[atlas:bill]

AN ACT Relating to regulatory reform; amending RCW 34.05.230, 34.05.310, 34.05.320, 34.05.328, 34.05.350, 34.05.380, 34.05.570, 4.84.340, 4.84.350, 4.84.360, 43.05.040, 43.05.030, 34.05.610, 34.05.630, 34.05.640, 34.05.660, and 43.135.060; adding new sections to chapter 34.05 RCW; adding a new section to chapter 43.21A RCW; adding a new section to chapter 43.22 RCW; adding new sections to chapter 4.84 RCW; adding a new section to chapter 43.05 RCW; adding a new chapter to Title 34 RCW; creating new sections; repealing RCW 34.05.354; providing an effective date; and providing an expiration date.

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

PART I

EXTEND EXPEDITED RULE-MAKING AUTHORITY

Sec. 1. RCW 34.05.230 and 1997 c 409 s 202 are each amended to read as follows:

(1) ((~~An agency may file notice for the expedited adoption of rules in accordance with the procedures set forth in this section for rules meeting any one of the following criteria:~~

~~(a) The proposed rules relate only to internal governmental operations that are not subject to violation by a person;~~

(b) The proposed rules adopt or incorporate by reference without material change federal statutes or regulations, Washington state statutes, rules of other Washington state agencies, shoreline master programs other than those programs governing shorelines of state-wide significance, or, as referenced by Washington state law, national consensus codes that generally establish industry standards, if the material adopted or incorporated regulates the same subject matter and conduct as the adopting or incorporating rule;

~~(c) The proposed rules only correct typographical errors, make address or name changes, or clarify language of a rule without changing its effect;~~

~~(d) The content of the proposed rules is explicitly and specifically dictated by statute;~~

(e) The proposed rules have been the subject of negotiated rule making, pilot rule making, or some other process that involved substantial participation by interested parties before the development of the proposed rule; or

~~(f) The proposed rule is being amended after a review under RCW 34.05.328 or section 210 of this act.~~

(2) The expedited rule-making process must follow the requirements for rule making set forth in RCW 34.05.320, except that the agency is not required to prepare a small business economic impact statement under RCW 19.85.025, a statement indicating whether the rule constitutes a significant legislative rule under RCW 34.05.328(5)(c)(iii), or a significant legislative rule analysis under RCW 34.05.328. An agency is not required to prepare statements of inquiry under RCW 34.05.310 or conduct a hearing for the expedited adoption of rules. The notice for the expedited adoption of rules must contain a statement in at least ten-point type, that is substantially in the following form:

~~NOTICE~~

THIS RULE IS BEING PROPOSED TO BE ADOPTED USING AN EXPEDITED RULE-MAKING PROCESS THAT WILL ELIMINATE THE NEED FOR THE AGENCY TO HOLD PUBLIC HEARINGS, PREPARE A SMALL BUSINESS ECONOMIC IMPACT STATEMENT, OR PROVIDE RESPONSES TO THE CRITERIA FOR A SIGNIFICANT LEGISLATIVE RULE. IF YOU OBJECT TO THIS RULE BEING ADOPTED USING THE EXPEDITED RULE-MAKING PROCESS, YOU MUST EXPRESS YOUR OBJECTIONS IN WRITING AND THEY MUST BE SENT TO (INSERT NAME AND ADDRESS) AND RECEIVED BY (INSERT DATE).

(3) The agency shall send a copy of the notice of the proposed expedited rule making to any person who has requested notification of proposals for the expedited adoption of rules or of agency rule making, as well as the joint administrative rules review committee, within three days after its publication in the Washington State Register. An agency may charge for the actual cost of providing a requesting party mailed copies of these notices. The notice of the proposed expedited rule making must be preceded by a statement substantially in the form provided in subsection (2) of this section. The notice must also include an explanation of the reasons the agency believes the expedited adoption of the rule is appropriate.

(4) The code reviser shall publish the text of all rules proposed for expedited adoption along with the notice required in this section in a separate section of the Washington State Register. Once the text of the proposed rules has been published in the Washington State Register, the only changes that an agency may make in the text of these proposed rules before their final adoption are to correct typographical errors.

(5) Any person may file a written objection to the expedited adoption of a rule. The objection must be filed with the agency rules coordinator within forty-five days after the notice of the proposed expedited rule making has been published in the Washington State Register. A person who has filed a written objection to the expedited adoption of a rule may withdraw the objection.

(6) If no written objections to the expedited adoption of a rule are filed with the agency within forty-five days after the notice of proposed expedited rule making is published, or if all objections that have been filed are withdrawn by the persons filing the objections, the agency may enter an order adopting the rule without further notice or a public hearing. The order must be published in the manner required by this chapter for any other agency order adopting, amending, or repealing a rule.

(7) If a written notice of objection to the expedited adoption of the rule is timely filed with the agency and is not withdrawn, the notice of proposed expedited rule making published under this section is considered a statement of inquiry for the purposes of RCW 34.05.310, and the agency may initiate further rule adoption proceedings in accordance with this chapter.

~~(8) Subsections (1) through (8) of this section expire on December 31, 2000.~~

~~an [An]~~)) An agency is encouraged to advise the public of its current opinions, approaches, and likely courses of action by means of interpretive or policy statements. Current interpretive and policy statements are advisory only. To better inform and involve the public, an agency is encouraged to convert long-standing interpretive and policy statements into rules.

(2) A person may petition an agency requesting the conversion of interpretive and policy statements into rules. Upon submission, the agency shall notify the joint administrative rules review committee of the petition. Within sixty days after submission of a petition, the agency shall either deny the petition in writing, stating its reasons for the denial, or initiate rule-making proceedings in accordance with this chapter.

