HB2781

SECTION 1. Section 201M-2, Hawaii Revised Statutes, is amended to read as follows:

"§201M-2 Determination of small business impact; small business impact statement. (a) Prior to submitting proposed rules for adoption, amendment, or repeal under section 91-3, the agency shall determine whether the proposed rules affect small business, and if so, the availability and practicability of less restrictive alternatives that could be implemented. This section shall not apply to emergency rulemaking.

(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 board 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) When a proposed rule includes provisions that are more stringent than those mandated by any comparable or related federal, state, or county standards, the agency shall, in addition to the information required by subsection (b), include in the small business impact statement information comparing the costs and benefits of the standard set by the proposed rule to the costs and benefits of the standard under the comparable or related federal, state, or county law. The agency shall also include a justification of its decision to impose the higher standard. The agency's comparison and justification shall include:

(1) A description of the public purposes to be served by imposing the standard under the proposed rule;

(2) The text of the related federal, state, or county law, including information about the purposes and applicability of the law;

(3) A comparison between the proposed rule and the related federal, state, or county law, including a comparison of their purposes and of the standards and their application and administration;

(4) A comparison of the monetary costs and benefits to the implementing agency and other agencies directly affected, of imposing the proposed standard, with the costs and benefits of imposing or deferring to the related federal, state, or county standard, as well as a description of the manner in which any additional fees derived from imposition of the proposed standard are to be used;

(5) A comparison, in dollar amounts, of the 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 with the standard under the proposed rule, with the costs of compliance with the related federal, state, or county standard;

(6) A comparison of the adverse effects on small businesses of the standard imposed by the proposed rule, with the adverse effects on small business of the related federal, state, or county standard;

(7) A description of any objections or concerns identified by the agency related to the imposition of a higher standard under the proposed rule than imposed under the related federal, state, or county law, and of possible alternatives to imposing the higher standard, or possible means of mitigating the undesirable effects of the higher standard; and

(8) The agency's reasons for rejecting any possible alternatives or methods of mitigation.

[~~(c)~~] (d) 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 that afford the agency no discretion to consider less restrictive alternatives."

SECTION 2. Section 201M-5, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(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] periodically evaluate existing rules affecting small business. The board shall also make recommendations to the agency or the legislature regarding the need for a rule change or legislation. For requests regarding county ordinances, the board may make recommendations to the county council or the mayor for appropriate action."

SECTION 3. Section 201M-7, Hawaii Revised Statutes, is amended as follows:

1. By amending subsection (a) to read:

"(a) Each agency having rules that affect small business shall submit by June 30 of each odd-numbered year, a list of those rules to the small business regulatory review board. [~~The~~] For each rule, the agency shall [~~also submit a report describing~~] describe the specific public purpose or interest for adopting the [~~respective rules~~] rule, and set forth any other reasons to justify its continued implementation. The agency shall also identify each rule that imposes requirements more stringent than those mandated by any comparable or related federal statute or regulation, and explain why the higher standard is necessary."

2. By amending subsection (c) to read:

"(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 board shall submit an evaluation report to the agency and the legislature not later than twenty days prior to the next regular session of the legislature[.], which report may be combined with the annual report required by section 201M-5(f). The evaluation report shall include an assessment [~~as to~~] of whether the public interest significantly outweighs [~~a rule's~~] the effect of a rule, or of a higher standard than imposed by federal law, on small business [~~and any legislative proposal~~]. The report shall also include recommendations for the amendment or repeal of rules to eliminate or reduce the effect of a rule on small business. The legislature may take any action in response to the report as it finds appropriate."

SECTION 4. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 5. This Act shall take effect upon its approval.

INTRODUCED BY:	_____________________________

HOUSE OF REPRESENTATIVES	H.B. NO.	2781
TWENTY-FOURTH LEGISLATURE, 2008
STATE OF HAWAII