BILL REQ. #:  S-4027.1 

Read first time 01/21/2004.   Referred to Committee on Children & Family Services & Corrections.

     AN ACT Relating to fair competition in class I and class II correctional industries; amending RCW 72.09.070, 72.09.100, 72.09.015, 34.05.030, and 34.05.030; reenacting and amending RCW 72.09.100; adding a new section to chapter 72.09 RCW; providing effective dates; and providing expiration dates.

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

Sec. 1   RCW 72.09.070 and 1994 sp.s. c 7 s 535 are each amended to read as follows:
     (1) There is created a correctional industries board of directors which shall have the composition provided in RCW 72.09.080.
     (2) Consistent with general department of corrections policies and procedures pertaining to the general administration of correctional facilities, the board shall establish and implement policy for correctional industries programs designed to:
     (a) Offer inmates meaningful employment, work experience, and training in vocations that are specifically designed to reduce recidivism and thereby enhance public safety by providing opportunities for legitimate means of livelihood upon their release from custody;
     (b) Provide industries which will reduce the tax burden of corrections and save taxpayers money through production of goods and services for sale and use;
     (c) Operate correctional work programs in an effective and efficient manner which are as similar as possible to those provided by the private sector;
     (d) Encourage the development of and provide for selection of, contracting for, and supervision of work programs with participating private enterprise firms;
     (e) Develop and ((design)) select correctional industries work programs that do not unfairly compete with Washington businesses;
     (f) Invest available funds in correctional industries enterprises and meaningful work programs that minimize the impact on in-state jobs and businesses.
     (3) The board of directors shall at least annually review the work performance of the director of correctional industries division with the secretary.
     (4) The director of correctional industries division shall review and evaluate the productivity, funding, and appropriateness of all correctional work programs and report on their effectiveness to the board and to the secretary.
     (5) The board of directors shall have the authority to identify and establish trade advisory or apprenticeship committees to advise them on correctional industries work programs. The secretary shall appoint the members of the committees.
     Where a labor management trade advisory and apprenticeship committee has already been established by the department pursuant to RCW 72.62.050 the existing committee shall also advise the board of directors.
     (6) The board shall develop a strategic yearly marketing plan that shall be consistent with and work towards achieving the goals established in the six-year phased expansion of class I and class II correctional industries established in RCW 72.09.111. This marketing plan shall be presented to the appropriate committees of the legislature by January 17 of each calendar year until the goals set forth in RCW 72.09.111 are achieved.

