MISSISSIPPI LEGISLATURE

2005 Regular Session

To: Finance

By: Senator(s) Ross

Senate Bill 2795

(As Passed the Senate)

AN ACT TO CREATE THE "MISSISSIPPI SMALL BUSINESS REGULATORY FLEXIBILITY ACT"; TO MAKE LEGISLATIVE FINDINGS; TO DEFINE CERTAIN TERMS AS USED IN THE ACT; TO ESTABLISH A SMALL BUSINESS REGULATORY REVIEW COMMITTEE; TO IMPROVE STATE RULEMAKING BY CREATING PROCEDURES TO ANALYZE THE ECONOMIC IMPACT ON AND AVAILABILITY OF MORE FLEXIBLE APPROACHES FOR SMALL BUSINESS; AND FOR RELATED PURPOSES.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:

SECTION 1. The Mississippi Legislature finds that:

(a) A vibrant and growing small business sector is critical to creating jobs in a dynamic economy;

(b) Small businesses bear a disproportionate share of regulatory costs and burdens;

(c) Fundamental changes that are needed in the regulatory and enforcement culture of state agencies to make them more responsive to small business can be made without compromising the statutory missions of the agencies;

(d) When adopting regulations to protect the health, safety and economic welfare of Mississippi, state agencies should seek to achieve statutory goals as effectively and efficiently as possible without imposing unnecessary burdens on small employers;

(e) Uniform regulatory and reporting requirements can impose unnecessary and disproportionately burdensome demands including legal, accounting and consulting costs upon small businesses with limited resources;

(f) The failure to recognize differences in the scale and resources of regulated businesses can adversely affect competition in the marketplace, discourage innovations and restrict improvements in productivity;

(g) Unnecessary regulations create entry barriers in many industries and discourage potential entrepreneurs from introducing beneficial products and processes;

(h) The practice of treating all regulated businesses as equivalent may lead to inefficient use of regulatory agency resources, enforcement problems, and, in some cases, to actions inconsistent with the legislative intent of health, safety, environmental and economic welfare legislation;

(i) Alternative regulatory approaches which do not conflict with the stated objective of applicable statutes may be available to minimize the significant economic impact of rules on small businesses; and

(j) The process by which state regulations are developed and adopted should be reformed to require agencies to solicit the ideas and comments of small businesses, to examine the impact of proposed and existing rules on such businesses, and to review the continued need for existing rules.

ARTICLE IV

SMALL BUSINESS REGULATORY FLEXIBILITY.

SECTION 2. The following shall be codified as Section 25-43-4.101, Mississippi Code of 1972:

25-43-4.101. Title. This article may be cited as the "Mississippi Small Business Regulatory Flexibility Act".

SECTION 3. The following shall be codified as Section 25-43-4.102, Mississippi Code of 1972:

25-43-4.102. Definitions. As used in this article:

(a) "Agency" is defined in Section 25-43-1.102;

(b) "Department" means the Mississippi Development Authority;

(d) "Rule" is defined in Section 25-43-1.102, except that the term "rule" shall not include emergency or preemptive rules; and

(e) "Small business" means a for-profit business entity employing fewer than one hundred (100) full-time employees or having gross annual sales or revenues of less than Five Million Dollars ($5,000,000.00).

SECTION 4. The following shall be codified as Section 25-43-4.103, Mississippi Code of 1972:

25-43-4.103. Small Business Regulatory Review Committee. (1) (a) There is established a Small Business Regulatory Review Committee.

(2) The duties of the committee shall be to:

(a) Provide agencies with input regarding proposed permanent rules which may have an adverse economic impact upon small business and for which a notice of intended action is published by the Secretary of State on or after July 1, 2005;

(b) Review any rule promulgated by a state agency for which notice has been given by the agency to the committee that the proposed rule has or may have an adverse economic effect upon small business and make recommendations to the agency and or the Legislature regarding the need for a rule or legislation;

(c) Petition an agency to amend, revise, or revoke an existing regulation based on an adverse economic impact on small business; and

(d) Advise and assist agencies in complying with the provisions of and perform any and all acts and duties set forth and authorized in the Mississippi Small Business Regulatory Flexibility Act.

(3) The committee is assigned to the Mississippi Development Authority for administrative purposes only. The department shall act as a coordinator for the committee, and shall not be required to provide legal counsel for the committee.

