(1) Existing law, known as the Administrative Procedure Act (APA), governs the procedures 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 (OAL). The APA requires a state agency proposing to adopt, amend, or repeal an administrative regulation to, among other things, assess the potential for adverse economic impact on California business enterprises and individuals, and requires a state agency proposing to adopt, amend, or repeal a major regulation to prepare and submit to the Department of Finance for review, a standardized regulatory impact analysis, as provided. The APA defines “major regulation,” for purposes of the act, to mean any proposed adoption, amendment, or repeal of a regulation subject to review by the OAL that will have an economic impact on California business enterprises and individuals in an amount exceeding $50,000,000, as provided. The APA provides exceptions for emergency regulations in the case of a situation that calls for immediate action to avoid serious harm to the public peace, health, safety, or general welfare.

This bill would prohibit a major regulation from taking effect until the Legislature enacts a law to approve the regulation, except as provided for emergency regulations. If the Legislature fails to enact a law to approve the regulation or does not vote on the regulation within 60 days of receiving the regulation from the office, the bill would require that the regulation be deemed disapproved.

(2) The APA requires every agency subject to its provisions to prepare, submit to the OAL with the notice of proposed action, as specified, and make available to the public upon request, specified information, including, an initial statement of reasons for proposing the adoption, amendment, or repeal of a regulation. The APA requires a state agency proposing to adopt, amend, or repeal a major regulation to satisfy additional requirements, including by requiring the state agency to prepare a standardized regulatory impact analysis in the manner prescribed by the Department of Finance, as specified. The APA requires the OAL to review all regulations adopted, amended, or repealed and submitted to it for publication in the California Code of Regulations Supplement and for transmittal to the Secretary of State and make determinations using all of the specified standards, including necessity.

This bill would require every agency subject to its provisions to also submit the above-described specified information to the Legislature and would remove the condition that the information be prepared, submitted, and made available upon request. The bill would require the notice of proposed action to include a determination of whether the regulation is a major regulation, as specified, and would require the standardized regulatory impact analysis for a major regulation to address, among other things, the estimated effect on state revenue. The bill would additionally require the OAL to use the standard of economic impact to make determinations and would require the OAL to make an independent determination as to whether the proposed regulation is a major regulation, as provided. For each major regulation, the bill would require the OAL to produce an independent regulatory impact analysis conducted in the same manner and including the same considerations as the above-described standardized regulatory impact analysis, and would require the OAL to submit that analysis to the Legislature and the major regulation for approval or disapproval.

(3) The APA authorizes any interested person to obtain a judicial declaration as to the validity of any regulation or order of repeal by bringing an action for declaratory relief, as specified. In any action for declaratory relief brought with respect to a regulation or order of repeal, the APA prohibits a court from considering the approval of a regulation or order of repeal by the OAL or the Governor’s overruling of a decision of the OAL disapproving a regulation or order of repeal. The APA authorizes a court to consider only specified evidence, including any evidence relevant to whether a regulation used by an agency is required to be adopted under the provisions of the APA.

This bill would authorize a court to consider the agency’s determination of whether a regulation is a major regulation that requires legislative approval under the provisions of this bill.