HOUSE BILL REPORT

HB 689

BYRepresentatives Hargrove, Rasmussen, Holm, Cantwell, Fisch, Kremen, Zellinsky, B. Williams, Haugen, Cooper, L. Smith, Silver,  Sanders, Schoon, Amondson and Basich

Establishing a regulatory fairness compliance officer.

House Committe on Trade & Economic Development

Majority Report:     Do pass.  (18)

     Signed by Representatives Vekich, Chair; Wineberry, Vice Chair; Amondson, Beck, Braddock, Cantwell, Doty, Grant, Hargrove, Holm, Kremen, McLean, McMullen, Moyer, Rasmussen, Schoon, B. Williams and J. Williams.

House Staff:Bonnie Austin (786-7107)

AS REPORTED BY COMMITTEE ON TRADE & ECONOMIC DEVELOPMENT

MARCH 5, 1987

BACKGROUND:

The Regulatory Fairness Act requires that state agencies reduce the impact of their rules on small businesses.  Whenever the adoption of a rule will have an economic impact on more than twenty percent of all industries, or on more than ten percent of any one industry, the state agency must prepare a small business economic impact statement and must develop alternative means of compliance, simplify reporting requirements, or exempt small business from requirements when feasible.

The Joint Administrative Rules Review Committee (JARRC) is a bipartisan legislative committee which reviews state agency rules to determine whether they are within the statutory intent of the legislature.  If JARRC finds that a rule is not within the legislative intent, a hearing is held.  If the problem is not corrected, the JARRC files a notice of objection and a statement of the reasons for the objection by with the code revisor, which are published in the state register.

Currently, a rule may be declared invalid in a declaratory judgment only if it is unconstitutional, exceeds statutory authority, or was adopted without compliance with statutory rulemaking procedures.  It may not be declared invalid based upon the contents of s small business economic impact statement or upon substantive compliance with the Regulatory Fairness Act.

SUMMARY:

The governor shall designate a regulatory fairness compliance officer.  The officer shall: (1)  Review all proposed state agency rules for compliance with the Regulatory Fairness Act; (2) assist state agencies in complying with the Regulatory Fairness Act; (3) assist persons affected by a proposed rule in providing input into the process; and (4)  appoint an advisory committee, if necessary.

If the regulatory fairness compliance officer finds that a proposed rule does not comply with the Regulatory Fairness Act, the officer shall notify the agency, the Joint Administrative Rules Review Committee, the Legislature, and the Governor.

In adopting rules which will have an economic impact on more than twenty percent of all industries, or on more than ten percent of any one industry, state agencies shall make a reasonable effort to obtain input from parties who may be potentially affected by the economic impact of the proposed rule.

In the preparation of small business economic impact statements, agencies shall analyze the cost of compliance based on existing data, indicate the alternatives considered by the agency to reduce the impact of the rule on small businesses, and indicate their reasons for the agency decision. If a small business economic impact statement is prepared, and the determination is made that there is no economic impact on small business, agencies shall indicate this in the statement.

The Joint Administrative Rules Review Committee may review any rule to determine whether an agency has complied with the Regulatory Fairness Act.  The procedures of the Joint Administrative Rules Review Committee shall apply to all hearings, reviews, and objections raised under the Regulatory Fairness Act.

If any rule is found not to be in compliance with the Regulatory Fairness Act by the Joint Administrative Rules Review Committee, any person may petition superior court for a declaratory judgment on the validity of the rule.  Any person who prevails in a court action against an agency for a violation of the Regulatory Fairness Act shall be awarded all costs and attorneys' fees.

Fees set by state agencies shall not put a disproportionate economic burden on small businesses.  Agencies shall consider actors such as gross sales, net profit margins, and the number of employees in determining small business ability to pay fees.

Appropriation:  $40,000 to the Department of Trade and Economic Development.

Fiscal Note:    Requested March 3, 1987.

House Committee ‑ Testified For:     Linda Madsen, NFIB; Mike Healy, Seattle Chamber of Commerce; Gary Smith, IBA.

House Committee - Testified Against: None Presented.

House Committee - Testimony For:     The current agency approach to the Regulatory Fairness Act is one of "rubber-stamping".  Agencies that do comply with the letter of the law fail to comply with its spirit.  Although Washington was one of the first states to enact regulatory fairness legislation, our law has no teeth in it because it lacks enforcement power.  This bill allows a petitioner to go to court to block a regulation based on failure to comply with the Regulatory Fairness Act.

House Committee - Testimony Against: None Presented.