SB986 - Major regulations.

Amended IN Senate April 15, 2026 Amended IN Senate March 26, 2026 CALIFORNIA LEGISLATURE— 2025–2026 REGULAR SESSION Senate Bill No. 986 Introduced by Senator Seyarto (Coauthor: Senator Strickland) February 05, 2026 An act to amend Sections 11346.2, 11346.3, 11346.5, 11349.1, and 11349.3 11346.5 of, and to add Section 11346.10 to, the Government Code, relating to state government. LEGISLATIVE COUNSEL'S DIGEST SB 986, as amended, Seyarto. Major regulations. (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, submission to, and expiration of a 60 -day review period by, the Legislature, except as provided for emergency regulations. The bill would, prior to the expiration of the 60 -day review period, require the Legislature to hold an informational hearing on the major regulation. The bill would authorize the Legislature to reject a major regulation during the review period by adoption of a concurrent resolution, and would prohibit a major regulation that has been rejected from taking effect, as specified. If the Legislature fails to enact does not adopt a law to approve concurrent resolution rejecting the regulation or does not vote on the regulation within 60 days of receiving the regulation from the office, within the 60 -day review period, the bill would require that the regulation be deemed disapproved. become effective. (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. Digest Key Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: NO Bill Text The people of the State of California do enact as follows: SECTION 1. Section 11346.2 of the Government Code is amended to read: 11346.2. Every agency subject to this chapter shall prepare, submit to the office and each house of the Legislature with the notice of the proposed action as described in Section 11346.5, and make available to the public all of the following: (a) A copy of the express terms of the proposed regulation. (1) The agency shall draft the regulation in plain, straightforward language, avoiding technical terms as much as possible, and using a coherent and easily readable style. The agency shall draft the regulation in plain English. (2) The agency shall include a notation following the express terms of each California Code of Regulations section, listing the specific statutes or other provisions of law authorizing the adoption of the regulation and listing the specific statutes or other provisions of law being implemented, interpreted, or made specific by that section in the California Code of Regulations. (3) The agency shall use underline or italics to indicate additions to, and strikeout to indicate deletions from, the California Code of Regulations. (b) An initial statement of reasons for proposing the adoption, amendment, or repeal of a regulation. This statement of reasons shall include, but not be limited to, all of the following: (1) A statement of the specific purpose of each adoption, amendment, or repeal, the problem the agency intends to address, and the rationale for the determination by the agency that each adoption, amendment, or repeal is reasonably necessary to carry out the purpose and address the problem for which it is proposed. The statement shall enumerate the benefits anticipated from the regulatory action, including the benefits or goals provided in the authorizing statute. These benefits may include, to the extent applicable, nonmonetary benefits such as the protection of public health and safety, worker safety, or the environment, the prevention of discrimination, the promotion of fairness or social equity, and the increase in openness and transparency in business and government, among other things. Where the adoption or amendment of a regulation would mandate the use of specific technologies or equipment, a statement of the reasons why the agency believes these mandates or prescriptive standards are required. (2) (A) For a regulation that is not a major regulation, the economic impact assessment required by subdivision (b) of Section 11346.3. (B) For a major regulation proposed on or after November 1, 2013, the standardized regulatory impact analysis required by subdivision (c) of Section 11346.3. (3) An identification of each technical, theoretical, and empirical study, report, or similar document, if any, upon which the agency relies in proposing the adoption, amendment, or repeal of a regulation. (4) (A) A description of reasonable alternatives to the regulation and the agency’s reasons for rejecting those alternatives. Reasonable alternatives to be considered include, but are not limited to, alternatives that are proposed as less burdensome and equally effective in achieving the purposes of the regulation in a manner that ensures full compliance with the authorizing statute or other law being implemented or made specific by the proposed regulation. In the case of a regulation that would mandate the use of specific technologies or equipment or prescribe specific actions or procedures, the imposition of performance standards shall be considered as an alternative. (B) A description of reasonable alternatives to the regulation that would lessen any adverse impact on small business and the agency’s reasons for rejecting those alternatives. (C) Notwithstanding subparagraph (A) or (B), an agency is not required to artificially construct alternatives or describe unreasonable alternatives. (5) (A) Facts, evidence, documents, testimony, or other evidence on which the agency relies to support an initial determination that the action will not have a significant adverse economic impact on business. (B) (i) If a proposed regulation is a building standard, the initial statement of reasons shall include the estimated cost of compliance, the estimated potential benefits, and the related assumptions used to determine the estimates. (ii) The model codes adopted pursuant to Section 18928 of the Health and