(4) The committee shall consist of thirteen (13) members, who shall be appointed as follows:

(a) Three (3) members to be appointed by the Governor;

(b) Three (3) members to be appointed by the Lieutenant Governor;

(d) Four (4) members to include one (1) small business representative member from each of the following business associations, as designated by each respective business association:

(i) National Federation of Independent Business;

(ii) Mississippi Manufacturer's Association;

(iii) Mississippi Retail Association; and

(iv) Mississippi Petroleum Marketers and Convenience Stores Association.

(5) Appointments to the committee shall be representative of a variety of small businesses in this state. All appointed members shall be either current or former owners or officers of a small business.

(6) The initial appointments to the committee shall be made within sixty (60) days from July 1, 2005. The Mississippi Development Authority shall provide the name and address of each appointee to the Governor, Lieutenant Governor, the President Pro Tempore of the Senate, the Speaker of the House of Representatives and the Secretary of State.

(7) (a) Members initially appointed to the committee shall serve for terms ending December 31, 2006. Thereafter, appointed members shall serve two-year terms that expire on December 31 of the second year.

(b) The Governor shall appoint the initial chair of the committee from the appointed members for a term ending December 31, 2006, and shall appoint subsequent chairs of the committee from the appointed members for two-year terms that expire on December 31 of the second year.

(8) Members shall not receive any compensation.

(9) The committee shall meet as determined by the chair of the committee.

(10) A majority of the voting members of the committee shall constitute a quorum to do business. The concurrence of a majority of the members of the committee present and voting shall be necessary to make any action of the committee valid.

(11) No appointed committee member shall serve more than three (3) consecutive terms.

SECTION 5. The following shall be codified as Section 25-43-4.104, Mississippi Code of 1972:

25-43-4.104. Proposed permanent rules; determination of impact on small business. (1) Prior to submitting proposed permanent rules for adoption, amendment, revision or revocation pursuant to the Mississippi Administrative Procedures Law, the agency shall comply with Section 25-43-3.105(2)(d) in order to determine whether the proposed rules adversely affect small business by preparing an economic impact statement that includes the following:

(a) An identification and estimate of the number of small businesses subject to the proposed regulation;

(b) The projected reporting, recordkeeping and other administrative costs required for compliance with the proposed regulation, including the type of professional skills necessary for preparation of the report or record;

(d) A description of any less intrusive or less costly alternative methods of achieving the purpose of the proposed regulation.

(2) If the proposed rules may have an adverse economic effect upon small business, the agency shall submit a copy of the proposed rules and the economic impact statement to the committee for its review and comment pursuant to the review and comment provisions of the Mississippi Administrative Procedures Law. During the committee review process, the director or the director's designee of the promulgating agency shall be available at the request of the committee for comment on the proposed regulation.

(3) Within the review and comment period, if the committee determines that the proposed rules may have an adverse economic effect upon small business, the committee shall submit to the agency a request to prepare a regulatory flexibility analysis in which the agency, consistent with health, safety and environmental and economic welfare, shall consider utilizing regulatory methods that will accomplish the objectives of applicable statutes while minimizing adverse impact on small businesses. The request shall be made no later than the end of the public comment period that follows the notice of proposed regulation, as provided in Section 25-43-3.104; the promulgating agency shall have sixty (60) days from the date of the request to complete a regulatory flexibility analysis and deliver the analysis to the committee. The regulatory flexibility analysis shall consider the availability and practicability of less restrictive alternatives that could be implemented, and creative, innovative or flexible methods of compliance for small businesses. In preparing the analysis, the agency shall consider, without limitation, each of the following methods of reducing the impact of the proposed regulation on small businesses:

(a) The establishment of less stringent compliance or reporting requirements for small businesses;

(b) The establishment of less stringent schedules or deadlines for compliance or reporting requirements for small businesses;

(d) The establishment of performance standards for small businesses to replace design or operational standards required in the proposed regulation; and

(e) The exemption of small businesses from all or any part of the requirements contained in the proposed regulations.

(4) The committee shall, if applicable, submit to the promulgating agency, no later than thirty (30) days after the receipt of the regulatory flexibility analysis prepared by the promulgating agency, a written statement advising the agency that a proposed permanent regulation has significant adverse impact on small business.

