HOUSE OF REPRESENTATIVES                H.B. NO.           
TWENTIETH LEGISLATURE, 1999                                
STATE OF HAWAII                                            

                   A  BILL  FOR  AN  ACT



 1      SECTION 1.  The legislature showed strong support for the
 2 needs of the small business community with passage of Act 168 in
 3 the 1998 session.  They found that small businesses bear an
 4 inordinate burden from regulations that treat all businesses the
 5 same regardless of size.  Many very small businesses do not have
 6 the resources to adequately research and defend their interests
 7 as part of the rule-making process.  Accordingly, Act 168, the
 8 Hawaii Small Business Regulatory Flexibility Act, provides more
 9 opportunity for input from affected firms in the earliest stages
10 of rule-drafting.  It also provides an opportunity for small
11 firms to register complaints about rules that have a particularly
12 disproportionate negative impact on smaller companies.
13      The legislature finds, however, that Act 168, as enacted,
14 has some unforeseen and unintended consequences that make
15 implementation less effective than anticipated.  These include
16 defining small businesses as those with fewer than 200 employees.
17 Since businesses of that size or smaller make up about 98% of all
18 establishments in Hawaii, it is not possible to focus regulatory
19 relief on those firms who need it most and can least afford the

a                                                     BED-28(99)
Page 2                                                     1031
                                     H.B. NO.           

 1 costs of compliance and advocacy.
 2      Further, the creation of a Public Defender in the
 3 legislative branch has not been justified in terms of
 4 demonstrated need or an approximation of the caseload that could
 5 arise.  The legislature recognizes that very small businesses can
 6 benefit from advice and support when faced with a citation for a
 7 violation of rules.  Accordingly, they have reaffirmed the value
 8 of a Business Advocate in the legislative branch who can both
 9 help cited firms and advocate on behalf of all small businesses
10 over a wider range of regulatory issues that businesses have
11 noted as troublesome.
12      SECTION 2.  Act 168, Session Laws of Hawaii 1998, is amended
13 by amending   -1, SECTION 2. to read as follows:
14                             "CHAPTER
16         -1 Definitions.  As used in this chapter, unless the
17 context clearly requires otherwise:
18      "Advisory committee" means an advisory committee on small
19 business as established in section  -4.
20      "Affected small businesses" or "affects small business"
21 means any potential or actual requirement imposed upon a small
22 business through an agency's proposed or adopted rule that will

a                                                     BED-28(99)
Page 3                                                     1031
                                     H.B. NO.           

 1 cause a direct and significant economic burden upon a small
 2 business, or is directly related to the formation, operation, or
 3 expansion of a small business.
 4      "Agency" means each state or county board, commission,
 5 department, or officer authorized by law to make rules, except
 6 those in the legislative or judicial branches.
 7      "Board" means the small business regulatory review board.
 8      "Small business" means a for-profit enterprise consisting of
 9 fewer than [two hundred] fifty full-time or part-time employees."
10      SECTION 3.  Act 168, Session Laws of Hawaii 1998, is further
11 amended by repealing   -8, SECTION 2.
12      SECTION 4.  Act 168, Session Laws of Hawaii 1998, is further
13 amended by amending SECTION 3. to read as follows:
14                             "CHAPTER
16         -1  Small business [defender] advocate.(a) There is
17 established within the legislature a small business [defender]
18 advocate.  The small business [defender] advocate shall be
19 appointed by the senate president and speaker of the house of
20 representatives.  The senate president and speaker of the house
21 of representatives shall determine the salary of the small
22 business [defender] advocate.  The senate president and speaker

a                                                     BED-28(99)
Page 4                                                     1031
                                     H.B. NO.           

 1 of the house of representatives may also appoint administrative
 2 support personnel who shall assist and support the small business
 3 [defender] advocate.
 4      (b)  Unless otherwise specifically provided by law, and upon
 5 written request by a small business, the small business
 6 [defender] advocate may [represent, defend, and provide legal
 7 representation] provide advice and support to any small business,
 8 during any adjudicatory or contested proceeding involving any
 9 civil citation issued by a state or county agency in which the
10 small business is a party[; provided that the small business
11 shall seek its own legal representation whenever the potential
12 remedies against the small business may include fines or
13 penalties that exceed $25,000 or may result in the suspension or
14 revocation of a license.  The small business defender shall have
15 the discretion to accept of refuse any case for good cause].  The
16 small business [defender] advocate may also engage in the
17 following activities:
18      (1)  Advocate and negotiate, upon consultation with the
19           small business regulatory review board, with federal,
20           state, and county agencies and officials on any matter
21           relating to and promoting the interests of small
22           business;

a                                                     BED-28(99)
Page 5                                                     1031
                                     H.B. NO.           

 1      (2)  Conduct investigations to secure information useful in
 2           the lawful administration of any provision in this
 3           chapter;
 4      (3)  Refer any appropriate matter to the auditor or
 5           ombudsman for examination or investigation; and
 6      (4)  Do any and all things necessary to effectuate the
 7           purposes of this chapter.
 8      [(c)  The small business shall waive and release any and all
 9 claims, damages, cause of action, and any request for relief made
10 against the small business defender, the State or counties, their
11 officers, employees, or agents, and arising from the legal
12 representation of the small business by the small business
13 defender provided under this section.]
14         -2 Annual report.  The small business [defender]
15 advocate shall submit an annual report to the legislature
16 detailing its activities and expenditures no later than twenty
17 days prior to convening of the regular session."
18      SECTION 5.  This Act shall take effect upon its approval.
20                           INTRODUCED BY: ________________________

a                                                     BED-28(99)