California's Regulatory Environment
When small businesses discuss California's economic difficulties, they frequently cite the state's regulatory climate as one of their primary reasons for relocating to other areas of the country.
No one disputes that there is a need for some government regulation, but California's reputation for over-regulation gives businesses pause when they consider creating jobs in the state. In fact, over-regulation was one factor over 650 CEOs across the country considered when they again ranked California as the worst state for business in a 2012 Chief Executive poll.
In an interview with the The Maddy Report for ValleyPBS, Jack Stewart, president of the California Manufacturers and Technology Association, noted that Sacramento is especially good at creating regulations that are specific only to California. These are added costs that may not be required in other states, driving some entrepreneurs to move their businesses out of California.
Additionally, businesses have long pointed out that the numerous duplicative regulations in California between state requirements and federal requirements can inhibit costs and hurt their ability to create jobs.
Such is the basis for a criticism from Andrew Puzder, CEO of CKE Restaurants, which owns brands like Carl's Jr. and Hardee's. In a 2011 column1, Puzder writes that although CKE Restaurants wants to invest in California and create jobs in the state, the regulatory climate discourages them from doing so. He observes that a permitting process that can take eight months or longer in California only takes six weeks in Texas.
There are several proposals in the Legislature this year to provide regulatory relief to small businesses. They include the following bills:
Assembly Bill 292 (Nestande) -- California Code of Regulations: open access- This bill would provide that the full text of the California Code of Regulations shall bear an open access creative commons attribution license, allowing any individual, at no cost, to use, distribute, and create derivative works based on the material for either commercial or noncommercial purposes.
Assembly Bill 376 (Donnelly) -- Regulations: notice- Requires any state agency enforcing a regulation to notify all businesses affected.
Assembly Bill 671 (Logue) -- State Air Resources Board: regulations: data sets- Requires the California Air Resources Board to release data sets used for studies or regulations to the public.
Assembly Bill 756 (Melendez) -- CEQA: Judicial Review - This bill would apply that an environmental impact report (EIR) on a project that it proposes to carry out or approve that may have a significant effect on the environment these provisions to a public works project, defined to mean an infrastructure project carried out by the city, county, or state government or contracted out to a private entity by the local or state government.
Assembly Bill 866 (Linder) -- Regulations – Reforms the current regulatory process to include business in the regulatory process and ensuring an economic analysis is completed for every major regulation proposed, allowing California to move forward with as much information possible.
Assembly Bill 887 (Allen) –State government: regulations: economic analysis- Makes technical changes to the Office of Administrative Law which reviews regulatory actions taken by agencies.
Assembly Bill 1302 (Hagman) -- Environmental quality: the Sustainable Environmental Protection Act- Will make changes to reform abuse of the CEQA process.
Assembly Constitutional Amendment 1 (Donnelly) -- Administrative regulations: legislative approval- Requires any state agency to submit all regulations to the Legislature for approval.