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GAVIN NEWSOM, GOVERNOR OFFICE OF ADMINISTRATIVE LAW
California Regulatory Notice Register
REGISTER 2021, NUMBER 1-Z PUBLISHED WEEKLY BY THE OFFICE OF ADMINISTRATIVE LAW JANUARY 1, 2021
PROPOSED ACTION ON REGULATIONS
TITLE 2. FAIR POLITICAL PRACTICES COMMISSION
Conflict–of–Interest — Notice File Number Z2020–1222–01..................................................................1
Adoption
Multi–County: Options for Youth, California, Inc.
TITLE 2. PUBLIC EMPLOYEES’ RETIREMENT SYSTEM
Risk Adjustment for Health Premiums — Notice File Number Z2020–1221–02..............................................2
TITLE 10. DEPARTMENT OF FINANCIAL PROTECTION AND INNOVATION
Escrow: Recordkeeping Updates, Annual Audit — Notice File Number Z2020–1222–04....................................4
TITLE 13. CALIFORNIA HIGHWAY PATROL
Hi–Lo Audible Warning Sound — Notice File Number Z2020–1222–02......................................................8
TITLE 14. SAN FRANCISCO BAY CONSERVATION AND DEVELOPMENT COMMISSION
Amend Commission Enforcement Procedures — Notice File Number Z2020–1216–01.................................... 10
GENERAL PUBLIC INTEREST
OCCUPATIONAL SAFETY AND HEALTH STANDARDS BOARD
Public/Business Meeting on February 18, 2021.............................................................................. 14
(Continued on next page)
Time-
Dated
MaterialSUMMARY OF REGULATORY ACTIONS Regulations filed with Secretary of State..................................................................................... 14 The California Regulatory Notice Register is an official state publication of the Office of Administrative Law containing notices of proposed regulatory actions by state regulatory agencies to adopt, amend or repeal regulations contained in the California Code of Regulations. The effective period of a notice of proposed regulatory action by a state agency in the California Regulatory Notice Register shall not exceed one year [Government Code § 11346.4(b)]. It is suggested, therefore, that issues of the California Regulatory Notice Register be retained for a minimum of 18 months. CALIFORNIA REGULATORY NOTICE REGISTER is published weekly by the Office of Administrative Law, 300 Capitol Mall, Suite 1250, Sacramento, C A 95814-4339. The Register is printed by Barclays, a subsidiary of West, a Thomson Reuters Business, and is offered by subscription for $205.00 (annual price). To order or make changes to current subscriptions, please call (800) 328−4880. The Register can also be accessed at http://www.oal.ca.gov.
CALIFORNIA REGULATORY NOTICE REGISTER 2021, VOLUME NUMBER 1-Z
Any interested person may present statements, ar-
PROPOSED ACTION ON guments or comments, in writing to the Executive
Director of the Commission, relative to review of the
REGULATIONS proposed conflict–of–interest code(s). Any written
comments must be received no later than February 15,
2021. If a public hearing is to be held, oral comments
Information contained in this document is may be presented to the Commission at the hearing.
published as received from agencies and is COST TO LOCAL AGENCIES
not edited by Thomson Reuters.
There shall be no reimbursement for any new or
increased costs to local government which may re-
TITLE 2. FAIR POLITICAL sult from compliance with these codes because these
PRACTICES COMMISSION are not new programs mandated on local agencies by
NOTICE IS HEREBY GIVEN that the Fair Political the codes since the requirements described herein
Practices Commission, pursuant to the authority were mandated by the Political Reform Act of 1974.
vested in it by Sections 82011, 87303, and 87304 of Therefore, they are not “costs mandated by the state”
the Government Code to review proposed conflict– as defined in Government Code Section 17514.
of–interest codes, will review the proposed/amended
conflict–of–interest codes of the following: EFFECT ON HOUSING
COSTS AND BUSINESSES
CONFLICT–OF–INTEREST CODES
Compliance with the codes has no potential effect
on housing costs or on private persons, businesses or
ADOPTION small businesses.
AUTHORITY
MULTI–COUNTY:
Options for Youth, California, Inc. Government Code Sections 82011, 87303 and 87304
A written comment period has been established provide that the Fair Political Practices Commission
commencing on January 1, 2021 and closing on as the code–reviewing body for the above conflict–of–
February 15, 2021. Written comments should be di- interest codes shall approve codes as submitted, revise
rected to the Fair Political Practices Commission, the proposed code and approve it as revised, or return
Attention Amanda Apostol, 1102 Q Street, Suite 3000, the proposed code for revision and re–submission.
Sacramento, California 95811.
REFERENCE
At the end of the 45–day comment period, the pro-
posed conflict–of–interest code(s) will be submitted to Government Code Sections 87300 and 87306 pro-
the Commission’s Executive Director for his review, vide that agencies shall adopt and promulgate conflict–
unless any interested person or his or her duly autho- of–interest codes pursuant to the Political Reform Act
rized representative requests, no later than 15 days pri- and amend their codes when change is necessitated by
or to the close of the written comment period, a public changed circumstances.
hearing before the full Commission. If a public hear-
ing is requested, the proposed code(s) will be submit- CONTACT
ted to the Commission for review.
The Executive Director of the Commission will Any inquiries concerning the proposed conflict–of–
review the above–referenced conflict–of–interest interest code(s) should be made to Amanda Apostol,
code(s), proposed pursuant to Government Code Fair Political Practices Commission, 1102 Q Street,
Section 87300, which designate, pursuant to Suite 3000, Sacramento, California 95811, telephone
Government Code Section 87302, employees who (916) 322–5660.
must disclose certain investments, interests in real
property and income. AVAILABILITY OF PROPOSED
The Executive Director of the Commission, upon CONFLICT–OF–INTEREST CODES
his or its own motion or at the request of any interested
person, will approve, or revise and approve, or return Copies of the proposed conflict–of–interest codes
the proposed code(s) to the agency for revision and re– may be obtained from the Commission offices or
submission within 60 days without further notice. the respective agency. Requests for copies from the
1CALIFORNIA REGULATORY NOTICE REGISTER 2021, VOLUME NUMBER 1-Z
Commission should be made to Amanda Apostol, Fair to every person who has filed a request for notice with
Political Practices Commission, 1102 Q Street, Suite CalPERS.