Sec. 2   RCW 72.09.100 and 2002 c 175 s 49 are each amended to read as follows:
     It is the intent of the legislature to vest in the department the power to provide for a comprehensive inmate work program and to remove statutory and other restrictions which have limited work programs in the past. It is also the intent of the legislature to ensure that the correctional industries board of directors, in developing and selecting correctional industries work programs, does not encourage the development of, or provide for selection of or contracting for, the significant expansion of new or existing class I or class II correctional industries work programs that unfairly compete with Washington businesses. The legislature intends that the requirements relating to fair competition in the correctional industries work programs be liberally construed to protect Washington businesses from unfair competition.
     For purposes of establishing such a comprehensive program, the legislature recommends that the department consider adopting any or all, or any variation of, the following classes of work programs:
     (1) CLASS I: FREE VENTURE INDUSTRIES.
     (a) The employer model industries in this class shall be operated and managed in total or in part by any profit or nonprofit organization pursuant to an agreement between the organization and the department. The organization shall produce goods or services for sale to both the public and private sector.
     (b) The customer model industries in this class shall be operated and managed by the department to provide Washington state manufacturers or businesses with products or services currently produced or provided by out-of-state or foreign suppliers.
     (c) The correctional industries board of directors shall review these proposed industries, including any potential new class I industries work program or the expansion of an existing class I industries work program, before the department contracts to provide such products or services. The review shall include ((an)) the analysis ((of the potential impact of the proposed products and services on the Washington state business community and labor market)) required under section 4 of this act to determine if the proposed correctional industries work program will compete with any Washington business. An agreement for a new class I correctional industries work program, or an agreement for a significant expansion of an existing class I correctional industries work program, that unfairly competes with any Washington business is prohibited.
     (d) The department of corrections shall supply appropriate security and custody services without charge to the participating firms.
     (e) Inmates who work in free venture industries shall do so at their own choice. They shall be paid a wage comparable to the wage paid for work of a similar nature in the locality in which the industry is located, as determined by the director of correctional industries. If the director cannot reasonably determine the comparable wage, then the pay shall not be less than the federal minimum wage.
     (f) An inmate who is employed in the class I program of correctional industries shall not be eligible for unemployment compensation benefits pursuant to any of the provisions of Title 50 RCW until released on parole or discharged.
     (2) CLASS II: TAX REDUCTION INDUSTRIES.
     (a) Industries in this class shall be state-owned and operated enterprises designed to reduce the costs for goods and services for tax-supported agencies and for nonprofit organizations.
     (b) The industries selected for development within this class shall, as much as possible, match the available pool of inmate work skills and aptitudes with the work opportunities in the free community. The industries shall be closely patterned after private sector industries but with the objective of reducing public support costs rather than making a profit. The products and services of this industry, including purchased products and services necessary for a complete product line, may be sold to public agencies, to nonprofit organizations, and to private contractors when the goods purchased will be ultimately used by a public agency or a nonprofit organization. Clothing manufactured by an industry in this class may be donated to nonprofit organizations that provide clothing free of charge to low-income persons.
     (c)(i) Class II correctional industries products and services, including any potential new class II correctional industries work program or the expansion of an existing class II correctional industries work program, shall be reviewed by the correctional industries board of directors before offering such products and services for sale to private contractors. The review shall include the analysis required under section 4 of this act to determine if the proposed correctional industries work program will compete with any Washington business. An agreement for a new class II correctional industries work program, or an agreement for a significant expansion of an existing class II correctional industries work program, that unfairly competes with any Washington business is prohibited.
     (ii) The board of directors shall conduct a yearly marketing review of the products and services offered under this subsection. ((Such review shall include an analysis of the potential impact of the proposed products and services on the Washington state business community.)) To avoid waste or spoilage and consequent loss to the state((,)) when there is no public sector market for such goods, byproducts and surpluses of timber, agricultural, and animal husbandry enterprises may be sold to private persons, at private sale. Surplus byproducts and surpluses of timber, agricultural and animal husbandry enterprises that cannot be sold to public agencies or to private persons may be donated to nonprofit organizations. All sales of surplus products shall be carried out in accordance with rules prescribed by the secretary.
     (d) Security and custody services shall be provided without charge by the department of corrections.
     (e) Inmates working in this class of industries shall do so at their own choice and shall be paid for their work on a gratuity scale which shall not exceed the wage paid for work of a similar nature in the locality in which the industry is located and which is approved by the director of correctional industries.
     (f) Subject to approval of the correctional industries board, provisions of RCW 41.06.380 prohibiting contracting out work performed by classified employees shall not apply to contracts with Washington state businesses entered into by the department of corrections through class II industries.
     (3) CLASS III: INSTITUTIONAL SUPPORT INDUSTRIES.
     (a) Industries in this class shall be operated by the department of corrections. They shall be designed and managed to accomplish the following objectives:
     (((a))) (i) Whenever possible, to provide basic work training and experience so that the inmate will be able to qualify for better work both within correctional industries and the free community. It is not intended that an inmate's work within this class of industries should be his or her final and total work experience as an inmate.
     (((b))) (ii) Whenever possible, to provide forty hours of work or work training per week.
     (((c))) (iii) Whenever possible, to offset tax and other public support costs.
     (b) Supervising, management, and custody staff shall be employees of the department.
     (c) All able and eligible inmates who are assigned work and who are not working in other classes of industries shall work in this class.
     (d) Except for inmates who work in work training programs, inmates in this class shall be paid for their work in accordance with an inmate gratuity scale. The scale shall be adopted by the secretary of corrections.
     (4) CLASS IV: COMMUNITY WORK INDUSTRIES.
     (a) Industries in this class shall be operated by the department of corrections. They shall be designed and managed to provide services in the inmate's resident community at a reduced cost. The services shall be provided to public agencies, to persons who are poor or infirm, or to nonprofit organizations.
     (b) Inmates in this program shall reside in facilities owned by, contracted for, or licensed by the department of corrections. A unit of local government shall provide work supervision services without charge to the state and shall pay the inmate's wage.
     (c) The department of corrections shall reimburse participating units of local government for liability and workers compensation insurance costs.
     (d) Inmates who work in this class of industries shall do so at their own choice and shall receive a gratuity which shall not exceed the wage paid for work of a similar nature in the locality in which the industry is located.
     (5) CLASS V: COMMUNITY RESTITUTION PROGRAMS.
     (a) Programs in this class shall be subject to supervision by the department of corrections. The purpose of this class of industries is to enable an inmate, placed on community supervision, to work off all or part of a community restitution order as ordered by the sentencing court.
     (b) Employment shall be in a community restitution program operated by the state, local units of government, or a nonprofit agency.
     (c) To the extent that funds are specifically made available for such purposes, the department of corrections shall reimburse nonprofit agencies for workers compensation insurance costs.

