6242 AAS 2/12/94 S5067.3

6242 AAS 2/12/94 S5067.3

SB 6242 - S AMD

By Senators Moore, Sheldon, Gaspard, Vognild and Snyder

ADOPTED AS AMENDED - 2/14/94

Strike everything after the enacting clause and insert the following:

"NEW SECTION. Sec. 1. A new section is added to chapter 44.04 RCW to read as follows:

(1) The legislature recognizes that clear grants of rule-making authority are necessary for efficient and effective regulatory programs and accountability in governmental decision making, and that the agency granted rule-making authority should be the most competent to exercise jurisdiction over the subject matter. It is therefore the legislature's purpose to establish processes to ensure that existing and future laws provide clear and appropriate rule-making authority.

(2) The standing committees of the legislature shall selectively review legislative grants of rule-making authority to determine: (a) Whether the authority granted is clear and as intended; (b) whether the legislative intent is specific and includes defined objectives; and (c) whether the grant of authority is consistent with and not duplicative of grants to other agencies. In performing such a review, priority shall be given to grants of rule-making authority to the department of revenue, the employment security department, the department of ecology, the department of labor and industries, the department of health, the department of licensing, the department of fish and wildlife, the department of natural resources, and the insurance commissioner.

In those instances where the review identifies statutes that do not meet these criteria, corrective legislation shall be prepared that clarifies, narrows, or repeals the grants of rule-making authority.

(3) The senate and the house of representatives shall ensure that bills introduced that grant rule-making authority to state agencies contain clear and specific direction regarding the authority granted. (4) Appropriate standing committees of the senate and house of representatives shall prepare a regulatory note as part of the bill report on each bill before the committee that grants rule-making authority to a state agency. The regulatory note shall identify if rule making is required or authorized by the bill, describe the nature of the rule making, identify agencies to which rule making is delegated, and identify any other agencies that have rule-making authority over the same activity or subject matter. However in the event of a conflict between the note and any section of the revised code of Washington or uncodified session law, the revised code or uncodified session law shall prevail and nothing in the note shall be considered to be part of the revised code or uncodified session law.

Sec. 2. RCW 34.05.370 and 1988 c 288 s 313 are each amended to read as follows:

(1) Each agency shall maintain an official rule-making file for each rule that it (a) proposes by publication in the state register, or (b) adopts. The file and materials incorporated by reference shall be available for public inspection.

(2) The agency rule-making file shall contain all of the following:

(a) Copies of all publications in the state register with respect to the rule or the proceeding upon which the rule is based;

(b) Copies of any portions of the agency's public rule-making docket containing entries relating to the rule or the proceeding on which the rule is based;

(c) All written petitions, requests, submissions, and comments received by the agency and all other written material regarded by the agency as important to adoption of the rule or the proceeding on which the rule is based;

(d) Any official transcript of oral presentations made in the proceeding on which the rule is based or, if not transcribed, any tape recording or stenographic record of them, and any memorandum prepared by a presiding official summarizing the contents of those presentations;

(e) The concise explanatory statement required by RCW 34.05.355;

(f) All petitions for exceptions to, amendment of, or repeal or suspension of, the rule; ((~~and~~))

(g) Citations to all data, factual information, studies, or reports on which the agency relies in the adoption of the rule, indicating where such data, factual information, studies, or reports are available for review by the public;

(h) The written summary and response required by RCW 34.05.325(6); and

(i) Any other material placed in the file by the agency.

(3) Internal agency documents are exempt from inclusion in the rule-making file under subsection (2) of this section to the extent they constitute preliminary drafts, notes, recommendations, and intra-agency memoranda in which opinions are expressed or policies formulated or recommended, except that a specific document is not exempt from inclusion when it is publicly cited by an agency in connection with its decision.

(4) Upon judicial review, the file required by this section constitutes the official agency rule-making file with respect to that rule. Unless otherwise required by another provision of law, the official agency rule-making file need not be the exclusive basis for agency action on that rule.

Sec. 3. RCW 34.05.350 and 1989 c 175 s 10 are each amended to read as follows:

(1) If an agency for good cause finds:

(a) That immediate adoption, amendment, or repeal of a rule is necessary for the preservation of the public health, safety, or general welfare, and that observing the time requirements of notice and opportunity to comment upon adoption of a permanent rule would be contrary to the public interest; or

(b) That state or federal law or federal rule or a federal deadline for state receipt of federal funds requires immediate adoption of a rule,

the agency may dispense with those requirements and adopt, amend, or repeal the rule on an emergency basis. The agency's finding and a concise statement of the reasons for its finding shall be incorporated in the order for adoption of the emergency rule or amendment filed with the office of the code reviser under RCW 34.05.380 and with the rules review committee.

