Report Title:

Small Business



Establishes the Small Business Bill of Rights. Requires the Ombudsman to investigate complaints of violations of the Small Business Bill of Rights. (HB2736 HD1)



H.B. NO.



H.D. 1


















SECTION 1. The legislature finds that small businesses are an essential element in strengthening and diversifying Hawaii's economy and creating jobs for our people. To help ensure that they can achieve this goal, a "small business bill of rights" would afford small businesses equal and fair treatment as well as reduce the numerous roadblocks to business success, which will inevitably lead to more investment and job growth in Hawaii.

The legislature also finds that in the past decade, states adopting a less burdensome method of issuing permits and enforcing laws have obtained more cooperation and have increased regulatory compliance by working in partnership with businesses. Because the regulatory system is often driven by a "fine-and-punishment" approach, state agencies and private businesses often are unnecessarily antagonistic. The small business regulatory review board was established by the legislature in 1998 to address these concerns. It works closely with state and county agencies that adopt rules to help reduce the regulatory burden. A "bill of rights" is an essential part of the review process.

To ensure that state administrative rules remain relevant to evolving business practices and conditions, a "sunset" process for review of state administrative rules should be put into effect. Every administrative rule maintained by any state agency should be reviewed, updated, and, if appropriate, eliminated by that agency. The small business regulatory review board should assist in that process by reviewing on a periodic basis existing rules to ensure that more innovative approaches to business regulation are fully considered.

"Small business", meaning any legal entity that is independently owned and operated and employs not more than one hundred full-time employees, is the backbone of Hawaii's economy, and is central to Hawaii's way of life. More than 95 per cent of all Hawaii establishments are small businesses, and they provide jobs for 60 per cent of all Hawaii employees. Accordingly, future growth in Hawaii's workforce will come primarily from new, homegrown businesses and from existing small businesses that hire new workers.

Hawaii's residents should be able to enjoy a business culture that encourages and supports small business. Hawaii currently has the natural, technical, and human resources to ensure that every person who wants to work can achieve meaningful employment and that every company has access to what it needs not only to survive but also to thrive.

The purpose of this Act is to set forth specific "rights" that small businesses should have and to allow them to achieve success for themselves and their employees for the good of all the people of Hawaii.

SECTION 2. The rights of small businesses in the State of Hawaii include but are not limited to:

(1) The right to expect state agencies to provide a prompt, accurate, and courteous response to a request for information and to work together to ensure ready access to the information needed to assist businesses in their relationships with state government;

(2) The right to a clear, stable, and predictable regulatory and record-keeping environment with easily accessible information and administrative rules in as clear and concise language as is practicable, including the posting of all proposed administrative rule changes on the Internet website of the office of the lieutenant governor;

(3) The right to timely notice of an agency's rulemaking proceedings when requested. The notice should be mailed to all persons who have made a written request for such a notice;

(4) The right to be treated equally and fairly, with reasonable access to state services;

(5) The right to a one-stop permitting process that includes a centralized Internet website-based application system. This site should have quick and responsible timeframes to process state and county permits, licenses, registrations, and approvals, when appropriate, to simplify and reduce the filing of forms affecting business;

(6) The right to a timely response to an application for a permit, license, registration, or approval necessary to operate the small business, within the established maximum period of time for that agency in accordance with section 91-13.5, Hawaii Revised Statutes;

(7) The right to automatic renewal of essential permits, licenses, registrations, or approvals, absent a specific reason for nonrenewal. All issuing agencies shall take action to grant or deny any renewal application for a business or development-related permit, license, registration, or approval within the established maximum period of time for that agency. If an agency intends to deny the business or development-related permit, license, registration, or approval, the agency should give notice to the holder of the permit, license, registration, or approval, thirty days before the expiration with the reasons for denial. The reasons for denial should be clearly stated and under conditions set forth in law;

(8) The right to a timely hearing in the event a state regulatory agency takes an adverse action against a business. Officials conducting such hearings should be impartial. Small businesses should be provided a full and complete hearing to present their explanation of any alleged violation, deficiency, or wrongdoing. In any hearing, there should be a presumption that the small business did not commit an alleged violation or wrongdoing until the agency proves otherwise by a preponderance of the evidence. The small business should have the right to present evidence, both oral and written. This evidence must be fully considered by the agency. In the event of an unfavorable decision, the business should have the right to a judicial review pursuant to section 91-14, Hawaii Revised Statutes;

(9) The right to be notified, in writing, at least thirty days prior to any adverse action by any state agency because of a violation of civil law, except where the violation has health, safety, or environmental impact, or may result in economic loss, unless that notice would allow possible destruction of evidence, continued unlawful practice, or flight;

(10) The right to privacy regarding confidential and proprietary business information when competing for state procurement contracts. No state agency shall mandate the disclosure of confidential or proprietary business information as a condition of obtaining any contract or payment under any contract when a contract is to be awarded on a firm fixed price or cost plus fixed price basis;

(11) The right to all of the protections afforded in the Taxpayer Bill of Rights, P.L. 104-168;

(12) The right to request information relating to administrative actions of state agencies from the office of the ombudsman, in accordance with chapter 96, Hawaii Revised Statutes, except where prohibited by law;

(13) The right to request information and an opinion from the office of information practices, in accordance with chapters 92 and 92F, Hawaii Revised Statutes, with regard to access to information from public meetings or the release of government documents;

(14) The right to provide information to the division of consumer advocacy in accordance with chapter 269, Hawaii Revised Statutes, with regard to issues under the purview of the public utilities commission;

(15) The right to request information from the office of consumer protection, in accordance with chapter 487, Hawaii Revised Statutes, with regard to business and consumer issues;

(16) The right to access the small business advocate in the department of business, economic development, and tourism regarding any dispute with a state agency to ensure government resources are coordinated on behalf of small business and the rights of businesses are being upheld; and

(17) The right to administrative rule review pursuant to the Small Business Regulatory Flexibility Act by filing a petition with the small business regulatory review board in accordance with section 201M-6, Hawaii Revised Statutes.

SECTION 3. Any person who is injured by reason of any violation of any right under this Act may lodge a complaint with the ombudsman, who shall promptly investigate the complaint and render findings, opinions, and a recommendation.


SECTION 4. Section 96-8, Hawaii Revised Statutes, is amended to read as follows:

"96-8 Appropriate subjects for investigation. An appropriate subject for investigation is an administrative act of an agency which might be:

(1) Contrary to law;

(2) Unreasonable, unfair, oppressive, or unnecessarily discriminatory, even though in accordance with law;

(3) Based on a mistake of fact;

(4) Based on improper or irrelevant grounds;

(5) Unaccompanied by an adequate statement of reasons;

(6) Performed in an inefficient manner; [or]

(7) Otherwise erroneous[.]; or

(8) A violation of the small business bill of rights.

The ombudsman may investigate to find an appropriate remedy."

SECTION 5. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 6. This Act shall take effect on July 1, 2034.