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:

§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

(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


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.