Chapter 230

2009 -- H 6318 SUBSTITUTE A AS AMENDED

Enacted 11/09/09

A N A C T

RELATING TO STATE AFFAIRS AND GOVERNMENT - SMALL BUSINESS

REGULATORY FAIRNESS IN ADMINISTRATIVE PROCEDURES

Introduced By: Representative Brian P. Kennedy

Date Introduced: June 25, 2009

It is enacted by the General Assembly as follows:

SECTION 1. Title 42 of the General Laws entitled "STATE AFFAIRS AND

GOVERNMENT" is hereby amended by adding thereto the following chapter:

CHAPTER 35.1

SMALL BUSINESS REGULATORY FAIRNESS IN ADMINISTRATIVE PROCEDURES

42-35.1-1. Legislative findings. – The general assembly finds and declares that:

(1) A vibrant and growing small business sector is critical to creating jobs in a dynamic

economy;

(2) Small businesses bear a disproportionate share of regulatory costs and burdens;

(3) Fundamental changes that are needed in the regulatory and enforcement culture of

state agencies to make them more responsive to small business can be made without

compromising the statutory missions of the agencies;

(4) When adopting regulations to protect the health, safety, and economic welfare of

Rhode Island state agencies should seek to achieve statutory goals as effectively and efficiently as

possible without imposing unnecessary burdens on small employers;

(5) Uniform regulatory and reporting requirements can impose unnecessary and

disproportionately burdensome demands including legal, accounting and consulting costs upon

small businesses with limited resources;

(6) The failure to recognize differences in the scale and resources of regulated businesses

can adversely affect competition in the marketplace, discourage innovation, and restrict

improvements in productivity;

(7) Unnecessary regulations create entry barriers in many industries and discourage

potential entrepreneurs from introducing beneficial products and processes;

(8) The practice of treating all regulated businesses as equivalent may lead to inefficient

use of regulatory agency resources, enforcement problems, and in some cases, to actions

inconsistent with the legislative intent of health, safety, environmental, and economic welfare

legislation;

(9) Alternative regulatory approaches which do not conflict with the stated objective of

applicable statutes may be available to minimize the significant economic impact of rules on

small businesses;

(10) The process by which state regulations are developed and adopted should be

reformed to require agencies to solicit the ideas and comments of small businesses, to examine

the impact of proposed and existing rules on such businesses, and to review the continued need

for existing rules.

42-35.1-2. Definitions. – As used in this section:

(1) "Agency" means each state board, commission, department, or officer authorized by

law to make regulations or to determine contested cases;

(2) "Proposed regulation" means a proposal by an agency for a new regulation or for a

change in, addition to, or repeal of an existing regulation;

(3) "Regulation" means each agency statement of general applicability, without regard to

its designation, that implements, interprets, or prescribes law or policy, or describes the

organization, procedure, or practice requirements of agency. The term includes the amendment or

repeal of a prior regulation but does not include; (i) Statements concerning only the internal

management of any agency and not affecting private rights of procedures available to the public,

(ii) Declaratory ruling; (iii) Intra-agency or interagency memoranda; (iv) An order;

(4) "Small business" shall have the same meaning as in section 42-35-1.

42-35.1-3. Economic Impact statements. – (a) Prior to the adoption of any proposed

regulation that may have an adverse impact on small businesses, excluding those businesses

defined in subsection 42-35-3.3(d), each agency shall prepare, in congruence with the analysis

required in section 42-35-3.3, an economic impact statements that includes the following:

(1) An identification and estimate of the number of the small businesses subject to the

proposed regulation;

(2) The projected reporting, recordkeeping, and other administrative costs required for

compliance with the proposed regulation, including the type of professional skills necessary for

preparation of the report or record;

(3) A statement of the probable effect on impacted small businesses;

(4) A description of any less intrusive or less costly alternative methods of achieving the

purpose of the proposed regulation.

(b) The economic impact statement required herein shall be published in guide form as

well as posted on the department of administration and the of economic development corporation

websites. The guide should be published and/or posted on or around the same date as the

regulation change and shall include a description of actions need by the small business to meet

the requirement of the regulation.

