publication of the notice of proposed action, involve parties that would be subject to the proposed regulations in public discussions regarding those proposed regulations, when the proposed regulations involve complex proposals or a large number of proposals that cannot easily be reviewed during the comment period. The act requires an agency that does not or cannot comply with that requirement to state the reasons for noncompliance with reasonable specificity in the rulemaking record. The act also provides that these requirements are not subject to judicial review or a specified review by the office. This bill would make the requirement to involve parties that would be subject to the proposed regulations in public discussions regarding those proposed regulations applicable to all proposed regulations. The bill would also require, for a major regulation, as defined, that an agency consider and evaluate reasonable alternatives to a proposed regulation that are proposed by a party who would be subject to the proposed regulation. The bill would require that an agency that does not or cannot comply with these requirements justify its noncompliance by substantial evidence. The bill would repeal the provisions that exempt these requirements from judicial review and review by the office. (3) The act requires a state agency proposing to adopt, amend, or repeal any administrative regulation to assess the potential for adverse economic impact on California business enterprises and individuals, as prescribed. The act also requires the Department of Finance to adopt and update, as necessary, instructions for inclusion in the State Administrative Manual prescribing the methods that an agency shall use in making certain determinations relating to cost impacts of regulations. This bill would require each state agency proposing to adopt, amend, or repeal a regulation, in addition to those existing economic analysis requirements, to prepare a cost-benefit economic analysis of the proposed regulation with specified information. Commencing July 1, 2012, this bill would require an agency that proposes to adopt a major regulation to prepare an economic competitiveness assessment with specified information. The bill would establish within the Department of Finance the Office of Economic and Regulatory Analysis, which would be required to review and approve economic analyses of proposed regulations, including economic competitiveness assessments conducted for proposed major regulations, and perform other related duties, as specified. The bill would require the Office of Economic and Regulatory Analysis to adopt guidelines that each agency would be required to follow for purposes of performing the economic assessments, including economic competitiveness assessments. (4) The act requires a state agency to issue a notice of proposed action, with specified information relating to the proposed regulation, including an informative digest and a statement related to the description of cost impacts known to the agency. This bill would require additional information to be included in the informative digest, as specified, and would eliminate the requirement that the agency include a prescribed statement in the notice of proposed action when no cost impacts are known to the agency. The bill would also require that the notice of proposed action also include a statement of the results of the economic assessment, including the economic competitiveness assessment performed for a major regulation, and the corresponding approval from the Office of Economic and Regulatory Analysis. (5) The act requires the office to approve or disapprove regulations submitted by an agency within 30 days. The office is required to make determinations regarding submitted regulations using the standards of necessity, authority, clarity, consistency, reference, and nonduplication, as defined. The act requires that the office disapprove and return to the agency a regulation that does not satisfy prescribed requirements of the act. The act authorizes an agency to appeal to the Governor a decision by the office to disapprove a proposed regulation, as specified. This bill would define the term "competitiveness" and revise the definition of the term "consistency," as specified. The bill would increase to 60 days the amount of time in which the office is required to approve or disapprove a submitted regulation. The bill would require the office to review a major proposed regulation for the standard of competitiveness. The bill would repeal the provisions that authorize an agency to appeal an office decision to the Governor. (6) The act requires the office, at the request of any standing, select, or joint committee of the Legislature, to initiate a priority review of any regulation, group of regulations, or series of regulations that the committee believes does not meet the standards of necessity, authority, clarity, consistency, reference, and nonduplication. If the office determines that the regulation no longer meets those standards, the office is required to file an order of repeal of the regulation with the Secretary of State, as specified. The act requires the office to make its determination within 60 days, and if the office fails to do so, the regulation is deemed to meet those standards. This bill would repeal the requirement that a regulation be deemed to meet the review standards if the office fails to make a determination within 60 days. This bill would require the Office of Administrative Law to convene public workshops, as specified, for determining whether regulations should be subject to the priority review process. The bill would require the office to initiate the priority review process for a regulation, if the office determines it no longer meets the required standards and an alternative has been proposed, as specified. (7) The act exempts the State Water Resources Control Board from the procedures of the act, except as provided. This bill would require the State Water Resources Control Board to comply with the economic assessment requirements of the act and would specify that an exemption for certain requirements and permits and waivers are limited to those for individual applicants, as specified. (8) This bill would make conforming changes.