((~~(11)~~)) (3) Each agency shall maintain a roster of interested persons, consisting of persons who have requested in writing to be notified of all interpretive and policy statements issued by that agency. Each agency shall update the roster once each year and eliminate persons who do not indicate a desire to continue on the roster. Whenever an agency issues an interpretive or policy statement, it shall send a copy of the statement to each person listed on the roster. The agency may charge a nominal fee to the interested person for this service.

((~~(12)~~)) (4) Whenever an agency issues an interpretive or policy statement, it shall submit to the code reviser for publication in the Washington State Register a statement describing the subject matter of the interpretive or policy statement, and listing the person at the agency from whom a copy of the interpretive or policy statement may be obtained.

Sec. 2. RCW 34.05.310 and 1995 c 403 s 301 are each amended to read as follows:

(1) To meet the intent of providing greater public access to administrative rule making and to promote consensus among interested parties, agencies shall solicit comments from the public on a subject of possible rule making before filing with the code reviser a notice of proposed rule making under RCW 34.05.320. The agency shall prepare a statement of inquiry that:

(a) Identifies the specific statute or statutes authorizing the agency to adopt rules on this subject;

(b) Discusses why rules on this subject may be needed and what they might accomplish;

(c) Identifies other federal and state agencies that regulate this subject, and describes the process whereby the agency would coordinate the contemplated rule with these agencies;

(d) Discusses the process by which the rule might be developed, including, but not limited to, negotiated rule making, pilot rule making, or agency study;

(e) Specifies the process by which interested parties can effectively participate in the decision to adopt a new rule and formulation of a proposed rule before its publication.

The statement of inquiry shall be filed with the code reviser ((~~for publication~~)) and published in the state register at least thirty days before the date the agency files notice of proposed rule making under RCW 34.05.320 and shall be sent to any party that has requested receipt of the agency's statements of inquiry.

(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 by which representatives of an agency and of the interests that are affected by a subject of rule making, including, where appropriate, county and city representatives, 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 feasibility of complying with or administering draft new rules or draft amendments to existing rules through the use of volunteer pilot groups in various areas and circumstances, as provided in RCW 34.05.313 or as otherwise provided by the agency.

(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 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.

(4) Statements issued by an agency under this section and filed with the code reviser are regarded as withdrawn if the agency has not proposed a rule as provided by RCW 34.05.320 within one hundred eighty days after publication of the statement in the register.

(5) This section does not apply to:

(a) Emergency rules adopted under RCW 34.05.350;

(b) ((~~Rules relating only to internal governmental operations that are not subject to violation by a nongovernment party;~~

(c) Rules adopting or incorporating by reference without material change federal statutes or regulations, Washington state statutes, rules of other Washington state agencies, shoreline master programs other than those programs governing shorelines of state-wide significance, or, as referenced by Washington state law, national consensus codes that generally establish industry standards, if the material adopted or incorporated regulates the same subject matter and conduct as the adopting or incorporating rule;

~~(d) Rules that only correct typographical errors, make address or name changes, or clarify language of a rule without changing its effect;~~

~~(e) Rules the content of which is explicitly and specifically dictated by statute;~~

~~(f)~~)) Rules that can be adopted or repealed using expedited rule making under section 3 of this act;

((~~(g)~~)) (d) Rules that adopt, amend, or repeal:

(i) A procedure, practice, or requirement relating to agency hearings; or

(ii) A filing or related process requirement for applying to an agency for a license or permit.

NEW SECTION. Sec. 3. A new section is added to chapter 34.05 RCW to read as follows:

(1) An agency may file notice for the expedited adoption of rules in accordance with the procedures set forth in this section for rules meeting any one of the following criteria:

(a) The proposed rules relate only to internal governmental operations that are not subject to violation by a person;

(b) The proposed rules adopt or incorporate by reference without material change federal statutes or regulations, Washington state statutes, rules of other Washington state agencies, shoreline master programs other than those programs governing shorelines of statewide significance, or, as referenced by Washington state law, national consensus codes that generally establish industry standards, if the material adopted or incorporated regulates the same subject matter and conduct as the adopting or incorporating rule;

(c) The proposed rules only correct typographical errors, make address or name changes, or clarify language of a rule without changing its effect;

(d) The content of the proposed rules is explicitly and specifically dictated by statute;

(f) The proposed rule is being amended after a review under RCW 34.05.328.

(2) An agency may file notice for the expedited repeal of rules under the procedures set forth in this section for rules meeting any one 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 expedited rule-making process must follow the requirements for rule making set forth in RCW 34.05.320, except that the agency is not required to prepare a small business economic impact statement under RCW 19.85.025, a statement indicating whether the rule constitutes a significant legislative rule under RCW 34.05.328(5)(c)(iii), or a significant legislative rule analysis under RCW 34.05.328. An agency is not required to prepare statements of inquiry under RCW 34.05.310 or conduct a hearing for the expedited rule making. The notice for the expedited rule making must contain a statement in at least ten-point type, that is substantially in the following form:

NOTICE

THIS RULE IS BEING PROPOSED UNDER AN EXPEDITED RULE-MAKING PROCESS THAT WILL ELIMINATE THE NEED FOR THE AGENCY TO HOLD PUBLIC HEARINGS, PREPARE A SMALL BUSINESS ECONOMIC IMPACT STATEMENT, OR PROVIDE RESPONSES TO THE CRITERIA FOR A SIGNIFICANT LEGISLATIVE RULE. IF YOU OBJECT TO THIS USE OF THE EXPEDITED RULE-MAKING PROCESS, YOU MUST EXPRESS YOUR OBJECTIONS IN WRITING AND THEY MUST BE SENT TO (INSERT NAME AND ADDRESS) AND RECEIVED BY (INSERT DATE).

