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 office to adopt a standardized cost of living methodology for use by all agencies.

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 that criteria, to conduct an independent analysis into the adequacy of an agency's economic analyses, to conduct its own analysis into the cost of living impacts on residents in the state, and, if the office finds those costs of living impacts are significant, to identify means by which the costs of the proposed regulation could be reduced.

Existing law requires the office to return any regulation to the adopting agency upon the occurrence of specified events.

This bill would require the office to return a regulation to the adopting agency if the office has independently evaluated the cost of living impacts on residents of the state and found that the impacts are significant, and would require the office to establish a methodology and threshold to determine when a cost of living impact becomes significant.

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. If one of the reasons for disapproval includes a significant cost of living impact, the bill would require the written decision to specify the means by which the costs of the proposed regulation could be reduced and would require the agency to pursue a less costly alternative or explain why a less costly alternative is infeasible.