3000, Sacramento, California 95811, telephone (916)
322–5660. IV. ACCESS TO HEARING ROOM
The hearing room will be accessible to persons with
TITLE 2. PUBLIC EMPLOYEES’ mobility impairments, and it can be made accessible
RETIREMENT SYSTEM to persons with hearing or vision impairments upon
advance request to the Regulation Coordinator.
NOTICE IS HEREBY GIVEN that the Board
of Administration (Board) of the California Public
Employees’ Retirement System (CalPERS) proposes V. AUTHORITY AND REFERENCE
to take the regulatory action described below
after considering public comments, objections, or The Board has general authority to take regulatory
recommendations. action under G C § 22796. Reference citation:
California Government Code §§ 22850, 22864 and
22911.
I. PROPOSED REGULATORY ACTION
In this filing, the Board proposes to amend VI. INFORMATIVE DIGEST/POLICY
§ 599.500 and § 599.508 of the California Code of STATEMENT OVERVIEW
Regulations (C C R), Title 2, titled “Definitions” and
“Minimum Standards for Health Benefit Plans.” The CalPERS benefit programs and administrative
proposed regulations will modify or delete out of date processes are subject to numerous regulatory
provisions and make other technical changes to align requirements, several of which have been identified
the regulations with current and best practices. by team members as outdated, subject to confusion
among stakeholders, or which otherwise represent
II. WRITTEN COMMENT PERIOD an opportunity to realize efficiencies through their
modification or clarification. In these cases, the
Any interested person may submit written comments recommended regulatory changes are appropriate for
relevant to the proposed regulatory action. The written the continued administration and good governance of
comment period has been established commencing CalPERS.
on January 1, 2021 and closing on February 15, CalPERS seeks to make changes to align the
2021. The Regulations Coordinator must receive all regulations with current and best practices. Currently,
written comments by the close of the comment period. the Public Employees’ Medical and Hospital Care Act
Comments may be submitted via Fax at (916) 795– (P E M H C A) regulations include outdated provisions
4607; e–mail at Regulation_Coordinator@calpers. and practices.
ca.gov or mailed to the following address:
ANTICIPATED BENEFITS OF THE
Anthony Martin, Regulation Coordinator PROPOSED REGULATION
California Public Employees’ Retirement System
P.O. Box 942702 The proposed regulatory action will not affect
Sacramento, California 94229–2702 worker safety or the state’s environment. The
Phone: (916) 795–3038 proposed regulations will modify or delete out–of–
date provisions and make other technical changes to
III. PUBLIC HEARING align the regulations with current and best practices.
Pursuant to Government Code (G C) § 11346.8, a EVALUATION OF INCONSISTENCY/
public hearing on this matter has not been scheduled. INCOMPATIBILITY WITH EXISTING
However, if an interested person or his or her duly STATE REGULATIONS
authorized representative submits in writing to the
CalPERS Regulations Coordinator a request for a CalPERS has evaluated and determined that
public hearing no later than 15 days prior to the close the proposed regulations are not inconsistent nor
of the written comment period, February 1, 2021, a incompatible with existing State regulations. There
public hearing shall be scheduled before the CalPERS are no other comparable existing State regulations
Pension and Health Benefits Committee. Notice of the pursuant to G C Section 11346.5, subdivision (a),
time, date, and place of the hearing will be provided paragraphs (3)(D).
2CALIFORNIA REGULATORY NOTICE REGISTER 2021, VOLUME NUMBER 1-Z
VII. EFFECT ON SMALL BUSINESS of California residents by ensuring program
The proposed regulatory action does not affect integrity and sustainability of the CalPERS health
small business because it applies only to the California benefits programs which cover more than 1.5
Public Employees’ Retirement Law. million active and retired state, local government,
and school employees, and their family members.
VIII. DISCLOSURES REGARDING THE
I. EFFECT ON HOUSING COSTS: The proposed
PROPOSED REGULATORY regulatory action will have no significant effect
ACTION/RESULTS OF THE ECONOMIC on housing costs.
ANALYSIS/ASSESSMENT
J. COST TO ANY LOCAL AGENCY OR SCHOOL
A. MANDATE ON LOCAL AGENCIES AND DISTRICT WHICH MUST BE REIMBURSED
SCHOOL DISTRICTS: The proposed regulatory IN ACCORDANCE WITH G C SECTIONS
action does not impose requirements on local 17500 THROUGH 17630: There are no costs to
agencies and school districts that contract with any local agency or school district which must
CalPERS above and beyond the normal scope of be reimbursed in accordance with G C Sections
setting health benefit plan premiums. 17500 through 17630.
B. COST OR SAVINGS TO ANY STATE
AGENCY: The proposed regulatory action will
not reflect a cost or savings to any State agency. IX. CONSIDERATION OF ALTERNATIVES
C. COST TO ANY LOCAL AGENCY OR SCHOOL
DISTRICT: The proposed regulatory action will In accordance with G C Section 11346.5, subdivision
not impose costs to any local agency or school (a)(13), the Board must determine that no reasonable
district. alternative considered by the Board or that has
D. NONDISCRETIONARY COSTS OR SAVINGS otherwise been identified and brought to the attention
IMPOSED ON LOCAL AGENCIES: The of the Board, would be:
proposed regulatory action will not impose
nondiscretionary costs or savings on local ● more effective in carrying out the purpose of the
agencies. proposed action,
E. COSTS OR SAVINGS IN FEDERAL FUNDING
● as effective as, and less burdensome to affected
TO THE STATE: There are no costs or savings in
private persons than the proposed action, or
federal funding to the state.
F. ADVERSE ECONOMIC IMPACT: The proposed ● more cost–effective to affected private persons
regulation will not have a significant, statewide and equally effective in implementing the
adverse economic impact directly affecting statutory policy or other provision of law.
business, including the ability of California
businesses to compete with businesses in other The Board invites interested persons to present
states. statements or arguments with respect to alternatives to
G. COST IMPACT ON REPRESENTATIVE the proposed regulations during the written comment
PRIVATE PERSONS OR BUSINESSES: period.
CalPERS is not aware of any cost impacts that a
representative private person or business would
necessarily incur in reasonable compliance with X. CONTACT PERSONS
the proposed action.
