Report Title:

Small Business Regulatory Flexibility Act

Description:

Clarifies and amends the Small Business Regulatory Flexibility Act to include a provision establishing when the small business impact statement is to be submitted to the Small Business Regulatory Review Board, and update certain provisions.

THE SENATE

S.B. NO.

711

TWENTY-THIRD LEGISLATURE, 2005

 

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

RELATING TO THE SMALL BUSINESS REGULATORY FLEXIBILITY ACT.

 

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

SECTION 1. The legislature finds that there is a need to clarify the timing of preparation and distribution of the small business impact statement required by chapter 201M, Hawaii Revised Statutes, to allow adequate review and comment to the rulemaking agency by small businesses directly affected by a proposed rule and by the small business regulatory review board.

The legislature further finds that when the Small Business Regulatory Flexibility Act was enacted on July 1, 1998, it was necessary to review administrative rules that were in place before the small business regulatory review board began its review of new or modified rules. Each rulemaking agency has submitted to the small business regulatory review board a list of rules adopted before July 1, 1998 affecting small business and described the public purpose for the rule and any other reasons to justify continued implementation. A report of this review has been made to the legislature as required by the statute. The need to periodically review adopted rules for their small business impact remains valid. Accordingly a periodic review process will ensure that agencies thoughtfully consider if the original public purpose for rule adoption remains.

The purpose of this Act is to clarify the Small Business Regulatory Flexibility Act, chapter 201M, Hawaii Revised Statutes. Specifically, this Act provides that a small business impact statement will be prepared and submitted to the small business regulatory review board as early as practicable in the rule drafting process. It also provides that adopted rules affecting small business will be reviewed to determine if they are still appropriate within five years after adoption. The Act further provides for other non-substantive changes to chapter 201M to clarify the definition of a rule and to remove outdated sections of the chapter.

SECTION 2. Section 201M-1, Hawaii Revised Statutes, is amended by adding a new definition to be appropriately inserted and to read as follows:

""Rule" means each state or county agency statement of general or particular applicability and future effect that implements, interprets, or prescribes law or policy or describes the organization, procedure, or practice requirements of any agency as fully defined in section 91-1."

SECTION 3. Section 201M-2, Hawaii Revised Statutes, is amended by amending subsections (b) and (c) to read as follows:

"(b) If the proposed rules affect small business, the agency shall consider creative, innovative, or flexible methods of compliance for small businesses and prepare a small business impact statement to be submitted with the proposed rules to the departmental advisory committee on small business and the small business regulatory review board [prior to providing notice for a public hearing.] when the rules are essentially complete and before the rules are submitted to the governor for approval for public hearing. The statement shall provide a reasonable determination of the following:

(1) The businesses that will be directly affected by, bear the costs of, or directly benefit from the proposed rules;

(2) Description of the small businesses that will be required to comply with the proposed rules and how they may be adversely affected;

(3) In dollar amounts, the increase in the level of direct costs such as fees or fines, and indirect costs such as reporting, recordkeeping, equipment, construction, labor, professional services, revenue loss, or other costs associated with compliance;

(4) The probable monetary costs and benefits to the implementing agency and other agencies directly affected, including the estimated total amount the agency expects to collect from any additionally imposed fees and the manner in which the moneys will be used;

(5) The methods the agency considered or used to reduce the impact on small business such as consolidation, simplification, differing compliance or reporting requirements, less stringent deadlines, modification of the fines schedule, performance rather than design standards, exemption, or any other mitigating techniques;

(6) How the agency involved small business in the development of the proposed rules; and

(7) Whether the proposed rules include provisions that are more stringent than those mandated by any comparable or related federal, state, or county standards, with an explanation of the reason for imposing the more stringent standard.

(c) This chapter shall not apply to proposed rules adopted by an agency to implement a statute or ordinance that does not require an agency to interpret or describe the requirements of the statute or ordinance, such as federally[-] mandated regulations [which affords] that afford the agency no discretion to consider less restrictive alternatives."

SECTION 4. Section 201M-5, Hawaii Revised Statutes, is amended to read as follows:

"[[]§201M-5[]] Small business regulatory review board; powers. (a) There shall be established within the department of business, economic development, and tourism, for administrative purposes, a small business regulatory review board to review any proposed new or amended rule or to consider any request from small business owners for review of any rule adopted by a state agency and to make recommendations to the agency or the legislature regarding the need for a rule change or legislation. For requests regarding county [ordinances,] rules, the board may make recommendations to the county council or the mayor for appropriate action.

(b) The board shall consist of eleven members, who shall be appointed by the governor pursuant to section 26-34. Nominations to fill vacancies shall be made from names submitted by the review board. The appointments shall reflect representation of a variety of businesses in the State; provided that no more than two members shall be representatives from the same type of business, and that there shall be at least two representatives from each county.

(c) All members of the board shall be either a current or former owner or officer of a business and shall not be an officer or employee of the federal, state, or county government. A majority of the board shall elect the chairperson. The [chairperson shall serve a term of not more than one year,] chairperson's term shall be one year, unless removed earlier by a two-thirds vote of all members to which the board is entitled. A member may serve more than one term as chairperson.

(d) A majority of all the members to which the board is entitled shall constitute a quorum to do business, and the concurrence of a majority of all the members to which the board is entitled shall be necessary to make any action of the board valid.

(e) In addition to any other powers provided by this chapter, the board may:

(1) Adopt any rules necessary to implement this chapter;

(2) Organize and hold conferences on problems affecting small business; and

(3) Do any and all things necessary to effectuate the purposes of this chapter.

