HB3 Alabama 2021 Session

Existing law relating to the adoption of new rules by agencies grants the Joint Committee on Administrative Regulation Review discretionary authority to approve, disapprove, or recommend changes to an agency's proposed rule, or to render no action and approve an agency's proposed rule by implication

The existing review process for proposed rules also requires that: (1) proposed rules that have an economic impact on businesses must be accompanied by a Business Impact Analysis detailing the proposed rule's estimated impact on businesses; and (2) proposed rules that have any economic impact must be accompanied by a fiscal note detailing the rule's impact on the state, its governmental and non-governmental entities, and its residents, generally. The joint committee, upon receipt of these materials, may exercise its discretionary power to require the agency to consider the feasibility of alternatives with less economic impact

This bill would set a minimum threshold for a proposed rule's economic impact where, if the total costs estimated within the fiscal note detailing the proposed rule's impact exceeds a $1 million threshold, the rule shall not take effect absent a joint resolution of approval by the Legislature, or submission to the joint committee for approval of a germane modification to the rule to reduce costs below the threshold. If that estimate exceeds $750,000, the Legislative Services Agency, Fiscal Division, would perform an analysis of the veracity and accuracy of the fiscal note

This bill would also allow any member of the Legislature or the joint committee to request that the joint committee require an agency to prepare and submit a Business Impact Analysis

Relating to administrative procedure; to amend Sections 41-22-5.1, 41-22-5.2, and 41-22-23 of the Code of Alabama 1975, as last amended by Act 2019-498, 2019 Regular Session; to set a minimum threshold for a proposed rule's economic impact; to set measures to reduce the cost of proposed rules below that threshold; to require approval by the Joint Committee on Administrative Regulation Review for any rule with costs above that threshold to take effect; and to allow a member of the Legislature to petition the joint committee to request a Business Impact Analysis without prompting by a business.

Section 1

Sections 41-22-5.1, 41-22-5.2, and 41-22-23, Code of Alabama 1975, as last amended by Act 2019-498, 2019 Regular Session, are amended to read as follows:

§41-22-5.1.

(a) This section and Section 41-22-5.2 shall be known and may be cited as "The Red Tape Reduction Act."

(b) When an agency files a notice of intent to adopt, amend, or repeal any rule, the agency shall make its best efforts to notify the public of the proposed rule. At a minimum, when the agency files the notice of intent, the agency shall post the text of the rule the agency proposes to adopt, amend, or repeal on its website or, if the agency has no website, on a website operated or maintained by the executive branch. Additionally, when the agency files a notice of intent to adopt, amend, or repeal a rule, the agency shall electronically notify any person who has registered with the agency his or her desire to receive notification of any proposal by the agency to adopt, amend, or repeal a rule.

(c) If, prior to the end of the notice period, a business notifies an agency that it will be negatively impacted by an action proposed under subsection (b), the agency shall prepare and submit to the committee the information provided by the affected business as well as a business impact analysis of the proposed action. The analysis shall estimate the number of businesses subject to the agency's proposal as well as the projected reporting, recordkeeping, and other administrative costs required for compliance with the proposal. An agency shall prepare the business impact analysis using information available to the agency in the normal course of business and utilizing the expertise and experience of existing agency employees.

(d) If, prior to the end of the notice period, any member of the Legislature or the joint committee notifies the committee that he or she wishes the agency to prepare and submit to the committee a business impact analysis as described in subsection (c), the committee may, upon a majority vote of the committee, require the agency to prepare and submit the statement.

(d) (e) After receiving a business impact analysis from an agency, the committee may require the agency to analyze and report to the committee the feasibility of some or all of the following methods of reducing the impact of the rule on businesses:

(1) The establishment of less stringent compliance or reporting requirements for businesses.

(2) The establishment of less stringent schedules or deadlines for compliance or reporting requirements for businesses.

(3) The consolidation or simplification of compliance or reporting requirements for businesses.

(4) The establishment of performance standards for businesses to replace design or operational standards required in the rule.

(e) (f) The agency shall state in the business impact analysis whether the proposed rule is proposed as a result of a requirement issued by a federal agency or self-regulatory organization or an act of the Legislature to administer a non-discretionary tax, license, fee, or penalty. If so, the agency shall submit information identifying the specific requirement issued by the federal agency or self-regulatory organization or required by an act of the Legislature.

(f) (g) A business impact analysis required to be filed pursuant to this section shall be filed with the Legislative Services Agency, Legal Division, at the same time as the certified rule is filed and shall be available for public inspection.

(g) (h) Each agency that files a business impact analysis, at the time it is filed, shall place that statement on its website in a location that is easily accessible by the general public, or, if the agency does not have a website, on a website operated or maintained by the executive branch.