H. IMPACT ON JOBS AND BUSINESS WITHIN Please direct inquiries concerning the substance of
CALIFORNIA: The proposed regulatory action the proposed rulemaking action to:
will not: (1) create or eliminate jobs within
California; (2) create new businesses or eliminate Karen Pales, Assistant Division Chief
existing businesses within California; (3) affect CalPERS Health Plan Research & Administration
the expansion of businesses currently doing Division
business within California; or (4) affect worker California Public Employees’ Retirement System
safety or the state’s environment. P.O. Box 720724
CalPERS believes making corrections to outdated Sacramento, C A 94229–0724
terms and provisions and other technical changes Telephone: (916) 795–0112
to the regulation benefits the health and welfare E–Mail: Karen.Pales@calpers.ca.gov
3CALIFORNIA REGULATORY NOTICE REGISTER 2021, VOLUME NUMBER 1-Z
Ryan Ball, Research Data Specialist TITLE 10. DEPARTMENT OF
CalPERS Health Plan Research & Administration FINANCIAL PROTECTION AND
Division INNOVATION
California Public Employees’ Retirement System
P.O. Box 720724 Notice is Hereby Given (Gov. Code, § 11346.5(a)(1))
Sacramento, C A 94229–0724 The Commissioner of the Department of
Telephone: (916) 795–7847 Financial Protection and Innovation, formerly
E–Mail: Ryan.Ball@calpers.ca.gov the Commissioner of the Department of Business
Please direct requests concerning processing of Oversight, (“Commissioner”) is proposing adding
this rulemaking action to the CalPERS Regulation sections 1711.1 and 1741.7 regarding “personal proper-
Coordinator, at the address shown in Section II. ty” and “prohibited compensation” and amendments
to sections 1732.2, 1737.3 and 1741.5 of title 10 of the
XI. AVAILABILITY OF STATEMENT California Code of Regulations (hereafter referred to
OF REASONS AND TEXT OF PROPOSED as “Rule”),1 regarding the escrow books and records
and the annual audit report of the financial statement
REGULATIONS
of escrow agents under section 17406 of the Escrow
The entire rulemaking file is available for public Law (Cal. Fin. Code, § 17000, et seq.). The amend-
inspection through the Regulations Coordinator at the ments clarify (1) the meanings of “personal property”
address shown above. To date, the file consists of this and “prohibited compensation”; (2) how to maintain
notice, the proposed text of the regulations, and the books and preserve records; and (3) that the annual
Initial Statement of Reasons (I S O R). A copy of the report must consist of audited financial statements and
proposed text and the I S O R is available at no charge the results of an agreed upon procedures engagement,
upon telephone or written request to the Regulations an agreement between an escrow company and a cer-
Coordinator. tified public accountant on audit procedures.
The Final Statement of Reasons can be obtained, Public Hearing (Gov. Code, § 11346.5(a)(17))
once it has been prepared, by written request to A public hearing has not been scheduled. Any
Anthony Martin, Regulation Coordinator, at the interested person or his or her duly authorized
address shown in Section II. representative may request a public hearing no later
For immediate access, the regulatory material than 15 days prior to the close of the written comment
regarding this action can be accessed at CalPERS’ period. If the Department of Financial Protection and
website at www.calpers.ca.gov. Innovation, formerly the Department of Business
Oversight (“Department”) receives a request for a
XII. AVAILABILITY OF CHANGED OR public hearing, the Department will provide notice
MODIFIED TEXT of the time, date, and place of the hearing by mailing
the notice to every person who has filed a request for
The Board may, on its own motion or at the notice with the Department.
recommendation of any interested person, modify Comment Deadline (Gov. Code, § 11346.5(a)(15))
the proposed text of the regulations after the public Written comments related to the proposed action
comment period closes. must be received by February 15, 2021 to be consid-
If the Board modifies its regulatory action, it will ered by the Department before it proceeds with this
prepare a comparison of the original proposed text and regulatory action.
the modifications for an additional public comment Comments may be submitted by e–mail to the fol-
period of not less than 15 days prior to the date on lowing address:
which the Board adopts, amends, or repeals the
resulting regulation. A copy of the comparison text regulations@dfpi.ca.gov
will be mailed to all persons who submitted written Comments may be submitted by U.S. mail to the
comments or asked to be kept informed as to the following address:
outcome of this regulatory action.
Department of Financial Protection and
XIII. AVAILABILITY OF THE FINAL Innovation
Attention: Regulations Coordinator
STATEMENT OF REASONS
300 S. Spring Street, Suite 15513
Upon completion, copies of the Final Statement of Los Angeles, California 90013
Reasons may be obtained by contacting the CalPERS (213) 897–3432
Regulation Coordinator at the address shown in 1
Use of “Rule” in this notice of proposed action refers to the
Section II. California Code of Regulations.
4CALIFORNIA REGULATORY NOTICE REGISTER 2021, VOLUME NUMBER 1-Z
Comments may be submitted by fax to the follow- machines are no longer widely used. To address this
ing number: outdated provision, the proposed amendment to the
rule would delete this outdated provision. Lastly, the
(213) 897–8860 existing rule requires reconciliation of the escrow led-
Authority (Gov. Code, § 11346.5(a)(2)) ger and the escrow liability controlling account once
a week. Due to modern technology, this process has
The authority for this regulatory action is California
been made much more expedient. Since misappropri-
Financial Code sections 17315, 17400 and 17406.
ations, accidental or intentional, may occur on a daily
Reference (Gov. Code, § 11346.5(a)(2)) basis, to help alleviate these potential issues, the pro-
The reference for this regulatory action is California posed amendment to the rule would require such rec-
Financial Code sections 17003, 17403.5, 17404, 17406, onciliations to occur on a daily basis. Since all licens-
17409 and 17420. ees currently do the daily liability reconciliations on a
Informative Digest (Gov. Code, § 11346.5(a)(3)) daily basis, this will not be a change for them.