(5) A small business that is adversely affected or aggrieved by final agency action is entitled to judicial review of agency compliance with the requirements of this article. A small business may seek such review during the period beginning on the date of final agency action.

(6) To ensure that any final rule continues to minimize economic impact on small businesses in a manner consistent with the stated objectives of applicable statutes, each agency shall, during any periodic review required by this chapter, consider the following factors:

(a) The continued need for the rule;

(b) The nature of complaints or comments received concerning the rule from the public;

(d) The extent to which the rule overlaps, duplicates, or conflicts with other federal, state and local governmental rules; and

(e) The length of time since the rule has been evaluated or the degree to which technology, economic conditions, or other factors have changed in the area affected by the rule.

SECTION 6. The following shall be codified as Section 25-43-4.105, Mississippi Code of 1972:

25-43-4.105. Promulgated rules; petition objecting to adverse effect on small business; review of committee decision. (1) For promulgated regulations, the committee may file a written petition with the agency that has promulgated the regulations opposing all or part of a regulation that has a significant adverse impact on small business.

(a) Within sixty (60) days after the receipt of the petition, the agency shall determine whether the impact statement or the public hearing addressed the actual and significant impact on small business or if conditions justifying the regulation have changed. The agency shall submit a written response of its determination to the committee within sixty (60) days after receipt of the petition. If the agency determines that the petition merits the amendment, revision, or revocation of a regulation, the agency may initiate proceedings in accordance with the applicable requirements of the Mississippi Administrative Procedures Law.

(b) If the agency determines that the petition does not merit the amendment or repeal of a regulation, the committee promptly shall convene a meeting for the purpose of determining whether to recommend that the agency initiate proceedings to amend or repeal the regulation in accordance with the Mississippi Administrative Procedures Law. The review must be based upon the actual record presented to the agency. The committee shall base its recommendation on any of the following reasons:

(i) The actual impact on small business was not reflected in, or significantly exceeded, the economic impact statement formulated by the promulgating agency, pursuant to Section 25-43-3.105 or 25-43-4.104; or

(ii) The actual impact was not previously considered by the agency in its economic impact statement formulated pursuant to Section 25-43-3.105 or 25-43-4.104 or its regulatory flexibility analysis formulated pursuant to Section 25-43-4.104; or

(iii) The technology, economic conditions or other relevant factors justifying the purpose for the regulations have changed or no longer exist.

(2) If the committee recommends that any agency initiate regulation proceedings for a reason enumerated in this section, the committee shall submit to the Speaker of the House of Representatives and the President Pro Tempore of the Senate an evaluation report and the agency's response as required by this section. The Legislature may take later action in response to the evaluation report and the agency's response as the Legislature finds appropriate.

SECTION 7. The following shall be codified as Section 25-43-4.106, Mississippi Code of 1972:

25-43-4.106. Waiver of administrative penalties or fines. (1) Notwithstanding any other law of this state, any agency authorized to assess administrative penalties or administrative fines upon a business may waive or reduce any administrative penalty or administrative fine for a violation of any statute, ordinance, or rules by a small business under the following conditions:

(a) The small business corrects the violation within thirty (30) days or less after receipt of a notice of violation or citation; or

(b) The violation was the result of an excusable misunderstanding of an agency's interpretation of a rule.

(2) Subsection (1) of this section shall not apply when:

(a) A small business has been notified of the violation of a statute, ordinance, or rule by the agency pursuant to this section and has been given an opportunity to correct the violation on a prior occasion;

(b) A small business fails to exercise good faith in complying with the statute, ordinance or rule;

(d) A violation results in serious health, safety or environmental impact; or

(e) The penalty or fine is assessed pursuant to a federal law or regulation and for which no waiver or reduction is authorized by the federal law or regulation.

SECTION 8. The following shall be codified as Section 25-43-4.107, Mississippi Code of 1972:

25-43-4.107. Applicability. The Mississippi Small Business Regulatory Flexibility Act shall not apply to:

(a) Proposed permanent rules 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 state legislative or federally mandated provisions which afford the agency no discretion to consider less restrictive alternatives.

(b) Any rule required by the federal government pursuant to a state/federal program delegation agreement or contract.

(d) A temporary rule adopted pursuant to Section 25-43-3.108.

SECTION 9. This act shall take effect and be in force from and after July 1, 2005.