Sec. 3   RCW 72.09.100 and 2002 c 354 s 238 and 2002 c 175 s 49 are each reenacted and amended to read as follows:
     It is the intent of the legislature to vest in the department the power to provide for a comprehensive inmate work program and to remove statutory and other restrictions which have limited work programs in the past. It is also the intent of the legislature to ensure that the correctional industries board of directors, in developing and selecting correctional industries work programs, does not encourage the development of, or provide for selection of or contracting for, the significant expansion of new or existing class I or class II correctional industries work programs that unfairly compete with Washington businesses. The legislature intends that the requirements relating to fair competition in the correctional industries work programs be liberally construed to protect Washington businesses from unfair competition. For purposes of establishing such a comprehensive program, the legislature recommends that the department consider adopting any or all, or any variation of, the following classes of work programs:
     (1) CLASS I: FREE VENTURE INDUSTRIES.
     (a) The employer model industries in this class shall be operated and managed in total or in part by any profit or nonprofit organization pursuant to an agreement between the organization and the department. The organization shall produce goods or services for sale to both the public and private sector.
     (b) The customer model industries in this class shall be operated and managed by the department to provide Washington state manufacturers or businesses with products or services currently produced or provided by out-of-state or foreign suppliers.
     (c) The correctional industries board of directors shall review these proposed industries, including any potential new class I industries work program or the expansion of an existing class I industries work program, before the department contracts to provide such products or services. The review shall include ((an)) the analysis ((of the potential impact of the proposed products and services on the Washington state business community and labor market)) required under section 4 of this act to determine if the proposed correctional industries work program will compete with any Washington business. An agreement for a new class I correctional industries work program, or an agreement for a significant expansion of an existing class I correctional industries work program, that unfairly competes with any Washington business is prohibited.
     (d) The department of corrections shall supply appropriate security and custody services without charge to the participating firms.
     (e) Inmates who work in free venture industries shall do so at their own choice. They shall be paid a wage comparable to the wage paid for work of a similar nature in the locality in which the industry is located, as determined by the director of correctional industries. If the director cannot reasonably determine the comparable wage, then the pay shall not be less than the federal minimum wage.
     (f) An inmate who is employed in the class I program of correctional industries shall not be eligible for unemployment compensation benefits pursuant to any of the provisions of Title 50 RCW until released on parole or discharged.
     (2) CLASS II: TAX REDUCTION INDUSTRIES.
     (a) Industries in this class shall be state-owned and operated enterprises designed to reduce the costs for goods and services for tax-supported agencies and for nonprofit organizations.
     (b) The industries selected for development within this class shall, as much as possible, match the available pool of inmate work skills and aptitudes with the work opportunities in the free community. The industries shall be closely patterned after private sector industries but with the objective of reducing public support costs rather than making a profit. The products and services of this industry, including purchased products and services necessary for a complete product line, may be sold to public agencies, to nonprofit organizations, and to private contractors when the goods purchased will be ultimately used by a public agency or a nonprofit organization. Clothing manufactured by an industry in this class may be donated to nonprofit organizations that provide clothing free of charge to low-income persons.
     (c)(i) Class II correctional industries products and services, including any potential new class II correctional industries work program or the expansion of an existing class II correctional industries work program, shall be reviewed by the correctional industries board of directors before offering such products and services for sale to private contractors. The review shall include the analysis required under section 4 of this act to determine if the proposed correctional industries work program will compete with any Washington business. An agreement for a new class II correctional industries work program, or an agreement for a significant expansion of an existing class II correctional industries work program, that unfairly competes with any Washington business is prohibited.
     (ii) The board of directors shall conduct a yearly marketing review of the products and services offered under this subsection. ((Such review shall include an analysis of the potential impact of the proposed products and services on the Washington state business community.)) To avoid waste or spoilage and consequent loss to the state, when there is no public sector market for such goods, byproducts and surpluses of timber, agricultural, and animal husbandry enterprises may be sold to private persons, at private sale. Surplus byproducts and surpluses of timber, agricultural and animal husbandry enterprises that cannot be sold to public agencies or to private persons may be donated to nonprofit organizations. All sales of surplus products shall be carried out in accordance with rules prescribed by the secretary.
     (d) Security and custody services shall be provided without charge by the department of corrections.
     (e) Inmates working in this class of industries shall do so at their own choice and shall be paid for their work on a gratuity scale which shall not exceed the wage paid for work of a similar nature in the locality in which the industry is located and which is approved by the director of correctional industries.
     (f) Subject to approval of the correctional industries board, provisions of RCW 41.06.142 shall not apply to contracts with Washington state businesses entered into by the department of corrections through class II industries.
     (3) CLASS III: INSTITUTIONAL SUPPORT INDUSTRIES.
     (a) Industries in this class shall be operated by the department of corrections. They shall be designed and managed to accomplish the following objectives:
     (((a))) (i) Whenever possible, to provide basic work training and experience so that the inmate will be able to qualify for better work both within correctional industries and the free community. It is not intended that an inmate's work within this class of industries should be his or her final and total work experience as an inmate.
     (((b))) (ii) Whenever possible, to provide forty hours of work or work training per week.
     (((c))) (iii) Whenever possible, to offset tax and other public support costs.
     (b) Supervising, management, and custody staff shall be employees of the department.
     (c) All able and eligible inmates who are assigned work and who are not working in other classes of industries shall work in this class.
     (d) Except for inmates who work in work training programs, inmates in this class shall be paid for their work in accordance with an inmate gratuity scale. The scale shall be adopted by the secretary of corrections.
     (4) CLASS IV: COMMUNITY WORK INDUSTRIES.
     (a) Industries in this class shall be operated by the department of corrections. They shall be designed and managed to provide services in the inmate's resident community at a reduced cost. The services shall be provided to public agencies, to persons who are poor or infirm, or to nonprofit organizations.
     (b) Inmates in this program shall reside in facilities owned by, contracted for, or licensed by the department of corrections. A unit of local government shall provide work supervision services without charge to the state and shall pay the inmate's wage.
     (c) The department of corrections shall reimburse participating units of local government for liability and workers compensation insurance costs.
     (d) Inmates who work in this class of industries shall do so at their own choice and shall receive a gratuity which shall not exceed the wage paid for work of a similar nature in the locality in which the industry is located.
     (5) CLASS V: COMMUNITY RESTITUTION PROGRAMS.
     (a) Programs in this class shall be subject to supervision by the department of corrections. The purpose of this class of industries is to enable an inmate, placed on community supervision, to work off all or part of a community restitution order as ordered by the sentencing court.
     (b) Employment shall be in a community restitution program operated by the state, local units of government, or a nonprofit agency.
     (c) To the extent that funds are specifically made available for such purposes, the department of corrections shall reimburse nonprofit agencies for workers compensation insurance costs.

