BILL REQ. #:  S-2211.1 

READ FIRST TIME 03/02/05.   

     AN ACT Relating to regulation of small businesses; and amending RCW 19.85.020, 19.85.030, 19.85.040, 19.85.050, 19.85.070, and 34.05.671.

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

Sec. 1   RCW 19.85.020 and 2003 c 166 s 1 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, 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)) single North American industry classification system classification or 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 or equivalent North American industry classification system classification.
     (4) "Minor cost" means a cost per business that is less than three-tenths of one percent of one hundred dollars in sales, or less than one-tenth of one percent of the annual payroll.

Sec. 2   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 small business economic impact statement: (a) If the proposed rule will impose more than minor costs on businesses in an industry; or (b) 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. 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.
     An agency shall prepare the small business economic 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 to any person requesting it.
     (2) Based upon the extent of disproportionate impact on small business 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, maximally reduce the costs imposed by the rule on small businesses. ((Methods to reduce the costs on small businesses may include)) The agency shall consider, without limitation, each of the following methods of reducing the impact of the proposed rule on small businesses:
     (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 including those suggested by small businesses or their advocates.
     (3) If the agency determines it cannot reduce the disproportionate impact of a rule on small businesses, the agency shall provide a clear explanation of why it has made that determination and include a statement to that effect with the notice required by RCW 34.05.320.

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

Sec. 4   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 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)) Any state agency receiving separate written requests by more than twenty persons, excluding identical form letter-type requests, within one hundred twenty calendar days to review an existing rule shall review that rule in accordance with the criteria established in subsection (2) of this section within ninety days of receiving the twenty-first request and complete the review within one hundred eighty days from commencing the review. For the purposes of this section, a request for a review of a rule includes any request submitted to the agency rules coordinator that identifies all or a portion of a rule by title and chapter without regard to a specific section within the chapter and any request that provides a narrative description of the rule that reasonably identifies the rule but may not identify the title or chapter of the rule.
     (2) In reviewing rules under subsection (1) of this section to minimize ((any significant)) the economic impact of the rule on small businesses 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)) Whether the rule is authorized by statute;
     (b) ((The nature of complaints or comments received concerning the rule from the public)) Whether the rule is needed;
     (c) ((The complexity of the rule)) Whether the rule is clearly and simply stated;
     (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;
     (f) Whether alternatives to the rule exist that will meet the objectives of the applicable statutes at less cost;
     (g) Whether the rule serves the purposes and goals for which it was adopted; and
     (h) Whether the rule was adopted according to all provisions of law, including RCW 34.05.328(1), if applicable.
     (3) ((Each year each)) At the end of the review of its rule, the agency shall publish a ((list of rules which are to be reviewed pursuant to this section during the next twelve months)) report 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)) report. The ((list)) report 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)) a summary of the agency's consideration and analysis of the factors in subsection (2) of this section, and the agency's decision on whether it is required to initiate rule making under the criterion in subsection (4) of this section. The agency shall invite public comment upon the rule during the course of its review.
     (4) If the review under subsection (2) of this section identifies ways to revise the rule to reduce the economic impacts of the rule by more than a minor cost on business in an industry while meeting the objectives of the applicable statutes, the agency shall file a statement of inquiry under RCW 34.05.310 within sixty days of issuing its report and file its proposed rule making in accordance with RCW 34.05.320 within one year of issuing its report.
     (5) An agency's decision on whether it is required to initiate rule making under the criterion in subsection (4) of this section may be challenged under the provisions of RCW 34.05.570(4). An agency's failure to timely commence review or to timely issue a report under this section may be challenged under RCW 34.05.570(4).

Sec. 5   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 is required, the adopting agency shall provide notice to small businesses of the proposed rule through ((any of the following)):
     (1) Direct notification of known interested small businesses 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 of the types affected by the proposed rule; and
     (3) Posting on the agency web site.

Sec. 6   RCW 34.05.671 and 1995 c 403 s 505 are each amended to read as follows:
     (1) The rules review committee may make reports from time to time to the members of the legislature and to the public with respect to any of its findings or recommendations. The committee shall keep complete minutes of its meetings.
     (2) The committee may establish ad hoc advisory boards, including but not limited to, ad hoc economics or science advisory boards to assist the committee in its rules review functions. The committee shall establish a small business advisory board to ensure that small business concerns are reflected in the rules review process.
     (3) The committee may hire staff as needed to perform functions under this chapter.