It is enacted by the General Assembly as follows:

SECTION 1. Sections 42-92-1 and 42-92-2 of the General Laws in Chapter 42-92 entitled "Equal Access to Justice for Small Businesses and Individuals" are hereby amended to read as follows:

{ADD 42-92-1. Purpose. -- ADD} (a) It is hereby declared that the state and its {ADD municipalities and their respective ADD} various agencies possess a tremendous power in their ability to affect the individuals and businesses they regulate or otherwise affect directly. The legislature further finds that the abilities of agencies to determine benefits, impose fines, suspend or revoke licenses, or to compel or restrict activities imposes a great, and to a certain extent, unfair burden upon individuals and small businesses in particular. The legislature further finds that this situation often tempts state agencies to proceed against individuals or small businesses which are least able to contest the agency's actions, and that often results in actions other than those which are in the best interest of the public.

(b) The legislature further finds that by contesting an unjust agency action and prevailing, the individual or small business often performs an important service to the public because it compels the agency to enforce the laws of this state {ADD and respective municipalities ADD} as they were written by the elected representatives of this state {ADD or the respective municipalities ADD} . Therefore, in order to encourage individuals and small businesses to contest unjust actions by the state {ADD and/or municipal ADD} agencies, the legislature hereby declares that the financial burden borne by these individuals and small businesses should be, in all fairness, subject to state {ADD and/or municipal ADD} reimbursement of reasonable litigation expenses when the individual or small business prevails in contesting an agency action, which was without substantial justification.

{ADD 42-92-2. Definitions. -- ADD} As used in this chapter:

(a) "Adjudicative officer" means the deciding official, without regard to whether the official is designated as an administrative law judge, a hearing officer or examiner, or otherwise, who presided at the adversary adjudication.

(b) "Adjudicatory proceedings" means any proceeding conducted by or on behalf of the state administratively or quasi-judicially which may result in the loss of benefits, the imposition of a fine, the adjustment of a tax assessment, the suspension or revocation of a license, permit, or which may result in the compulsion or restriction of the activities of a party. Any agency charged by statute with investigating complaints shall be deemed to have substantial justification for the investigation and for the proceedings subsequent to the investigation.

(c) "Agency" means any state {ADD and/or municipal ADD} board, commission, {ADD council, ADD} department, or officer, other than the legislature or the courts, authorized by law to make rules or to determine contested cases, to bring any action at law or in equity, including {ADD but not limited to ADD} injunctive and other relief, or to initiate criminal proceedings. This shall include contract boards of appeal, tax proceedings, and employment security administrative proceedings.

(d) "Party" means any individual whose net worth is less than {DEL two hundred fifty thousand dollars ($250,000) DEL} {ADD five hundred thousand dollars ($500,000) ADD} at the time the adversary adjudication was initiated; and, any individual, partnership, corporation, association, or private organization doing business and located in the state, which is independently owned and operated, not dominant in its field, and which employs one hundred (100) or fewer persons at the time the adversary adjudication was initiated.

(e) "Reasonable litigation expenses" means those expenses which were reasonably incurred by a party in adjudicatory proceedings, including, but not limited to, attorney's fees, witness fees of all necessary witnesses, and other such costs and expenses as were reasonably incurred, except that:

(1) The award of attorney's fees may not exceed seventy five ($75.00) dollars per hour;

(2) No expert witness may be compensated at a rate in excess of the highest rate or compensation for experts paid by this state.

(f) "Substantial justification" means that the initial position of the agency, as well as the agency's position in the proceedings, has a reasonable basis in law and fact.

{ADD (g) "Municipality" shall mean the individual cities and towns in the state of Rhode Island and including but not limited to any city or town housing authority, fire, water, sewer district, local or regional school district, public building authority or other municipal financed agency or department. ADD}

SECTION 2. This act shall take effect upon passage.