1105

AN ACT Relating to the rule-making process; amending RCW 34.05.310, 34.05.313, 34.05.325, 34.05.330, 34.05.375, and 19.85.030; adding new sections to chapter 34.05 RCW; adding a new section to chapter 19.85 RCW; and repealing RCW 34.05.355.

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

NEW SECTION. Sec. 1. A new section is added to chapter 34.05 RCW under the subchapter heading Part III to read as follows:

(1) Before adopting a rule described in subsection (4) of this section, an agency shall:

(a) Clearly state in detail the general goals and specific objectives of the statute that the rule implements and the specific objectives the agency seeks to achieve;

(b) Determine that the rule is needed to achieve the general goals and specific objectives stated under (a) of this subsection, and analyze alternatives to rule making and the consequences of not adopting the rule;

(c) Determine that the probable benefits of the rule are greater than its probable costs, taking into account both the qualitative and quantitative benefits and costs and the specific directives of the statute being implemented;

(d) Determine, after considering alternative versions of the rule and the analysis required under (b) and (c) of this subsection, that the rule being adopted is the least burdensome alternative for those required to comply with the rule that will achieve the general goals and the specific objectives stated under (a) of this subsection;

(e) Determine that the rule does not require those to whom it applies to take an action that violates requirements of another federal or state law;

(f) Coordinate the rule, to the maximum extent practicable, with other federal, state, and local laws applicable to the same circumstances and list, by citation, duplicative, inconsistent, or conflicting laws;

(g) Determine that the rule does not impose more stringent performance requirements on private entities than on public entities unless required to do so by federal or state law;

(h) Determine if the rule differs from any applicable federal regulation or statute and, if so, determine that the difference is justified by the following:

(i) State statutory authority that explicitly allows the agency to differ from federal standards; or

(ii) Substantial evidence that the difference is necessary to achieve the specific objectives of the authorizing state statute;

(i) Describe how the agency will monitor and evaluate on an ongoing basis whether the rule in fact achieves the general goals and specific objectives stated under (a) of this subsection, including, to the maximum extent practicable, the use of interim milestones to assess progress and the use of objectively measurable outcomes;

(j) Describe how the agency will implement and enforce the rule and encourage voluntary compliance with the rule;

(k) Describe which resources the agency intends to use to implement the rule; and

(l) Document compliance with the requirements of this section in the rule-making file.

(2) Before adopting a rule described in subsection (4) of this section, an agency shall include in the rule-making file a written plan that describes:

(a) The methods the agency will use in making a reasonable attempt to notify those to whom the rule applies of the adoption of the rule and how they may get more information on how to comply with the rule; and

(b) How the agency will provide adequate sources of information and technical assistance to those to whom the rule applies to assist them in voluntarily complying with the rule.

(3) For rules implementing statutes enacted after the effective date of this section, except emergency rules adopted pursuant to RCW 34.05.350, an agency may not rely solely on the statute's statement of intent or purpose, or on the enabling provisions of the statute establishing the agency, or on any combination of such provisions, for its statutory authority to adopt the rule. An agency may use the statement of intent or purpose or the agency enabling provisions to interpret ambiguities in a statute's other provisions.

(4)(a) Subsections (1) and (2) of this section shall apply only to:

(i) Significant legislative rules of the departments of ecology, labor and industries, and revenue, and the employment security department, and to significant legislative rules of the department of fish and wildlife implementing chapter 75.20 RCW; and

(ii) Legislative rules of any agency, if such rules are designated as significant by the joint administrative rules review committee pursuant to (d) of this subsection.

(b) Notwithstanding (a) of this subsection, subsections (1) and (2) of this section shall not apply to:

(i) Emergency rules adopted pursuant to RCW 34.05.350;

(ii) Rules relating to internal governmental operations;

(iii) Rules adopting or incorporating by reference without material change federal statutes or rules, rules of other Washington state agencies, shoreline master programs, or, as referenced by Washington state law, national consensus codes that generally establish industry standards, as long as the material adopted or incorporated regulates the same subject matter and conduct as the adopting or incorporating rule;

(iv) Rules that simply correct typographical errors, make address or name changes, clarify language without changing intent, or conform language in the rule to mandated statutory changes or judicial decisions, as long as the need for conformance is specific; or

(v) Rules that set or adjust fees or rates pursuant to legislative standards.