Section 17404 of the Escrow Law requires every Section 17404 of the Escrow Law requires every
person subject to the Escrow Law to keep and use person subject to the Escrow Law to keep and use
in its business, books, accounts, and records which in its business, books, accounts, and records which
will properly enable the Commissioner to determine will properly enable the Commissioner to determine
whether the escrow functions performed by such per- whether the escrow functions performed by such per-
son comply with the provisions of the Escrow Law and son comply with the provisions of the Escrow Law
rules. Section 17409 further requires that all monies and rules. Specifically, section 17403.5 of the Escrow
deposited in escrow, which are to be delivered upon Law provides that: (1) all required records may be
the close of escrow or upon any other contingen- maintained by Internet escrow agents and submitted
cy, be deposited in a noninterest–bearing demand or to the Commissioner electronically; (2) all transfers
checking account in a bank insured by the Federal by Internet escrow agents between accounts may be
Deposit Insurance Corporation and approved by the made electronically; and (3) customer account state-
Commissioner. Such funds, when deposited, must be ments may be sent by Internet escrow agents via email
designated as “trust funds,” “escrow accounts,” or or the Internet. Rule 1737.3 requires escrow agents to
with a name that indicates the funds do not belong to preserve records for at least five years from the close
the escrow agent. Rule 1732.2 sets forth what books of escrow. The existing rule implies that records can
an escrow agent is required to establish and maintain be destroyed after five years from the close of escrow.
regarding its escrow accounts and specifies how often It does not consider that there could be undisbursed
they must be reconciled. In particular, the existing rule funds in escrow or outstanding checks that need to be
specifies the escrow ledger and liability controlling escheated. The State Controller’s Office requires files
account must be reconciled at least once a month with for escheated funds be kept for 7 years. To address
bank statements of the “trust” or “escrow” account, that issue, the proposed amendment to the rule would
and the escrow ledger must be reconciled at least once take these events into account by requiring the com-
a week with the escrow liability controlling account. pany to keep and use the files for five years, or longer,
The existing rule contemplates non–electronic rec- if necessary to properly disburse the funds or escheat
onciliation, such as using adding machines, which them to the state. Additionally, the existing rule does
is time consuming and does not involve software. not provide clarification regarding the use of comput-
Reconciling accounts using adding machines is more ers and electronic records. The proposed amendments
time consuming than reconciling them electronically to the rule would clarify what licensees should do
and it does not involve the use of computer programs. when using technology, including providing “imag-
Many escrow agents currently establish and use es” of checks, using encryption or other secure meth-
electronic books, accounts and records. As a result, ods when sending records by email, and maintaining
these escrow agents perform their required reconcili- printed copies of all requisite records when they are no
ations electronically as well. The existing Rule 1732.2 longer available electronically due to a change in an
does not provide clarification regarding the use of escrow agent’s software.
computer programs. To address this shortcoming, the Section 17406 of the Escrow Law requires each
proposed amendment to the rule provides clarification licensee to submit to the Commissioner an audit report
for the use of accounting software in regard to escrow containing audited financial statements within 105
liability controlling accounts by requiring that the ac- days after the close of each calendar or fiscal year. The
counts be maintained separately from any accounting licensee must also file additional relevant information
software used by an escrow agent. The existing rule required by the Commissioner. Rule 1741.5 sets forth
also provides clarification regarding the use of adding the requirements for preparing the annual audit report.
machines, which is no longer necessary because such The existing rule contemplates an audit engagement
5CALIFORNIA REGULATORY NOTICE REGISTER 2021, VOLUME NUMBER 1-Z
that culminates in an unqualified opinion by a certi- eration as compensation” may be interpreted in many
fied public accountant stating that the financial state- ways, including discounting and waiving escrow fees.
ments of the licensee are fairly stated. The lack of clarity limits the Department’s adminis-
Interested parties have notified the Commissioner trative ability to take actions against companies pay-
that the existing rule sets forth procedures for a cer- ing referral fees and kickbacks. To address this vague
tified public accountant (“C P A”) to follow in the an- language, the rulemaking would clarify “consider-
nual audit of the licensee, which if accompanied by an ation as compensation” by plainly describing what
unqualified opinion would result in the C P A violating constitutes an act of referral for business similar to the
the professional accounting principles. In particular, provisions in the Insurance Code. This would enable
the provisions of Rule 1741.5 that dictate the proce- the Department to more easily enforce the prohibition.
dures for a C P A to follow may only be performed un- The objective of this rulemaking is to update rules
der an agreed–upon procedures engagement, and may regarding establishing, maintaining and preserving
result in findings regarding the procedures performed. escrow books and records, to ensure that C P As may
However, the C P A may not provide an unqualified participate in engagements to meet the annual audit
opinion on audit procedures not established under the report requirement for Escrow Law licensees without
C P A’s own professional judgment. violating any rule of professional conduct, to clarify
To avoid violating the professional accounting prin- that “personal property” as used in the definition of
ciples, C P As have been refusing to draft the annual an escrow includes “gametic material,” and to clarify
audit reports as required by the Escrow Law. As a re- what are considered to be prohibited escrow referral
sult, many escrow agents are out of compliance with compensation acts. A specific benefit of this action
the requirement for submitting an annual audit report. is to ensure that adequate procedures are set forth
The proposed rulemaking would provide the guidance regarding establishing, maintaining and preserving
needed to enable C P As to prepare the required audit escrow books and records and the annual audit to pro-
reports without simultaneously violating their profes- vide the Commissioner with the assurance that the
sional standards of conduct. trust accounts of the licensee are accurately reflected
To address these concerns, the Commissioner is in the licensee’s books and records, and no consum-
proposing revisions to Rule 1741.5 to provide that a er funds have been misappropriated. Additionally,
licensee must engage a C P A to submit an unqualified the rulemaking would benefit escrow agents because
opinion regarding the financial statements and sup- it would enable them to comply with their audit re-
plementary information of the licensee, and a report port requirements and thus avoid license suspension
of findings regarding the agreed–upon procedures set or revocation. Finally, the rulemaking would provide
forth in the rule. Cumulatively the reports will consti- clarification regarding the definition of “escrow” and
tute the annual audit report and additional information what acts are prohibited as escrow referral compensa-
authorized under section 17406 of the Escrow Law. tion. After conducting an evaluation, the Department
The Escrow Law defines an “escrow” as any trans- has found that these are the only regulations con-
action in which one person, in order to sell, transfer, cerning state escrow books and records, annual audit
encumber, or lease real or personal property to another reports, personal property and prohibited compen-
person, delivers a written instrument, money, evidence sation. Therefore, the proposed regulations are nei-
of title to real or personal property, or other thing of ther inconsistent nor incompatible with existing state
value to a third person to be held until the happening regulations.
of a specified event or the performance of a prescribed Documents Incorporated by Reference
condition, at which time it is delivered to a grantee, No documents are incorporated by reference.
grantor or its representative, pursuant to Financial Any other matters prescribed by statute (Gov. Code,
Code section 17003. The definition of “escrow” does § 11346.5 (a)(4))
not specify if “personal property” includes “gametic No other matters are prescribed by statute.
material.” To address this issue, the rulemaking would Determination Regarding Mandate on Local Agencies
clarify that “personal property” within the definition or School Districts (Gov. Code, § 11346.5(a)(5))
of “escrow” includes “gametic material.” This would
enable the Department to regulate surrogacy transac- This regulatory action does not impose a mandate
tions and protect the public. on local agencies or school districts.
