DEFINITION - 6602

(Revised: 06/2014)

For the purposes of implementing these guidelines, the following definitions apply:

Agency, Local. Any city, county, special district, authority, or other political subdivision of the state.

Agency, State. Every office, officer, department, division, bureau, board, council, or commission in state government. A ―state agency‖ does not include an agency in the judicial or legislative branches of state government.

Direct Fiscal Costs

Economic Impact. All costs or all benefits, (direct, indirect and induced) of the proposed major regulation on business enterprises and individuals located in or doing business in California. All costs or all benefits, (direct, indirect and induced) of the proposed major regulation on business enterprises and individuals located in or doing business in California.

A direct economic impact is the first-round impact of the policy change from the proposed regulation, e.g., a cost to a business of investing in new required equipment or a benefit to consumers of having additional health coverage. There are two additional types of economic impacts – indirect and induced – which are the reactions to the direct economic impact. An indirect economic impact is the secondary economic impact resulting from the direct economic impact, e.g., the extra sales of equipment to the regulated businesses, or the additional supply or demand for health care from expanded coverage. An induced economic impact is any other economic impact of the policy change from the proposed regulation not accounted for by the direct or indirect economic impacts, e.g., the additional household spending by employees of firms selling extra equipment or in the health care industry, or the additional tax burden on businesses and individuals from fiscal costs associated with enforcing the regulation.

Calculating an economic impact for a major regulation includes all costs or all benefits, computed without regard to any offsetting benefits or costs that might result directly or indirectly, to business enterprises and individuals directly affected by the regulation.

Fiscal Costs. All additional expenses for which either supplemental financing or the redirection of existing staff and/or resources (with or without the need for supplemental funding) is required. Costs include those which can be absorbed in an agency's existing budget.

Indirect Fiscal Costs. Any costs related to the additional personnel or operating expenses described in the preceding which are not directly allocated or assigned to those personnel. They do not include a pro rata share of the costs of any manager or supervisor above the first line supervisors since it is assumed that any such supervisors would be in place whether or not the personnel hired to comply with the regulations were there. For example, if a regulation necessitated the hiring of additional staff in a county welfare department, it would not be appropriate to assign, through an indirect cost system, a portion of the costs of the county welfare director to those new personnel since the director would exist to perform his/her functions even if the new personnel were not hired.

Major Regulation. Any proposed rulemaking action adopting, amending or repealing a regulation subject to review by OAL that will have an economic impact on California business enterprises and individuals in an amount exceeding fifty million dollars ($50,000,000) in any 12-month period between the date the major regulation is estimated to be filed with the Secretary of State through 12 months after the major regulation is estimated to be fully implemented (as estimated by the agency), computed without regard to any offsetting benefits or costs that might result directly or indirectly from that adoption, amendment or repeal.

Mandate. A requirement with a consequence of noncompliance of either (1) a criminal penalty, (2) a civil liability, or (3) an administrative penalty.

Public Agency. Any state agency, city, county, special district, school district, community college district, county superintendent of schools, or federal agency.

Reasonable Compliance. No universal definition is available. However, the ―prudent person‖ test can be utilized to arrive at an appropriate definition of the term. For example, if an agency is required by regulation to provide transportation for certain persons, it clearly would not be appropriate to purchase limousine-type luxury automobiles to do so. On the other hand, it would not be appropriate to provide the service by purchasing tandem bicycles. Reasonable compliance can be achieved with some mode of transportation between the two extremes cited. The issuing agency must evaluate each instance separately and determine what ―reasonable compliance‖ would be. The estimate developed must clearly indicate the mode or level of activity it has assumed would achieve such compliance.

Since compliance connotes that the regulation involves a requirement, costs incurred by state or local agencies in exercising any authority granted by a regulation which is permissive or optional are not germane and need not be estimated.

Regulation. Every rule, order, or standard of general application or the amendment, supplement, or revision of any rule, order or standard adopted by any state agency to implement, interpret, or make specific the law enforced or administered by it, or to govern its procedure.

The term "emergency" means a situation that calls for immediate action to avoid serious harm to the public peace, health, safety, or general welfare. An emergency regulation is adopted pursuant to Government Code Section 11346.1.

Revenues. Any changes in the amounts of operating income received by state and local agencies as the result of an executive regulation must also be identified. In this context, ―revenue‖ includes taxes, state and/or federal assistance, fees, licenses, and so forth.

Savings.  Both actual budget reductions and the ―freeing up‖ of staff and/or resources for reassignment to other areas of legitimate concern of the agency.

School District. Any school district, community college district, or county superintendent of schools.

Special District. Any agency of the state which performs governmental or proprietary functions within limited boundaries. Special district includes a redevelopment agency, a joint powers agency or entity, a county service area, a maintenance district or area, an improvement district or improvement zone, or any other zone or area. Special district does not include a city, a county, a school district, or a community college district.

County free libraries established pursuant to Chapter 6 (commencing with Section 19100) of Part II of the Education Code, areas receiving county fire protection services pursuant to Government Code Section 25643, and county road districts established pursuant to Chapter 7 (commencing with Section 1550) of Division 2 of the Streets and Highways Code shall be considered special districts for all purposes of this section.

Standardized Regulatory Impact Assessment. An analysis of the economic impacts of proposed major regulations which is required for any proposed regulation that has an estimated economic impact to business enterprises and individuals located in or doing business in California exceeding $50 million in any 12-month period between the date the major regulation is estimated to be filed with the Secretary of State through 12 months after the major regulation is estimated to be fully implemented.