COMMITTEE SUBSTITUTE
FOR
Senate Bill No. 392
(By Senators Anderson, Sharpe, Buckalew, Ross and Bowman)
____________
[Originating in the Committee on
Small Business;
reported February 24, 1995.]
A BILL to amend chapter twenty-nine-a of the code of West
Virginia, one thousand nine hundred thirty-one, as amended,
by adding thereto a new article, designated article eight,
relating to the creation of the "West Virginia Regulatory
Flexibility Act"; legislative findings and purpose;
definitions; analysis of cost to state and regulated persons
and business to be filed with legislative auditor; issuance
of statement on impact of the proposed rule by the
legislative auditor; filing of notice with the secretary of
state; issuance of rules in two or more parts; providing
standards for rules issued in two or more parts;
applications by businesses for exemptions; application of
article in case of emergency; and requiring agencies to
review existing rules after effective date of this article.
Be it enacted by the Legislature of West Virginia:
That chapter twenty-nine-a of the code of West Virginia, one
thousand nine hundred thirty-one, as amended, be amended by
adding thereto a new article, designated article eight, to read as follows:
ARTICLE 8. REGULATORY FLEXIBILITY ACT.
§29A-8-1. Short title.
This article shall be known and may be cited as the "West
Virginia Regulatory Flexibility Act."
§29A-8-2. Legislative finding.
The Legislature finds that in numerous instances compliance
with the rules issued and promulgated by state agencies imposes
unreasonable demands and burdens on individuals of limited means
and on businesses and organizations engaged in or planning
business projects on a small scale; that a regulatory dilemma has
developed in which efforts to protect the health, safety and
economic welfare of the people of this state have created a
burden of required legal, accounting and consulting services
which is causing economic harm to individuals and organizations
of limited resources, and is adversely affecting competition in
the marketplace; that the sheer scope and volume of rules already
in place has created high entry barriers in many industries, and
discouraged potential entrepreneurs from introducing beneficial
products and processes; that the practice of treating all
regulated individuals, organizations, businesses and business
activities as equivalent, for purposes of regulatory and
paperwork requirements, has led to inefficient use of the
resources of some state agencies and to enforcement problems;
that the collection of information by the state has not
adequately weighted the privacy rights of individuals and
enterprises against the state's need to know because the design of the regulatory process has encouraged regulators to treat
information as a free good; and that the deep public
dissatisfaction with the regulatory process has stemmed in large
part from a public perception of the failure of burdensome rules
to correct key problems.
The Legislature, therefore, declares it to be in the best
interest of its citizens that this state establish as a principle
of regulatory issuance that regulatory and informational
requirements fit the scale of the persons and activities being
regulated, that fewer and simpler requirements be made of
individuals, small organizations, small businesses and larger
private entities engaged in business activity on a small scale,
and that to achieve these ends state agencies should be empowered
and encouraged to issue rules which apply differently to
different segments of regulated industries and activities.
§29A-8-3. Definitions.
As used in this article:
(a) "Administrative rule" or "rule" means any agency
statement which is made, adopted and promulgated pursuant to law,
is of general applicability and continuing effect and which
implements or interprets any law or policy and applies to persons
engaged in business;
(b) "Business" means any trade, business or professional
entity or activity which is conducted for profit;
(c) "Small business" means any independently owned and
operated enterprise which is not dominant in its field of
operation; has less than thirty employees and gross receipts of less than four million dollars; or, any other business which an
agency using this criteria would consider as a small business;
(d) "Small organization" means any unincorporated business,
sheltered workshop or nonprofit enterprise which is not dominant
in its field of operation; has gross receipts of less than four
million dollars; or, any other organization which an agency using
this criteria would consider a small organization; and
(e) "State agency" or "agency" means each of the principal
departments in the executive branch of the state government, and
all boards, divisions, commissions, agencies, departments,
councils, authorities, offices or officers within the departments
now existing or hereafter established and authorized by statute
to make, adopt or promulgate rules.
§29A-8-4. Analysis of cost to state; filed with legislative
auditor.