The Escrow Law prohibits escrow licensees from Estimate of Cost or Savings (Gov. Code,
paying over to any other person any commission, fee, § 11346.5(a)(6))
or other consideration as compensation for referring, State Agency
soliciting, handling, or servicing escrow customers or This regulatory action may increase the time for the
accounts, pursuant to Financial Code section 17420. Department of Financial Protection and Innovation,
The compensation language is vague because “consid- formerly the Department of Business Oversight,
6CALIFORNIA REGULATORY NOTICE REGISTER 2021, VOLUME NUMBER 1-Z
(“Department”) to review annual audit reports. The addition of “gametic material” to the definition
However, the Department anticipates that this in- of “personal property” under the “escrow” definition
crease will not be significant and is absorbable within will clarify that escrow agents may conduct transac-
existing resources. The action may also create addi- tions that hold and disburse funds under assisted re-
tional costs to the Department by clarifying that “ga- production agreements. This clarification of personal
metic material” is “personal property” under the defi- property will create more business opportunities for
nition of “escrow.” This will result in the Department escrow agents, which will provide more benefit than
being authorized to regulate “assisted reproduction cost to them.
agreements.” Regulation of the financial portion of Results of Economic Impact Assessment (Gov. Code,
the assisted reproduction industry will increase the § 11346.5(a)(10))
Department’s cost of doing business in licensing and The Department has assessed the potential for ad-
examination based on the number of new licensees verse economic impact on California business enter-
that do these types of escrow transactions. At this prises and individuals, with consideration of the abili-
point, it is unknown if this change will result in any ty of California businesses to compete with businesses
new licensees. However, part of the cost of any new in other states.
licensees would be offset by the licensees’ fees. The Department finds that this regulatory action will
Other not result in the creation or elimination of jobs within
This regulatory action will not result in any cost the state; will not result in the creation of new busi-
to any local agency or school district required to be nesses or the elimination of existing businesses within
reimbursed, will not result in other nondiscretionary the state; and will not result in the expansion of busi-
cost or savings imposed on local agencies, and will not nesses currently doing business within the state. The
result in cost or savings in federal funding to the state. Department finds that this regulatory action will ben-
Determination Regarding Adverse Economic Impact efit the welfare of California residents by setting forth
(Gov. Code, § 11346.5(a)(7) and (8)) procedures that will help ensure trust funds placed on
deposit with escrow agents are not misappropriated.
The Department has made an initial determination The regulatory action will not benefit worker safety or
that this regulatory action will not have a significant, the state’s environment.
statewide adverse economic impact directly affecting
Determination of Effect of Small Business (Cal. Code
business, including the ability of California businesses
of Regs., title 1, § 4.)
to compete with businesses in other states.
The Commissioner has made a determination that
Cost Impacts on Representative Private Person or the proposed regulation will not affect small business.
Business (Gov. Code, § 11346.5(a)(9)) Under Government Code section 11342.610, “small
The Department anticipates that a licensee will incur business” does not include the professional or business
an additional cost related to the need for two separate activity of escrow agents.
audit engagements for the annual report. However, the Finding Regarding Report (Gov. Code,
substantive audit requirements that are being moved § 11346.5(a)(11))
from an audit of financial statements to an agreed–
This regulatory action requires a report. The
upon procedures engagement have been in Rule 1741.5
Department finds that it is necessary for the health,
since 2002, and therefore no additional field work is
safety, or welfare of the people of the state that this
required for the agreed–upon procedures engagement.
regulation apply to businesses.
Consequently, while the amendments to the rule will
require the former single audit report to be separat- Effect on Housing Costs (Gov. Code, § 11346.5(a)(12))
ed into two parts and two separate engagements, the The Department finds that this regulatory action
workload will remain substantially the same. As a re- will not have a significant effect on housing costs.
sult, the Department anticipates that the typical cost Statement Regarding Reasonable Alternatives (Gov.
for a licensee to amend its past audit procedure to Code, § 11346.5(a)(13))
comply with the new audit procedure required by this The Department must determine that no reasonable
proposed rulemaking will be $1,000 or less. The cur- alternative considered by the Department or that has
rent rule does not specify the procedures a C P A must otherwise been identified and brought to the attention
perform to make the statements required in the report. of the Department would be more effective in carry-
The procedures proposed in the proposed regulation ing out the purpose for which the action is proposed,
may be different than those previously used by C P As. would be as effective and less burdensome to affect-
Therefore, the time to perform them may vary slight- ed private persons than the proposed action, or would
ly for different C P As. Also, some proposed require- be more cost–effective to affected private persons and
ments will require smaller samples, which will reduce equally effective in implementing the statutory policy
the time necessary to perform those procedures. or other provision of law.
7CALIFORNIA REGULATORY NOTICE REGISTER 2021, VOLUME NUMBER 1-Z
Agency Representative and Backup Contact (Gov. TITLE 13. CALIFORNIA HIGHWAY
Code, § 11346.5(a)(14)) PATROL
Agency representative for substantive inquiries:
Department of Financial Protection and DIVISION 2, CHAPTER 4, ADD ARTICLE 8.5,
Innovation SECTIONS 1029.1, 1029.2, 1029.3, AND 1029.4.
Attention: Sherri Kaufman, Senior Counsel
2101 Arena Boulevard HI–LO AUDIBLE WARNING SOUND
Sacramento, California 95834 (C H P–R–2020–06207)
(916) 217–6643; sherri.kaufman@dfpi.ca.gov
In compliance with the requirements of Section
Agency representative for non–substantive requests: 27002 of the California Vehicle Code (C V C), the
Department of Financial Protection and California Highway Patrol (C H P) proposes to adopt
Innovation regulations in Title 13, California Code of Regulations
Attention: Sandra Sandoval (C C R), Division 2, Chapter 4, adding Article 8.5,
300 S. Spring Street, Suite 15513 Sections 1029.1, 1029.2, 1029.3, and 1029.4. This
Los Angeles, California 90013 proposed rulemaking adopts criteria that define and
Telephone: (213) 897–3432 establish performance requirements and applicability
regulations@dfpi.ca.gov for the use of a Hi–Lo Audible Warning Sound on
authorized emergency vehicles.