(2) An emergency rule adopted under this section takes effect upon filing with the code reviser, unless a later date is specified in the order of adoption, and may not remain in effect for longer than one hundred twenty days after filing. Identical or substantially similar emergency rules may not be adopted in sequence unless conditions have changed or the agency has filed notice of its intent to adopt the rule as a permanent rule, and is actively undertaking the appropriate procedures to adopt the rule as a permanent rule. This section does not relieve any agency from compliance with any law requiring that its permanent rules be approved by designated persons or bodies before they become effective.

(3) Within seven days after the rule is adopted, any person may petition the governor requesting the immediate repeal of a rule adopted on an emergency basis by any agency headed by a nonelected official. Within seven days after submission of the petition, the governor shall either deny the petition in writing, stating his or her reasons for the denial, or order the immediate repeal of the rule. In ruling on the petition, the governor shall consider only whether the conditions in subsection (1) of this section were met such that adoption of the rule on an emergency basis was necessary. If the governor orders the repeal of the emergency rule, any agency action based on that rule is void. This subsection shall not be construed to prohibit adoption of any rule as a permanent rule.

(4) In adopting an emergency rule, the agency shall meet the same criteria as set forth in section 4 of this act or provide written justification for its failure to provide the information.

NEW SECTION. Sec. 4. A new section is added to chapter 34.05 RCW to read as follows:

(1) In addition to other requirements imposed by law, an agency may not adopt a rule the violation of which subjects a person to a penalty or administrative sanction; that establishes, alters, or revokes a qualification or standard for the issuance, suspension, or revocation of a license to pursue a commercial activity, trade, or profession; or that establishes, alters, or revokes a mandatory standard for a product or material that must be met before distribution or sale, unless:

(a) The rule is needed;

(b) The likely benefits of the rule justify its likely costs;

(d) Any fee imposed is reasonable and related to the cost of administration;

(e) The rule is clearly and simply stated, so that it can be understood by persons required to comply;

(f) The rule does not conflict with, or unless necessary to achieve the objectives of the statute upon which the rule is based, overlap, or duplicate any other provision of federal, state, or local law;

(g) The rule does not, unless necessary to achieve the objectives of the statute upon which the rule is based, differ from any provision of federal law regulating the same activity or subject matter; and

(h) The rule does not, unless necessary to achieve the objectives of the statute upon which the rule is based, differ in its application to public and private entities.

(2) Nothing in subsection (1) of this section shall be construed to change the existing standard of judicial review of agency rule making.

NEW SECTION. Sec. 5. A new section is added to chapter 34.05 RCW to read as follows:

(1) Upon adoption of any rule covered by section 4 of this act, an agency shall have a plan to: (a) Inform and educate affected persons about the rule; (b) promote voluntary compliance; (c) evaluate whether the rule achieves the purpose for which it was adopted; and (d) evaluate whether the rule avoids the taking of private property for public use unless no reasonable alternative exists that advances the public interest.

(2) Upon the adoption of a rule covered by section 4 of this act regulating the same activity or subject matter as another provision of federal, state, or local law, an agency shall do all of the following:

(a) Provide to the business assistance center a list citing by reference the other federal, state, and local laws that regulate the same activity or subject matter;

(b) Coordinate implementation and enforcement of the rule with the other federal, state, and local entities regulating the same activity or subject matter by doing one or more of the following: (i) Deferring to the other entity; (ii) designating a lead agency; or (iii) entering into an agreement with the other entities specifying how the agency and entities will coordinate implementation and enforcement. If the agency is unable to meet this requirement, the agency shall report to the legislature pursuant to (c) of this subsection;

(c) Report to the chief clerk of the house of representatives and the secretary of the senate regarding: (i) The existence of any overlap or duplication of other federal, state, or local laws, and any differences from federal law; (ii) legislation that may be necessary to eliminate or mitigate any adverse effects of such overlap, duplication, or difference; and (iii) legislation that may be necessary to facilitate coordination with appropriate governmental entities regulating the same activity or subject matter.

