Read first time 01/27/2003.   Referred to Committee on State Government.

     AN ACT Relating to housing; and amending RCW 19.85.011, 19.85.020, 19.85.025, 19.85.030, 19.85.040, 19.85.050, and 19.85.070.

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

Sec. 1   RCW 19.85.011 and 1994 c 249 s 9 are each amended to read as follows:
     The legislature finds that administrative rules adopted by state agencies can have a disproportionate impact on the state's small businesses, particularly those providing housing, because of the size of those businesses and the regulations imposed upon them. This disproportionate impact reduces competition, innovation, employment, and new employment opportunities, and threatens the very existence of some small businesses. Further, because most providers of housing are small businesses, this disproportionate impact upon them significantly reduces the availability of housing to Washington residents, particularly those with lower incomes and middle incomes. The legislature therefore enacts the Regulatory Fairness Act with the intent of reducing the disproportionate impact of state administrative rules on small business and housing.

Sec. 2   RCW 19.85.020 and 1994 c 249 s 10 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, that has the purpose of making a profit, 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 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.
     (4) "Housing" means residential housing that is rented or owned by a person or household.
     (5) "Housing impact statement" means a statement meeting the requirements of RCW 19.85.040 prepared by a state agency pursuant to RCW 19.85.030.
     (6) "Provider of housing" means a business that engages, in whole or in any part, in the development and building of housing.
     (7) "Significant adverse impact on housing" means causing an increase of five percent or more on the cost on housing, or on the cost of a component of housing.

Sec. 3   RCW 19.85.025 and 1997 c 409 s 212 are each amended to read as follows:
     (1) Unless an agency receives a written objection to the expedited repeal of a rule, this chapter does not apply to a rule proposed for expedited repeal pursuant to RCW ((34.05.354)) 34.05.353. If an agency receives a written objection to expedited repeal of the rule, this chapter applies to the rule-making proceeding.
     (2) This chapter does not apply to a rule proposed for expedited adoption under RCW ((34.05.230 (1) through (8))) 34.05.353, unless a written objection is timely filed with the agency and the objection is not withdrawn.
     (3) This chapter does not apply to the adoption of a rule described in RCW 34.05.310(4).
     (4) An agency is not required to prepare a separate small business economic impact statement or a housing impact statement under RCW 19.85.040 if it prepared an analysis under RCW 34.05.328 that meets the requirements of a small business economic impact statement or a housing impact statement, respectively, and if the agency reduced the costs imposed by the rule on small business or the significant adverse impact on housing to the extent required by RCW 19.85.030(((3))) (2). The portion of the analysis that meets the requirements of RCW 19.85.040 shall be filed with the code reviser and provided to any person requesting it in lieu of a separate small business economic impact statement or housing impact statement.

Sec. 4   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) A small business economic impact statement: (((a)))(i) If the proposed rule will impose more than minor costs on businesses in an industry; or (((b)))(ii) 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; or
     (b) A housing impact statement if the proposed rule will have a significant adverse impact on housing. 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 or a housing impact statement.
     An agency shall prepare the small business economic impact statement or housing 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 or housing impact statement to any person requesting it.
     If a housing impact statement is required to be prepared, it may be included as a component of a small business economic impact statement.      (2) The department of community, trade, and economic development, in consultation with the governor's housing advisory board, shall develop guidelines to assist agencies in determining whether a proposed rule will create a significant adverse impact on housing, and therefore require preparation of a housing impact statement. The department of community, trade, and economic development may review an agency determination that a proposed rule will not have such an impact, and shall advise the joint administrative rules review committee on disputes involving agency determinations under this section.
     (3) Based upon the extent of disproportionate impact on small business or the extent of the significant adverse impact on housing 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, reduce the costs imposed by the rule on small businesses or reduce the significant adverse impact on housing. Methods to reduce the costs on small businesses or reduce the significant adverse impact on housing may include:
     (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.

Sec. 5   RCW 19.85.040 and 1995 c 403 s 403 are each amended to read as follows:
     (1) A small business economic impact statement and housing impact statement must include a brief description of the reporting, record keeping, and other compliance requirements of the proposed rule, and the kinds of professional services that a small business or provider of housing is likely to need in order to comply with such requirements. It shall analyze the costs of compliance for businesses or providers of housing required to comply with the proposed rule adopted pursuant to RCW 34.05.320, including costs of equipment, supplies, labor, financing, and increased administrative costs. It shall consider, based on input received, whether compliance with the rule will cause businesses or providers of housing to lose sales or revenue. To determine whether the proposed rule will have a disproportionate impact on small businesses or the affordability of housing, the impact statement must compare the cost of compliance for small business or providers of housing with the cost of compliance for the ten percent of businesses or providers of housing that are the largest businesses or providers of housing 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; or
     (d) Cost per unit of housing.
     (2) ((A small business economic)) An 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 or providers of housing as required by RCW 19.85.030(3), or reasonable justification for not doing so, addressing the options listed in RCW 19.85.030(3);
     (b) A description of how the agency will involve small businesses or providers of housing 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 or providers of housing.

Sec. 6   RCW 19.85.050 and 1989 c 175 s 74 are each amended to read as follows:
     (1) Within one year after June 10, 1982, each agency shall publish and deliver to the office of financial management and to all persons who make requests of the agency for a copy of a plan to periodically review all rules then in effect and which have been issued by the agency which have an economic impact on more than twenty percent of all industries or ten percent of the businesses in any one industry. Such plan may be amended by the agency at any time by publishing a revision to the review plan and delivering such revised plan to the office of financial management and to all persons who make requests of the agency for the plan. The purpose of the review is to determine whether such rules should be continued without change or should be amended or rescinded, consistent with the stated objectives of applicable statutes, to minimize the economic impact on small businesses and providers of housing as described by this chapter. The plan shall provide for the review of all such agency rules in effect on June 10, 1982, within ten years of that date.
     (2) In reviewing rules to minimize any significant economic impact of the rule on small businesses and any significant adverse impact on housing as described by this chapter, and in a manner consistent with the stated objectives of applicable statutes, the agency shall consider the following factors:
     (a) The continued need for the rule;
     (b) The nature of complaints or comments received concerning the rule from the public;
     (c) The complexity of the rule;
     (d) The extent to which the rule overlaps, duplicates, or conflicts with other state or federal rules, and, to the extent feasible, with local governmental rules; and
     (e) The degree to which technology, economic conditions, or other factors have changed in the subject area affected by the rule.
     (3) Each year each agency shall publish a list of rules which are to be reviewed pursuant to this section during the next twelve months and deliver a copy of the list to the office of financial management and all persons who make requests of the agency for the list. The list shall include a brief description of the legal basis for each rule as described by RCW 34.05.360, and shall invite public comment upon the rule.

Sec. 7   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 or a housing impact statement is required, the adopting agency shall provide notice to small businesses or providers of housing of the proposed rule through any of the following:
     (1) Direct notification of known interested small businesses, providers of housing, 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 or providers of housing of the types affected by the proposed rule.