SENATE BILL REPORT

SB 5831

BYSenators Wojahn, Smitherman, Warnke, Lee, Vognild, Cantu, Anderson, Newhouse, Bailey, McCaslin, Moore, Metcalf and Johnson

Improving regulatory fairness toward small businesses.

Senate Committee on Economic Development & Labor

Senate Hearing Date(s):February 27, 1987; January 21, 1988

Senate Staff:Bill Lynch (786-7427)

AS OF JANUARY 20, 1988

BACKGROUND:

The Regulatory Fairness Act requires agencies to reduce the impact rules have on small business.  An agency must prepare a small business economic impact statement whenever the adoption of a rule will have an economic impact on more than 20 percent of all industries, or more than 10 percent of any one industry.  If a proposed rule will have such an economic impact, an agency must try to develop the following alternative means of compliance:  simplify reporting requirements; establish performance rather than design standards; or exempt small business from any or all requirements.

A small business is defined as an independent business entity with 50 or less employees with the purpose of making a profit.

Current law prohibits people from challenging a rule based on the contents of the small business economic impact statement.  Some agencies have experienced difficulty in complying with the law.

SUMMARY:

Each agency is directed to make a reasonable effort to notify, through trade groups or associations, those businesses affected by a proposed rule and seek their input.  The Department of Trade and Economic Development is directed to provide information to an agency upon request concerning agency responsibilities under the Regulatory Fairness Act.  The Department must also provide information upon request to the business community concerning the administrative rule-making process.

A small business economic impact must indicate the alternatives the agency considered to reduce the impact of the rule on small business and the reasons the agency decided on the proposed rule.

The prohibition against challenging the validity of a rule based upon the contents of a small business economic impact statement is eliminated.  Any person affected by the rule may appeal to superior court or to the agency for a ruling on the validity of the small business economic impact statement.  A person who prevails against a public agency is entitled to reasonable attorney fees and all court costs.

Each agency must report to the Governor and the Legislature by September 1st of each year on all contested cases based upon challenges of small business economic impact statements.

Appropriation:    none

Revenue:    none

Fiscal Note:      available