Existing law, the Administrative Procedure Act, governs the procedure for the adoption, amendment, or repeal of regulations by state agencies and for the review of those regulatory actions by the Office of Administrative Law. The act requires a state agency proposing to adopt, amend, or repeal any administrative regulation to assess the potential for adverse economic impact on California business enterprises and individuals and requires the state agency to adhere to specified requirements in making that assessment.
This bill would include among those requirements for assessing the potential for adverse economic impact the consideration of the proposal's cost-of-living impacts on residents of the state, as defined.
Existing law requires a state agency proposing to adopt, amend, or repeal a regulation that is not a major regulation to prepare an economic impact assessment that includes to what extent the regulation will affects specified factors, including the creation or elimination of jobs within the state. Existing law requires a state agency proposing to adopt, amend, or repeal a major regulation to prepare a standardized regulatory impact analysis that addresses specified factors, including the creation or elimination of jobs within the state.
This bill would also require the assessment for nonmajor regulations to include to what extent it will affect the cost-of-living impacts on residents of the state, and would require the standardized regulatory impact analysis for major regulations to address the cost-of-living impacts on residents of the state. The bill would require an agency to notify the office when the agency determines it needs to contract for outside services to perform the analyses and would require the office to select the contractor and oversee its work. The bill would require the Legislative Analyst's Office to adopt a standardized cost-of-living methodology for use by all agencies that includes a process for determining whether those cost-of-living impacts are significant. The bill would require each state agency to submit the standardized regulatory impact analysis to the Legislative Analyst's Office, and would require the Legislative Analyst's Office to take certain actions, including conducting an independent analysis of the adequacy of an agency's economic analysis and an analysis of the cost-of-living impacts on residents of the state, and to provide its analysis to the state agency.
This bill would require the Department of Finance to develop and maintain a regulatory economic burden tracker that will gather and analyze the cumulative economic burden of regulations by sector of the economy. The bill would require the department to post the tracker on its internet website and update the tracker annually.
Existing law requires the notice of proposed adoption, amendment, or repeal of a regulation to include, among other information, a statement of the results of the economic impact assessment and a summary of any comments submitted to the agency.
This bill would instead require the notice to include a detailed statement of the results of the economic impact assessment. The bill would require the summary of comments to include the Legislative Analyst's Office comments and agency responses, as referenced above.
Existing law requires the office to review regulations and make determinations using specified standards, including, necessity, authority, and clarity.
This bill would add to those standards the cost-of-living impacts on residents of the state. The bill would require the office, in reviewing proposed regulations for cost-of-living impacts on residents of the state, to use the standardized methodology developed by the Legislative Analyst's Office.
Existing law requires the office to either approve a regulation or disapprove it within 30 working days after a regulation has been submitted to the office for review. Existing law requires the office, if it disapproves a regulation, to provide the adopting agency with a written notice detailing the reasons for disapproval.
This bill would, for major regulations, increase the period of time for approval or disapproval to 60 working days. The bill would require the office, for major regulations, to hold a public hearing within 30 working days after the regulation has been submitted to the office. If one of the reasons for disapproval includes a significant cost-of-living impact, the bill would require the agency to pursue a less costly alternative or explain why a less costly alternative is infeasible.

Statutes affected:
AB 2366: 11346.3 GOV, 11346.5 GOV, 11349 GOV, 11349.1 GOV, 11349.3 GOV
02/19/26 - Introduced: 11346.3 GOV, 11346.5 GOV, 11349 GOV, 11349.1 GOV, 11349.3 GOV