AB 35 amends provisions tied to the Safe Drinking Water, Wildfire Prevention, Drought Preparedness, and Clean Air Bond Act of 2024 by imposing new transparency and audit obligations and by carving out an alternative, expedited rulemaking path for program guidelines and grant selection criteria. The bill requires the Natural Resources Agency to publish an annual, downloadable spreadsheet of all projects and expenditures, directs the Department of Finance to arrange independent audits (with escalation rules if impropriety is found), and funds oversight costs from bond proceeds.
Crucially, AB 35 creates two nonstandard routes for adopting program guidelines: it treats certain implementing regulations as emergency regulations that the Office of Administrative Law (OAL) must accept as necessary for public safety and lets agencies keep those emergency regulations in effect without OAL repeal; alternatively, agencies can follow a streamlined but mandatory public-comment process (draft guidelines, 30-day comment, tribal consultation) followed by verification and posting by the Natural Resources Secretary. The result is faster deployment of bond funds but a reduced role for traditional APA review and new administrative burdens and oversight trade-offs for agencies and grant programs.
At a Glance
What It Does
Requires the Natural Resources Agency to publish an annual, downloadable spreadsheet of all bond-funded projects and expenditures and directs the Department of Finance to secure independent audits. It also creates two expedited paths for adopting program guidelines: an emergency-regulation route with limited OAL oversight and a streamlined public-comment-and-verification route.
Who It Affects
State grant-making agencies that administer programs under Chapters 2–9 of the bond division, the Natural Resources Agency and its Secretary, the Department of Finance, auditors, grant applicants and recipients, and communities targeted by bond programs (including disadvantaged communities and tribes).
Why It Matters
The bill increases program-level transparency and audit authority while authorizing faster guideline adoption to speed grant disbursements. That combination will shape how quickly bond funds flow, how much administrative capacity agencies need, and how public oversight of program rules operates.
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What This Bill Actually Does
AB 35 layers three accountability tools on top of the bond programs: open data, audits, and procedural rules for how agencies set the rules. First, the Natural Resources Agency must publish, at least once a year, a downloadable spreadsheet that lists each funded project with location, objectives, status, anticipated outcomes, public benefits (including whether benefits reach vulnerable or disadvantaged communities), costs and funding sources, and the applicable chapter authorizing the money.
The spreadsheet is meant to be machine-readable and to give a single, searchable inventory of bond spending.
Second, the Department of Finance must provide for an independent audit of expenditures under the division. If any legally required audit of a funded entity uncovers impropriety, the State Auditor or Controller can trigger or arrange a full audit of any or all funded activities.
Audits of federal research labs must follow an existing federal contracting statute. Agencies that issue grants must require adequate expenditure reporting from grantees to support audits and monitoring.Third, AB 35 changes how program guidelines and selection criteria are adopted.
It authorizes two alternative procedures. One permits agencies to adopt emergency regulations—explicitly treated as necessary for public peace, health, safety, and welfare—without the ordinary requirement to show facts demonstrating the need for immediate action, and directs OAL to file but not repeal those regulations so they remain in force until the adopting agency changes them.
The other path is a nonemergency but expedited procedure: agencies must post draft solicitation and evaluation guidelines, run a minimum 30-day public comment period (post comments and respond), offer tribal consultation, finalize guidelines, and submit them to the Natural Resources Secretary for a consistency check and public posting (the State Water Resources Control Board is exempt from this submission requirement). Existing guidelines adopted before this bill that already comply are grandfathered.
The Five Things You Need to Know
The Natural Resources Agency must publish an annual, downloadable spreadsheet listing funded projects with nine data elements, including location, objectives, status, anticipated outcomes, public benefits to disadvantaged communities, total cost, bond amount, matching funds, and the applicable chapter.
The Department of Finance must arrange an independent audit of expenditures; if a required audit of a funded entity reveals impropriety, the State Auditor or Controller may conduct a full audit of any or all activities funded under the division.
The bill allows agencies to adopt emergency regulations for program guidelines without showing facts that justify immediate action and instructs the Office of Administrative Law to file but not repeal those emergency regulations, leaving them effective until the adopting agency amends or repeals them.
As an alternative to emergency regulations, agencies may use a streamlined process that requires draft solicitation/evaluation guidelines, a minimum 30-day public comment period with posted comments and responses, tribal consultation, and Secretary-of-Natural-Resources verification and posting (with an exception for the State Water Resources Control Board).
Costs for publications, audits, statewide bond tracking, cash management, and related oversight are payable from bond proceeds and must be shared proportionally by each program funded under the division, with administrative costs for nongrant programs likewise paid from bond proceeds.
Section-by-Section Breakdown
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Annual public spreadsheet of projects and expenditures
Requires the Secretary of the Natural Resources Agency to publish, at least annually, a written list and an electronic, downloadable spreadsheet of all program and project expenditures under this division. The bill prescribes nine specific data fields the spreadsheet must include—from location and project objectives to the amount of bond funding and matching moneys—creating a standardized public ledger designed to support oversight, analysis, and data-driven accountability.
Independent audits and escalation for impropriety
Directs the Department of Finance to arrange for an independent audit of expenditures under the division. It also creates an escalation mechanism: if any legally required audit of a bond-funded entity discloses impropriety, the California State Auditor or the Controller may initiate or arrange a full audit of any or all activities funded by the division. The section also cross-references federal law when auditing federal DOE or NASA research centers, limiting those audits to the procedures required by the Federal Laboratory Contracting Act.
