Report Title:

Small Business Regulatory Flexibility

Description:

Makes various administrative and technical amendments to the small business regulatory flexibility act.  Codifies the small business bill of rights.  (SD1)

THE SENATE	S.B. NO.	1276
TWENTY-FIFTH LEGISLATURE, 2009		S.D. 1
STATE OF HAWAII

A BILL FOR AN ACT

RELATING TO SMALL BUSINESS.

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

     SECTION 1.  The purpose of this Act is to amend the Small Business Regulatory Flexibility Act as follows:

     (1)  Requiring the small business regulatory review board to determine the small business impact;

     (2)  Adding definitions of "county" and "State";

     (3)  Amending the definitions of "affected small businesses" and "agency";

     (4)  Increasing the number of board members from eleven to thirteen;

     (5)  Removing the restriction that the chairperson shall serve a term of not more than one year;

     (6)  Codifying the small business bill of rights from Act 230, Session Laws of Hawaii 2008, section 2; and

     (7)  Making other non-substantive changes.

     SECTION 2.  Chapter 201M, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§201M‑   Small business bill of rights. The rights of small businesses in the State include but are not limited to:

(1) The right to expect state agencies to provide a prompt, accurate, and courteous response to a request for information and to work together to ensure ready access to the information needed to assist small businesses in their relationships with state government;

(2) The right to a clear, stable, and predictable regulatory and recordkeeping environment with easily accessible information and administrative rules in as clear and concise language as is practicable, including the posting of all proposed administrative rule changes on the Internet website of the office of the lieutenant governor;

(3) The right to request and receive timely notice of an agency's rulemaking proceedings.  The notice shall be mailed to all persons who have made a written request to receive those notices;

(4) The right to be treated equally and fairly, with reasonable access to state services;

(5) The right to a one-stop permitting process that will, in the long term, include a centralized internet website-based application system.  This website's goals are to have quick and dependable timeframes to process state and county permits, licenses, registrations, and approvals, when appropriate, to simplify and reduce the filing of forms affecting small business;

(6) The right to a timely response to an application for a permit, license, registration, or approval necessary to operate the small business, within the established maximum period of time for that agency in accordance with section 91-13.5;

(7) The right to renewal of essential permits, licenses, registrations, or approvals, absent a specific reason for nonrenewal.  All issuing agencies shall take action to grant or deny any renewal application for a small business or development-related permit, license, registration, or approval within the established maximum period of time for that agency.  The reasons for a denial shall be clearly stated and under conditions set forth in law;

(8) Whenever a contested case hearing is provided by law, in the event a regulatory agency takes action against a small business, the right to a timely hearing.  Officials conducting hearings shall be impartial.  Small businesses shall be provided a full and complete hearing to present their explanation of any alleged violation, deficiency, or wrongdoing.  In any hearing, there shall be a presumption that the small business did not commit an alleged violation or wrongdoing until the agency proves otherwise by a preponderance of the evidence.  The small business shall have the right to present oral and written evidence.  The evidence on the record of the case shall be fully considered by the agency.  In the event of an unfavorable decision, the small business shall have the right to a judicial review pursuant to section 91‑14;

(9) The right to privacy regarding confidential and proprietary small business information when competing for state procurement contracts.  No state agency shall mandate the disclosure of confidential or proprietary information as a condition of obtaining any contract or payment under any contract when a contract is to be awarded on a firm fixed price or cost plus fixed price basis;

(10) The right to all of the protections afforded in the Taxpayer Bill of Rights, P.L. 104-168;

(11) The right to submit complaints regarding a violation of these rights or any other administrative acts of state and county agencies with the office of the ombudsman, in accordance with chapter 96;

(12) The right to request information and an opinion from the office of information practices, in accordance with chapters 92 and 92F, with regard to access to information from public meetings or the release of government documents;

(13) The right to provide information to the division of consumer advocacy in accordance with chapter 269, with regard to issues under the purview of the public utilities commission;

(14) The right to request information from the office of consumer protection, in accordance with chapter 487, with regard to business and consumer issues;

(15) The right to access the small business advocate in the department of business, economic development, and tourism regarding any dispute with a state agency to ensure government resources are coordinated on behalf of small business and the rights of small businesses are being upheld; and

(16) The right to administrative rule review pursuant to this chapter by filing a petition with the small business regulatory review board in accordance with section 201M-6."

     SECTION 3.  Section 201M-1, Hawaii Revised Statutes, is amended as follows:

1.  By adding two new definitions to be appropriately inserted and to read:

     ""County" means any county located in the State of Hawaii.

"State" means the State of Hawaii."

     2.  By amending the definitions of "affected small businesses" or "affects small business" and "agency" to read:

     ""Affected small businesses" or "affects small business" means any potential or actual requirement imposed upon a small business through an agency's proposed or adopted rule that will cause or has caused a direct and significant economic burden upon a small business, or is directly related to the formation, operation, or expansion of a small business.