(i) A "procedural rule" is a rule that establishes, alters, or revokes (A) any procedure, practice, or requirement relating to any agency hearings, or (B) any filing or related process requirement for making application to an agency for a license.

(ii) An "interpretive rule" is a rule, the violation of which does not subject a person to a penalty or sanction, that sets forth the agency’s interpretation of statutory provisions it administers.

(iii) A "legislative rule" includes a rule other than a procedural or interpretive rule that (A) adopts substantive provisions of law pursuant to delegated legislative authority, the violation of which subjects a violator of such rule to a penalty or sanction, or (B) establishes, alters, or revokes any qualification or standard for the issuance, suspension, or revocation of a license.

(iv) A legislative rule is "significant" if it (A) adopts a new policy or regulatory program, (B) establishes a new set of qualifications or standards for the issuance, suspension, or revocation of a license, (C) makes significant amendments to an existing policy or regulatory program or existing qualification or standard for the issuance, suspension, or revocation of a license that likely are to generate controversy, (D) is designated as such by the agency, or (E) is designated as such by the joint administrative rules review committee pursuant to (d) of this subsection.

(d) At the time of filing a notice of proposed rule making pursuant to RCW 34.05.320, an agency shall designate whether it considers the rule contemplated to be developed a significant legislative rule and shall so inform the joint administrative rules review committee of that designation by providing to that committee a copy of that notice. The joint administrative rules review committee by a majority vote within thirty days of receipt of the notice may designate the contemplated rule as significant and so inform the agency.

(e) An agency may voluntarily adopt a rule other than a significant legislative rule under the factors listed in subsection (1) of this section. Such a decision by the agency shall be included in the filing of the notice of proposed rule making made pursuant to RCW 34.05.320.

(5) By January 31, 1996, and by January 31st of each even-numbered year thereafter, the office of financial management, after consulting with state agencies, and business, labor, and environmental organizations, shall report to the governor and the legislature regarding the effects of this section on the regulatory system in this state. The report shall document:

(a) The rules proposed to which this section applied and to the extent possible, how compliance with this section affected the substance of the rule, if any, that the agency ultimately adopted;

(b) The costs incurred by state agencies in complying with this section;

(c) Any legal action maintained based upon the alleged failure of any agency to comply with this section, the costs to the state of such action, and the result;

(d) The extent to which this section has resulted in the increased inappropriate use by the agencies of policy statements and guidelines in place of rules;

(e) The extent to which this section has adversely affected the capacity of agencies to fulfill their legislatively prescribed mission;

(f) The extent to which this section has improved the acceptability of state rules to those regulated; and

(g) Any other information considered by the office of financial management to be useful in evaluating the effect of this section.

(6) This section expires June 30, 2000.

NEW SECTION. Sec. 2. A new section is added to chapter 34.05 RCW under the subchapter heading Part III to read as follows:

(1) Not later than June 30th of each year, each agency shall submit to the code reviser, according to procedures and time lines established by the code reviser, rules that it determines should be repealed by the expedited repeal procedures provided for in this section. An agency shall file a copy of a preproposal notice of intent, as provided in RCW 34.05.310(1), that identifies the rule as one that is proposed for expedited repeal.

(2) An agency may propose the expedited repeal of rules meeting one or more of the following criteria:

(a) The statute on which the rule is based has been repealed and has not been replaced by another statute providing statutory authority for the rule;

(b) The statute on which the rule is based has been declared unconstitutional by a court with jurisdiction, there is a final judgment, and no statute has been enacted to replace the unconstitutional statute;

(d) Other rules of the agency or of another agency govern the same activity as the rule, making the rule redundant.

(3) The agency shall also send a copy of the preproposal notice of intent to any person who has requested notification of copies of proposals for the expedited repeal of rules or of agency rule making. The preproposal notice of intent shall include a statement that any person who objects to the repeal of the rule must file a written objection to the repeal within thirty days after the preproposal notice of intent is published. The notice of intent shall also include an explanation of the reasons the agency believes the expedited repeal of the rule is appropriate.

(4) The code reviser shall publish all rules proposed for expedited repeal in a separate section of a regular edition of the Washington state register or in a special edition of the Washington state register. The publication shall be not later than July 31st, or in the first register published after that date.

(5) Any person may file a written objection to the expedited repeal of a rule. The notice shall be filed with the agency rules coordinator within thirty days after the notice of intent has been published in the Washington state register. The written objection need not state any reason for objecting to the expedited repeal of the rule.

