New regulatory reform for small business

This week Gov. Jay Inslee signed into law House Bill 1120, a regulatory reform bill sponsored by state Rep. Norma Smith (R-Clinton). According to a news release from Rep. Smith, the legislation was

in response to an audit conducted by the State Auditor’s Office (SAO) last year that found many state agencies were not complying with the requirements of the RFA [the state Regulatory Fairness Act, enacted in 1982 to reduce the disproportionate impact of state administrative rules on small businesses].

The SAO reviewed 331 rules proposed by 16 state agencies between 2014 and 2015. It was discovered the agencies had claimed an exemption from the RFA for 127 of them. However, in only slightly more than half of these instances did agencies rely on and cite an allowable exemption.


House Bill 1120 makes five changes to curb ongoing RFA compliance issues.

  • Agencies able to demonstrate a proposed rule would have no effect on small businesses will be exempt from completing a small business economic impact statement.
  • Agencies proposing a rule that would only affect small businesses will be required to consider mitigation options to reduce the cost to small businesses.
  • Agencies whose proposed rules would impose more than minor costs on small businesses will be required to mitigate those costs if the agency does not have sufficient data to calculate disproportionate impacts.
  • The Office of Regulatory Innovation and Assistance will be required to act as the state’s central entity to assist agencies with meeting the RFA’s requirements.
  • Beginning June 30, 2020, the SAO would be required to conduct performance reviews of agencies to assess their compliance with the RFA.

The bill goes into effect 90 days after April 23, the official end of the Legislature's regular session.

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