Safety Code shall be exempt from the requirements of this subparagraph. However, if an interested party has made a request in writing to the agency, at least 30 days before the submittal of the initial statement of reasons, to examine a specific section for purposes of estimating the cost of compliance and the potential benefits for that section, and including the related assumptions used to determine the estimates, then the agency shall comply with the requirements of this subparagraph with regard to that requested section. (6) A department, board, or commission within the Environmental Protection Agency, the Natural Resources Agency, or the Office of the State Fire Marshal shall describe its efforts, in connection with a proposed rulemaking action, to avoid unnecessary duplication or conflicts with federal regulations contained in the Code of Federal Regulations addressing the same issues. These agencies may adopt regulations different from federal regulations contained in the Code of Federal Regulations addressing the same issues upon a finding of one or more of the following justifications: (A) The differing state regulations are authorized by law. (B) The cost of differing state regulations is justified by the benefit to human health, public safety, public welfare, or the environment. (c) A state agency that adopts or amends a regulation mandated by federal law or regulations, the provisions of which are identical to a previously adopted or amended federal regulation, shall be deemed to have complied with subdivision (b) if a statement to the effect that a federally mandated regulation or amendment to a regulation is being proposed, together with a citation to where an explanation of the regulation can be found, is included in the notice of proposed adoption or amendment prepared pursuant to Section 11346.5. However, the agency shall comply fully with this chapter with respect to any provisions in the regulation that the agency proposes to adopt or amend that are different from the corresponding provisions of the federal regulation. (d) This section shall be inoperative from January 1, 2012, until January 1, 2014. SEC. 2. Section 11346.3 of the Government Code is amended to read: 11346.3. (a) A state agency proposing to adopt, amend, or repeal any administrative regulation shall assess the potential for adverse economic impact on California business enterprises and individuals, avoiding the imposition of unnecessary or unreasonable regulations or reporting, recordkeeping, or compliance requirements. For purposes of this subdivision, assessing the potential for adverse economic impact shall require agencies, when proposing to adopt, amend, or repeal a regulation, to adhere to the following requirements, to the extent that these requirements do not conflict with other state or federal laws: (1) The proposed adoption, amendment, or repeal of a regulation shall be based on adequate information concerning the need for, and consequences of, proposed governmental action. (2) The state agency, before submitting a proposal to adopt, amend, or repeal a regulation to the office, shall consider the proposal’s impact on business, with consideration of industries affected including the ability of California businesses to compete with businesses in other states. For purposes of evaluating the impact on the ability of California businesses to compete with businesses in other states, an agency shall consider, but not be limited to, information supplied by interested parties. (3) An economic impact assessment prepared pursuant to this subdivision for a proposed regulation that is not a major regulation or that is a major regulation proposed before November 1, 2013, shall be prepared in accordance with subdivision (b), and shall be included in the initial statement of reasons as required by Section 11346.2. An economic assessment prepared pursuant to this subdivision for a major regulation proposed on or after November 1, 2013, shall be prepared in accordance with subdivision (c), and shall be included in the initial statement of reasons as required by Section 11346.2. (b) (1) A state agency proposing to adopt, amend, or repeal a regulation that is not a major regulation or that is a major regulation proposed before November 1, 2013, shall prepare an economic impact assessment that assesses whether and to what extent it will affect the following: (A) The creation or elimination of jobs within the state. (B) The creation of new businesses or the elimination of existing businesses within the state. (C) The expansion of businesses currently doing business within the state. (D) The benefits of the regulation to the health and welfare of California residents, worker safety, and the state’s environment. (2) This subdivision does not apply to the University of California, the college named in Section 92200 of the Education Code, or the Fair Political Practices Commission. (3) Information required from a state agency for the purpose of completing the assessment may come from existing state publications. (4) (A) For purposes of conducting the economic impact assessment pursuant to this subdivision, a state agency may use the consolidated definition of small business in subparagraph (B) in order to determine the number of small businesses within the economy, a specific industry sector, or geographic region. The state agency shall clearly identify the use of the consolidated small business definition in its rulemaking package. (B) For the exclusive purpose of undertaking the economic impact assessment, a “small business” means a business that is all of the following: (i) Independently owned and operated. (ii) Not dominant in its field of operation. (iii) Has fewer than 100 employees. (C) Subparagraph (A) shall not apply to a regulation adopted by the Department of Insuran [Text truncated for display. Full text available on Congress.gov.]