Senate Bill S3943

                                BILL NUMBER:S3943

TITLE OF BILL:

An act
to amend the executive law, in relation to regulatory flexibility and
review of rules

PURPOSE:

This legislation is intended to foster jobs, investment and economic
activity by ensuring that the state's regulatory requirements avoid
undue deleterious economic effects or overly burdensome impacts upon
persons and the economy.

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.