SENATE BILL REPORT

SHB 2024

BYHouse Committee on Trade & Economic Development (originally sponsored by Representatives Walk, Cantwell, Schoon, Rasmussen, Doty, Winsley, P. King, Pruitt, Kremen, Wood and D. Sommers) 

Mandating regulatory fairness.

House Committe on Trade & Economic Development

Senate Committee on Economic Development & Labor

Senate Hearing Date(s):March 29, 1989; March 31, 1989

Majority Report:  Do pass as amended.

      Signed by Senators Lee, Chairman; Anderson, Vice Chairman; McDonald, McMullen, Matson, Murray, Saling, Smitherman, Warnke, Williams.

Senate Staff:Jonathan Seib (786-7427)

                  March 31, 1989

AS REPORTED BY COMMITTEE ON ECONOMIC DEVELOPMENT & LABOR, MARCH 31, 1989

BACKGROUND:

RCW 19.85, the Regulatory Fairness Act, requires each state agency to take steps to reduce the disproportionate economic impact on small businesses of any rule, which, if adopted, will have economic impact on more than 20 percent of all industries, or more than 10 percent of any one industry.  "Small businesses" are those employing 50 persons or less.

One required step is agency preparation of a small business economic impact statement analyzing the cost of compliance with the rule and comparing the costs for small businesses with those of large businesses.  The Federal Regulatory Flexibility Act and similar acts in other states require economic impact statements which also contain a description of the requirements of the proposed rule and the professional services small businesses are likely to need in order to comply.

The Washington Administrative Procedure Act encourages agencies to solicit comments from the public on the subject of a proposed rule, but there is no statutory requirement that agencies notify small businesses of upcoming rulemaking proceedings.  The federal act and acts in other states require agencies to ensure small business participation in the rulemaking process. 

The Joint Administrative Rules Review Committee may review agency rules to determine whether they comply with legislative intent.  There is no provision in the law for the committee to review a proposed rule to determine whether an agency complied with the Regulatory Fairness Act.

SUMMARY:

Small business economic impact statements must contain a brief description of the requirements of the proposed rule and the professional services that a small business is likely to need in order to comply.  An agency may request assistance from the Business Assistance Center in preparing the impact statement.

When a proposed rule requires the preparation of a small business economic impact statement, an agency must give notice of the proposed rule to small businesses through any of several specified means.

In lieu of an impact statement, an agency may submit a statement that a rule is being adopted solely for the purpose of conformity or compliance with federal law or regulations, or that the rule will have minor economic impact.  The Business Assistance Center will develop guidelines for determining whether a rule will have minor impact, and may review agency statements to determine compliance with these guidelines.

The Joint Administrative Rules Review Committee may review any rule to determine whether an agency complied with the Regulatory Fairness Act.

Appropriation:    none

Revenue:    none

Fiscal Note:      available

SUMMARY OF PROPOSED SENATE AMENDMENT:

New sections are added which provide that the Business Assistance Center within the Department of Trade and Economic Development is authorized to act as the primary agency of state government to respond to complaints regarding administrative rules that unduly favor either the for-profit or nonprofit business sectors.  An individual who considers that administrative rules adopted by a state agency unduly favor either the for-profit corporations or nonprofit corporations may submit a complaint in writing to the center.  The center is authorized to:  conduct background research; request information from agencies promulgating the rules; and arrange meetings with interested parties.

Upon determining a case of preferential treatment between a for-profit or nonprofit corporation, the center is required to notify the affecting agency and request appropriate modifications.  If remedial action is not taken, the center may refer the issue to the Joint Administrative Rules Review Committee.

Senate Committee - Testified: David Dougherty, Department of Trade and Economic Development; Gary Smith, IBA