(f) The board shall submit an annual report to the legislature twenty days prior to each regular session detailing any requests from small business owners for review of any rule adopted by a state agency, and any recommendations made by the board to an agency or the legislature regarding the need for a rule change or legislation. The report shall also contain a summary of the comments made by the board to agencies regarding its review of proposed new or amended rules."

SECTION 5. Section 201M-6, Hawaii Revised Statutes, is amended to read as follows:

"[[]§201M-6[]] Petition for regulatory review. (a) In addition to the basis for filing a petition provided in section 91-6, any affected small business may file a written petition with the agency that has adopted the rules objecting to all or part of any rule affecting small business on any of the following grounds:

(1) The actual effect on small business was not reflected in, or significantly exceeded, the small business impact statement submitted prior to the adoption of the rules;

(2) The small business impact statement did not consider new or significant economic information that reveals an undue impact on small business; [or]

(3) These impacts were not previously considered at the public hearing on the rules[.];

[(b) For rules adopted prior to July 1, 1998, an affected small business may file a written petition with the agency that adopted the rules objecting to all or part of any rules affecting small business on any of the following grounds:]

[(1)] (4) The rules [created] create an undue barrier to the formation, operation, and expansion of small businesses in a manner that significantly outweighs its benefit to the public;

[(2)] (5) The rules duplicate, overlap, or conflict with rules adopted by another agency or violate the substantive authority under which the rules were adopted; or

[(3)] (6) The technology, economic conditions, or other relevant factors justifying the purpose for the rules have changed or no longer exist.

[(c)] (b) Upon submission of the petition, the agency shall forward a copy of the petition to the board as notification of a petition filed under this chapter. The agency shall promptly consider the petition and may seek advice and counsel regarding the petition from the appropriate departmental advisory committee on small business. Within sixty days after the submission of the petition, the agency shall determine whether the impact statement or the public hearing addressed the actual and significant impact on small business. The agency shall submit a written response of the agency’s determination to the small business review board within sixty days after receipt of the petition. If the agency determines that the petition merits the adoption, amendment, or repeal of a rule, it may initiate proceedings in accordance with section 91-3.

[(d)] (c) If the agency determines that the petition does not merit the adoption, amendment, or repeal of any rule, any affected small business may seek a review of the decision by the small business regulatory review board. The board shall promptly convene a meeting pursuant to chapter 92 for the purpose of soliciting testimony that will assist in its determination whether to recommend that the agency initiate proceedings in accordance with section 91-3. [For rules adopted after July 1, 1998, the] The board may base its recommendation on any of the following reasons:

(1) The actual effect on small business was not reflected in, or significantly exceeded, the impact statement submitted prior to the adoption of the rules;

(2) The impact statement did not consider new or significant economic information that reveals an undue impact on small business; [or]

(3) These impacts were not previously considered at the public hearing on the rules[.];

[(e) For rules adopted prior to July 1, 1998, the regulatory review board may base its recommendation to the agency on any of the following reasons:]

[(1)] (4) The rules [created] create an undue barrier to the formation, operation, and expansion of small businesses in the State in a manner that significantly outweighs its benefit to the public;

[(2)] (5) The rules duplicate, overlap, or conflict with rules adopted by another agency or violate the substantive authority under which the rules were adopted; or

[(3)] (6) The technology, economic conditions, or other relevant factors justifying the purpose for the rules have changed or no longer exist.

[(f)] (d) If the small business regulatory review board recommends that an agency initiate rulemaking proceedings for any reason provided in subsection [(d) or (e),] (c), it shall submit to the legislature an evaluation report and the agency's response as provided in subsection [(c).] (b). The legislature may subsequently take such action in response to the evaluation report and the agency's response as it finds appropriate.

[(g)] (e) Nothing in this section shall entitle an affected small business to a contested case hearing under chapter 91."

SECTION 6. Section 201M-7, Hawaii Revised Statutes, is amended to read as follows:

"[[]§201M-7[]] Periodic review; evaluation report. (a) Each agency having rules that affect small business [in effect on July 1, 1998] shall submit by June 30 [of each odd-numbered year], 2005 and every five years thereafter, a list of those rules adopted in the previous five years to the small business regulatory review board. The agency shall also submit a report describing the specific public purpose or interest for adopting the respective rules and any other reasons to justify [its] their continued implementation.

(b) The small business regulatory review board shall provide to the head of each agency a list of any rules adopted by the agency that affect small business and have generated complaints or concerns, including any rules that the board determines may duplicate, overlap, or conflict with other rules, or exceed statutory authority. Within forty-five days after being notified by the board of the list, the agency shall submit a written report to the board in response to the complaints or concerns. The agency shall also state whether the agency has considered the continued need for the rules and the degree to which technology, economic conditions, and other relevant factors may have diminished or eliminated the need for maintaining the rules.

(c) The board may solicit testimony from the public regarding any report submitted by the agency under this section at a public meeting held pursuant to chapter 92. Upon consideration of any report submitted by an agency under this section and any public testimony, the small business regulatory review board shall submit an evaluation report to [each] the next regular session of the legislature [in even-numbered years]. The evaluation report shall include an assessment as to whether the public interest significantly outweighs a rule's effect on small business and any legislative proposal to eliminate or reduce the effect on small business. The legislature may take such action in response to the report as it finds appropriate."

SECTION 7. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 8. This Act shall take effect upon its approval.

INTRODUCED BY:

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BY REQUEST