(4) The agency shall send a copy of the notice of the proposed expedited rule making to any person who has requested notification of proposals for expedited rule making or of regular agency rule making, as well as the joint administrative rules review committee, within three days after its publication in the Washington State Register. An agency may charge for the actual cost of providing a requesting party mailed copies of these notices. The notice of the proposed expedited rule making must be preceded by a statement substantially in the form provided in subsection (3) of this section. The notice must also include an explanation of the reasons the agency believes the expedited rule-making process is appropriate.

(5) The code reviser shall publish the text of all rules proposed for expedited adoption, and the citation and caption of all rules proposed for expedited repeal, along with the notice required in this section in a separate section of the Washington State Register. Once the notice of expedited rule making has been published in the Washington State Register, the only changes that an agency may make in the noticed materials before their final adoption or repeal are to correct typographical errors.

(6) Any person may file a written objection to the expedited rule making. The objection must be filed with the agency rules coordinator within forty-five days after the notice of the proposed expedited rule making has been published in the Washington State Register. A person who has filed a written objection to the expedited rule making may withdraw the objection.

(7) If no written objections to the expedited rule making are filed with the agency within forty-five days after the notice of proposed expedited rule making is published, or if all objections that have been filed are withdrawn by the persons filing the objections, the agency may enter an order adopting or repealing the rule without further notice or a public hearing. The order must be published in the manner required by this chapter for any other agency order adopting, amending, or repealing a rule.

(8) If a written notice of objection to the expedited rule making is timely filed with the agency and is not withdrawn, the notice of proposed expedited rule making published under this section is considered a statement of inquiry for the purposes of RCW 34.05.310, and the agency may initiate further rule-making proceedings in accordance with this chapter.

(9) This section expires July 1, 2005.

NEW SECTION. Sec. 4. RCW 34.05.354 (Expedited repeal) and 1998 c 280 s 6, 1997 c 409 s 208, & 1995 c 403 s 701 are each repealed.

PART II

NORMAL RULE-MAKING PROCEDURES

Sec. 5. RCW 34.05.320 and 1995 c 403 s 302 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) An explanation of the differences between the rule and any federal or state law dealing with the same activity or subject matter;

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

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

((~~(j)~~)) (k) 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;

((~~(k)~~)) (l) A copy of the local government economic impact statement prepared under section 31 of this act;

(m) A copy of the small business economic impact statement prepared under chapter 19.85 RCW, or an explanation for why the agency did not prepare the statement; and

((~~(l)~~)) (n) A statement indicating whether RCW 34.05.328 applies to the rule adoption.

(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, city, and county that has made a request to the agency for a mailed copy of such notices. An agency may charge for the actual cost of providing a requesting party 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.

Sec. 6. RCW 34.05.328 and 1997 c 430 s 1 are each amended to read as follows:

(1) Before ((~~adopting~~)) proposing a rule described in subsection (5) of this section, an agency shall:

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

(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 it that will achieve the general goals and 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) 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;

(g) Determine if the rule differs from any federal or state regulation or statute applicable to the same activity or subject matter and, if so, determine that the difference is justified by the following:

(i) A state statute that explicitly allows the agency to differ from federal standards; or

(ii) Substantial evidence that the difference is necessary to achieve the general goals and specific objectives stated under (a) of this subsection; and

(h) Coordinate the rule, to the maximum extent practicable, with other federal, state, and local laws applicable to the same activity or subject matter.

(2) In making its determinations pursuant to subsection (1)(b) through (g) of this section, the agency shall place in the rule-making file documentation of sufficient quantity and quality so as to persuade a reasonable person that the determinations are justified.

(3) Before adopting rules described in subsection (5) of this section, an agency shall place in the rule-making file a rule implementation plan for rules filed under each adopting order. The plan shall describe how the agency intends to:

(a) Implement and enforce the rule, including a description of the resources the agency intends to use;

(b) Inform and educate affected persons about the rule;

(d) Evaluate whether the rule achieves the purpose for which it was adopted, including, to the maximum extent practicable, the use of interim milestones to assess progress and the use of objectively measurable outcomes.

(4) After adopting a rule described in subsection (5) of this section regulating the same activity or subject matter as another provision of federal or state law, an agency shall do all of the following:

(a) Provide to the ((~~business assistance center~~)) department of community, trade, and economic development a list citing by reference the other federal and state laws that regulate the same activity or subject matter;

(b) Coordinate implementation and enforcement of the rule with the other federal and state entities regulating the same activity or subject matter by making every effort to do 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 comply with this subsection (4)(b), the agency shall report to the legislature pursuant to (c) of this subsection;

(i) The existence of any overlap or duplication of other federal or state laws, any differences from federal law, and any known overlap, duplication, or conflict with local laws; and

(ii) Make recommendations for any legislation that may be necessary to eliminate or mitigate any adverse effects of such overlap, duplication, or difference.

(5)(a) Except as provided in (b) of this subsection, this section applies to:

(i) Significant legislative rules of the departments of ecology, labor and industries, health, revenue, social and health services, and natural resources, the employment security department, the forest practices board, the office of the insurance commissioner, and to the legislative rules of the department of fish and wildlife implementing chapter ((~~75.20~~)) 77.55 RCW; and

(ii) Any rule of any agency, if this section is voluntarily made applicable to the rule by the agency, or is made applicable to the rule by a majority vote of the joint administrative rules review committee within forty-five days of receiving the notice of proposed rule making under RCW 34.05.320.