     "Agency" means each [state or county] board, commission, department, or officer under the jurisdiction of the State or its counties authorized by law to make rules, except those in the legislative or judicial branches."

     SECTION 4.  Section 201M-2, Hawaii Revised Statutes, is amended by amending subsections (a) and (b) to read as follows:

     "(a)  Prior to submitting proposed rules for adoption, amendment, or repeal under section 91-3, the agency shall [determine] declare whether the proposed rules affect small business, [and if so,] subject to the determination of the small business regulatory review board.  If the small business regulatory review board determines that the proposed rules affect small business, the agency shall also recommend 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] that are less burdensome and restrictive 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."

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

1.  By amending subsections (a) to (c) to read:

     "(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] any 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, the board may make recommendations to the county council or the mayor for appropriate action.

     (b)  The board shall consist of [eleven] thirteen 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, unless removed earlier by a two-thirds vote of all members to which the board is entitled.]"

     2.  By amending subsection (f) to read:

     "(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] any 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 6.  Section 201M-6, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

     "(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;

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

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

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

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

     SECTION 7.  Section 2, Act 230, Session Laws of Hawaii 2008, is repealed.

     ["SECTION 2.  The rights of small businesses in the State of Hawaii include but are not limited to:

(1) The right to expect state agencies to provide a prompt, accurate, and courteous response to a request for information and to work together to ensure ready access to the information needed to assist businesses in their relationships with state government;

(2) The right to a clear, stable, and predictable regulatory and record-keeping environment with easily accessible information and administrative rules in as clear and concise language as is practicable, including the posting of all proposed administrative rule changes on the Internet website of the office of the lieutenant governor;

(3) The right to request and receive timely notice of an agency's rulemaking proceedings.  The notice should be mailed to all persons who have made a written request for such a notice;

(4) The right to be treated equally and fairly, with reasonable access to state services;

(5) The right to a one-stop permitting process that will, in the long term, include a centralized Internet website-based application system.  This site's goals are to have quick and responsible timeframes to process state and county permits, licenses, registrations, and approvals, when appropriate, to simplify and reduce the filing of forms affecting business;

(6) The right to a timely response to an application for a permit, license, registration, or approval necessary to operate the small business, within the established maximum period of time for that agency in accordance with section 91-13.5, Hawaii Revised Statutes;

(7) The right to renewal of essential permits, licenses, registrations, or approvals, absent a specific reason for nonrenewal.  All issuing agencies shall take action to grant or deny any renewal application for a business or development-related permit, license, registration, or approval within the established maximum period of time for that agency.  The reasons for a denial should be clearly stated and under conditions set forth in law;

(8) Whenever a contested case hearing is provided by law, in the event a regulatory agency takes action against a business, the right to expect a timely hearing.  Officials conducting such hearings should be impartial.  Small businesses should be provided a full and complete hearing to present their explanation of any alleged violation, deficiency, or wrongdoing.  In any hearing, there should be a presumption that the small business did not commit an alleged violation or wrongdoing until the agency proves otherwise by a preponderance of the evidence.  The small business should have the right to present evidence, both oral and written.  This evidence must be fully considered by the agency.  In the event of an unfavorable decision, the business should have the right to a judicial review pursuant to section 91-14, Hawaii Revised Statutes;

(9) The right to privacy regarding confidential and proprietary business information when competing for state procurement contracts.  No state agency shall mandate the disclosure of confidential or proprietary business information as a condition of obtaining any contract or payment under any contract when a contract is to be awarded on a firm fixed price or cost plus fixed price basis;

(10) The right to all of the protections afforded in the Taxpayer Bill of Rights, P.L. 104-168;

(11) The right to submit complaints regarding a violation of these rights or any other administrative acts of state and county agencies with the office of the ombudsman, in accordance with chapter 96, Hawaii Revised Statutes;

(12) The right to request information and an opinion from the office of information practices, in accordance with chapters 92 and 92F, Hawaii Revised Statutes, with regard to access to information from public meetings or the release of government documents;

(13) The right to provide information to the division of consumer advocacy in accordance with chapter 269, Hawaii Revised Statutes, with regard to issues under the purview of the public utilities commission;

(14) The right to request information from the office of consumer protection, in accordance with chapter 487, Hawaii Revised Statutes, with regard to business and consumer issues;

(15) The right to access the small business advocate in the department of business, economic development, and tourism regarding any dispute with a state agency to ensure government resources are coordinated on behalf of small business and the rights of businesses are being upheld; and

(16) The right to administrative rule review pursuant to the Small Business Regulatory Flexibility Act by filing a petition with the small business regulatory review board in accordance with section 201M-6, Hawaii Revised Statutes."]

     SECTION 8.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 9.  This Act shall take effect upon its approval.