Relates to regulatory flexibility and review of rules

Summary of provisions

The bill requires the Secretary of State to provide oversight over the regulatory processes of state agencies, public authorities, and commissions through the review, analysis, and revision of proposed and existing rules in a manner that includes actions, such as:

* Ensuring that regulations faithfully execute the laws of the state, without unduly burdening the state's economy and regulated parties and without imposing deleterious costs and requirements on the businesses, local governments and citizens of this state;

* Conducting an assessment or requiring the assessment of the cumulative impact of rules on the state's policies, programs and regulations in the areas of energy, economic development, and the environment;

* Conducting an assessment or requiring the assessment of the cumulative impact of the state's environmental policies, programs, and regulations on the state's economic development and on the implementation of state's energy policies, programs and regulations;

* Issuing or requiring the issuance of a regulatory flexibility analysis and assessment of the economic and technological feasibility of compliance with rules, as well as an evaluation, to the fullest extent possible, of the fiscal impact of rules that impose a mandate;

* Giving preference to the least costly and least burdensome regulatory and paperwork requirements;

* Favoring market-oriented solutions and performance standards over a command-and-control approach to implementing regulations; and

* Convening a negotiated rulemaking, wherein interested parties and the involved agency, public authority, or commission, with the assistance of a neutral facilitator, negotiate to reach consensus on the terms of rules.

Additionally, the legislation would require the Secretary of State to make recommendations for simplifying the rulemaking process and for the amendment or repeal of any existing rule that may be (1)

obsolete, (2) harmful to the economy or job growth in the state, (3) excessive in view of state or federal statutes and regulations, (4) economically and! or technologically infeasible, and! or (5) a threat to the reliability of the energy system.

Furthermore, the bill would require state agencies, public authorities, and commissions, which are the subject of the recommendations of the Secretary of State, to propose regulations or revisions to their rules and policies to incorporate those recommendations.

Existing law

Section 104 of the Executive Law encourages the Secretary of State to cooperate with state entities on the content of rulemakings.

Executive Order 20 of 1995 established the Governor's Office of Regulatory Reform (GORR), which is an office designed to improve the state's regulatory process. Executive Order 20 was continued by Executive Order 2 of 2011; however, the 2011-2012 Executive Budget proposes the elimination of GORR. This legislation would transfer the core elements of GORR's powers and duties to the Secretary of State.

Executive Order 2 of 2008 also was continued by Executive Order 2 of 2011, established a State Energy Planning Board and authorized the creation and implementation of a State Energy Plan. Among other provisions, this order provided that State Energy Plan include an "assessments of state environmental policies and programs, which impact the state's development and implementation of energy policy and programs."

In addition, Executive Order 25 of 2009 was continued by Executive Order 2 of 2011 and established a Regulatory Review and Reform Program. This initiative is intended to evaluate, reform, or repeal, where necessary, rules and paperwork requirements, in order to reduce substantially unnecessary burdens, costs and inefficiencies to improve the state's economy, while maintaining appropriate protections for public health, safety and welfare and the conduct of business.

Justification

Section 3-101 of the New York State Energy Law describes state energy policy as having a comprehensive balance among energy, environmental and economic development components. Also, publications from the fall of 2010 identified the need for a balanced approach to energy, environmental and economic development issues, as well as noted the need to reduce the high costs of doing business in the state, to have an improved regulatory environment, and to reduce regulatory burdens.

However, the 2009 State Energy Plan contains an Issue Brief, Environmental Impact and Regulation of Energy Systems, which fails significantly to accomplish the directive for the conduct of the assessment pursuant to Executive Order 2 of 2008. The Issue Brief does not contain an analysis of the cumulative impact of the layering of DEC's regulations on fuel diversity and energy system reliability but just includes a recitation of the provisions of existing programs.

Additionally, pursuant to Executive Order 25 of 2009, the evaluation of the New York State Department of Environmental Conservation's (DEC) regulations identified only five regulatory areas for additional amendments, despite numerous public comments of the onerous nature of many DEC regulations. In particular, the DEC identified for additional amendment two regulations that already had expired and were replaced with another regulatory requirement. As a result, the DEC failed to focus on its regulations that have unclear compliance pathways.

Through the State Energy Planning Process and the public comment processes of individual rulemakings, many significant concerns have been expressed about the specific and cumulative impacts that arise from the layering of environmental regulations on the state's electricity producers and correspondingly on the diversity of fuels used to manufacture electricity in a reliable and cost-effective manner. Over the course of the last two years, ten regulatory initiatives were adopted, without a cumulative impact evaluation, and seventeen more are pending this year. These regulations, plans and policies place additional constraints on electric generating units, and the cumulative effect of the layering of all these actions impacts New York's energy policy.

The state must focus its attention on the cumulative impacts that the layering of regulatory initiatives causes the electricity industry and other sectors in the state, most importantly the increased cost of and potentially decreased reliable supply of energy for the state's businesses and residents. An important lesson to be learned from the current state economic environment is that state and local governments depend on the tax revenues and jobs created by the private sector. When private industry suffers, the corresponding impact to counties, towns, and schools also is felt through reduced programs, jobs, and services.

A "cumulative impact" evaluation of the layering of regulatory requirements is essential, because the power sector and many other industries in New York are driven by long-term capital planning cycles in excess often year horizons. In many cases, the return on investment is calculated over a twenty year or longer period. The layering of regulations and/or legislative requirements on top of each other, without the requirement of understanding the full cumulative effects, creates tremendous uncertainty, prevents necessary investment, and makes New York a less desirable investment environment than other states. New York State's businesses and residents must be able to rely on the state to ensure that environmental requirements do not impede a reliable and affordable

energy system that can continue to meet their energy needs in a balanced and cost-effective manner.

The 2010 Comprehensive Reliability Plan (CRP), completed by the New York Independent System Operator (NYISO), assessed new environmental regulatory programs for their potential impacts on reliability. These regulatory initiatives, which are being promulgated by both state and federal environmental regulatory agencies, cumulatively will require considerable investment by the owners of New York's existing them1al power plants in order to comply with these new regulatory requirements, if promulgated as currently proposed. The magnitude of the combined investments required to comply with the four evaluated initiatives alone could lead to multiple unplanned plant retirements.

Furthermore, on October 26, 2010, the North American Electric Reliability Corporation (NERC) released the results of its examination of the possible impacts of four potential U.S. Environmental Protection Agency (EPA) regulations in a special assessment - Potential Resource Adequacy Impacts of us. Environmental Regulations. The results of this assessment showed a significant potential impact to reliability, should the four EPA rules be implemented as proposed.

Both the NYISO's CRP and the NERC's assessment of EPA's regulations indicate the need for the state's rulemaking processes to consider comprehensively the cumulative impact of regulations. This cumulative impact evaluation should be a central component of the regulatory impact analyses that form the basis for state rulemakings.

Legislative history

This bill is new legislation.

Fiscal implications

The provisions of this legislation are consistent with existing requirements for rulemakings and the provisions of Executive Orders and should be able to be accomplished within existing appropriations.

Effective date

This bill would take effect immediately.