(b) This section does not apply to:

(i) Emergency rules adopted under RCW 34.05.350;

(ii) Rules relating only to internal governmental operations that are not subject to violation by a nongovernment party;

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

(iv) Rules that only correct typographical errors, make address or name changes, or clarify language of a rule without changing its effect;

(v) Rules the content of which is explicitly and specifically dictated by statute;

(vi) Rules that set or adjust fees or rates pursuant to legislative standards; or

(vii) Rules of the department of social and health services relating only to client medical or financial eligibility and rules concerning liability for care of dependents.

(i) A "procedural rule" is a rule that adopts, amends, or repeals (A) any procedure, practice, or requirement relating to any agency hearings; (B) any filing or related process requirement for making application to an agency for a license or permit; or (C) any policy statement pertaining to the consistent internal operations of an agency.

(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 "significant legislative rule" is 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; (B) establishes, alters, or revokes any qualification or standard for the issuance, suspension, or revocation of a license or permit; or (C) adopts a new, or makes significant amendments to, a policy or regulatory program.

(d) In the notice of proposed rule making under RCW 34.05.320, an agency shall state whether this section applies to the proposed rule pursuant to (a)(i) of this subsection, or if the agency will apply this section voluntarily.

(6) By January 31, 1996, and by January 31st of each even-numbered year thereafter, the office of financial management, after consulting with state agencies, counties, and cities, 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 adversely affected the capacity of agencies to fulfill their legislatively prescribed mission;

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

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

Sec. 7. RCW 34.05.350 and 1994 c 249 s 3 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 must contain the governor's signature approving the adoption of the emergency rule or amendment if immediate adoption is found necessary for the preservation of the general welfare. In that case, the governor shall also include a statement explaining why the rule is necessary for that reason. For all other emergency rules, the order of adoption must contain the agency's finding and a concise statement of the reasons for its finding.

(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 department listed in RCW 43.17.010. 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 sanction imposed 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 comply with section 4 of this act or provide a written explanation for its failure to do so.~~))

Sec. 8. RCW 34.05.380 and 1989 c 175 s 11 are each amended to read as follows:

(1) Each agency shall file in the office of the code reviser a certified copy of all rules it adopts, except for rules contained in tariffs filed with or published by the Washington utilities and transportation commission. The code reviser shall place upon each rule a notation of the time and date of filing and shall keep a permanent register of filed rules open to public inspection. In filing a rule, each agency shall use the standard form prescribed for this purpose by the code reviser.

(2)(a) Emergency rules adopted under RCW 34.05.350 become effective upon filing unless a later date is specified in the order of adoption.

(b) All other rules become effective upon the expiration of thirty days after the ((~~date of filing~~)) adjournment of the regular session of the legislature in the calendar year after the year in which the rule was adopted, unless a later date is required by statute or specified in the order of adoption.

(3) A rule may become effective immediately upon its filing with the code reviser or on any subsequent date earlier than that established by subsection (2) of this section, if the agency establishes that effective date in the adopting order and finds that:

(a) Such action is required by the state or federal Constitution, a statute, or court order;

(b) The rule only delays the effective date of another rule that is not yet effective; or

The finding and a brief statement of the reasons therefor required by this subsection shall be made a part of the order adopting the rule.

(4) With respect to a rule made effective pursuant to subsection (3) of this section, each agency shall make reasonable efforts to make the effective date known to persons who may be affected by it.

NEW SECTION. Sec. 9. RCW 34.05.380(2)(b) applies only to rules adopted after the effective date of this section.

NEW SECTION. Sec. 10. A new section is added to chapter 34.05 RCW to read as follows:

(1) Every rule adopted under this chapter before the effective date of this section that is still in effect one day less than five years after the effective date of this section, terminates five years after the effective date of this section.

(2) A rule adopted under this chapter on or after the effective date of this section that is still in effect one day less than five years after the date the rule was adopted, terminates five years after the date the rule was adopted. The amendment of a rule that was adopted on or after the effective date of this section establishes a new date for calculating this five-year termination date.

PART III

LIMIT RULE-MAKING AUTHORITY OF DEPARTMENT OF ECOLOGY

AND DEPARTMENT OF LABOR AND INDUSTRIES

NEW SECTION. Sec. 11. (1) The legislature recognizes that clear and specific grants of rule-making authority are necessary for accountability in decision making by governmental agencies, and that an agency should exercise jurisdiction and adopt rules over a subject matter only if it has obvious and explicit rule-making authority to do so. It is therefore the legislature's purpose to ensure that existing and future rules exist only under clear and appropriate rule-making authority.

(2) The legislature further finds that state agencies have adopted administrative rules without clear authority to do so from the legislature, relying on general grants of authority rather than specific legislative policy direction. This has resulted in agency-initiated policy that has been adopted without the benefit of the public dialogue and accountability inherent to the legislative process. It is therefore the intent of the legislature to eliminate reliance on general grants of authority, limit certain agency rule making to those matters specifically authorized by the legislature, and that grants of rule-making authority be narrowly construed.

NEW SECTION. Sec. 12. A new section is added to chapter 43.21A RCW to read as follows:

The director of the department of ecology may adopt, in accordance with chapter 34.05 RCW, rules or policy statements, other than emergency rules, only:

(1) As specifically required by federal law, and only to the extent specifically required; or

(2) As specifically authorized, and only to the extent specifically authorized, by the legislature.