(h) (i) If the committee determines that an agency or a division of an agency exists primarily to perform certification or licensing-related functions, the agency is not required to comply with this section unless the committee determines in writing that an agency's proposal has such a negative impact on businesses that the filing of a business impact analysis is warranted. Notwithstanding subsection (c) of Section 41-22-6, which provides that a rule is effective 45 days after notice that the agency filed the certified rule with the Legislative Services Agency, Legal Division, is published in the Alabama Administrative Monthly, in any case in which the committee determines that the filing of a business impact analysis is warranted as provided in this section, the effective date of the rule shall be 45 additional days after the effective date specified in subsection (c) of Section 41-22-6. In all other respects, the remainder of this chapter shall continue to apply to the proposed rule.

(i) (j) An agency or department shall fulfill any request for license or permit within 28 (30) calendar days after receiving the application or notify the applicant of the reason for failure to issue the license or permit.

(j) (k) An agency is not required to comply with this section if the proposed rule is being adopted in order for the agency to comply with membership requirements in a multi-state or national membership organization.

(k) (l) This section shall not apply to the adoption of an emergency rule adopted pursuant to subsection (b) of Section 41-22-5.

§41-22-5.2.

(a) Within five years of July 1, 2013, and every five years thereafter, each agency shall review all agency rules existing on that date to determine whether the rules should be continued without change, or should be amended or rescinded , and shall certify that the agency completed the review to the Legislative Services Agency, Legal Division. The agency may indicate compliance with the requirements of this section by filing a notice in the Alabama Administrative Monthly certifying its compliance. If the head of the agency determines that completion of the review of existing rules is not feasible by the established date, the agency shall publish a statement certifying that determination.

(b) A rule adopted after July 1, 2013, shall be reviewed every five years in a manner consistent with subsection (a).

(b) If an agency does not certify that the agency has reviewed its rules within each five-year period pursuant to subsection (a), the agency shall not adopt any new rules within each five-year period pursuant to subsection (a), unless those new rules are required to be adopted, implemented, or amended pursuant to a requirement issued by a federal agency, federal law, self-regulatory organization, or required by an act of the Legislature.

§41-22-23.

(a) The notice required by subdivision (a)(1) of Section 41-22-5 shall be given, in addition to the persons named in the notice, to each member of the committee and such other persons in the legislative department as the committee requires. The form of the proposed rule presented to the committee shall be as follows: New language shall be underlined and language to be deleted shall be typed and lined through. The notice may be provided in an electronic format.

(b)(1) Within the 45-day period between the date of publication in the Alabama Administrative Monthly that a rule has been certified and the date it becomes effective, and subject to subsection (h) of Section 41-22-5.1, the committee shall study all proposed rules and may hold public hearings. The committee may adopt a policy providing when a public hearing will be held on a rule meeting specified criteria. In the event the committee fails to give notice to the agency of either its approval or disapproval of the proposed rule within ays after the notice is published in the Alabama Administrative Monthly that the rule has been certified and filed with the Legislative Services Agency, Legal Division, pursuant to Section 41-22-6, the committee shall be deemed to have approved the proposed rule for the purposes of this section. (2) In the event the committee disapproves a proposed rule or any part thereof, it shall give notice of the disapproval to the agency. The disapproval of any rule may be appealed to the Lieutenant Governor in writing by the agency that submitted the rule within 15 days of disapproval. The Office of the Lieutenant Governor shall stamp the written appeal to denote the date the appeal was received. If the disapproval of a rule is appealed to the Lieutenant Governor, the Lieutenant Governor, within the 15 days after the notice of appeal of the disapproval of the rule is filed, may review the rule and hold public hearings he or she determines necessary.

(3) If the Lieutenant Governor sustains the disapproval of the rule, he or she shall notify the committee and return the rule to the agency and the disapproval shall be final.

(4) If the Lieutenant Governor approves the rule, he or she shall notify the chair of the committee. The rule shall become effective upon adjournment of the next regular session of the Legislature that commences after the approval unless, prior to that time, the Legislature adopts a joint resolution that overrules the approval by the Lieutenant Governor and sustains the action of the committee.

(5) If the Lieutenant Governor fails to either approve or disapprove the rule within the 15 days after the notice of appeal of the disapproval of the committee, the rule shall be deemed approved and the rule shall become effective upon adjournment of the next regular session of the Legislature that commences after the deemed approval unless, prior to that time, the Legislature adopts a joint resolution that overrides the deemed approval of the Lieutenant Governor and sustains the action of the committee. In the event the Office of the Lieutenant Governor is vacant, a rule disapproved by the committee shall be suspended until the adjournment of the next regular session of the Legislature following the disapproval. The rule shall be reinstated on adjournment of that regular session unless the Legislature, by joint resolution, sustains the disapproval.

(c) The committee may propose an amendment to any proposed rule and return it to the agency with the suggested amendment. In the event the agency accepts the rule as amended, the agency may resubmit the rule as amended to the committee and the rule shall become effective on the date specified in the rule, or on the date the amended rule is submitted, whichever is later. In the event the agency does not accept the amendment, the proposed amended rule shall be deemed disapproved, as provided in subsection (b).