42-35.1-4. Regulatory flexibility – Flexibility analysis required. – (a) Notwithstanding

any general or public law to the contrary, prior to the adoption of any proposed regulation on and

after January 1, 2010, each agency shall prepare a regulatory flexibility analysis in which the

agency shall, where consistent with health, safety, environmental, and economic welfare consider

utilizing regulatory methods that will accomplish the objectives of applicable statutes while

minimizing adverse impact on small businesses. The agency shall consider, without limitation,

each of the following methods of reducing the impact of the proposed regulation on small

businesses:

(1) The establishment of less stringent compliance or reporting requirements for small

businesses;

(2) The establishment of less stringent schedules or deadlines for compliance or reporting

requirements for small businesses;

(3) The consolidation or simplification of compliance or reporting requirements for small

businesses;

(4) The establishment of performance standards for small businesses to replace design or

operational standards required in the proposed regulation; and

(5) The exemption of small businesses from all or any part of the requirements contained

in the proposed regulation.

(b) Prior to the adoption of any proposed regulation that may have an adverse impact on

small businesses each agency shall notify the economic development corporation of its intent to

adopt the proposed regulation. The economic development corporation shall advise and assist

agencies in complying with the provisions of this section.

42-35.1-5. Small business enforcement ombudsman. – (a) The director of the economic

development corporation shall designate an existing staff member as a "small business regulatory

enforcement ombudsman", who shall report directly to the director.

(b) The ombudsman shall:

(1) Work with each agency with regulatory authority over small businesses to ensure that

small business concerns that receive or are subject to an audit, on-site inspection, compliance

assistance effort, or other enforcement related communication or contact by agency personnel are

provided with a means to comment on the enforcement activity conducted by such personnel;

(2) Establish means to receive comments from small business concerns regarding actions

by agency employees conducting compliance or enforcement activities;

(3) Within six (6) months of appointment, work with each regulating entity to develop

and publish reporting policies;

(4) Based on substantiated comments received from small business concerns the

ombudsman shall annually report to the general assembly and affected agencies evaluating the

enforcement activities of agency personnel including a rating of the responsiveness of the

regulatory agencies policies;

(5) Coordinate and report annually on the activities, findings and recommendations to the

general assembly and the directors of affected agencies; and

(6) Provide the affected agency with an opportunity to comment on reports prepared

pursuant to this chapter, and include a section of the final report in which the affected agency may

make such comments as are not addressed by the ombudsman.

42-35.1-6. Judicial review. – For any regulation subject to this section, a small business

that is adversely affected or aggrieved by final agency action is entitled to judicial review of

agency compliance with the requirements of this section. Proceedings for review shall be

conducted in accordance with section 42-35-15.

42-35.1-7. Expenses. – The director of administration shall annually appropriate such

sums as it may deem necessary to carry out the provisions of this chapter.

42-35.1-8. Severability. – If any clause, sentence, paragraph, or part of this chapter or the

application thereof to any person or circumstance shall, for any reason, be judged by a court of

competent jurisdiction to be invalid, such judgment shall not affect, impair, or invalidate the

remainder of this chapter or its application to other persons or circumstances.

SECTION 2. Section 42-91-3 of the General Laws in Chapter 42-91 entitled "Small

Business Advocacy Council" is hereby amended to read as follows:

42-91-3. Purpose and duties. -- (a) The purpose of the council shall be to develop those

specific and comprehensive recommendations for executive and legislative action as may be

necessary and proper to maintain and encourage the continued viability of small businesses in the

state. To enable it to carry out that purpose, the council shall study the following matters and any

others it deems appropriate:

      (1) The problems and needs of small businesses.

      (2) The role of small businesses in creating jobs, and what will assist small businesses in

carrying out that role.

      (3) The status of women and minorities as small business owners.

      (4) The rules and regulations of the various departments, boards, and agencies of state

and local government that affect small businesses.

      (5) The policies, practices, and procedures of governmental bodies in dealing with small

businesses.

      (6) The communication of information concerning state and federal programs that may

provide assistance to small businesses.

      (7) The promotion of a continuing dialogue between government and small business.

      (b) The council is empowered to appoint subcommittees to study specialized areas of

concern and to report their findings to the council.

      (c) The council is empowered to seek the advice and assistance of the United States

Small Business Association, the United States Small Business Development Center, members of

local small business associations, and members of small business councils of chambers of

commerce.

      (d) All departments, boards, and agencies of the state shall cooperate with the council

and furnish any advice and information, documentary and otherwise, that may be necessary or

desirable to facilitate the purposes of this chapter.

(e) The council shall:

(1) Advise the ombudsman established pursuant to section 42-35.1-5 on matters of

concern to small businesses relating to the enforcement activities of agencies;

(2) Report to the ombudsman on substantiated instances of enforcement actions of

agencies against small business concerns including any findings or recommendations of the

council as to agency enforcement policies or practices;

(3) Prior to publication, provide comment on the annual report of the ombudsman

prepared under section 42-35.1-3.

SECTION 3. This act shall take effect upon passage.

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LC02917/SUB A

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