(a) Each state agency shall, prior to the adoption and
promulgation of a proposed administrative rule, conduct an
analysis for the purpose of making a determination of the
approximate amount, if any, of legal, enforcement, consulting and
accounting costs to the state which would be required by the
proposed rule necessitated. The determination shall be based on
the amount of governmental information collection the proposed
rule would necessitate. The state agency shall also determine
the approximate overall cost to persons other than public
entities of compliance with the rule, averaged, for each person,
business concern and organization affected by it, as compared
with the importance of the public policy to be achieved. Pursuant to the analysis, the state agency shall make a further
determination whether the rule should apply at all or in the same
manner to persons, businesses and organizations of various sizes
and resources, or to business operations of different scope.
(b) The head of any agency preparing an administrative rule
shall submit the rule, together with the analysis of its costs
and benefits as required under subsection (a) of this section, to
the legislative auditor. The legislative auditor shall review
the proposed rule and the analysis of costs and benefits and
shall, if the legislative auditor determines that the proposed
rule will have a substantial effect on any significant number of
businesses, issue a statement to the agency within ninety days of
receipt of the rule, containing comments on the impact of the
proposed rule should it be promulgated. The statement shall also
contain comments on the impact of the proposed rule on businesses
not directly regulated by it.
(c) The head of the agency proposing an administrative rule
shall issue a notice that the analysis of costs and benefits and
any statement on the impact of the proposed rule made by the
legislative auditor is on file with the secretary of state and
the notice is to be included with the public notice which is to
be distributed to interested persons and published in the state
register pursuant to the provisions of article three of this
chapter.
(d) The legislative auditor and the secretary of state shall
maintain a file of all administrative rules submitted to them
pursuant to this article along with the analysis of costs and benefits and the statement of impact, if any.
§29A-8-5. Rules issuing in two or more parts.
(a) Whenever both the results of the analysis by a state
agency and comments by the legislative auditor indicate the
desirability and feasibility of promulgating rules which differ
with respect to their substance or applicability to various
segments of the businesses or business activities to which the
rules, as proposed, would apply, the agency shall issue the new
rule in two or more parts, with each part containing varying
requirements for performance or reporting, as appropriate, to
persons, business concerns and organizations of varying economic
sizes and resources engaged in business activities of varying
scope. These varying requirements shall take into account: (1)
The capitalization, annual income, number of employees and such
other factors as bear on the ability of the regulated persons,
concerns or organizations to sustain the costs attached to
compliance with the rule; and (2) in the case of regulated
activities, the value of the activities to the economy of the
state and the welfare of its citizens. In establishing segments
of regulated businesses or business activities for the purposes
of this section, agencies shall establish objective and, to the
maximum extent feasible, uniform criteria to facilitate
determinations by those engaged in such businesses and business
activities of the applicability to the businesses of rules issued
under this section.
(b) Whenever a state agency proposes to issue or issues a
rule, any business affected directly or indirectly by the rule may at any time apply to the agency for any exemption to the rule
it believes is authorized by subsection (a) of this section. The
agency shall review all applications and may include any
exemptions requested in the application in its official criteria
and standards for the exemptions, or in any revision of official
criteria and standards, upon finding that the public health,
safety or welfare will be protected. Within sixty days after its
receipt of an application the agency shall inform the applicant
of: (1) Its rejection of the application and its reasons for the
rejection; or (2) its approval of the application and the
approximate date when the applied for exemptions will be included
in the agency's official criteria and standards for exemptions,
or in any revision of the official criteria and standards. If an
agency response is not postmarked within sixty days, the
application shall be considered approved.
(c) Notwithstanding any other provisions of this chapter or
any other law, the head of any agency issuing a rule in two or
more parts, as provided in section five of this article, shall
upon issuing the rule transmit a copy of the rule, together with
any statements and comments as may be made in connection with the
rule by the legislative auditor to the president of the Senate
and to the speaker of the House of Delegates.
§29A-8-6. Provisions not to apply in case of emergency.
The provisions of this article shall not apply when an
agency finds that an emergency exists which requires the
immediate adoption of a rule and states in writing its reasons
for that finding pursuant to the provisions of section fifteen, article three of this chapter.
§29A-8-7. Agencies to review rules after enactment of this
article.
Each agency shall, during the five-year period beginning
with the effective date of this article, review its substantive
rules which are in effect on that date and make the
determinations referred to in section four of this article, with
respect to each rule.