(d) An agency may withdraw a proposed or certified rule. An agency may resubmit a rule so withdrawn or returned under this section with minor modification. Such a rule is a new filing and subject to this section but is not subject to further notice as provided in subsection (a) of Section 41-22-5.

(e) The committee is authorized to review and approve or disapprove any rule adopted prior to October 1, 1982.

(f) A rule submitted to the committee which has an economic impact shall be accompanied by a fiscal note prepared by the agency and including a specific dollar amount of anticipated economic impact in accordance with this subsection. The fiscal note shall be resubmitted with any changes when filing the certified rule. For any fiscal note anticipating seven hundred fifty thousand dollars ($750,000) or more of implementation and compliance costs, the Legislative Services Agency, Fiscal Division, within 21 days of certification of the rule, shall provide to the committee a brief analysis of the accuracy and veracity of the agency's fiscal note and anticipated economic impact. Upon receiving the fiscal note, and analysis, if any, the committee may require additional information from the submitting agency, other state agencies, or other sources. A state agency shall cooperate and provide information to the committee. At a minimum, the fiscal note submitted with a proposed rule shall include the following:

(1) A determination of the need for the rule and the expected benefit of the rule.

(2) A determination of the costs and benefits associated with the rule and an explanation of why the rule is considered to be the most cost effective, efficient, and feasible means for allocating public and private resources and for achieving the stated purpose.

(3) The effect of the rule on competition.

(4) The effect of the rule on the cost of living and doing business in the geographical area in which the rule would be implemented.

(5) The effect of the rule on employment in the geographical area in which the rule would be implemented.

(6) The source of revenue to be used for implementing and enforcing the rule.

(7) A conclusion on the short-term and long-term economic impact upon all persons substantially affected by the rule, including an analysis containing a description of which persons will bear the costs of the rule and which persons will benefit directly and indirectly from the rule.

(8) The uncertainties associated with the estimation of particular benefits and burdens and the difficulties involved in the comparison of qualitatively and quantitatively dissimilar benefits and burdens. A determination of the need for the rule shall consider qualitative and quantitative benefits and burdens.

(9) The effect of the rule on the environment and public health.

(10) The detrimental effect on the environment and public health if the rule is not implemented.

(11) Whether the proposed rule is proposed as a result of a requirement issued by a federal agency or self-regulatory organization or required to be adopted, implemented, or amended by an act of the Legislature to administer a non-discretionary tax, license, fee, or penalty.

(g)(1) If the total economic impact estimated within the fiscal note submitted with a certified rule exceeds one million dollars ($1,000,000), in implementation and compliance costs, or if the Legislative Services Agency, Fiscal Division determines that the estimated economic impact exceeds one million dollars ($1,000,000) in implementation and compliance costs, the rule shall not take effect unless a joint resolution of approval is passed by the Legislature, or a modification is approved by the joint committee pursuant subdivision (2). This subdivision shall not apply to rules required to be adopted, implemented, or amended as a result of a change in federal law, a requirement issued by a federal agency or self-regulatory organization, or as a result of an act of the Legislature to administer a non-discretionary tax, license, fee, or penalty.

(2) The agency may submit to the committee for approval a germane modification to the rule to reduce the economic impact below one million dollars ($1,000,000); if the committee approves the proposed amendment, the rule shall take effect as amended. The agency, in modifying the certified rule, shall consider the following criteria:

a. The establishment of less stringent compliance or reporting requirements for businesses, governmental entities, and individuals.

b. The establishment of less stringent schedules or deadlines for compliance or reporting requirements for businesses, governmental entities, and individuals.

c. The consolidation or simplification of compliance or reporting requirements for businesses, governmental entities, and individuals.

d. The establishment of performance standards for businesses or governmental entities to replace design or operational standards required in the bill.

(g) (h) In determining whether to approve or disapprove proposed rules, the committee shall consider the following criteria:

(1) Is there a statutory authority for the proposed rule?

(2) Would the absence of the rule or rules significantly harm or endanger the public health, safety, or welfare?

(3) Is there a reasonable relationship between the state's police power and the protection of the public health, safety, or welfare?

(4) Is there another, less restrictive method of regulation available that could adequately protect the public?

(5) Does the rule or do the rules have the effect of directly or indirectly increasing the costs of any goods or services involved and, if so, to what degree?

(6) Is the increase in cost, if any, more harmful to the public than the harm that might result from the absence of the rule or rules?

(7) Are the qualitative and quantitative benefits to businesses, governmental entities, and individuals outweighed by the estimated burden?

(7) (8) Are all facets of the rulemaking process designed solely for the purpose of, and so they have, as their primary effect, the protection of the public?

(8) (9) Any other criteria the committee may deem appropriate."

Section 2

This act shall become effective on the first day of the third month following its passage and approval by the Governor, or its otherwise becoming law.