(3) For purposes of this section, "taking" means totally destroying or rendering valueless private property, damaging by a public use in connection with an actual taking by the exercise of eminent domain, or when there is interference with use of property to owner's prejudice, with resulting diminution in value. Police action to prevent or abate actual damage to another is not considered a taking.

Sec. 6. RCW 34.05.330 and 1988 c 288 s 305 are each amended to read as follows:

(1) Any person may petition an agency requesting the adoption, amendment, or repeal of any rule. Each agency may prescribe by rule the form for such petitions and the procedure for their submission, consideration, and disposition. Within sixty days after submission of a petition, the agency shall ((~~(1)~~)) (a) either deny the petition in writing, stating its reasons for the denial, or ((~~(2)~~)) (b) initiate rule-making proceedings in accordance with this chapter.

(2) If an agency headed by a nonelected official denies a petition to repeal or amend a rule submitted under subsection (1) of this section, the petitioner, within thirty days of the denial, may appeal the denial to the governor. The petitioner may file notice of the appeal with the code reviser for publication in the Washington State Register. Within sixty days after receiving the appeal, the governor shall either reject the appeal in writing, stating his or her reasons for the rejection, or order the agency to initiate rule-making proceedings in accordance with this chapter. In deciding on the appeal, among other factors the governor should consider:

(a) Whether the agency complied with sections 4 and 5 of this act;

(b) Whether the agency has established an adequate internal rules review process, allowing public participation, and has subjected the rule to that review;

(d) Whether the rule conflicts with, overlaps, or duplicates any other provision of federal, state, or local law and, if so, whether the agency has taken steps to mitigate any adverse effects of the conflict, overlap, or duplication;

(e) The extent to which technology, social or economic conditions, or other relevant factors have changed since the rule was adopted, and whether, given those changes, the rule continues to be necessary and appropriate;

(f) Whether the statute that the rule implements has been amended or repealed by the legislature, or ruled invalid by a court.

(3) The governor's office shall provide a copy of the governor's ruling under subsection (2) of this section to anyone upon request.

Sec. 7. RCW 34.05.325 and 1992 c 57 s 1 are each amended to read as follows:

(1) The agency shall make a good faith effort to insure that the information on the proposed rule published pursuant to RCW 34.05.320 accurately reflects the rule to be presented and considered at the oral hearing on the rule. Written comment about a proposed rule, including supporting data, shall be accepted by an agency if received no later than the time and date specified in the notice, or such later time and date established at the rule-making hearing.

(2) The agency shall provide an opportunity for oral comment to be received by the agency in a rule-making hearing.

(3) If the agency possesses equipment capable of receiving telefacsimile transmissions or recorded telephonic communications, the agency may provide in its notice of hearing filed under RCW 34.05.320 that interested parties may comment on proposed rules by these means. If the agency chooses to receive comments by these means, the notice of hearing shall provide instructions for making such comments, including, but not limited to, appropriate telephone numbers to be used; the date and time by which comments must be received; required methods to verify the receipt and authenticity of the comments; and any limitations on the number of pages for telefacsimile transmission comments and on the minutes of tape recorded comments. The agency shall accept comments received by these means for inclusion in the official record if the comments are made in accordance with the agency's instructions.

(4) The agency head, a member of the agency head, or a presiding officer designated by the agency head shall preside at the rule-making hearing. Rule-making hearings shall be open to the public. The agency shall cause a record to be made of the hearing by stenographic, mechanical, or electronic means. Unless the agency head presides or is present at substantially all the hearings, the presiding official shall prepare a memorandum for consideration by the agency head, summarizing the contents of the presentations made at the rule-making hearing. The summarizing memorandum is a public document and shall be made available to any person in accordance with chapter 42.17 RCW.

(5) Rule-making hearings are legislative in character and shall be reasonably conducted by the presiding official to afford interested persons the opportunity to present comment. Rule-making hearings may be continued to a later time and place established on the record without publication of further notice under RCW 34.05.320.

(6) Before the adoption of a final rule, an agency shall prepare a written summary of all comments received regarding the proposed rule, and a substantive response to the comments by category or subject matter, indicating how the final rule reflects agency consideration of the comments, or why it fails to do so. The agency shall provide the written summary and response to any person upon request or from whom the agency received comment.