NEW SECTION. Sec. 13. A new section is added to chapter 43.22 RCW to read as follows:

The director of the department of labor and industries may adopt in accordance with chapter 34.05 RCW, rules or policy statements, other than emergency rules, only:

(1) As specifically required by federal law, and only to the extent specifically required; or

(2) As specifically authorized, and only to the extent specifically authorized, by the legislature.

PART IV

JUDICIAL REVIEW

Sec. 14. RCW 34.05.570 and 1995 c 403 s 802 are each amended to read as follows:

(1) Generally. Except to the extent that this chapter or another statute provides otherwise:

(a) Except as provided in subsection (2) of this section and except that an agency bears the burden of demonstrating that the agency action was authorized by law, the burden of demonstrating the invalidity of agency action is on the party asserting invalidity;

(b) The validity of agency action shall be determined in accordance with the standards of review provided in this section, as applied to the agency action at the time it was taken;

(c) The court shall make a separate and distinct ruling on each material issue on which the court's decision is based; and

(d) The court shall grant relief only if it determines that a person seeking judicial relief has been substantially prejudiced by the action complained of.

(2) Review of rules. (a) A rule may be reviewed by petition for declaratory judgment filed pursuant to this subsection or in the context of any other review proceeding under this section. In an action challenging the validity of a rule, the agency shall be made a party to the proceeding.

(b) The validity of any rule may be determined upon petition for a declaratory judgment 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. When the validity of a rule is challenged, after the petitioner has identified the defects in the rule, the burden of going forward with the evidence is on the agency. The declaratory judgment order may be entered whether or not the petitioner has first requested the agency to pass upon the validity of the rule in question.

(c) In a proceeding involving review of a rule, the court shall declare the rule invalid only if it finds that: The rule violates constitutional provisions; the rule exceeds the statutory authority of the agency; the rule was adopted without compliance with statutory rule-making procedures; or the rule is arbitrary and capricious.

(3) Review of agency orders in adjudicative proceedings. The court shall grant relief from an agency order in an adjudicative proceeding only if it determines that:

(a) The order, or the statute or rule on which the order is based, is in violation of constitutional provisions on its face or as applied;

(b) The order is outside the statutory authority or jurisdiction of the agency conferred by any provision of law;

(c) The agency has engaged in unlawful procedure or decision-making process, or has failed to follow a prescribed procedure;

(d) The agency has erroneously interpreted or applied the law;

(e) The order is not supported by evidence that is substantial when viewed in light of the whole record before the court, which includes the agency record for judicial review, supplemented by any additional evidence received by the court under this chapter;

(f) The agency has not decided all issues requiring resolution by the agency;

(g) A motion for disqualification under RCW 34.05.425 or 34.12.050 was made and was improperly denied or, if no motion was made, facts are shown to support the grant of such a motion that were not known and were not reasonably discoverable by the challenging party at the appropriate time for making such a motion;

(h) The order is inconsistent with a rule of the agency unless the agency explains the inconsistency by stating facts and reasons to demonstrate a rational basis for inconsistency; ((or))

(i) The order is arbitrary or capricious; or

(j) The order is based on a de facto rule.

(4) Review of other agency action.

(a) All agency action not reviewable under subsection (2) or (3) of this section shall be reviewed under this subsection.

(b) A person whose rights are violated by an agency's failure to perform a duty that is required by law to be performed may file a petition for review pursuant to RCW 34.05.514, seeking an order pursuant to this subsection requiring performance. Within twenty days after service of the petition for review, the agency shall file and serve an answer to the petition, made in the same manner as an answer to a complaint in a civil action. The court may hear evidence, pursuant to RCW 34.05.562, on material issues of fact raised by the petition and answer.

(c) Relief for persons aggrieved by the performance of an agency action, including the exercise of discretion, or an action under (b) of this subsection can be granted only if the court determines that the action is:

(i) Unconstitutional;

(ii) Outside the statutory authority of the agency or the authority conferred by a provision of law;

(iii) Arbitrary or capricious; ((or))

(iv) Taken by persons who were not properly constituted as agency officials lawfully entitled to take such action; or

(v) Based on a de facto rule.

PART V

EQUAL ACCESS TO JUSTICE

Sec. 15. RCW 4.84.340 and 1995 c 403 s 902 are each amended to read as follows:

Unless the context clearly requires otherwise, the definitions in this section apply throughout RCW 4.84.340 through 4.84.360.

(1) "Adjudicative proceeding" means an adjudicative proceeding as defined in RCW 34.05.010 and an administrative review under RCW 34.05.464. RCW 4.84.340 through 4.84.360 and sections 18 and 19 of this act apply only to the following adjudicative proceedings:

(a) Cases conducted for the department of social and health services, but excluding the division of child support and the division of juvenile rehabilitation;

(b) Licensing cases conducted for the liquor control board;

(c) Business and professional licensing cases for the department of licensing, but excluding motor vehicle franchise cases under chapter 46.96 RCW;

(d) Business and professional licensing cases for the department of labor and industries;

(e) Employer assessment and penalty cases conducted under chapters 49.17, 51.48, and 51.52 RCW for the department of labor and industries; and

(f) Employer assessment and penalty cases conducted under chapter 50.24 RCW for the employment security department.

(2) "Administrative review" means an adjudicative proceeding under RCW 34.05.464.

(3) "Administrative tribunal" means an independent agency that conducts adjudicative proceedings, as defined in RCW 34.05.010, as its sole or principal duty, to: (a) Review decisions of another agency or governmental unit; or (b) resolve disputes in which the tribunal is not a party.

(4) "Agency" means any state board, commission, department, institution of higher education, or officer, authorized by law to make rules or to conduct adjudicative proceedings, except those in the legislative or judicial branches, the governor, or the attorney general except to the extent otherwise required by law.