NEW SECTION.  Sec. 4   A new section is added to chapter 72.09 RCW to read as follows:
     (1) The correctional industries board of directors must prepare a threshold analysis for any proposed new class I or class II correctional industries work program or the significant expansion of an existing class I or class II correctional industries work program before the department enters into an agreement to provide such products or services. The analysis must state whether the proposed new or expanded program will impact any Washington business and must be based on information sufficient to evaluate the impact on Washington business.
     (2) If the threshold analysis determines that a proposed new or expanded class I or class II correctional industries work program will impact a Washington business, the correctional industries board of directors must complete a business impact analysis before the department enters into an agreement to provide such products or services. The business impact analysis must include:
     (a) A detailed statement identifying the scope and types of impacts caused by the proposed new or expanded correctional industries work program on Washington businesses; and
     (b) A detailed statement of the actual business costs of the proposed correctional industries work program compared to the costs of the impacted Washington businesses.
     (3) The completed threshold analysis and any completed business impact analysis with all supporting documents must be shared in a meaningful and timely manner with affected chambers of commerce, trade or business associations, local and state labor union organizations, and government entities before a finding required under subsection (4) of this section is made on the proposed new or expanded class I or class II correctional industries work program.
     (4) If a business impact analysis is completed, the correctional industries board of directors must conduct a public hearing to take public testimony on the business impact analysis. The department must provide notice to each Washington business assigned the same three-digit standard industrial classification code, or the corresponding North American industry classification system code, as the organization seeking the class I or class II correctional industries work program agreement of the date, time, and place of the hearing. Following the public hearing, the board shall adopt a finding that the proposed new or expanded class I or class II correctional industries work program: (a) Will not compete with any Washington business; (b) will not compete unfairly with any Washington business; or (c) will compete unfairly with any Washington business and is therefore prohibited under this act. Hearings conducted under this subsection are exempt from the requirements for adjudicative proceedings under chapter 34.05 RCW.