Reference to Statement of Reasons (Gov. Code,
§ 11346.5(a)(16)) INFORMATIVE DIGEST/POLICY
The Department has prepared a statement of the STATEMENT OVERVIEW
reasons for the proposed action, has available all the
information upon which the proposal is based, and On September 29, 2020, Governor Gavin Newsom
has available the express terms of the proposed ac- signed into law Senate Bill 909 (Dodd, Chapter
tion. This notice of rulemaking, the text of the pro- 262, Statutes of 2020). Senate Bill 909 is a senate
posed regulatory action, and the initial statement of transportation bill which amends the existing practice
reasons for the proposed regulatory action are on the of allowing the use of a Hi–Lo Audible Warning Sound
Department’s website at www.dfpi.ca.gov. Additional only through a permit issued by the California Highway
public records relating to this regulatory action will be Patrol (C H P). Senate Bill 909 expressly permits an
made available upon request. authorized emergency vehicle to be equipped with
a Hi–Lo Audible Warning Sound for the purpose of
Availability of Full Text (Gov. Code, § 11346.5(a)(18)) warning individuals of an immediate evacuation in
The full text of any sufficiently related modifications the case of an emergency. The amendment requires
to the original proposed regulation will be available the C H P to provide regulations to determine the
for at least 15 days prior to the date the Department standardization of such a Hi–Lo Audible Warning
adopts, amends, or repeals the resulting regulation of Sound used across the state.
this regulatory action. Section 2402 C V C authorizes the Commissioner
Final Statement of Reasons (Gov. Code, of the C H P to make and enforce regulations as
§ 11346.5(a)(19)) necessary to carry out the duties of the C H P. Section
26103 C V C authorizes the Department to adopt
Any person may obtain a copy of the final
regulations establishing standards and specifications
statement of reasons after its preparation through
of vehicle equipment, including, but not limited to,
the Department’s website at www.dfpi.ca.gov, by e–
sirens. Section 27002 C V C, by regulation, permits
mailing a request to the Regulations Coordinator at
the use of a Hi–Lo Audible Warning Sound, meeting
regulations@dfpi.ca.gov, by calling the Legal Division
the requirements established by the Department, on
at (213) 897–3432, or by sending a request by mail to
authorized emergency vehicles.
the Regulations Coordinator at 300 S. Spring Street,
Suite 15513, Los Angeles, California 90013. The C H P proposes to adopt Title 13, C C R, Sections
1029.1, 1029.2, 1029.3, and 1029.4, in order to fulfill
Internet Availability (Gov. Code, § 11346.5(a)(20)) statutory requirements contained in Section 27002
Documents related to regulatory actions are avail- C V C. This proposed rulemaking adopts criteria that
able on the Department’s website at www.dfpi.ca.gov, define and establish performance requirements and
under the “Laws & Regs” tab and “Rulemaking” links. applicability for the use of a Hi–Lo Audible Warning
For assistance, contact the Regulations Coordinator at Sound on authorized emergency vehicles. This action
(213) 897–3432 or regulations@dbo.ca.gov. will consider the competitiveness of California
8CALIFORNIA REGULATORY NOTICE REGISTER 2021, VOLUME NUMBER 1-Z
businesses by eliminating or modifying, to the extent The rulemaking file is available for inspection at
possible, regulations that impose a negative impact on the C H P, C V S, 601 North 7th Street, Sacramento,
businesses and the economy. C A 95811. Interested parties are advised to call for an
Anticipated Benefits of Proposed Regulations: appointment.
This proposed regulatory action will provide a Documents regarding the proposed action are
nonmonetary benefit to the protection and safety of available through the C H P’s website at www.chp.
public health, employees, and the environment by ca.gov/news–alerts/regulatory–actions.
establishing standards and specifications for the use of
Hi–Lo Audible Warning Sound that may be used for
the purpose of warning individuals of an immediate CONTACT PERSON
evacuation in the case of an emergency.
Evaluation of Inconsistency/Incompatibility with Any inquiries concerning the written materials
Existing State Regulations: pertaining to the proposed regulations or questions
The C H P has determined this proposed regulation regarding the substance of the proposed regulations
is neither inconsistent, nor incompatible, with existing should be directed to Sergeant David Kelly or Officer
regulations. After conducting a review for any Kasonja Pochop, C H P, C V S, at (916) 843–3400.
regulations that would relate to or affect this area, the
C H P has concluded that these are the only regulations ADOPTION OF PROPOSED REGULATIONS
that concern the Hi–Lo Audible Warning Sound.
PUBLIC COMMENTS After consideration of public comments, the C H P
may adopt the proposal substantially as set forth
Interested persons may submit written comments without further notice. If the proposal is modified prior
on this proposed action via facsimile at (916) 322– to adoption and the change is not solely grammatical or
3154, by e–mail to cvsregulations@chp.ca.gov, or by nonsubstantive in nature, the full text of the resulting
writing to: regulation, with the changes clearly indicated, will be
made available to the public for at least 15 days prior
California Highway Patrol to the date of adoption.
Enforcement and Planning Division
Commercial Vehicle Section
Attention: Officer Kasonja Pochop FISCAL AND ECONOMIC IMPACT/RESULTS
P.O. Box 942898 OF THE ECONOMIC IMPACT ANALYSIS
Sacramento, C A 94298–0001
Written comments will be accepted until February The C H P has made an initial determination that this
15, 2021. proposed regulatory action: (1) will have no effect on
No public hearing has been scheduled. If any person housing costs; (2) will impose no new mandate upon
desires a public hearing, a written request must be local agencies or school districts; (3) will involve no
received by the C H P, Commercial Vehicle Section nondiscretionary cost or savings to any local agency,
(C V S), no later than 15 days prior to the close of the no cost to any local agency or school district for which
written comment period. Sections 17500–17630 of the Government Code (G C)
require reimbursement, no cost or savings to any state
AVAILABILITY OF INFORMATION agency, nor costs or savings in federal funding to the
state; (4) will neither create or eliminate jobs in the
The C H P has available for public review an Initial State of California, nor result in the elimination of
Statement of Reasons for the proposed regulatory existing businesses, nor create or expand businesses
action, the information upon which this action is based in the State of California; (5) will have no significant
(the rulemaking file), and the proposed regulation text. statewide adverse economic impact directly affecting
Requests to review or receive copies of this information businesses, including the ability of California
should be directed to the C H P at the above address, by businesses to compete with businesses in other states;
facsimile to (916) 322–3154, or by calling the C H P, and (6) will provide a nonmonetary benefit to the
C V S, at (916) 843–3400. All requests for information protection and safety of public health, employees, and
should include the following information: the title of safety to the environment by establishing standards
the rulemaking package, the requester’s name, proper and specifications for the use of the Hi–Lo Audible
mailing address (including city, state, and zip code), Warning Sound that may be used for the purpose of
and a daytime telephone number in case the requester’s warning individuals of an immediate evacuation in
information is incomplete or illegible. the case of an emergency.