((~~(2)~~)) (5) "Agency action" means agency action as defined by chapter 34.05 RCW.

((~~(3)~~)) (6) "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, presiding officer, or reviewing officer 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 shall 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, presiding officer, or reviewing officer 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.

((~~(4)~~)) (7) "Judicial review" means ((~~a judicial review as defined by chapter 34.05 RCW~~)) review of an agency action in the superior court and courts of appeal.

(8) "Presiding officer" means a presiding officer under RCW 34.05.425.

(9) "Qualified administrative party" means (a) an individual whose net worth did not exceed two hundred fifty thousand dollars at the time the initial petition for an adjudicatory proceeding was filed, or (b) a sole owner of an unincorporated business, or a partnership, corporation, association, or organization whose net worth did not exceed one million two hundred fifty thousand dollars at the time the initial petition for an adjudicatory proceeding 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. 1141J(a)), may be a party regardless of the net worth of the organization or cooperative association.

((~~(5)~~)) (10) "Qualified judicial 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, or (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. 1141J(a)), may be a party regardless of the net worth of such organization or cooperative association.

(11) "Qualified party" means a qualified judicial party or a qualified administrative party.

(12) "Reviewing officer" means a reviewing officer under RCW 34.05.464.

Sec. 16. RCW 4.84.350 and 1995 c 403 s 903 are each amended to read as follows:

(1) Except as otherwise specifically provided by statute, a court shall award a qualified judicial party that prevails in a judicial review of an agency action and a presiding officer or reviewing officer shall award a qualified administrative party that prevails in an adjudicative proceeding challenging an agency action, fees and other expenses, including reasonable attorneys' fees, unless the court, presiding officer, or reviewing officer finds that the agency action was substantially justified or that circumstances make an award unjust. A qualified party ((~~shall be~~)) is considered to have prevailed if the qualified party obtained relief on a significant issue that achieves some benefit that the qualified party sought.

(2) The amount awarded a qualified party under subsection (1) of this section ((~~shall~~)) may not exceed twenty-five thousand dollars for the total request for the combined proceedings, administrative hearing, or administrative review, and may not exceed fifty thousand dollars for the fees and other expenses incurred in superior court, and fifty thousand dollars for the fees and other expenses incurred in each court of appeal, but not to exceed a total award for judicial expenses of seventy-five thousand dollars. Subsection (1) of this section shall not apply unless all parties challenging the agency action are qualified parties. If two or more qualified parties join in an action, the award in total ((~~shall~~)) may not exceed twenty-five thousand dollars in the superior court. The court, presiding officer, or reviewing officer, in its discretion, may reduce the amount to be awarded pursuant to subsection (1) of this section, or deny any award, to the extent that a qualified party during the course of the proceedings engaged in conduct that unduly or unreasonably protracted the final resolution of the matter in controversy.

(3) The agencies that conduct their own administrative hearings or administrative reviews under chapter 34.05 RCW, the chief administrative law judge of the office of administrative hearings, and the board of industrial insurance appeals are authorized to adopt rules to implement RCW 4.84.340 through 4.84.360 and sections 18 and 19 of this act. These rules may include reasonable requirements for notices of appearances by authorized representatives, requirements for notices of intent to seek fees under this section, limitations on the eligibility for fees for nonattorney representatives, and a schedule for hours, rates, or limitations on amounts of fees and other expenses presumed reasonable for the type of adjudicative proceeding. In addition, rules may set a maximum total amount including all fees and expenses for specific types of adjudicative proceedings.

Sec. 17. RCW 4.84.360 and 1995 c 403 s 904 are each amended to read as follows:

Fees and other expenses awarded under RCW 4.84.340 and 4.84.350 ((~~shall~~)) must be paid by the agency over which the party prevails from operating funds appropriated to the agency within ((~~sixty~~)) thirty days. The fees and other expenses must be paid from moneys appropriated to the agency for administration and support services, and not from moneys appropriated for program activities or service delivery, if the operating budget or budget notes specifically designate administrative and support services. Agencies paying fees and other expenses pursuant to RCW 4.84.340 and 4.84.350 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~~)), presiding officer, or reviewing officer are subject to ((~~the provisions of~~)) chapter 39.76 RCW and ((~~shall~~)) must be deemed payable on the date the court, presiding officer, or reviewing officer announces the award.

NEW SECTION. Sec. 18. A new section is added to chapter 4.84 RCW to read as follows:

When an agency has made an offer to participate in an alternative dispute resolution process, the appellant must participate in good faith or be precluded from applying for an award of attorneys' fees or expenses under RCW 4.84.340 through 4.84.360, this section, and section 19 of this act.

NEW SECTION. Sec. 19. A new section is added to chapter 4.84 RCW to read as follows:

No fees or other expenses may be awarded against an administrative tribunal.

PART VI

TECHNICAL ASSISTANCE PROGRAMS

NEW SECTION. Sec. 20. A new section is added to chapter 34.05 RCW to read as follows:

(1) Within two hundred days after the effective date of a rule that imposes additional requirements on businesses, the violation of which subjects a person to a penalty, assessment, or administrative sanction, an agency shall make a good faith effort to notify businesses affected by the rule of the requirements of the rule and how to obtain technical assistance to comply.

(2) For purposes of this section, the agency has made a good faith effort to notify businesses affected by the rule if:

(a) The agency at least notifies businesses in the standard industrial classifications registered with the department of revenue that are identified in the rule-making file as businesses affected by the rule; or

(b) For rules imposing additional requirements only on persons or firms licensed, registered, or operating under a permit, the agency notifies the persons or firms holding the license, registration, or permit.

