On May 18th Gov. Coyler signed into law HB 2280. This bill revises the Rules and Regulations Filing Act. The new law provides stricter guidelines for the rule-making process, grants authority to the director of budget to review and approve of proposed rules and regs, and alters the State Rule and Regulations Board. It also requires an evaluation of the economic impact statements by the Legislative Division of Post Audit.
The bill was introduced as HB 2526 and heard by the House Commerce, Labor and Economic Development Committee. There were three proponents of the bill, one neutral and no opponents of the bill. The proponents included Rep. John Carmichael, Rep. Ron Highland and lobbyist Tuck Duncan. The neutral conferee was the Kansas Chamber of Commerce.
Kansas Chamber of Commerce
Rep. John Carmichael
Rep. Ron Highland
R.E. “Tuck” Duncan
HB 2280 imposes a new requirement on executive branch agencies and staff (agency lawyers) to include more information when trying to adopt a new rule/reg or attempting to amend an existing rule/reg. The law now requires the agency and its director to submit an economic impact statement that includes a cost-benefit analysis. It further requires that the economic impact statement address which business sectors would be affected and those business sectors be consulted.
In summary, HB 2280 adds new requirements when adding or changing a rule or regulation. It adds individuals to the State Rules and Regulations Board, it requires agencies to draft an economic impact statement and develops an approval process for the director of the budget.
Below is a summary drafted by the Kansas Legislative Research Department for HB 2280.
Economic Impact Statements
The bill revises the contents of the economic impact statement that accompanies a state agency’s proposed rule and regulation or, if applicable, the proposed amendment to a current rule or regulation. Currently, an economic impact statement includes a description of:
● The proposed rule and regulation;
● The extent to which the proposed rule and regulation is required by federal law;
● The cost, including the government agencies and other persons who will bear the expense; and
● Any less-intrusive or less-costly methods to achieve the same end and the reasons for rejecting those methods.
The bill deletes references to the descriptions of cost and alternative means, and requires instead an economic impact statement to include a quantified cost-benefit analyses to be performed by the state agency and the director of the budget. If a state agency’s proposed rule and regulation would address a policy issue differently than a neighboring state’s agency or the federal government, the state agency will be required to include an explanation.
The economic impact statement will include an analysis that addresses the following factors:
● The extent to which the rule and regulation will enhance or restrict business activities and growth;
● The economic effect on the Kansas economy, including specific businesses, business sectors, public utility ratepayers, individuals, and local units of government;
● The businesses that will be affected directly;
● The benefits compared to the cost;
● Measures taken by the agency to minimize the cost and impact on businesses and economic development within the state, local units of government and individuals;
● An estimate of the total annual implementation and compliance costs, which will be expressed as a single dollar amount, that will be expected to be absorbed by businesses, local units of government or members of the public, and which will include an agency determination of whether these costs will exceed $3.0 million over a two-year period; and
In addition, the bill requires state agencies to consult and solicit information from businesses, business associations, local governmental units, state agencies or institutions, and members of the public who may be affected by the proposed rules and regulations or who may provide relevant information.
Approval Process by the Director of the Budget
Prior to an agency submitting a proposed rule and regulation to the secretary of administration and the attorney general, as required by law, the agency will send the proposed rule and regulation to the director of the budget, who will conduct an independent analysis, using the factors specified above, to determine whether the costs incurred by non-state government entities will be $3.0 million or less over a two-year period. The director will approve the proposed rule and regulation for submission to the secretary and attorney general if it is determined the impact will be less than or equal to $3.0 million. If the impact exceeds $3.0 million, the director may either disapprove the proposed rule and regulation or approve it, provided the agency conducted a public hearing prior to submitting the proposed rule and regulation and found the costs have been accurately determined and will be necessary for achieving legislative intent.
Starting with the 2019 Legislative Session, the director of the budget will submit an annual report to the legislature and the joint committee that will include the text of each rule and regulation reviewed, the final economic impact statement, and a summary of the analysis supporting the director’s decision. If the legislature is in session, the director will submit a separate report to the legislature and the joint committee regarding the director’s decision involving a proposed rule and regulation determined to cost more than $3.0 million over a two-year period.
Composition of the State Rules and Regulations Board
The bill amends statutes governing the appointment of members to the state board. The bill adds a member of the minority party to the membership of the state board, along with the chairperson of the Senate Committee on Ways and Means (in even-numbered years) or the chairperson of the House Committee on Appropriations (in odd-numbered years). Under the provisions of the bill, the new minority party member of the state board will be either the ranking minority member of the joint committee or a member of the joint committee appointed by the minority leader of the same legislative chamber as the joint committee chairperson.
Composition and Powers of the Joint Committee on Administrative Rules and Regulations
A ranking minority member will be designated for the joint committee by the minority leader of the senate or house, as will be applicable, so that the chairperson and the ranking minority member will be from the same chamber. Following each of its meetings where comments, recommendations, and concerns are expressed while reviewing proposed rules and regulations, the joint committee will issue a report to the legislature. The report will be made available to each agency that had proposed rules and regulations. If it will be impractical to finalize a report in time for an agency’s public hearing on the proposed rules and regulations, a preliminary report will be made available to the agency. In that case, the preliminary report will be made part of the final report, and it will be made available to each agency.
In 2021, the Legislative Post Audit Committee will direct the Legislative Division of Post Audit to conduct an audit that studies:
● The accuracy of economic impact statements submitted by state agencies for the preceding seven years;
● The impact the director’s review has had on the accuracy of economic impact statements; and
● Whether the $3.0 million threshold is the appropriate level to trigger an additional public hearing.
The bill becomes effect on publication in the Kansas Register.