Sec. 8. RCW 34.05.355 and 1988 c 288 s 310 are each amended to read as follows:

((~~(1)~~)) At the time it files an adopted rule with the code reviser or within thirty days thereafter, an agency shall place into the rule-making file maintained under RCW 34.05.370 a concise explanatory statement about the rule, identifying ((~~(a)~~)) (1) the agency's reasons for adopting the rule, and ((~~(b)~~)) (2) a description of any difference between the text of the proposed rule as published in the register and the text of the rule as adopted, other than editing changes, stating the reasons for change.

(((2) Upon the request of any interested person within thirty days after adoption of a rule, the agency shall issue a concise statement of the principal reasons for overruling the considerations urged against its adoption.))

NEW SECTION. Sec. 9. A new section is added to chapter 19.85 RCW to read as follows:

The legislature finds that administrative rules adopted by state agencies can have a disproportionate impact on the state's small businesses because of the size of those businesses. This disproportionate impact reduces competition, innovation, employment, and new employment opportunities, and threatens the very existence of some small businesses. The legislature therefore enacts the regulatory fairness act, chapter . . ., Laws of 1994 (this act), with the intent of reducing the disproportionate impact of state administrative rules on small business.

Sec. 10. RCW 19.85.020 and 1993 c 280 s 34 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" means any business entity, including a sole proprietorship, corporation, partnership, or other legal entity, that is owned and operated independently from all other businesses, that has the purpose of making a profit, and that has fifty or fewer employees.

(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~~)) four-digit standard industrial classification as published by the United States department of commerce.

(4) "Taking" means totally destroying or rendering valueless private property, damaging by a public use in connection with an actual taking by the exercise of eminent domain, or when there is interference with use of property to owner's prejudice, with resulting diminution in value. Police action to prevent or abate actual damage to another is not considered a taking.

Sec. 11. RCW 19.85.030 and 1989 c 374 s 2 and 1989 c 175 s 72 are each reenacted and amended to read as follows:

((In the adoption of any rule pursuant to RCW 34.05.320 that 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;~~

~~(c) Establish performance rather than design standards;~~

~~(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 34.05.320;~~

~~(3)~~)) (1) In the adoption of a rule under RCW 34.05.320, an agency shall prepare a small business economic impact statement: (a) If the proposed rule will impose more than minor costs on businesses in an industry; or (b) if requested to do so by a majority vote of the joint administrative rules review committee within thirty days after notice of the proposed rule is published in the state register.

An agency shall prepare the small business economic impact statement in accordance with RCW 19.85.040, and file it with the code reviser along with the notice required under RCW 34.05.320. An agency shall file a statement prepared at the request of the joint administrative rules review committee with the code reviser upon its completion before the adoption of the rule. An agency shall provide a copy of the small business economic impact statement to any person requesting it.

An agency may request assistance from the business assistance center in the preparation of the small business economic impact statement.

(2) A proposed rule will impose more than minor costs on businesses in an industry when the costs imposed will equal or exceed 0.1 percent of the average yearly profit for businesses in that industry. The business assistance center shall develop guidelines to assist agencies in determining whether a proposed rule will impose such costs. The business assistance center may review an agency determination that a proposed rule will not impose such costs, and shall advise the joint administrative rules review committee on disputes involving agency determinations under this section.

(3) Based upon the extent of disproportionate impact on small business identified in the statement prepared under RCW 19.85.040, the agency shall, unless reasonable justification exists to do otherwise, reduce the costs imposed by the rule on small businesses. Methods to reduce the costs on small businesses may include, but are not limited to:

(a) Reducing, modifying, or eliminating substantive regulatory requirements;

(b) Establishing performance rather than design standards;

(d) Reducing the frequency of inspections;

(e) Delaying compliance timetables; or

(f) Reducing or modifying fine schedules for noncompliance.

Sec. 12. RCW 19.85.040 and 1989 c 374 s 3 and 1989 c 175 s 73 are each reenacted and amended to read as follows:

(1) A small business economic impact statement must include a brief description of the reporting, recordkeeping, and other compliance requirements of the proposed rule, and the kinds of professional services that a small business is likely to need in order to comply with such requirements. ((~~A small business economic impact statement~~)) It shall analyze((~~, based on existing data,~~)) the costs of compliance for businesses required to comply with the ((~~provisions of a~~)) proposed rule adopted pursuant to RCW 34.05.320, including costs of equipment, supplies, labor, lost sales or revenue, and increased administrative costs((~~, and~~)). To determine whether the proposed rule will have a disproportionate impact on small businesses, the impact statement must 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~~)) businesses that are the largest businesses required to comply with the proposed ((~~new or amendatory~~)) rules((~~. The small business economic impact statement shall use~~)) using one or more of the following as a basis for comparing costs:

((~~(1)~~)) (a) Cost per employee;

((~~(2)~~)) (b) Cost per hour of labor; or

((~~(3)~~)) (c) Cost per one hundred dollars of sales((;

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

(2) A small business economic impact statement must also include:

(a) A statement of the steps taken by the agency to reduce the costs of the rule on small businesses as required by RCW 19.85.030(3), or reasonable justification for not doing so, addressing, at a minimum, each of the options listed in RCW 19.85.030(3);

(b) A description of how the agency will involve small businesses in the development of the rule; and

(3) To obtain information for purposes of this section, an agency may survey a representative sample of affected businesses or trade associations and should, whenever possible, appoint a committee under RCW 34.05.310(2) to assist in the accurate assessment of the costs of a proposed rule, and the means to reduce the costs imposed on small business.

NEW SECTION. Sec. 13. A new section is added to chapter 19.85 RCW to read as follows:

Unless so requested by a majority vote of the joint administrative rules review committee under RCW 19.85.030, an agency is not required to comply with this chapter when adopting any rule solely for the purpose of conformity or compliance, or both, with federal law. In lieu of the statement required under RCW 19.85.030, the agency shall file a statement citing, with specificity, the federal law with which the rule is being adopted to conform or comply, and describing the consequences to the state if the rule is not adopted.

Sec. 14. RCW 34.05.320 and 1992 c 197 s 8 are each amended to read as follows:

(1) At least twenty days before the rule-making hearing at which the agency receives public comment regarding adoption of a rule, the agency shall cause notice of the hearing to be published in the state register. The publication constitutes the proposal of a rule. The notice shall include all of the following:

(a) A title, a description of the rule's purpose, and any other information which may be of assistance in identifying the rule or its purpose;

(b) Citations of the statutory authority for adopting the rule and the specific statute the rule is intended to implement;

(d) The agency personnel, with their office location and telephone number, who are responsible for the drafting, implementation, and enforcement of the rule;

(e) The name of the person or organization, whether private, public, or governmental, proposing the rule;

(f) Agency comments or recommendations, if any, regarding statutory language, implementation, enforcement, and fiscal matters pertaining to the rule;

(g) Whether the rule is necessary as the result of federal law or federal or state court action, and if so, a copy of such law or court decision shall be attached to the purpose statement;

(h) When, where, and how persons may present their views on the proposed rule;

(i) The date on which the agency intends to adopt the rule;

(j) A short explanation of the rule, its purpose, and anticipated effects, including in the case of a proposal that would modify existing rules, a short description of the changes the proposal would make; and

(k) A statement indicating how a person can obtain a copy of the small business economic impact statement((~~, if applicable, and a statement of steps taken to minimize the economic impact in accordance with RCW 19.85.030~~)) prepared under chapter 19.85 RCW, or an explanation for why the agency did not prepare the statement.

(2) Upon filing notice of the proposed rule with the code reviser, the adopting agency shall have copies of the notice on file and available for public inspection and shall forward three copies of the notice to the rules review committee.

(3) No later than three days after its publication in the state register, the agency shall cause a copy of the notice of proposed rule adoption to be mailed to each person who has made a request to the agency for a mailed copy of such notices. An agency may charge for the actual cost of providing individual mailed copies of these notices.

(4) In addition to the notice required by subsections (1) and (2) of this section, an institution of higher education shall cause the notice to be published in the campus or standard newspaper of the institution at least seven days before the rule-making hearing.

NEW SECTION. Sec. 15. A new section is added to chapter 43.31 RCW to read as follows:

To assist state agencies in reducing regulatory costs to small business and to promote greater public participation in the rule-making process, the business assistance center shall:

(1) Develop agency guidelines for the preparation of a small business economic impact statement and compliance with chapter 19.85 RCW;

(2) Review and provide comments to agencies on draft or final small business economic impact statements;

(3) Advise the joint administrative rules review committee on whether an agency reasonably assessed the costs of a proposed rule and reduced the costs for small business as required by chapter 19.85 RCW; and

(4) Organize and chair a state rules coordinating committee, consisting of agency rules coordinators and interested members of the public, to develop an education and training program that includes, among other components, a component that addresses voluntary compliance, for agency personnel responsible for rule development and implementation. The business assistance center shall submit recommendations to the department of personnel for an administrative procedures training program that is based on the sharing of interagency resources.