9CALIFORNIA REGULATORY NOTICE REGISTER 2021, VOLUME NUMBER 1-Z
COST IMPACTS ON PRIVATE TITLE 14. SAN FRANCISCO BAY
PERSONS OR BUSINESSES CONSERVATION AND DEVELOPMENT
COMMISSION
The C H P is not aware of any cost impacts that
a private person or business would incur while
maintaining compliance with the proposed action. DIVISION 5, CHAPTER 13. ENFORCEMENT
PROCEDURES (INCLUDING AMEND
EFFECT ON SMALL BUSINESSES APPENDIX H AND
APPENDIX I AND ADD NEW APPENDIX J)
The C H P has not identified any significant adverse
effect on small businesses. The proposed regulations
do not increase any requirements upon any small PUBLIC HEARING
businesses.
The San Francisco Bay Conservation and
Development Commission (Commission) will hold a
CONSIDERATION OF ALTERNATIVES public hearing on the subject of this Notice of Proposed
Rulemaking on February 18, 2021 at its regularly
In accordance with G C Section 11346.5(a)(13), the scheduled meeting, which will begin at 1:00 p.m., and
C H P must determine that no reasonable alternative will be held online and by teleconference due to the
considered, or otherwise identified and brought to its COVID–19 public health orders and in accordance
attention, would be more effective in carrying out the with the Governor’s Executive Order No. N–29–20
purpose for which the action is proposed, would be issued on March 17, 2020. The hearing will concern
as effective and less burdensome to affected private proposed changes to the Commission’s regulations
persons than the proposed action, or would be more governing its enforcement procedures that are codi-
cost–effective to affected private persons and equally fied at Title 14 of the California Code of Regulations,
effective in implementing the statutory policy or other Division 5, Chapter 13 (including Appendix H and
provision of law. The C H P invites interested parties Appendix I and a proposed new Appendix J). At
to present statements or arguments with respect to the hearing, any person may present comments, ar-
alternatives to the proposed regulations during the guments, or statements orally or in writing relevant
written comment period. to the proposed action described in the Informative
Digest (below). Information regarding how to access
AVAILABILITY OF FINAL the February 18, 2021, Commission meeting online or
STATEMENT OF REASONS by teleconference will be provided in a meeting notice
and agenda provided to interested parties and posted
Once the Final Statement of Reasons for this on the Commission’s website not less than ten days
proposed regulatory action is available, the public may prior to the meeting date.
request to review or receive copies of the statement. Following the public hearing, the Commission may
Requests should be directed to the C H P at the above adopt the proposal substantially as described below
address, by facsimile to (916) 322–3154, or by calling or may modify the proposal. With the exception of
the C H P, C V S, at (916) 843–3400. All requests for technical or grammatical changes, the full text of any
information should include the following information: modified proposal will be available for at least 15 days
the title of the rulemaking package, the requester’s prior to its adoption from the person designated in this
name, proper mailing address (including city, state, Notice as the Contact Person. Any proposed modifi-
and zip code), and a daytime telephone number in case cations will be mailed to those persons who submit
the requester’s information is incomplete or illegible. written comments, provide oral comments, or have
requested notification of any changes to the proposal.
Please notify the Commission to receive a meeting no-
AUTHORITY
tice and any notices of change to the hearing date (see
Contact Person, below).
This regulatory action is being taken pursuant to
Sections 2402 and 27002, C V C. WRITTEN COMMENT PERIOD
REFERENCE Any person or organization may submit written
comments on the proposed regulatory action. The
This action implements, interprets, and/or makes written comment period closes at 5 p.m. on February
specific Sections 2402, 26103, and 27002, C V C. 18, 2021. The Commission will only consider com-
10CALIFORNIA REGULATORY NOTICE REGISTER 2021, VOLUME NUMBER 1-Z
ments received by that time. Please submit written amendments implement certain recommendations
comments to: from an Audit Report released by the California State
Auditor in May 2019 that focused on improvements
Marc Zeppetello, Chief Counsel to the Commission’s enforcement program. The
San Francisco Bay Conservation and Development Audit Report recommendations included changes
Commission or additions to the enforcement regulations. The
375 Beale Street, Suite 510 proposed amendments would add an Administrative
San Francisco, California 94105 Civil Penalty Policy as Appendix J of the regulations.
Telephone: (415) 352–3655 The Administrative Civil Penalty Policy would
Email: marc.zeppetello@bcdc.ca.gov be used to calculate proposed civil penalties for
violations in a transparent and consistent manner and
AUTHORITY AND REFERENCE in accordance with the factors that the Commission
is required by statute to consider in determining the
Authority: Government Code Section 66632(f); and amount of administrative civil penalties for violations.
Public Resources Code Section 29201(e). The proposed amendments also include increases
References: Government Code Sections 11180– in some but not all of the standardized fine amounts
11181, 11415.60, 66637, 66638, 66640, 66641, established by the existing regulations for certain
66641.5(e), 66641.6, 66641.9, 666642(a), and 66643; categories of violations.