(6) If no written objections to the expedited repeal of a rule are filed with the agency within thirty days after the preproposal notice of intent is published, the agency may enter an order repealing the rule without further notice or an opportunity for a public hearing. The order shall be published in the manner required by this chapter for any other order of the agency adopting, amending, or repealing a rule. If a written objection to the expedited repeal of the rule is filed with the agency within thirty days after the notice of intent has been published, the preproposal notice of intent published pursuant to this section shall be considered a preproposal notice of intent for the purposes of RCW 34.05.310(1) and the agency may initiate rule adoption proceedings in accordance with the provisions of this chapter.

Sec. 3. RCW 34.05.310 and 1994 c 249 s 1 are each amended to read as follows:

(1) Unless an agency makes a determination pursuant to subsection (3) of this section, to meet the intent of providing greater public access to administrative rule making and to promote consensus among interested parties, ((~~agencies~~)) it shall solicit comments from the public on a subject of possible rule making before publication of a notice of proposed rule adoption under RCW 34.05.320. The agency shall prepare a statement of intent that:

(a) States the specific statutory authority for the new rule;

(b) Identifies the reasons the new rule is needed or the issue the agency is exploring to determine if a new rule is needed;

(d) Describes the process by which the rule will be developed, including, but not limited to, negotiated rule making((,)) or pilot rule making((~~, or agency study~~)); and

(e) Specifies the process by which interested parties can effectively participate in the formulation of the new rule.

The statement of intent shall be filed with the code reviser for publication in the state register and shall be ((~~sent~~)) provided to any party that has requested receipt of the agency's statements of intent.

(2) Agencies are encouraged to develop and use new procedures for reaching agreement among interested parties before publication of notice and the adoption hearing on a proposed rule. Examples of new procedures include, but are not limited to:

(a) Negotiated rule making which ((~~includes:~~

~~(i) Identifying individuals and organizations that have a recognized interest in or will be significantly affected by the adoption of the proposed rule;~~

~~(ii) Soliciting participation by persons who are capable, willing, and appropriately authorized to enter into such negotiations;~~

(iii) Assuring that participants fully recognize the consequences of not participating in the process, are committed to negotiate in good faith, and recognize the alternatives available to other parties;

~~(iv) Establishing guidelines to encourage consideration of all pertinent issues, to set reasonable completion deadlines, and to provide fair and objective settlement of disputes that may arise;~~

~~(v) Agreeing on a reasonable time period during which the agency will be bound to the rule resulting from the negotiations without substantive amendment; and~~

(vi) Providing a mechanism by which one or more parties may withdraw from the process or the negotiations may be terminated if it appears that consensus cannot be reached on a draft rule that accommodates the needs of the agency, interested parties, and the general public and conforms to the legislative intent of the statute that the rule is intended to implement)) means a process by which representatives of an agency and of the interests who are affected by a subject of rule making seek to reach consensus on the terms of the proposed rule and on the process by which it is negotiated; and

(b) Pilot rule making which includes testing the ((~~draft of a proposed rule~~)) feasibility of complying with or administering new draft rules or draft revisions to adopted rules through the use of volunteer pilot ((~~study~~)) groups in various areas and circumstances, as provided in RCW 34.05.313.

(3)(((a) An agency must make a determination whether negotiated rule making, pilot rule making, or another process for generating participation from interested parties prior to development of the rule is appropriate.

~~(b) An agency must~~)) If the agency determines that an opportunity for interested parties to participate in the rule-making process before publication of the proposed rule is not necessary to achieve the objectives of subsection (1) of this section, not later than the date it publishes the proposed rule for comment pursuant to RCW 34.05.320 it shall include ((~~a written justification~~)) in the rule-making file ((~~if an opportunity for interested parties to participate in the rule-making process prior to publication of the proposed rule has not been provided~~)) a written statement explaining the reasons for not providing such an opportunity and shall mail the statement to any person who has requested copies of the agency's statements of intent.

(4) The provisions of this section do not apply to:

(a) The adoption of an emergency rule pursuant to RCW 34.05.350;

(b) The adoption of a rule relating to internal governmental operations;

(c) The amendment of a rule that had adopted or incorporated by reference without material change federal statutes or rules, rules of other Washington state agencies, laws or rules of local governments, or national consensus codes that generally establish industry standards, and that simply revise the version of such adopted or incorporated material; or

(d) The adoption of a rule that simply corrects typographical errors, makes address or name changes, clarifies language without changing intent, or conforms language in the rule to statutory changes or judicial decisions.

