AN ACT Relating to regulatory flexibility for small businesses; amending RCW 19.85.020, 19.85.030, 19.85.040, and 34.04.070; and adding new sections to chapter 19.85 RCW.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

Sec. 1. Section 2, chapter 6, Laws of 1982 and RCW 19.85.020 are each amended to read as follows:

Unless the context clearly indicates otherwise, the definitions in this section apply through this chapter.

(1) "Small business" has the meaning given in RCW ((~~43.31.920~~)) 43.31.025.

(2) "Small business economic impact statement" means a statement meeting the requirements of RCW 19.85.040 prepared by a state agency pursuant to RCW 19.85.030.

(3) "Industry" means all of the businesses in this state in any one three-digit standard industrial classification as published by the United States department of commerce.

Sec. 2. Section 3, chapter 6, Laws of 1982 and RCW 19.85.030 are each amended to read as follows:

In the adoption of any rule pursuant to RCW 34.04.025 which will have an economic impact on more than twenty percent of all industries, or more than ten percent of any one industry, the adopting agency:

(1) Shall reduce the economic impact of the rule on small business by doing one or more of the following when it is legal and feasible in meeting the stated objective of the statutes which are the basis of the proposed rule:

(a) Establish differing compliance or reporting requirements or timetables for small businesses;

(b) Clarify, consolidate, or simplify the compliance and reporting requirements under the rule for small businesses;

(d) Exempt small businesses from any or all requirements of the rule;

(2) Shall prepare a small business economic impact statement in accordance with RCW 19.85.040 and file such statement with the code reviser along with the notice required under RCW 34.04.025;

(3) Shall make a reasonable effort to notify, through trade groups or associations, those businesses affected by a proposed rule, and request suggestions for minimizing or eliminating a disproportionate burden on small business, if any;

(4) May request from the ((~~office of small business available statistics which the agency can use in the preparation of the small business economic impact statement~~)) department of trade and economic development information on agency responsibilities under this chapter.

Sec. 3. Section 4, chapter 6, Laws of 1982 and RCW 19.85.040 are each amended to read as follows:

A small business economic impact statement shall analyze the costs of compliance for businesses required to comply with the provisions of a rule adopted pursuant to RCW 34.04.025, including costs of equipment, supplies, labor, and increased administrative costs, and compare to the greatest extent possible the cost of compliance for small business with the cost of compliance for the ten percent of firms which are the largest businesses required to comply with the proposed new or amendatory rules. The small business economic impact statement shall use one or more of the following as a basis for comparing costs:

(1) Cost per employee;

(2) Cost per hour of labor;

(3) Cost per one hundred dollars of sales;

(4) Any combination of (1), (2), or (3).

The small business economic impact statement shall indicate the alternatives considered by the agency to reduce the impact of the rule on small businesses and the reasons the agency decided on the provisions of the proposed rule.

NEW SECTION. Sec. 4. A new section is added to chapter 19.85 RCW to read as follows:

Any person who would be affected by a proposed or adopted rule may appeal to the rule-making agency or directly to the superior court for a ruling on the validity of the economic impact statement. The agency shall handle the appeal as a contested case under chapter 34.04 RCW.

Any person who prevails against a public agency in any such appeal shall be awarded all costs, including reasonable attorneys' fees, incurred in connection with the appeal.

Each agency director shall report to the governor and the legislature by September 1st of each year on all contested cases under this section.

NEW SECTION. Sec. 5. A new section is added to chapter 19.85 RCW to read as follows:

The department of trade and economic development shall provide information upon request to the business community on the state administrative rule-making process and on the methods for participation in the process.

Sec. 6. Section 7, chapter 234, Laws of 1959 as amended by section 8, chapter 6, Laws of 1982 and RCW 34.04.070 are each amended to read as follows:

(1) The validity of any rule may be determined upon petition for a declaratory judgment thereon addressed to the superior court of Thurston county, when it appears that the rule, or its threatened application, interferes with or impairs or immediately threatens to interfere with or impair, the legal rights or privileges of the petitioner. The agency shall be made a party to the proceeding. The declaratory judgment may be rendered whether or not the petitioner has first requested the agency to pass upon the validity of the rule in question.

(2) In a proceeding under subsection (1) of this section the court shall declare the rule invalid only if it finds that it violates constitutional provisions or exceeds the statutory authority of the agency or was adopted without compliance with statutory rule-making procedures.

(3) A person may petition for a declaratory judgment pursuant to this section ((~~may not be solely based~~)) on the ((~~contents~~)) validity of the small business economic impact statement. ((However, in the case of a petition for a declaratory judgment as to the validity of any rule which is adopted after June 10, 1982, and which is based on grounds other than the contents of the small business economic impact statement, the compliance or noncompliance by the agency with the provisions of this chapter and where applicable the small business economic impact statement shall constitute part of the whole record of the agency's action in connection with the petition.))