NEW SECTION. Sec. 16. The following acts or parts of acts are each repealed:

(1) RCW 19.85.010 and 1982 c 6 s 1;

(2) RCW 19.85.060 and 1989 c 374 s 5; and

(3) RCW 19.85.080 and 1992 c 197 s 2.

Sec. 17. RCW 34.05.620 and 1988 c 288 s 602 are each amended to read as follows:

Whenever a majority of the members of the rules review committee determines that a proposed rule is not within the intent of the legislature as expressed in the statute which the rule implements, or that an agency may not be adopting a proposed rule in accordance with all applicable provisions of law, including section 4 of this act and chapter 19.85 RCW, the committee shall give the affected agency written notice of its decision. The notice shall be given at least seven days prior to any hearing scheduled for consideration of or adoption of the proposed rule pursuant to RCW 34.05.320. The notice shall include a statement of the review committee's findings and the reasons therefor. When the agency holds a hearing on the proposed rule, the agency shall consider the review committee's decision.

Sec. 18. RCW 34.05.630 and 1993 c 277 s 1 are each amended to read as follows:

(1) All rules required to be filed pursuant to RCW 34.05.380, and emergency rules adopted pursuant to RCW 34.05.350, are subject to selective review by the legislature.

(2) The rules review committee may review an agency's use of policy statements, guidelines, and issuances that are of general applicability, or their equivalents to determine whether or not an agency has failed to adopt a rule or whether they are within the intent of the legislature as expressed by the governing statute.

(3) If the rules review committee finds by a majority vote of its members: (a) That an existing rule is not within the intent of the legislature as expressed by the statute which the rule implements, (b) that the rule has not been adopted in accordance with all applicable provisions of law, including section 4 of this act and chapter 19.85 RCW, (c) that an agency is using a policy statement, guideline, or issuance in place of a rule, or (d) that the policy statement, guideline, or issuance is outside of legislative intent, the agency affected shall be notified of such finding and the reasons therefor. Within thirty days of the receipt of the rules review committee's notice, the agency shall file notice of a hearing on the rules review committee's finding with the code reviser and mail notice to all persons who have made timely request of the agency for advance notice of its rule-making proceedings as provided in RCW 34.05.320. The agency's notice shall include the rules review committee's findings and reasons therefor, and shall be published in the Washington state register in accordance with the provisions of chapter 34.08 RCW.

(4) The agency shall consider fully all written and oral submissions regarding (a) whether the rule in question is within the intent of the legislature as expressed by the statute which the rule implements, (b) whether the rule was adopted in accordance with all applicable provisions of law, including section 4 of this act and chapter 19.85 RCW, (c) whether the agency is using a policy statement, guideline, or issuance in place of a rule, or (d) whether the policy statement, guideline, or issuance is within the legislative intent.

Sec. 19. RCW 34.05.640 and 1993 c 277 s 2 are each amended to read as follows:

(1) Within seven days of an agency hearing held after notification of the agency by the rules review committee pursuant to RCW 34.05.620 or 34.05.630, the affected agency shall notify the committee of its action on a proposed or existing rule to which the committee objected or on a committee finding of the agency's failure to adopt rules. If the rules review committee determines, by a majority vote of its members, that the agency has failed to provide for the required hearings or notice of its action to the committee, the committee may file notice of its objections, together with a concise statement of the reasons therefor, with the code reviser within thirty days of such determination.

(2) If the rules review committee finds, by a majority vote of its members: (a) That the proposed or existing rule in question has not been modified, amended, withdrawn, or repealed by the agency so as to conform with the intent of the legislature, or (b) that an existing rule was not adopted in accordance with all applicable provisions of law, including section 4 of this act and chapter 19.85 RCW, or (c) that the agency is using a policy statement, guideline, or issuance in place of a rule, or that the policy statement, guideline, or issuance is outside of the legislative intent, the rules review committee may, within thirty days from notification by the agency of its action, file with the code reviser notice of its objections together with a concise statement of the reasons therefor. Such notice and statement shall also be provided to the agency by the rules review committee.

