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H.B. NO.












SECTION 1. The legislature finds that there is a need to clarify the legal status of the small business impact statement required by chapter 201M, Hawaii Revised Statutes, to preclude interference with administrative rule adoption. The legislature further finds that agencies preparing draft administrative rules are uncertain when the impact statement is to be provided to the small business regulatory review board.

The purpose of this Act is to clarify the Small Business Regulatory Flexibility Act, chapter 201M, Hawaii Revised Statutes.

SECTION 2. Section 201M-2, Hawaii Revised Statutes, is amended to read as follows:

"[[]§201M-2[]] Determination of small business impact; small business impact statement. (a) Prior to submitting proposed rules for adoption, amendment, or repeal under section 91-3, the agency shall determine whether the proposed rules affect small business, and if so, the availability and practicability of less restrictive alternatives that could be implemented. This section shall not apply to emergency rulemaking. No rule shall be invalidated on the grounds that the contents of the small business impact statement are insufficient or inaccurate.

(b) If the proposed rules affect small business, the agency shall consider creative, innovative, or flexible methods of compliance 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 small business regulatory review board prior to providing notice for a 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.

(c) This chapter shall not apply to proposed rules adopted by an agency to implement a statute or ordinance that does not require an agency to interpret or describe the requirements of the statute or ordinance, such as federally[-] mandated regulations [which affords] that afford the agency no discretion to consider less restrictive alternatives.

(d) The small business impact statement shall be submitted to the small business regulatory review board when the preliminary rules are essentially complete and before the rules are submitted to the governor for approval for public hearing."

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

"[[]§201M-3[] Small business statement after public hearing.] Public hearing, small business comments. For any proposed rules that affect small business, the agency shall also submit a statement of the comments received from small business [statement] at the public hearing to the small business regulatory review board and the departmental advisory committee on small business after the public hearing is held. This section shall not apply to emergency rules. The [small business] statement required by this section shall provide the following information:

(1) A description of how opinions or comments from affected small business were solicited, a summary of the public and small business comments, and a summary of the agency’s response to those comments;

(2) The number of persons who:

(A) Attended the public hearing;

(B) Testified at the hearing; and

(C) Submitted written comments; and

(3) If there was a request to change the proposed rule at the hearing in a way that affected small business, a statement of the reasons for adopting the proposed rule without the requested change."

SECTION 4. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 5. This Act shall take effect upon its approval.