Cal. Code Regs. Tit. 1, § 2003 - Methodology for Making Estimates

Current through Register 2022 Notice Reg. No. 14, April 8, 2022

(a) In conducting the SRIA required by Section 11346.3(c) of the code, an agency shall use an economic impact method and approach that has all of the following capabilities:
(1) Can estimate the total economic effects of changes due to regulatory policies over a multi-year time period.
(2) Can generate California economic variable estimates such as personal income, employment by economic sector, exports and imports, and gross state product, based on inter-industry relationships that are equivalent in structure to the Regional Industry Modeling System published by the Bureau of Economic Analysis.
(3) Can produce (to the extent possible) quantitative estimates of economic variables that address or facilitate the quantitative or qualitative estimation 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; and
(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.
(b) The department's most current publicly available economic and demographic projections, which may be found on the department's website, shall be used unless the department approves the agency's written request to use a different projection for a specific proposed major regulation. Such approval shall be made on a case-by-case basis. An agency that anticipates that it will take more than one year to develop a major regulation is encouraged to work with the department in determining the most appropriate projections to use.
(c) Costs and benefits shall be separately identified for different groups of agencies, businesses and individuals if the impact of the regulation will differ significantly among identifiable groups.
(d) The agency shall compare regulatory alternatives with a baseline that reflects the anticipated behavior of individuals and businesses in the absence of the proposed major regulation and shall identify the baseline it used.
(e) In comparing proposed regulatory alternatives with an established baseline, an agency should consider including the following in its analysis:
(1) A description of feasible alternatives to the proposed major regulation and the rationale for choosing the proposed major regulation over the other alternatives considered. This description should also include:
(A) An explanation of how the need for the proposed major regulation affects the selection of regulatory alternatives;
(B) An evaluation of the legal and statutory constraints that limit the selection of regulatory alternatives.
(2) Whenever possible, at least two alternatives should be compared to the proposed major regulation, including:
(A) An alternative that could achieve additional benefits beyond those associated with the proposed major regulation; and
(B) A next-best alternative that would not yield the same level of benefits associated with the proposed major regulation, or is less likely to yield the same level of benefits.
(3) A comparison of the cost-effectiveness of different alternatives.
(A) Both total and incremental benefits and costs should be estimated. Incremental benefits and costs are the differences between the estimates associated with the alternatives considered.
(B) Whenever possible, final rather than intermediate outcomes should be used as measures of effectiveness.
(C) In cases where the proposed major regulation addresses more than one measure of effectiveness, weights should be applied to different categories of effects.
(D) The uncertainties associated with the estimates should be discussed.
(4) If there are significant differences between the incidence or timing of costs and benefits of a regulation, distributional effects should be addressed, including how the effects of the regulation are distributed, for example, by industry, income, race, sex, or geography, and how the effects are distributed over time.
(5) The assumptions, analytical methods, and data used in the analysis should be documented.
(A) To the extent possible, the analysis should rely on peer-reviewed literature.
(B) The source for all original information should be documented.
(f) An analysis of estimated changes in behavior by businesses and/or individuals in response to the proposed major regulation shall be conducted and, if feasible, an estimate made of the extent to which costs or benefits are retained within the business and/or by individuals or passed on to others, including customers, employees, suppliers and owners.
(g) For each assessment of the value of benefits of the proposed major regulation required by section 11346.3(c)(1)(F) of the code, the agency shall describe the applied analytical methods and data sources used and the results of that analysis.
(1) The agency's assessment may rely on current and (if applicable) projected market transaction data where a market exists that can directly reveal the quantity or monetary value of a projected benefit of the proposed major regulation.
(2) The agency may use an indirect approach (e.g., use values derived from related markets) in cases where the value of the benefits can be inferred from actual choices made by individuals in related markets. The assessment should rely on current and (if applicable) projected market transaction data.
(3) The agency may use a direct approach (e.g. use values from surveys), estimating the value of the benefits based on hypothetical choices made by individuals responding to a survey.
(4) The agency may estimate the value of the benefits based upon an existing study of another regulatory policy with similar subject or physical characteristics. This estimate should describe how the agency took into account the differences in the characteristics (such as time span, specific benefits to value, population, and other socio-economic factors) between the study and the proposed major regulation.
(h) In 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 major regulation, including the cost of enforcement and compliance to the agency, an agency shall follow the Department of Finance instructions in the State Administrative Manual sections 6601, 6602, and 6604 through 6616.


Cal. Code Regs. Tit. 1, § 2003

Note: Authority cited: Section 11346.36, Government Code. Reference: Sections 11342.548, 11346.3 and 11346.36, Government Code.

1. New section filed 10-29-2013; operative 11-1-2013 pursuant to Government Code section 11343.4(b)(3) (Register 2013, No. 44).

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