Sec. 4. RCW 34.05.313 and 1993 c 202 s 4 are each amended to read as follows:

((~~If,~~)) (1) During the development of a rule or after its adoption, an agency ((~~determines that implementation may produce unreasonable economic, procedural, or technical burdens, agencies are encouraged to~~)) may develop methods for measuring or testing the feasibility of ((~~compliance~~)) complying with or administering the rule((~~, including the use of voluntary pilot study groups~~)) and for identifying simple, efficient, and economical alternatives for achieving the goal of the rule. ((~~Measuring and testing methods should emphasize~~)) A pilot project shall include public notice, participation by ((~~persons who have a recognized interest in or are significantly affected by the adoption of the proposed rule~~)) volunteers who are or will be subject to the rule, a high level of involvement from agency management, ((~~consensus on issues and procedures among participants in the pilot group, assurance of fairness, and~~)) reasonable completion dates, and a process by which one or more parties may withdraw from the process or the process may be terminated ((~~if consensus cannot be reached on the rule~~)). Volunteers who agree to test a rule and attempt to meet the requirements of the draft rule, to report periodically to the proposing agency on the extent of their ability to meet the requirements of the draft rule, and to make recommendations for improving the draft rule shall not be obligated to comply fully with the rule being tested nor be subject to any enforcement action or other sanction for failing to comply with the requirements of the draft rule.

(2) An agency conducting a pilot rule project authorized under subsection (1) of this section may waive one or more provisions of agency rules otherwise applicable to participants in such a pilot project if the agency first determines that such a waiver is in the public interest and necessary to conduct the project. Such a waiver may be only for a stated period of time, not to exceed the duration of the project.

(3) The findings of the pilot project should be widely shared and, where appropriate, adopted as amendments to the rule.

(4) If an agency conducts a pilot rule project in lieu of meeting the requirements of the regulatory fairness act, chapter 19.85 RCW, the agency shall ensure the following conditions are met:

(a) If over ten small businesses are affected, there shall be at least ten small businesses in the test group and at least one-half of the volunteers participating in the pilot test group shall be small businesses.

(b)(i) If there are at least one hundred businesses affected, the participation by small businesses in the test group shall be as follows:

(A) Not less than twenty percent of the small businesses must employ twenty-six to fifty employees;

(B) Not less than twenty percent of the small businesses must employ eleven to twenty-six employees, and

(ii) If there do not exist a sufficient number of small businesses in each size category set forth in (b)(i) of this subsection willing to participate in the pilot project to meet the minimum requirements of that subsection, then the agency must comply with this section to the maximum extent practicable.

(d) Before filing the notice of proposed rule making pursuant to RCW 34.05.320, the agency must prepare a report of the pilot rule project that includes:

(i) A description of the difficulties small businesses had in complying with the pilot rule;

(ii) A list of the recommended revisions to the rule to make compliance with the rule easier or to reduce the cost of compliance with the rule by the small businesses participating in the pilot rule project; and

(iii) A written statement explaining the options it considered to resolve each of the difficulties described and a statement explaining its reasons for not including a recommendation by the pilot test group to revise the rule.

Sec. 5. RCW 34.05.325 and 1994 c 249 s 7 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~~)) (a) Except as otherwise provided in (c) of this subsection, at the time it files an adopted rule with the code reviser, or within thirty days thereafter, an agency shall prepare a ((~~written summary of~~)) concise explanatory statement of the rule:

(i) Identifying the agency's reasons for adopting the rule;

(ii) Describing differences 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 differences; and

(iii) Summarizing all comments received regarding the proposed rule, and ((~~a substantive response~~)) responding 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.

(b) The agency shall provide the ((~~written summary and response~~)) concise explanatory statement to any person upon request or from whom the agency received comment.

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~~)) The office of financial management shall prescribe by rule the ((~~form~~)) format for such petitions and the procedure for their submission, consideration, and disposition and provide a standard form that may be used to petition any agency. Within sixty days after submission of a petition, the agency shall ((~~(1)~~)) either (a) deny the petition in writing, stating (i) its reasons for the denial, specifically addressing the concerns raised by the petitioner, and, where appropriate, (ii) the alternative means by which it will address the concerns raised by the petitioner, or ((~~(2)~~)) (b) initiate rule-making proceedings in accordance with this chapter.

