READ FIRST TIME 03/02/05.   

     AN ACT Relating to regulation of small businesses; and amending RCW 19.85.020, 19.85.030, 19.85.040, 19.85.070, and 34.05.671.

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

Sec. 1   RCW 19.85.020 and 2003 c 166 s 1 are each amended to read as follows:
     Unless the context clearly indicates otherwise, the definitions in this section apply through this chapter.
     (1) "Small business" means any business entity, including a sole proprietorship, corporation, partnership, or other legal entity, that is owned and operated independently from all other businesses, and that has fifty or fewer employees.
     (2) "Small business economic impact statement" means a statement meeting the requirements of RCW 19.85.040 prepared by a state agency pursuant to RCW 19.85.030.
     (3) "Industry" means all of the businesses in this state in any ((one)) single North American industry classification system classification or four-digit standard industrial classification as published by the United States department of commerce. However, if the use of a ((four-digit standard industrial)) classification would result in the release of data that would violate state confidentiality laws, "industry" means all businesses in a three-digit standard industrial classification or equivalent North American industry classification system classification.
     (4) "Minor cost" means a cost per business that is less than three-tenths of one percent of one hundred dollars in sales, or less than one-tenth of one percent of the annual payroll.

Sec. 2   RCW 19.85.030 and 2000 c 171 s 60 are each amended to read as follows:
     (1) In the adoption of a rule under chapter 34.05 RCW, an agency shall prepare a small business economic impact statement: (a) If the proposed rule will impose more than minor costs on businesses in an industry; or (b) if requested to do so by a majority vote of the joint administrative rules review committee within forty-five days of receiving the notice of proposed rule making under RCW 34.05.320. However, if the agency has completed the pilot rule process as defined by RCW 34.05.313 before filing the notice of a proposed rule, the agency is not required to prepare a small business economic impact statement.
     An agency shall prepare the small business economic impact statement in accordance with RCW 19.85.040, and file it with the code reviser along with the notice required under RCW 34.05.320. An agency shall file a statement prepared at the request of the joint administrative rules review committee with the code reviser upon its completion before the adoption of the rule. An agency shall provide a copy of the small business economic impact statement to any person requesting it.
     (2) Based upon the extent of disproportionate impact on small business identified in the statement prepared under RCW 19.85.040, the agency shall, where legal and feasible in meeting the stated objectives of the statutes upon which the rule is based, maximally reduce the costs imposed by the rule on small businesses. ((Methods to reduce the costs on small businesses may include)) The agency shall consider, without limitation, each of the following methods of reducing the impact of the proposed rule on small businesses:
     (a) Reducing, modifying, or eliminating substantive regulatory requirements;
     (b) Simplifying, reducing, or eliminating recordkeeping and reporting requirements;
     (c) Reducing the frequency of inspections;
     (d) Delaying compliance timetables;
     (e) Reducing or modifying fine schedules for noncompliance; ((or))
     (f) Any other mitigation techniques including those suggested by small businesses or their advocates.
     (3) If the agency determines it cannot reduce the disproportionate impact of a rule on small businesses, the agency shall provide a clear explanation of why it has made that determination and include a statement to that effect with the notice required by RCW 34.05.320.

Sec. 3   RCW 19.85.040 and 1995 c 403 s 403 are each amended to read as follows:
     (1) A small business economic impact statement must include a brief description of the reporting, recordkeeping, and other compliance requirements of the proposed rule, and the kinds of professional services that a small business is likely to need in order to comply with such requirements. It shall analyze the costs of compliance for businesses required to comply with the proposed rule adopted pursuant to RCW 34.05.320, including costs of equipment, supplies, labor, professional services, and increased administrative costs. It shall consider, based on input received, whether compliance with the rule will cause businesses to lose sales or revenue. To determine whether the proposed rule will have a disproportionate cost impact on small businesses, the impact statement must compare the cost of compliance for small business with the cost of compliance for the ten percent of businesses that are the largest businesses required to comply with the proposed rules using one or more of the following as a basis for comparing costs:
     (a) Cost per employee;
     (b) Cost per hour of labor; or
     (c) Cost per one hundred dollars of sales.
     (2) A small business economic impact statement must also include:
     (a) A statement of the steps taken by the agency to reduce the costs of the rule on small businesses as required by RCW 19.85.030(((3))) (2), or reasonable justification for not doing so, addressing the options listed in RCW 19.85.030(((3))) (2);
     (b) A description of how the agency will involve small businesses in the development of the rule; and
     (c) A list of industries that will be required to comply with the rule. However, this subsection (2)(c) shall not be construed to preclude application of the rule to any business or industry to which it would otherwise apply.
     (3) To obtain information for purposes of this section, an agency may survey a representative sample of affected businesses or trade associations and should, whenever possible, appoint a committee under RCW 34.05.310(2) to assist in the accurate assessment of the costs of a proposed rule, and the means to reduce the costs imposed on small business.

Sec. 4   RCW 19.85.070 and 1992 c 197 s 1 are each amended to read as follows:
     When any rule is proposed for which a small business economic impact statement is required, the adopting agency shall provide notice to small businesses of the proposed rule through ((any of the following)):
     (1) Direct notification of known interested small businesses or trade organizations affected by the proposed rule; ((or))
     (2) Providing information of the proposed rule making to publications likely to be obtained by small businesses of the types affected by the proposed rule; and
     (3) Posting on the agency web site.

Sec. 5   RCW 34.05.671 and 1995 c 403 s 505 are each amended to read as follows:
     (1) The rules review committee may make reports from time to time to the members of the legislature and to the public with respect to any of its findings or recommendations. The committee shall keep complete minutes of its meetings.
     (2) The committee may establish ad hoc advisory boards, including but not limited to, ad hoc economics or science advisory boards to assist the committee in its rules review functions. The committee shall establish a small business advisory board to ensure that small business concerns are reflected in the rules review process.
     (3) The committee may hire staff as needed to perform functions under this chapter.