BILL REQ. #:  H-0229.3 

Read first time 01/28/13.   Referred to Committee on Government Operations & Elections.

     AN ACT Relating to suspension of rule making; amending RCW 34.05.310, 34.05.313, and 34.05.320; reenacting and amending RCW 34.05.328; adding new sections to chapter 34.05 RCW; and declaring an emergency.

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

NEW SECTION.  Sec. 1   A new section is added to chapter 34.05 RCW to read as follows:
     The legislature finds that Washington families, workers, and employers continue to struggle to make ends meet. As families and employers have streamlined their budgets and services, so should state government. Government continues to increase the burden on citizens and employers through perpetual alteration and expansion of rules. During 2012, an estimated 1,129 new sections to the Washington Administrative Code were permanently adopted, 2,211 sections were permanently amended, 393 emergency rule filings were made, and 961 sections were permanently repealed. A total of 5,511 pages of permanent rule changes were made and 2,398 pages of emergency rules were adopted.
      The constant changing of rules provides uncertainty to citizens and employers and adds additional costs to taxpayers as agencies hold public meetings and telephone conferences, and employees spend thousands of hours working on drafts for rules. Furthermore, continual proposal of new rules distracts employers from being productive in their respective businesses due to a need to comment on these proposed rules, and to change their policies, procedures, tools, and equipment to implement the rules once they are adopted. Most agencies do not track the number of hours employees spend on rule making nor do they track the cost to the agency to do this task. One way to reduce millions of dollars in employee and administrative costs is to impose a moratorium on formal and informal rule making by state agencies except in certain specified instances. This moratorium is to last for three years or until the state is no longer facing financial deficits.

NEW SECTION.  Sec. 2   A new section is added to chapter 34.05 RCW to read as follows:
     (1) Agency rule making is suspended until the later of July 1, 2016, or such time as the economic and revenue forecast council reports for three consecutive quarters that state revenue collections have increased above the official forecast adopted pursuant to RCW 82.33.010 on or before February 20th in an even-numbered year or March 20th in an odd-numbered year, except in the following cases:
     (a) A rule is needed to implement a federal law;
     (b) A rule is needed to implement the terms of a governor-declared state of emergency;
     (c) A rule is needed by the department of health to respond to a public health emergency;
     (d) A rule is needed to set the times for the taking of wildlife, fish, or shellfish pursuant to RCW 77.12.047(1) and 77.04.055(2); or
     (e) Legislation specifically directs that rule making be undertaken. Rules adopted under this subsection (1)(e) must be approved by the legislature in the ensuing legislative session before the rule may take effect.
     (2) This section does not prohibit an agency from repealing rules.

Sec. 3   RCW 34.05.310 and 2011 c 298 s 20 are each amended to read as follows:
     (1) The provisions of this section are subject to section 2 of this act.
     (2)(a) To meet the intent of providing greater public access to administrative rule making and to promote consensus among interested parties, agencies must 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 must prepare a statement of inquiry that:
     (i) Identifies the specific statute or statutes authorizing the agency to adopt rules on this subject;
     (ii) Discusses why rules on this subject may be needed and what they might accomplish;
     (iii) 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;
     (iv) Discusses the process by which the rule might be developed, including, but not limited to, negotiated rule making, pilot rule making, or agency study;
     (v) 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.
     (b) The statement of inquiry must be filed with the code reviser for publication 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 the statement, or a summary of the information contained in that statement, must be sent to any party that has requested receipt of the agency's statements of inquiry.
     (((2))) (3) 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))) (4)(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))) (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 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;
     (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 set or adjust fees under the authority of RCW 19.02.075 or that set or adjust fees or rates pursuant to legislative standards, including fees set or adjusted under the authority of RCW 19.80.045; or
     (g) 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.

Sec. 4   RCW 34.05.313 and 1995 c 403 s 303 are each amended to read as follows:
     (1) The provisions of this section are subject to section 2 of this act.
     (2) During the development of a rule or after its adoption, an agency may develop methods for measuring or testing the feasibility of complying with or administering the rule and for identifying simple, efficient, and economical alternatives for achieving the goal of the rule. A pilot project shall include public notice, participation by volunteers who are or will be subject to the rule, a high level of involvement from agency management, reasonable completion dates, and a process by which one or more parties may withdraw from the process or the process may be terminated. Volunteers who agree to test a rule and attempt to meet the requirements of the draft rule, to report periodically to the proposing agency on the extent of their ability to meet the requirements of the draft rule, and to make recommendations for improving the draft rule shall not be obligated to comply fully with the rule being tested nor be subject to any enforcement action or other sanction for failing to comply with the requirements of the draft rule.
     (((2))) (3) An agency conducting a pilot rule project authorized under subsection (((1))) (2) of this section may waive one or more provisions of agency rules otherwise applicable to participants in such a pilot project if the agency first determines that such a waiver is in the public interest and necessary to conduct the project. Such a waiver may be only for a stated period of time, not to exceed the duration of the project.
     (((3))) (4) The findings of the pilot project should be widely shared and, where appropriate, adopted as amendments to the rule.
     (((4))) (5) If an agency conducts a pilot rule project in lieu of meeting the requirements of the regulatory fairness act, chapter 19.85 RCW, the agency shall ensure the following conditions are met:
     (a) If over ten small businesses are affected, there shall be at least ten small businesses in the test group and at least one-half of the volunteers participating in the pilot test group shall be small businesses.
     (b)(i) If there are at least one hundred businesses affected, the participation by small businesses in the test group shall be as follows:
     (A) Not less than twenty percent of the small businesses must employ twenty-six to fifty employees;
     (B) Not less than twenty percent of the small businesses must employ eleven to twenty-six employees; and
     (C) Not less than twenty percent of the small businesses must employ zero to ten employees.
     (ii) If there do not exist a sufficient number of small businesses in each size category set forth in (b)(i) of this subsection willing to participate in the pilot project to meet the minimum requirements of that subsection, then the agency must comply with this section to the maximum extent practicable.
     (c) The agency may not terminate the pilot project before completion.
     (d) Before filing the notice of proposed rule making pursuant to RCW 34.05.320, the agency must prepare a report of the pilot rule project that includes:
     (i) A description of the difficulties small businesses had in complying with the pilot rule;
     (ii) A list of the recommended revisions to the rule to make compliance with the rule easier or to reduce the cost of compliance with the rule by the small businesses participating in the pilot rule project;
     (iii) A written statement explaining the options it considered to resolve each of the difficulties described and a statement explaining its reasons for not including a recommendation by the pilot test group to revise the rule; and
     (iv) If the agency was unable to meet the requirements set forth in (b)(i) of this subsection, a written explanation of why it was unable to do so and the steps the agency took to include small businesses in the pilot project.