(3) If the rules review committee makes an adverse finding under subsection (2) of this section, the committee may, by a two-thirds vote of its members, recommend suspension of an existing rule. Within seven days of such vote the committee shall transmit to the appropriate standing committees of the legislature, the governor, the code reviser, and the agency written notice of its objection and recommended suspension and the concise reasons therefor. Within thirty days of receipt of the notice, the governor shall transmit to the committee, the code reviser, and the agency written approval or disapproval of the recommended suspension. If the suspension is approved by the governor, it is effective from the date of that approval and continues until ninety days after the expiration of the next regular legislative session.

(4) If the governor disapproves the recommendation of the rules review committee to suspend the rule, the transmittal of such decision, along with the findings of the rules review committee, shall be treated by the agency as a petition by the rules review committee to repeal the rule under RCW 34.05.330.

(5) The code reviser shall publish transmittals from the rules review committee or the governor issued pursuant to subsection (1), (2), or (3) of this section in the Washington state register and shall publish in the next supplement and compilation of the Washington Administrative Code a reference to the committee's objection or recommended suspension and the governor's action on it and to the issue of the Washington state register in which the full text thereof appears.

((~~(5)~~)) (6) An election by the rules review committee to recommend suspension of a rule, whether or not the suspension is approved by the governor, establishes a presumption in any subsequent judicial review of the rule that the rule is invalid. The burden of demonstrating the rule's validity is then on the adopting agency.

(7) The reference shall be removed from a rule published in the Washington Administrative Code if a subsequent adjudicatory proceeding determines that the rule is within the intent of the legislature or was adopted in accordance with all applicable laws, whichever was the objection of the rules review committee.

Sec. 20. RCW 34.05.660 and 1988 c 288 s 606 are each amended to read as follows:

Except as provided in RCW 34.05.640(6), it is the express policy of the legislature that establishment of procedures for review of administrative rules by the legislature and the notice of objection required by RCW 34.05.630(2) and 34.05.640(2) in no way serves to establish a presumption as to the legality or constitutionality of a rule in any subsequent judicial proceedings interpreting such rules.

NEW SECTION. Sec. 21. The following acts or parts of acts are each repealed:

(1) RCW 34.05.670 and 1992 c 197 s 3; and

(2) RCW 34.05.680 and 1992 c 197 s 4.

NEW SECTION. Sec. 22. The department of community, trade, and economic development shall develop a standardized format for reporting information that is commonly required from the public by state and local government agencies for permits, licenses, approvals, and services. In the development of the format, the department shall work in conjunction with representatives from state and local government agencies and representatives of the business community.

The department shall submit the standardized format together with recommendations for implementation to the legislature by December 31, 1994.

NEW SECTION. Sec. 23. A new section is added to chapter 34.05 RCW to read as follows:

(1) This section applies only to the department of revenue, the employment security department, the department of ecology, the department of labor and industries, the department of health, the department of licensing, and the department of fish and wildlife.

(2) An agency listed in subsection (1) of this section may immediately impose a penalty otherwise provided for by law for a violation of a statute or administrative rule by a business entity only if the entity on which the penalty will be imposed has: (a) Previously violated the same statute or rule; or (b) willfully violated the statute or rule. Where a penalty is otherwise provided, but may not be imposed under this subsection, the agency shall issue a statement of deficiency.

(3) A statement of deficiency shall specify: (a) The particular rule violated; (b) the steps the entity must take to comply with the rule; (c) agency personnel designated by the agency to provide technical assistance regarding compliance with the rule; and (d) a date by which the entity is required to comply with the rule. The date specified shall provide a reasonable period of time for the entity to comply with the rule, considering the size of the entity, its available resources, and the threat posed by the violation. If the entity fails to comply with the rule by the date specified, it shall be subject to the penalty otherwise provided in law.

(4) Subsection (2) of this section shall not apply to any violation that places a person in danger of death or substantial bodily harm, is causing or is likely to cause significant environmental harm, or has caused or is likely to cause physical damage to the property of others in an amount exceeding one thousand dollars. With regard to a statute or rule requiring the payment of a tax, subsection (1) of this section shall not apply when a business entity has paid less than eighty-five percent of the tax actually owed.

(5) The state, the agency, and officers or employees of the state shall not be liable for damages to any person to the extent that liability is asserted to arise from the technical assistance provided under this section, or if liability is asserted to arise from the failure of the agency to supply technical assistance.

