Cal/OSHA Seeks Exemption from Economic Impact Analysis of Proposed Rules

A California Chamber of Commerce-opposed bill that could increase Cal/OSHA costs for employers will be considered by the Assembly Labor and Employment Committee today.

SB 772 (Leyva; D-Chino) reduces transparency, removes accountability, and runs contrary to California’s commitment to good governance by exempting Cal/OSHA from a rulemaking process applied to major regulations impacting the economy by more than $50 million to make sure that state agencies consider the economic impact their proposals will have on employers. SB 617 was enacted in 2011 with business support.

The standard rulemaking process requires conducting a Standardized Regulatory Impact Assessment (SRIA) for the most significant regulations (those having an economic impact greater than $50 million).

Because SB 772 allows Cal/OSHA to impose unnecessary burdens on California’s businesses, investors, and innovators without regard to the impact on the economy and without considering less costly alternatives, the CalChamber and a large coalition are opposing the legislation.

All California’s agencies conduct important work that protects and provides for the public, and all are held accountable to the people by conducting the SRIA. Cal/OSHA’s process is not different and does not warrant a special exemption. SB 772 excuses Cal/OSHA from this important analysis, allowing regulations having a significant impact on the economy to avoid the close scrutiny that would reveal their true costs and any unintended consequences.

The bill’s proponents suggest that the cost and benefit analysis of a regulation is completely satisfied by the debate in the Legislature, advisory meetings, and the public notice and comment process required by the Administrative Procedure Act (APA). This is not true – The regular rulemaking process does not adequately address economic impacts and alternative policy approaches.

Added Analysis

The Legislature created the SRIA in 2011 “to provide agencies and the public with tools to determine whether the regulatory proposal is an efficient and effective means of implementing the policy decisions enacted in statute . . . in the least burdensome manner.”  In doing so, the Legislature weighed the fiscal analysis required by the APA and found it wanting, persuaded by analysis that noted:

In testimony to the Little Hoover Commission in 2010, the acting director of the Office of Administrative Law suggested the current impact analysis practices required by the Administrative Procedures Act are “illusory and ineffective because it allows an agency to make a perfunctory, after-the-fact assessment of impact that is more symbolic than real.” (excerpt from the Assembly Accountability and Administrative Review Committee analysis of SB 617 (Calderon/Pavley)(2011))

The ordinary APA process is about ensuring agencies follow a specific procedure, not a substantive assessment of a regulation’s cost and benefits. It requires that the Office of Administrative Law (OAL) review an agency’s process to determine that it made a set of specific evaluations, not that it made those evaluations correctly or qualitatively. OAL does not review the underlying economic analysis or conduct its own impact assessment.

CalChamber-supported SB 617 was signed into law to make an agency’s impact analysis real and effective. When an agency such as Cal/OSHA—which has jurisdiction over virtually all businesses operating in this state and the 18 million wage-earning Californians they employ—plans to make a decision that will have a significant impact on all of California, the public needs more information, thoughtfulness, and transparency, not less.

Not Redundant

Cal/OSHA’s fiscal analysis is not redundant to the SB 617 process. The Legislature knew what it was doing when it passed SB 617; it did not create a duplicative process.

The SRIA analysis is more thorough than the analysis Cal/OSHA will conduct on its own, with only one overlapping consideration of business competitiveness:


Factors in Cal/OSHA’s Fiscal Analysis SB 617’s SRIA Factors for Major Regulations


Cost or savings to any state agency The creation or elimination of jobs in the state


Cost to any local agency or school district The creation of new businesses or the elimination of existing businesses in the state


Other nondiscretionary cost or savings The increase or decrease of investment in the state


Cost or savings in federal funding to the state The incentives for innovation in products, materials, or processes.


Cost impacts on a representative private person or business The benefits of the regulations, including, but not limited to, benefits to the health, safety, and welfare of California residents, worker safety, environment and quality of life, and any other benefits identified by the agency


Statewide adverse economic impact directly affecting business and individuals: including the ability of California businesses to compete The competitive advantages or disadvantages for businesses currently doing business in the state.


Significant effect on housing costs Consideration of alternatives



Weighs Broader Impact

The two analyses are fundamentally different and answer different questions. The SRIA analysis is holistic. It determines how a new rule will affect all of California, including effects that may fall outside of any individual agency’s purview.

Cal/OSHA’s fiscal analysis determines the cost of a new rule to the state and a single affected industry.

The SRIA also requires agencies to consider potential alternatives that may be less burdensome but achieve the same objective, something that Cal/OSHA will not do in a simple cost analysis of its approach. Each agency’s SRIA is also evaluated by the Department of Finance, establishing uniformity, accountability, consistency, and transparency across all of California’s regulatory system, which Cal/OSHA cannot do on its own.

Workers Protected

Cal/OSHA has existing powers to protect workers in the absence of a specific regulation. The SRIA process does not delay worker safety protections. Cal/OSHA has the statutory authority to immediately protect workers. It has the authority to shut down a business where an imminent threat to workplace safety or health is present, and can issue a special order to specifically address hazards in the workplace.

Furthermore, Cal/OSHA can use expedited processes, directives, bulletins, citations, and other enforcement actions. Cal/OSHA has issued citations for indoor heat illness as a hazard under the Injury and Illness Prevention Program, and those citations have been upheld on appeal.

Cal/OSHA recently completed the rulemaking process for a major regulation regarding refinery safety, proving the SRIA process is not unduly burdensome.

The agency submitted an SRIA for the proposed rule in March 2016. It conducted its public notice, comments, and hearing process between July 2016 and September 2016.

The rule was approved in May 2017. Worker safety is at no greater risk by conducting a SRIA than it would be under the analysis conducted for any other ordinary rule.

SB 772 unreasonably allows Cal/OSHA to impose unwarranted costs on the California economy and its businesses without considering their impact and where less costly alternatives are available to provide worker safety to meet policy objectives.

Action Needed

SB 772 will be considered by the Assembly Labor and Employment Committee today. CalChamber is urging members to contact their Assembly representative and committee members to ask them to oppose SB 772.

Staff Contact: Marti Fisher