Sec. 5   RCW 34.05.320 and 2012 c 210 s 2 are each amended to read as follows:
     (1) The provisions of this section are subject to section 2 of this act.
     (2) 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;
     (c) A short explanation of the rule, its purpose, and anticipated effects, including in the case of a proposal that would modify existing rules, a short description of the changes the proposal would make, and a statement of the reasons supporting the proposed action;
     (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 citation to such law or court decision;
     (h) When, where, and how persons may present their views on the proposed rule;
     (i) The date on which the agency intends to adopt the rule;
     (j) A copy of the small business economic impact statement prepared under chapter 19.85 RCW, or a copy of the school district fiscal impact statement under RCW 28A.305.135 in the case of the state board of education, or an explanation for why the agency did not prepare the statement;
     (k) A statement indicating whether RCW 34.05.328 applies to the rule adoption; and
     (l) If RCW 34.05.328 does apply, a statement indicating that a copy of the preliminary cost-benefit analysis described in RCW 34.05.328(1)(c) is available.
     (((2))) (3)(a) 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. Except as provided in (b) of this subsection, the agency shall forward three copies of the notice to the rules review committee.
     (b) A pilot of at least ten agencies, including the departments of labor and industries, fish and wildlife, revenue, ecology, retirement systems, and health, shall file the copies required under this subsection, as well as under RCW 34.05.350 and 34.05.353, with the rules review committee electronically for a period of four years from June 10, 2004. The office of regulatory assistance shall negotiate the details of the pilot among the agencies, the legislature, and the code reviser.
     (((3))) (4) No later than three days after its publication in the state register, the agency shall cause either a copy of the notice of proposed rule adoption, or a summary of the information contained on the notice, 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))) (5) In addition to the notice required by subsections (((1))) (2) and (((2))) (3) 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 2011 c 298 s 21 and 2011 c 149 s 1 are each reenacted and amended to read as follows:
     (1) The provisions of this section are subject to section 2 of this act.
     (2) Before adopting a rule described in subsection (((5))) (6) of this section, an agency must:
     (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) Provide notification in the notice of proposed rule making under RCW 34.05.320 that a preliminary cost-benefit analysis is available. The preliminary cost-benefit analysis must fulfill the requirements of the cost-benefit analysis under (d) of this subsection. If the agency files a supplemental notice under RCW 34.05.340, the supplemental notice must include notification that a revised preliminary cost-benefit analysis is available. A final cost-benefit analysis must be available when the rule is adopted under RCW 34.05.360;
     (d) 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;
     (e) Determine, after considering alternative versions of the rule and the analysis required under (b), (c), and (d) 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;
     (f) 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;
     (g) Determine that the rule does not impose more stringent performance requirements on private entities than on public entities unless required to do so by federal or state law;
     (h) Determine if the rule differs from any federal 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
     (i) Coordinate the rule, to the maximum extent practicable, with other federal, state, and local laws applicable to the same activity or subject matter.
     (((2))) (3) In making its determinations pursuant to subsection (((1))) (2)(b) through (h) of this section, the agency must 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))) (4) Before adopting rules described in subsection (((5))) (6) of this section, an agency must place in the rule-making file a rule implementation plan for rules filed under each adopting order. The plan must 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;
     (c) Promote and assist voluntary compliance; and
     (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))) (5) After adopting a rule described in subsection (((5))) (6) of this section regulating the same activity or subject matter as another provision of federal or state law, an agency must do all of the following:
     (a) 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))) (5)(a), the agency must report to the legislature pursuant to (b) of this subsection;
     (b) Report to the joint administrative rules review committee:
     (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))) (6)(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 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 under the authority of RCW 19.02.075 or that set or adjust fees or rates pursuant to legislative standards, including fees set or adjusted under the authority of RCW 19.80.045;
     (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; or
     (viii) Rules of the department of revenue that adopt a uniform expiration date for reseller permits as authorized in RCW 82.32.780 and 82.32.783.
     (c) For purposes of this subsection:
     (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 must 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))) (7) By January 31, 1996, and by January 31st of each even-numbered year thereafter, the office of regulatory assistance, after consulting with state agencies, counties, and cities, and business, labor, and environmental organizations, must report to the governor and the legislature regarding the effects of this section on the regulatory system in this state. The report must 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.

NEW SECTION.  Sec. 7   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.

NEW SECTION.  Sec. 8   This act is necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions, and takes effect immediately.