(3) Inadvertent failure to notify a specific person or business under this section does not invalidate a rule.

Sec. 21. RCW 43.05.040 and 1995 c 403 s 605 are each amended to read as follows:

(1) The owner and operator shall be given a reasonable period of time to correct violations identified during a technical assistance visit before any civil penalty provided for by law is imposed for those violations. A regulatory agency may revisit a facility, business, or other location after a technical assistance visit and a reasonable period of time has passed to correct violations identified by the agency in writing and issue civil penalties as provided for by law for any uncorrected violations.

(2) During a visit under subsection (1) of this section, the regulatory agency may not issue civil penalties:

(a) For violations not previously identified in a technical assistance visit, unless the violations are of the type for which the agency may issue a citation during a technical assistance visit under RCW 43.05.050; or

(b) If the owner or operator has made a good faith effort to comply with the agency's statement of what is required for compliance under RCW 43.05.030(3)(b).

(3) During a visit under subsection (1) of this section, if the regulatory agency identifies violations for which it may not issue civil penalties under subsection (2) of this section, the agency shall treat the visit as a technical assistance visit and notify the owner or operator of the violations under RCW 43.05.030(3)(a).

(4) This section does not apply to citations issued by the department of labor and industries under RCW 43.05.090.

Sec. 22. RCW 43.05.030 and 1996 c 206 s 2 are each amended to read as follows:

(1) For the purposes of this chapter, a technical assistance visit is a visit by a regulatory agency to a facility, business, or other location that:

(a) Has been requested or is voluntarily accepted; and

(b) Is declared by the regulatory agency at the beginning of the visit to be a technical assistance visit.

(2) A technical assistance visit also includes:

(a) A consultative visit pursuant to RCW 49.17.250; and

(b) A visit during which the agency identifies violations for which it may not issue civil penalties under RCW 43.05.040(2).

(3) During a technical assistance visit, or within a reasonable time thereafter, a regulatory agency shall inform the owner or operator of the facility of any violations of law or agency rules identified by the agency as follows:

(a) A description of the condition that is not in compliance and the text of the specific section or subsection of the applicable state or federal law or rule;

(b) A statement of what is required to achieve compliance;

(d) Notice of the means to contact any technical assistance services provided by the agency or others; and

(e) Notice of when, where, and to whom a request to extend the time to achieve compliance for good cause may be filed with the agency.

PART VII

LEGISLATIVE REVIEW

Sec. 23. RCW 34.05.610 and 1998 c 280 s 9 are each amended to read as follows:

(1) There is hereby created a joint administrative rules review committee which shall be a bipartisan committee consisting of the lieutenant governor, four senators, and four representatives from the state legislature. The lieutenant governor shall serve as a nonvoting committee member unless there is a tie vote among the members voting on an issue, in which case the lieutenant governor may vote to break the tie. The senate members of the committee shall be appointed by the president of the senate, and the house members of the committee shall be appointed by the speaker of the house. Not more than two members from each house may be from the same political party. The appointing authorities shall also appoint one alternate member from each caucus of each house. All appointments to the committee are subject to approval by the caucuses to which the appointed members belong.

(2) Members and alternates shall be appointed as soon as possible after the legislature convenes in regular session in an odd-numbered year, and their terms shall extend until their successors are appointed and qualified at the next regular session of the legislature in an odd-numbered year or until such persons no longer serve in the legislature, whichever occurs first. Members and alternates may be reappointed to the committee.

(3) On or about January 1, 1999, the president of the senate shall appoint the chairperson and the vice chairperson from among the committee membership. The speaker of the house shall appoint the chairperson and the vice chairperson in alternating even-numbered years beginning in the year 2000 from among the committee membership. The secretary of the senate shall appoint the chairperson and the vice chairperson in the alternating even-numbered years beginning in the year 2002 from among the committee membership. Such appointments shall be made in January of each even-numbered year as soon as possible after a legislative session convenes.

(4) The chairperson of the committee shall cause all meeting notices and committee documents to be sent to the members and alternates. A vacancy shall be filled by appointment of a legislator from the same political party as the original appointment. The appropriate appointing authority shall make the appointment within thirty days of the vacancy occurring.

Sec. 24. RCW 34.05.630 and 1998 c 21 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 committee.

(2) All agency policy and interpretive statements, guidelines, and documents that are of general applicability, or their equivalents, are subject to selective review by the committee to determine whether or not a statement, guideline, or document that is of general applicability, or its equivalent, is being used as a rule that has not been adopted in accordance with all applicable provisions of law.

(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, or (c) that an agency is using a policy or interpretive statement in place of a rule, 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 conduct the hearing within ninety days of receiving the rules review committee's finding. 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, and (c) whether the agency is using a policy or interpretive statement, guideline, or document that is of general applicability, or its equivalent, in place of a rule.

Sec. 25. RCW 34.05.640 and 1998 c 21 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 intended 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.

(2) If the rules review committee finds by a majority vote of its members: (a) That the proposed or existing rule in question will not be modified, amended, withdrawn, or repealed by the agency so as to conform with the intent of the legislature, (b) that an existing rule was not adopted in accordance with all applicable provisions of law, or (c) that the agency will not replace the policy or interpretive statement, guideline, or document that is of general applicability, or its equivalent, with a rule, the rules review committee may((~~, within thirty days from notification by the agency of its intended 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)(a) If the rules review committee makes an adverse finding regarding an existing rule under subsection (2)(a) or (b) of this section, the committee may, by a majority vote of its members, recommend suspension of the 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.

