Regulatory Dithering

The California Legislature passes hundreds of new laws every year, many of which require executive branch interpretation and implementation. According to legislative process maven Chris Micheli, the California Administrative Code comprises more than sixty thousand separate sections to give effect to legislative mandates.

In turn, the Administration is accountable to the Legislature for faithful execution of the laws. This is vital to ensure that the legislative intent is respected and that those subject to the regulations are afforded due process and fair treatment.

But what happens when the law to be implemented was passed by voters as a ballot initiative? Judging by recent experience,  some state agencies and departments take a more … casual approach.

Proposition 12 was approved by voters in 2018. The measure added new requirements for confining animals raised for pork and egg production. The measure provided guidance on the new livestock husbandry policies and directed the California Department of Food and Agriculture (CDFA) to write the specific rules by fall 2019 to then take effect beginning in 2022, more than three years after voters approved the initiative.

Trouble is, CDFA didn’t adopt final regulations for doing business until more than four months after the law went into effect last January. And this was only after the regulated producers sought and were granted a court order that enforcement could not occur until at least 180 days after adoption of the regulation. Until then, it was conceivable that the agency might begin enforcement of brand new regulations the very day they were enacted – rather than the two-year phase-in contemplated by the voters in Proposition 12. In the meantime, this absence of regulation has meant the supply chain for pork products must operate without knowing how state regulators will enforce the new law.

A few blocks from CDFA headquarters, a similar scenario is playing out in an entirely different agency.

The California Privacy Protection Agency was created by Proposition 24, approved by voters in 2020. The measure made a number of changes in consumer privacy protection law and directed the new agency to adopt regulations by July 1 of this year. The agency will not come close to meeting this deadline.

During a legislative budget subcommittee hearing this spring, the agency’s executive director waved away concerns that the regulations would not be timely adopted, stating that the agency’s governing board was supportive of the rulemaking process extending to the end of the calendar year.

In his defense, the executive director pointed to yet another agency, the Department of Justice, which also missed a regulatory adoption deadline for earlier consumer privacy regulations. The fact that the Attorney General (within the Executive Branch, but not part of the Governor’s administration) acted with impunity apparently taught the wrong object lesson.

State administrative agencies do not make laws – that is the job of the Legislature and occasionally the voters. By the same token, state agencies cannot ignore laws duly passed.

Most laws and ballot measures are drafted to adopt standards and ensure compliance. Sandbagging businesses is in nobody’s interest, and implementing agencies normally recognize this as a matter of course. There may be legitimate reasons for agencies to miss regulatory deadlines, such as a worldwide pandemic or hiring challenges. But it should be up to the Legislature judge the merits and, if justified, extend effective dates and compliance deadlines. Ballot measures often allow some legislative amendment if it is in furtherance of the measure.

Administrative agencies should seek this legislative safety valve, otherwise regulated businesses are unnecessarily penalized, costs go up for consumers, and compliance is hobbled – a scenario that is in no one’s interest.

Loren Kaye, President, California Foundation for Commerce and Education