Grant reporting requirement
Mandates that any state agency issuing grants with bond funding require adequate reporting from grant recipients on how funds are spent. This provision places the primary reporting duty on grant administrators and makes recipients contractually responsible for providing the expenditure detail auditors and the statewide spreadsheet will rely on.
Funding oversight from bond proceeds
Specifies that costs for publications, audits, statewide bond tracking, cash management, and related oversight activities are payable from bond proceeds and shared proportionally across programs funded by the division. The provision also confirms that actual administrative costs for nongrant programs must come from the bond proceeds, effectively setting the funding source for the new accountability infrastructure.
Emergency regulation route for program guidelines
Authorizes agencies to adopt emergency regulations to develop or implement program guidelines and selection criteria for Chapters 2–9 and instructs OAL to treat those adoptions as emergencies for preservation of public peace, health, safety, or welfare. Importantly, the adopting agency is exempt from demonstrating facts showing the need for immediate action, and the regulations are to be filed with—but not repealed by—OAL, so they remain effective until the agency amends or repeals them.
Streamlined public-comment-and-verification route and grandfathering
Provides a nonemergency alternative to the emergency regulation route. Under this path, agencies must develop draft solicitation and evaluation guidelines, post them for at least 30 days for public comment (post comments and respond), offer tribal consultation, finalize the guidelines, and submit them to the Natural Resources Secretary for verification that they comply with applicable statutes and division purposes; the Secretary will post both the submitted guidelines and the verification. The section exempts the State Water Resources Control Board from the submission requirement and allows agencies that already adopted compliant guidelines before this bill’s effective date to rely on those existing documents.
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Explore Government in Codify Search →Who Benefits and Who Bears the Cost
Every bill creates winners and losers. Here's who stands to gain and who bears the cost.
Who Benefits
- Disadvantaged communities and vulnerable populations — The required spreadsheet and public posting of anticipated public benefits make it easier to see whether projects target and deliver benefits to these communities, improving transparency around equity commitments.
- Auditors and watchdogs — Independent-audit authority and a public, machine-readable spending ledger provide auditors, the State Auditor, and civil-society monitors with standardized data and a trigger to escalate investigations when impropriety appears.
- Grant applicants and project planners — The formalized alternative adoption path and Secretary verification create a predictable framework (drafting, public comment, tribal consultation, and final post) that can reduce later rule ambiguity and help applicants understand selection criteria before applying.
- Tribes — The bill explicitly requires an opportunity for tribal consultation in the streamlined process, institutionalizing tribal input into guideline development for covered programs.
- Program administrators seeking speed — Agencies can use the emergency-regulation route to adopt implementing rules quickly when leadership determines immediate action is necessary for public safety or program rollout.
Who Bears the Cost
- State grant-making agencies — Agencies must produce draft guidelines, conduct 30-day comment periods, post comments and responses, offer tribal consultation, submit for Secretary verification, and maintain reporting systems and spreadsheets, increasing staff and compliance burdens.
- Natural Resources Agency and its Secretary — The Secretary must verify final guidelines for statutory consistency and post verifications and submitted guidelines, creating a new verification workload and potential bottleneck.
- Bond programs and ultimately taxpayers — Oversight, publication, and audit costs are paid from bond proceeds and shared across programs, which reduces the pool of funds available for direct project investment.
- Grant recipients — Grantees face more rigorous reporting obligations to support the public spreadsheet and audits, increasing administrative work and potential compliance costs.
- Department of Finance and audit bodies — The Department of Finance must arrange independent audits and coordinate escalated audits when impropriety appears, requiring resources and interagency coordination.
Key Issues
The Core Tension
The bill balances the urgency of moving bond funds into safety- and resiliency-related projects against the democratic and legal safeguards of the Administrative Procedure Act: it speeds up rulemaking and deployment where agencies judge immediate action necessary, while relying on open data and audits to preserve accountability—forcing a trade-off between rapid implementation and the procedural checks that protect transparency, predictability, and legal review.
AB 35 tries to square two objectives—speed of deployment and robust oversight—by combining expedited rulemaking options with data and audit requirements, but it leaves open several operational and legal questions. The emergency-regulation path removes standard OAL review and waives the requirement for agencies to state facts showing immediate need, which accelerates implementation but narrows traditional procedural checks; the bill’s instruction that OAL file but not repeal emergency regulations is unusual and could raise legal challenges about judicial reviewability and administrative oversight.
The alternative streamlined path imposes a structured public-comment and tribal-consultation process, but the bill does not set deadlines for Secretary verification or define standards for a ‘consistent with applicable statutes’ check, so agencies and applicants may face uncertainty about how long verification will take and what level of legal review the Secretary will perform.
Operationally, the mandated spreadsheet and expanded audits depend on consistent data from grantees; the statute requires agencies to demand ‘adequate reporting’ but leaves the data standards, update frequency, and privacy/security protections (for project locations and sensitive infrastructure) undefined. Funding oversight from bond proceeds increases accountability in theory but diverts resources from on-the-ground projects; the proportional-sharing rule assigns administrative overhead across programs but gives no mechanism for resolving disputes about allocations or for capping administrative spending.
Finally, the audit escalation rule empowers the State Auditor or Controller to perform full audits after impropriety is found, but the statute does not specify thresholds for ‘impropriety’ nor whether recipients may contest an escalated audit’s scope, raising procedural questions for audited entities.
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