Sec. 5   RCW 72.09.015 and 1995 1st sp.s. c 19 s 3 are each amended to read as follows:
     The definitions in this section apply throughout this chapter.
     (1) "Base level of correctional services" means the minimum level of field services the department of corrections is required by statute to provide for the supervision and monitoring of offenders.
     (2) "Contraband" means any object or communication the secretary determines shall not be allowed to be: (a) Brought into; (b) possessed while on the grounds of; or (c) sent from any institution under the control of the secretary.
     (3) "County" means a county or combination of counties.
     (4) "Department" means the department of corrections.
     (5) "Earned early release" means earned ((early)) release as authorized by RCW 9.94A.728.
     (6) "Extended family visit" means an authorized visit between an inmate and a member of his or her immediate family that occurs in a private visiting unit located at the correctional facility where the inmate is confined.
     (7) "Good conduct" means compliance with department rules and policies.
     (8) "Good performance" means successful completion of a program required by the department, including an education, work, or other program.
     (9) "Immediate family" means the inmate's children, stepchildren, grandchildren, great grandchildren, parents, stepparents, grandparents, great grandparents, siblings, and a person legally married to an inmate. "Immediate family" does not include an inmate adopted by another inmate or the immediate family of the adopted or adopting inmate.
     (10) "Indigent inmate," "indigent," and "indigency" mean an inmate who has less than a ten-dollar balance of disposable income in his or her institutional account on the day a request is made to utilize funds and during the thirty days previous to the request.
     (11) "Inmate" means a person committed to the custody of the department, including but not limited to persons residing in a correctional institution or facility and persons released on furlough, work release, or community custody, and persons received from another state, state agency, county, or federal jurisdiction.
     (12) "Privilege" means any goods or services, education or work programs, or earned early release days, the receipt of which are directly linked to an inmate's (a) good conduct; and (b) good performance. Privileges do not include any goods or services the department is required to provide under the state or federal Constitution or under state or federal law.
     (13) "Secretary" means the secretary of corrections or his or her designee.
     (14) "Significant expansion" includes any expansion into a new product line or service or an increase in production of the same product or service.
     (15) "Superintendent" means the superintendent of a correctional facility under the jurisdiction of the Washington state department of corrections, or his or her designee.
     (((15))) (16) "Unfair competition" means any net competitive advantage that a business may acquire as a result of a correctional industries contract, including but not limited to labor costs, financing, rent, marketing costs, tax advantages, utility costs, and other overhead costs. To determine net competitive advantage, the correctional industries board shall review any legitimate quantifiable expenses unique to operating a for-profit business inside a prison.
     (17) "Washington business" means a person subject to chapter 82.04 RCW.
     (18) "Work programs" means all classes of correctional industries jobs authorized under RCW 72.09.100.

