Regulatory Fairness Act Tools & Guidance
In 2017, the Washington State Legislature passed House Bill 1120, requiring the state to provide tools and guidance to improve state agency implementation of the Regulatory Fairness Act (RFA) . Provisions of the bill required ORIA to “act as the central entity to collaborate with and provide support to state agencies” in meeting RFA requirements. The State Auditor will conduct a performance review of agency compliance with the RFA in 2020.
 
The legislature enacted the RFA, chapter 19.85 RCW, in 1982 with the intent to reduce disproportionate costs of state regulations on small businesses. Under the RFA, a state agency must develop a small business economic impact statement (SBEIS) if a rule they propose to adopt under the Administrative Procedures Act will impose more than “minor” costs on businesses.
 
In complying with the RFA’s requirements when proposing a new rule, a state agency must:
  • Determine whether the proposed rule would impose more than “minor” costs.
o   “Minor cost” is defined in RCW 19.85.020(2) as a cost per business that is less than one percent of annual payroll or the greater of either 0.3 percent of annual revenue or $100. A minimum of $100 of costs will usually trigger the SBEIS requirement, though in unique situations, a lower number may possibly trigger the requirement. For DSHS, minor costs are defined as less than $50 of annual costs per client or other appropriate unit of service. 
  • Prepare an SBEIS if a proposed rule would impose more than “minor” costs.
  • Provide notice of an SBEIS to small businesses by using at least the three methods listed in RCW 19.85.070.
  • If the SBEIS reveals disproportionate costs on small business, reduce or mitigate the costs imposed by the rule, including consideration of all options listed in RCW 19.85.030(2), or explain why it is not legal or feasible for the agency to do so.
State agencies, ORIA, the Office of the Attorney General (AGO), and business associations are collaborating to share best practices, identify information needs, and develop online resources.
Guidance Documents and Resources

The resources and guidance provided here are meant to help agencies meet the requirements of the RFA, but they do not represent the only methods that could be used to achieve compliance with the law.

Type
Name
Description
Training
RFA/SLR/CBA Training (Department of Health)
DOH training PowerPoint on the basic requirements of RFA and interrelation with Significant Legislative Rules and Cost Benefit Analysis (CBA), cited in the 2015 State Auditor’s Report on regulatory reform.
Guidance document
Helpful information and FAQ’s provided by the AGO for agencies to understand SBEIS process and requirements
Guidance document
Helpful information for agencies to understand RFA process and requirements for a SBEIS and CBA
Guidance document
A form to facilitate internal review and comment of a proposed rule and to document decision making on the type of rule
Checklist
A checklist of what to include when considering relevant requirements to initiate rulemaking
Checklist
A checklist of what to include in a SBEIS or CBA as an agency goes through rule development
Template
A template DOH created for internal use that may help other agencies think through and document rationale on key RFA questions and requirements
Template
A template DOH created for internal use that may help other agencies think through and explain specific SLR obligations
Template
A template to help agencies meet RFA procedural and communication requirements
Example SBEIS
Sample SBEIS analyses prepared by various agencies
 
 
 
 
 

 

Cost Calculation and Economic Impact Data Resources
ORIA is tasked with providing access to available data for agencies to complete RFA cost calculations and to support SBEIS preparation.
 
Under RCW 19.85.040, agencies should consider the following factors when determining whether the rule will impose more than minor costs on businesses:
  • Description of reporting, recordkeeping, or other compliance requirements of the proposed rule;
  • Description of the types of professional services that a small business will need for compliance with the rule;
  • Analysis of the costs of equipment, supplies, labor, professional services, and administrative costs needed for compliance;
  • Whether compliance with the rule will cause losses to sales or revenue; and
  • Estimates of the number of jobs created or lost as a result of compliance with the rule.
Most cost calculations begin with identifying the industries affected by the proposed rulemaking. The North American Industry Classification System (NAICS) maintained by the U.S. Census Bureau is the most commonly used method of classifying affected industries and querying basic economic data. The Bureau maintains up-to-date information on business firms that is searchable by NAICS code and location.
 
As part of its 2015 performance audit, Assessing Implementation of the Regulatory Fairness Act, the State Auditor’s Office created a simple spreadsheet calculator – complete with instructions on how to use it – that can assist agencies in preparing cost calculations.
 
The Washington State Office of Financial Management’s Input-Output model is one tool agencies commonly use for economic impact analyses. The model was developed in collaboration with the University of Washington and legislative staff, and includes helpful impact worksheets for simple and complex analyses.
 
ORIA is working to increase the ease of access to economic impact data for use in minor cost calculations and SBEIS preparation. For further assistance, please contact us directly at help@oria.wa.gov or 360-725-0628.
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