(6) Where a state agency has been delegated authority to enforce federal rules, the agency shall submit a written petition to the appropriate federal agency for authorization to comply with this section for all inspections while retaining the state's federal delegation. In such cases, this section applies only to the extent authorized by the appropriate federal agency.

NEW SECTION. Sec. 24. A new section is added to chapter 4.84 RCW to read as follows:

Unless the context clearly requires otherwise, the definitions in this section apply throughout sections 24 through 26 and 27 of this act.

(1) "Agency" means agency as defined by chapter 34.05 RCW.

(2) "Fees and other expenses" includes the reasonable expenses of expert witnesses, the reasonable cost of a study, analysis, engineering report, test, or project that is found by the court to be necessary for the preparation of the party's case, and reasonable attorneys' fees. Reasonable attorneys' fees shall be based on the prevailing market rates for the kind and quality of services furnished, except that (a) no expert witness may be compensated at a rate in excess of the highest rates of compensation for expert witnesses paid by the state of Washington, and (b) attorneys' fees shall not be awarded in excess of one hundred fifty dollars per hour unless the court determines that an increase in the cost of living or a special factor, such as the limited availability of qualified attorneys for the proceedings involved, justifies a higher fee.

(3) "Judicial review" means a judicial review as defined by chapter 34.05 RCW.

(4) "Qualified party" means (a) an individual whose net worth did not exceed one million dollars at the time the initial petition for judicial review was filed; (b) a sole owner of an unincorporated business, or a partnership, corporation, association, or organization whose net worth did not exceed five million dollars at the time the initial petition for judicial review was filed, except that an organization described in section 501(c)(3) of the federal internal revenue code of 1954 as exempt from taxation under section 501(a) of the code and a cooperative association as defined in section 15(a) of the agricultural marketing act (12 U.S.C. Sec. 1141J(a)), may be a party regardless of the net worth of such organization or cooperative association; or (c) a sole owner of an unincorporated business, or a partnership, corporation, association, or organization, having not more than one hundred employees at the time the initial petition for judicial review was filed.

(5) "Rule" means a rule as defined by chapter 34.05 RCW.

NEW SECTION. Sec. 25. A new section is added to chapter 4.84 RCW to read as follows:

If upon judicial review a rule is declared invalid and the party that challenged the rule is a qualified party, the party shall be awarded fees and other expenses not to exceed fifty thousand dollars. This section does not apply unless all parties to the action challenging the rule are qualified parties. If two or more qualified parties join in an action challenging a rule, the fees and expenses awarded shall not in total exceed fifty thousand dollars.

NEW SECTION. Sec. 26. A new section is added to chapter 4.84 RCW to read as follows:

Fees and other expenses awarded under section 25 of this act shall be paid by the agency that adopted the invalid rule from operating funds appropriated to the agency within sixty days. Agencies paying fees and other expenses pursuant to section 25 of this act shall report all payments to the office of financial management within five days of paying the fees and other expenses. Fees and other expenses awarded by the court shall be subject to chapter 39.76 RCW and shall be deemed payable on the date the court announces the award.

NEW SECTION. Sec. 27. A new section is added to chapter 43.88 RCW to read as follows:

The office of financial management shall report annually to the legislature on the amount of fees and other expenses awarded during the preceding fiscal year under section 25 of this act. The report shall describe the number, nature, and amount of the awards, the claims involved in the controversy, and other relevant information that may aid the legislature in evaluating the scope and impact of the awards.

NEW SECTION. Sec. 28. Section 10 of this act shall take effect July 1, 1994.

NEW SECTION. Sec. 29. If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected."

SB 6242 - S AMD

By Senators Moore, Sheldon, Gaspard, Vognild and Snyder

ADOPTED 2/14/94

On page 1, line 2 of the title, after "reform;" strike the remainder of the title and insert "amending RCW 34.05.370, 34.05.350, 34.05.330, 34.05.325, 34.05.355, 19.85.020, 34.05.320, 34.05.620, 34.05.630, 34.05.640, and 34.05.660; reenacting and amending RCW 19.85.030 and 19.85.040; adding a new section to chapter 44.04 RCW; adding new sections to chapter 34.05 RCW; adding new sections to chapter 19.85 RCW; adding a new section to chapter 43.31 RCW; adding new sections to chapter 4.84 RCW; adding a new section to chapter 43.88 RCW; creating a new section; repealing RCW 19.85.010, 19.85.060, 19.85.080, 34.05.670, and 34.05.680; prescribing penalties; and providing an effective date."