(b) If the rules review committee makes an adverse finding regarding a policy or interpretive statement, guideline, or document that is of general applicability, or its equivalent, under subsection (2)(c) of this section, the committee may, by a majority vote of its members, advise the governor of its finding.

(4) The code reviser shall publish transmittals from the rules review committee or the governor issued pursuant to subsection (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) 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. 26. RCW 34.05.660 and 1988 c 288 s 606 are each amended to read as follows:

(1) Except as provided in subsection (2) of this section, 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)~~)) (3) 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.

(2) If the joint administrative rules review committee recommends to the governor that an existing rule be suspended because it does not conform with the intent of the legislature or was not adopted in accordance with all applicable provisions of law, the recommendation establishes a rebuttable presumption in a proceeding challenging the validity of the rule that the rule is invalid. The burden of demonstrating the validity of the rule is then on the adopting agency.

PART VIII

LOCAL GOVERNMENT IMPACT STATEMENT

Sec. 27. RCW 43.135.060 and 1998 c 321 s 15 are each amended to read as follows:

(1) After July 1, 1995, the legislature, or a state agency through the rule-making process, shall not impose responsibility for new programs or increased levels of service under existing programs on any political subdivision of the state unless the subdivision is fully reimbursed by the state for the costs of the new programs or increases in service levels. Reimbursement by the state may be made by: (a) A specific appropriation; ((or)) (b) increases in state distributions of revenue to political subdivisions occurring after January 1, 1998; or (c) funding from the state agency.

(2) If by order of any court, or legislative enactment, the costs of a federal or local government program are transferred to or from the state, the otherwise applicable state expenditure limit shall be increased or decreased, as the case may be, by the dollar amount of the costs of the program.

(3) The legislature, in consultation with the office of financial management or its successor agency, and state agencies through the local government impact statement as required in section 31 of this act, shall determine the costs of any new programs or increased levels of service under existing programs imposed on any political subdivision or transferred to or from the state.

(4) Subsection (1) of this section does not apply to the costs incurred for voting devices or machines under RCW 29.04.200.

(5) For the purposes of this section:

(a) "Agency" means a state board, commission, department, institution of higher education, or officer, authorized by law to make rules or conduct adjudicative proceedings, except those in the legislative or judicial branch; and

(b) "Local government" means a political subdivision or unit of local government of this state including, but not limited to municipal corporations, quasi-municipal corporations, special purpose districts, and local service districts.

NEW SECTION. Sec. 28. The legislature finds that administrative rules adopted by state agencies can have a disproportionate impact on local governments due to the financial burdens of providing services to its citizens. This disproportionate impact reduces service levels, forces employee reductions, and threatens the very existence of some small jurisdictions. The legislature therefore enacts the Local Government Regulatory Fairness Act with the intent of reducing the disproportionate impact of state administrative rules on local governments.

NEW SECTION. Sec. 29. For the purposes of this chapter, the following definitions apply:

(1) "Agency" means a state board, commission, department, institution of higher education, or officer, authorized by law to make rules or conduct adjudicative proceedings, except those in the legislative or judicial branch; and

(2) "Local government" means a political subdivision or unit of local government of this state including, but not limited to municipal corporations, quasi-municipal corporations, special purpose districts, and local service districts.

NEW SECTION. Sec. 30. Proposed rules adopted by state agencies that have a fiscal impact greater than fifty thousand dollars, as determined by the local government impact statement, may not be imposed without full reimbursement according to RCW 43.135.060.

NEW SECTION. Sec. 31. (1) In the adoption of a rule under chapter 34.05 RCW, an agency shall prepare a local government impact statement: (a) If the proposed rule will impose more than minor costs on local governments; or (b) if requested to do so by a majority vote of the joint administrative rules review committee within forty-five days of receiving the notice of proposed rule making under RCW 34.05.320.

An agency shall prepare the local government impact statement, 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 local government impact statement to any person requesting it.

(2) Based upon the extent of disproportionate impact on local governments identified in the statement prepared under this chapter, the agency shall, where legal and feasible in meeting the stated objectives of the statutes upon which the rule is based, reduce the costs imposed by the rule on local governments. Methods to reduce the costs on local governments may include:

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

(b) Delaying compliance timetables;

(d) Any other mitigation techniques.

NEW SECTION. Sec. 32. (1) A local government impact statement must include a brief description of the reporting, recordkeeping, and other compliance requirements of the proposed rule, and the kinds of regulatory changes a local government would need to implement to comply with such requirements. It must analyze the costs of compliance for local governments required to comply with the proposed rule, including costs of labor, planning, implementation, court defense, and administrative costs. It must consider, based on input received from local governments affected, whether compliance with the rule will result in a total cost of fifty thousand dollars or more to any one jurisdiction.

(2) A local government impact statement must also include:

(a) A statement of the steps taken by the agency to reduce the costs of the rule on local jurisdictions as required by section 31 of this act, or reasonable justification for not doing so, addressing the options listed in section 31 of this act;

(b) A description of how the agency will involve local governments 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 local governments or their 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 local governments.

NEW SECTION. Sec. 33. Sections 28 through 32 of this act constitute a new chapter in Title 34 RCW.

PART IX

MISCELLANEOUS

NEW SECTION. Sec. 34. A new section is added to chapter 43.05 RCW to read as follows:

When issuing a citation or other written finding that a person has violated a statute, rule, or order, the agency shall include with the citation or other written finding the text of the specific statute or statutes granting the agency the authority to regulate the subject matter of the citation or other written finding.

NEW SECTION. Sec. 35. Sections 1 through 4 of this act take effect January 1, 2002.

NEW SECTION. Sec. 36. 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.