(2) If an agency 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 governor shall immediately file notice of the appeal with the code reviser for publication in the Washington state register. Within forty-five days after receiving the appeal, the governor shall either (a) deny the petition in writing, stating (i) his or her reasons for the denial, specifically addressing the concerns raised by the petitioner, and, (ii) where appropriate, the alternative means by which he or she will address the concerns raised by the petitioner; (b) for agencies listed in RCW 43.17.010, direct the agency to initiate rule-making proceedings in accordance with this chapter; or (c) for agencies not listed in RCW 43.17.010, recommend that the agency initiate rule-making proceedings in accordance with this chapter. The governor's response to the appeal shall be published in the Washington state register and copies shall be submitted to the chief clerk of the house of representatives and the secretary of the senate.

(3) In petitioning for repeal or amendment of a rule under this section, a person is encouraged to address, among other concerns:

(a) Whether the rule is authorized;

(b) Whether the rule is needed;

(d) Whether alternatives to the rule exist that will serve the same purpose at less cost;

(e) Whether the rule applies differently to public and private entities;

(f) Whether the rule serves the purposes for which it was adopted;

(g) Whether the costs imposed by the rule are unreasonable; and

(h) Whether the rule is clearly and simply stated.

(4) The business assistance center and the office of financial management shall coordinate efforts among agencies to inform the public about the existence of this rules review process.

(5) The office of financial management shall initiate the rule making required by subsection (1) of this section by September 1, 1995.

Sec. 7. RCW 34.05.375 and 1988 c 288 s 314 are each amended to read as follows:

(1) No rule proposed after July 1, 1989, is valid unless it is adopted in substantial compliance with RCW 34.05.310 through 34.05.395. Inadvertent failure to mail notice of a proposed rule adoption to any person as required by RCW 34.05.320(3) does not invalidate a rule. ((~~No action based upon this section may be maintained to contest the validity of any rule unless it is commenced within two years after the effective date of the rule.~~))

(2)(a) Except as otherwise provided in (b) of this subsection, an action based upon this section to contest the validity of a rule shall be commenced within two years after the effective date of the rule.

(b) An action based upon a claim that an agency failed to comply with section 1 of this act shall be commenced within ninety days after the effective date of the rule being contested. Nothing in this subsection limits the authority of a court to review a rule under RCW 34.05.570(2).

NEW SECTION. Sec. 8. A new section is added to chapter 19.85 RCW to read as follows:

(1) Unless an agency receives a written objection to the expedited repeal of a rule, this chapter does not apply to a rule proposed for expedited repeal pursuant to section 2 of this act. If an agency receives a written objection to expedited repeal of the rule, this chapter applies to the rule-making proceeding.

(2) This chapter does not apply to the adoption of a rule described in RCW 34.05.310(4).

(3) An agency is not required to prepare a separate statement under this chapter if it prepared an analysis under section 1(1) of this act that makes the findings required and includes the mitigation required by this chapter and designates that part of the analysis that meets the requirements of this chapter.

Sec. 9. RCW 19.85.030 and 1994 c 249 s 11 are each amended to read as follows:

(1) In the adoption of any rule pursuant to RCW 34.05.320 that will impose more than minor costs on more than twenty percent of all industries, or more than ten percent of any one industry, the adopting agency:

(a) 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:

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

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

(iii) Establish performance rather than design standards;

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

(v) Reduce or modify fine schedules for noncompliance; and

(vi) Other mitigation techniques;

(b) Before filing notice of a proposed rule, shall either:

(i) Prepare a small business economic impact statement in accordance with RCW 19.85.040 and file notice of how the person can obtain the statement with the code reviser as part of the notice required under RCW 34.05.320; or

(ii) Complete the pilot rule process as defined by RCW 34.05.313 before filing the notice of a proposed rule.

(2) 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 a small business economic impact statement on the proposed rule before adoption of the rule. Upon completion, an agency shall provide a copy of the small business economic impact statement to any person requesting it.

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

(4) The business assistance center shall develop guidelines to assist agencies in determining whether a proposed rule will impose more than minor costs on businesses in an industry and therefore require preparation of a small business economic impact statement. 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.

NEW SECTION. Sec. 10. RCW 34.05.355 and 1994 c 249 s 8 & 1988 c 288 s 310 are each repealed.