Sec. 6   RCW 34.05.030 and 1994 c 39 s 1 are each amended to read as follows:
     (1) This chapter shall not apply to:
     (a) The state militia, or
     (b) The board of clemency and pardons, or
     (c) The department of corrections or the indeterminate sentencing review board with respect to persons who are in their custody or are subject to the jurisdiction of those agencies.
     (2) The provisions of RCW 34.05.410 through 34.05.598 shall not apply:
     (a) To adjudicative proceedings of the board of industrial insurance appeals except as provided in RCW 7.68.110 and 51.48.131;
     (b) Except for actions pursuant to chapter 46.29 RCW, to the denial, suspension, or revocation of a driver's license by the department of licensing;
     (c) To the department of labor and industries where another statute expressly provides for review of adjudicative proceedings of a department action, order, decision, or award before the board of industrial insurance appeals;
     (d) To actions of the Washington personnel resources board, the director of personnel, or the personnel appeals board; ((or))
     (e) To the extent they are inconsistent with any provisions of chapter 43.43 RCW; or
     (f) To hearings conducted by the correctional industries board under section 4(4) of this act.
     (3) Unless a party makes an election for a formal hearing pursuant to RCW 82.03.140 or 82.03.190, RCW 34.05.410 through 34.05.598 do not apply to a review hearing conducted by the board of tax appeals.
     (4) The rule-making provisions of this chapter do not apply to reimbursement unit values, fee schedules, arithmetic conversion factors, and similar arithmetic factors used to determine payment rates that apply to goods and services purchased under contract for clients eligible under chapter 74.09 RCW.
     (5) All other agencies, whether or not formerly specifically excluded from the provisions of all or any part of the Administrative Procedure Act, shall be subject to the entire act.

Sec. 7   RCW 34.05.030 and 2002 c 354 s 225 are each amended to read as follows:
     (1) This chapter shall not apply to:
     (a) The state militia, or
     (b) The board of clemency and pardons, or
     (c) The department of corrections or the indeterminate sentencing review board with respect to persons who are in their custody or are subject to the jurisdiction of those agencies.
     (2) The provisions of RCW 34.05.410 through 34.05.598 shall not apply:
     (a) To adjudicative proceedings of the board of industrial insurance appeals except as provided in RCW 7.68.110 and 51.48.131;
     (b) Except for actions pursuant to chapter 46.29 RCW, to the denial, suspension, or revocation of a driver's license by the department of licensing;
     (c) To the department of labor and industries where another statute expressly provides for review of adjudicative proceedings of a department action, order, decision, or award before the board of industrial insurance appeals;
     (d) To actions of the Washington personnel resources board or the director of personnel; ((or))
     (e) To the extent they are inconsistent with any provisions of chapter 43.43 RCW; or
     (f) To hearings conducted by the correctional industries board under section 4(4) of this act.
     (3) Unless a party makes an election for a formal hearing pursuant to RCW 82.03.140 or 82.03.190, RCW 34.05.410 through 34.05.598 do not apply to a review hearing conducted by the board of tax appeals.
     (4) The rule-making provisions of this chapter do not apply to reimbursement unit values, fee schedules, arithmetic conversion factors, and similar arithmetic factors used to determine payment rates that apply to goods and services purchased under contract for clients eligible under chapter 74.09 RCW.
     (5) All other agencies, whether or not formerly specifically excluded from the provisions of all or any part of the Administrative Procedure Act, shall be subject to the entire act.

NEW SECTION.  Sec. 8   (1) Section 3 of this act takes effect July 1, 2005.
     (2) Section 7 of this act takes effect July 1, 2006.

NEW SECTION.  Sec. 9   (1) Section 2 of this act expires July 1, 2005.
     (2) Section 6 of this act expires July 1, 2006.