Public Resources Code Sections 29600–29601 and Objectives and Anticipated Benefits of the Proposed
29610–29611; and Evidence Code Section 351. Amendments
The objectives of the proposed amendments are to
INFORMATIVE DIGEST promote transparency, consistency, and fairness in
the enforcement process and strengthen the deterrent
The Commission issues permits for certain activities effect of B C D C’s enforcement program. The benefits
conducted within its jurisdiction pursuant to two laws, of the proposed amendments are primarily non–
the McAteer–Petris Act (M P A) and the Suisun Marsh monetary. By making the Commission’s regulations
Preservation Act (S M P A). Both the M P A and the governing the enforcement process clearer, the
S M P A authorize the Commission to take enforcement proposed amendments will increase transparency and
action against any person who violates the terms or consistency in that process and will benefit businesses,
conditions of a Commission permit or who conducts individuals, and state and local government agencies
unauthorized activities within the Commission’s that are subject to the Commission’s jurisdiction and
jurisdiction in violation of the M P A or S M P A. permits. The benefits include compliance with the
Chapter 13 of the Commission’s regulations, Commission’s laws and policies and permits issued
entitled “Enforcement Procedures,” establishes by the Commission, including requirements to
procedural requirements for Commission enforcement provide and maintain public access and public access
proceedings brought for violations of the M P A, improvements, and environmental protection of San
S M P A, or a permit issued by the Commission. Such Francisco Bay and its shoreline and the Suisun Marsh,
proceedings may lead to an enforcement hearing before including preventing the unauthorized placement of
the Commission’s Enforcement Committee or the full fill in the Bay.
Commission and issuance by the Commission of a Evaluation of Inconsistency/Incompatibility with
cease and desist order, an order setting administrative Existing State Regulations:
civil liability (i.e. civil penalties), or a permit revocation
order. The regulations also identify six categories of The Commission has evaluated whether or not the
violations that may be resolved without Commission proposed amendments to its enforcement regulations
enforcement proceedings through corrective action would be inconsistent or incompatible with existing
and the payment of standardized fines in an amount, state regulations and has found that Chapter 13 of
if any, that depends on how long the responsible party the Commission’s regulations (and the associated
takes to correct the violation but which by statute may Appendices H and I) are the only state regulations
not exceed $30,000 per violation. concerning enforcement of the M P A, S M P A, and
The proposed amendments to the Chapter 13 Commission permits issued under either of those
regulations will improve the clarity and consistency Acts. Therefore, the proposed amended regulations
of the Commission’s enforcement regulations. are neither inconsistent nor incompatible with existing
The objectives of the proposed amendments are to state regulations.
promote transparency, consistency, and fairness in No Comparable Federal Statutes or Regulations
the enforcement process and strengthen the deterrent There are no federal statutes or regulations applicable
effect of B C D C’s enforcement program. The proposed to enforcement of the M P A, S M P A, or Commission
11CALIFORNIA REGULATORY NOTICE REGISTER 2021, VOLUME NUMBER 1-Z
permits. Therefore, neither the Commission’s existing potential administrative civil liability or fines, under
enforcement regulations nor the proposed amendments the Commission’s regulations. Therefore, a private
to those regulations differ from an existing comparable person or business that does not violate the law or
federal statute or regulation. the terms and conditions of any Commission permit
will not incur any costs to comply with the proposed
DETERMINATIONS REGARDING THE amendments to the Commission’s enforcement
PROPOSED ACTION regulations.
Significant effect on housing costs: None.
The Commission has made the following
determinations or initial determinations: Results of the Economic Impact Assessment:
Mandate imposed on local agencies or school The proposed amendments to the Commission’s
districts by proposed amendments: None. enforcement regulations will not create or eliminate
Cost or savings to any state agency: A state agency jobs within California, create new businesses or
that voluntarily applies for and obtains a Commission eliminate existing businesses within California, or
permit is required to comply with the terms and affect the expansion of businesses currently doing
conditions of that permit. Similarly, a state agency that business within California. Individuals, businesses,
does not apply for and obtain a Commission permit and state and local agencies that do not violate the
is required by law (i.e., the M P A and/or S M P A) M P A or S M P A or the terms and conditions of any
to refrain from conducting unauthorized activities Commission permit will not incur any costs, including
within an area of the Commission’s jurisdiction. A potential administrative civil liability or fines, to
state agency that complies with the law or with the comply with the proposed amendments. Individuals,
terms and conditions of any permit issued by the businesses, and state and local agencies may incur
Commission will not be subject to an enforcement costs to correct violations of a Commission permit,
action, including potential administrative civil the M P A, and/or the S M P A, as well as penalties or
liability or fines, under the Commission’s regulations. fines imposed by the Commission for such violations
Therefore, a state agency that does not violate the in an amount that will be dependent on the facts of
law or the terms and conditions of any Commission a particular case, including the nature, extent, and
permit will not incur any costs (or obtain any savings) number of violations, the period of time that it takes to
to comply with the proposed amendments to the correct the violations, and other factors.
Commission’s enforcement regulations. The benefits of the proposed amendments are
Cost to any local agency or school district that must primarily non–monetary. The benefits include
be reimbursed in accordance with Government Code improved transparency, consistency, and fairness
Sections 17500 through 17630: None. in the Commission’s enforcement process and a
Other nondiscretionary cost or savings imposed on strengthened deterrent effect of the enforcement
local agencies: None. program. The benefits also include increased
Cost or savings in federal funding to the state: None. compliance with the Commission’s laws and policies
Significant statewide adverse economic impact and permits issued by the Commission, including
directly affecting businesses, including the ability of requirements to provide and maintain public access
California businesses to compete with businesses in and public access improvements, and improved
other states: None. environmental protection of San Francisco Bay and its
Cost impacts on a representative private person shoreline and the Suisun Marsh, including preventing
or business: The Commission is not aware of any the unauthorized placement of fill in the Bay. By
cost impacts that a representative private person making the Commission’s regulations governing the
or business would necessarily incur in reasonable enforcement process clearer, the proposed amendments
compliance with the proposed amendments. A will increase transparency and consistency in that
private person or business that voluntarily applies process and will benefit businesses, individuals, and
for and obtains a Commission permit is required to state and local government agencies that are subject to
comply with the terms and conditions of that permit. the Commission’s jurisdiction and permits.
Similarly, a private person or business that does not An analysis of economic and fiscal impacts is
apply for and obtain a Commission permit is required contained in the Economic and Fiscal Impact Statement
by law (i.e., the M P A and/or S M P A) to refrain from (Form 399), including the supplement thereto.
conducting unauthorized activities within an area of Significant effect on housing costs: None.
the Commission’s jurisdiction. A private person or
business that complies with the law or with the terms Business reporting requirements: None.
and conditions of any permit issued by the Commission Determination of effect on small business: The
will not be subject to an enforcement action, including proposed amendments may affect small business.
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